Effects of elements of the marketing mix on the development of the Starbucks organization’s marketing strategy and tactics
In terms of products, Starbucks has a range of products that are more than 30 varieties of coffee beans from all over the world. It uses its systems to make fresh coffee for its customers. Apart from these coffee drinks, the company also offers various coffee products such as oatmeal, wraps, and smoothies to attract many customers and respond to competition (Kotler, Wong, Saunders and Armstrong, 2005).
Starbucks is always inventing and introducing new coffee products. This is in response to market demands and competition in the coffee consumption industry. For instance, the company introduced Instant via Ready and Tazo Tea Infusions. These are products Starbucks claims are different from other products and regular coffee or tea. Starbucks wishes to attract and retain tea consumers by providing both coffee and tea. Starbucks also store coffee, making machines for customers who prefer homemade coffee.
Starbucks believes that it is selling to high-end coffee and tea consumers. Consequently, its products cost more than other average coffee shops. The company also believes that its image and brand attract high-end coffee and tea consumers. However, it also offers a low-cost cup of coffee that customers can refill as they wish. Starbucks has realized the issue with its pricing strategy. Consequently, it has started implementing a strategy that focuses on value and emphasizes the low cost of coffee products. This will make potential customers stop perceiving it as an expensive coffee maker. In this regard, it offers breakfast paired with coffee at a relatively reduced price.
In terms of place, Starbucks usually choose corners and streets of high traffic. We can also find Starbucks in most popular neighborhoods. The company is also present in large retail bookstores such as Barnes and Noble. This is to attract customers who enjoy reading, listening to soft music, and sipping coffee or tea. Starbucks is also considering a new strategy of naming its coffee outlets after street names they occupy. This is a stealth strategy to the competitive coffee industry. The products shall only reflect the name of the street but not the store name.
Starbucks can use many promotional strategies to reach its target customers. Starbucks has always used its card to ensure customer loyalty and repeat businesses. The card also allows customers to get other customers by means of referral. Starbucks Card works as a tool for increasing the company’s brand loyalty. It also helps the company get new customers. Starbucks also offers gifts to most of its valued customers or suppliers. The same also happens among the employees, whereby the company gives them benefits depending on performance. The company also has delivery services to its customers. Starbucks offers different coffee and tea from different parts of the world to appeal to different tastes of clients. The company has also taken its corporate responsibility further by supporting community-based and non-profit making organizations. This ensures that Starbucks builds and creates its brand awareness.
Implementation of the marketing mix elements
Starbucks deals with coffee and tea products. The company offers these products in different quantities and quality. They are normally packed or consumed in Starbucks branded packaging. This is one method it uses to implement its marketing mix of products. It knows that packaging communicates to all customers consuming Starbucks products. Thus, the packaging of tea and coffee products must emphasize the Starbucks brand. It has to appeal to customers within the shortest time possible. Product packaging provides convenience to customers who want takeaway coffee or tea or other Starbucks products. Customers may buy products over and over again because of packaging. Over the years, Starbucks has strived to improve coffee and tea mugs for convenience, and for the comfort of its customers. Starbucks also ensures that all the company’s products have the same tastes across all its outlets.
Starbucks can guarantee all customers that the products will be of its standard always. It has learned to give customers some level of comfort by providing quality coffee and tea in all its outlets. This enables customers to know what to expect if the product does not meet their standards. This is necessary in cases where Starbucks is selling coffee machines for home use. This flexibility enables customers to trust Starbucks to deliver quality coffee and tea products always.
Starbucks ‘ marketing mix tends to consider the total marketing mix when setting prices. This is because the competitive coffee industry cannot allow for non-price strategy implementation. At the same time, the use of online to sell products like K-Cup Packs, free drinks through rewards, and Petites at reduced costs affects the price, promotion, and distribution of its products. These will strongly affect its pricing strategy. In all these marketing mixes oriented towards pricing, Starbucks must remember that buyers rarely consider price alone. Instead, the products they seek must give them the best value.
Starbucks has learned that it is selling to high-end consumers. Thus, Starbucks’ pricing strategy and implementation are essential. Pricing implementation must consider the message it is sending to customers. However, this depends on the market the company is serving. Customers want value for their money. Price implementation must consider the competition. Starbucks is not the only coffee or tea retailer in most busy streets. Thus, setting prices to beat the competition is a strategy that Starbucks must evaluate carefully before implementation.
In some cases, customers are sensitive to high prices, particularly in the busy streets. This leads to price elasticity has Starbucks tries to introduce low-cost coffee products and combined items for low prices. However, some customers pay more for the value of coffee or tea at Starbucks than get it elsewhere at a relatively lower price. Pricing strategy and implementation must control all other elements of the marketing mix.
Starbucks has been selective in choosing its outlets. The company seeks busy streets, places of high-end consumers, quite places like Barnes and Noble Books store, among others. This strategy is necessary because it ensures that Starbucks sells and distributes its products. Starbucks is also present online through its K-Cup Pack that clients can order online. The company seeks to be available everywhere of its interests. Availability is such places makes Starbucks conducts a lucrative coffee and tea business. The company has also created demands for its products. Implementation of place strategy must consider access to Starbucks’ target markets.
Starbucks has known the importance of choosing high-end places for its retail outlets. Place defines the quality of services and products a company may offer. Starbucks must implement a place strategy that matches its brand image and pricing goals of its products. This is why the company chooses high-end places, and busy streets to attract consumers who are from work, have no time to sip coffee seated or have money to spend on coffee or tea.
When implementing a place strategy, Starbucks must take into account the price, products’ image, place, and customer perception of its products and services. It must also study market dynamics and stay ahead of the competition. This could mean changing places, opening new channels, or improving existing outlets. Starbucks must also ensure that distribution channels must catch the attention of customers and employees. There are certain consumers who may not buy some products from certain locations due to different factors such as distance, insecurity, and pricing, among others.
Implementation of a promotional strategy is crucial for the success of any business venture. Companies rely on communication for building their brand images and creating awareness about their products. The company must consider the message and tools of communication in order to reach its target market. Starbucks must consider how to implement its advertisement messages using different media so as to appeal to various segments of the market. It may also engage the use of direct markets such as seeking referrals, public relations, support community-based events, and working on its company brochures and loyalty cards.
Starbucks must cover every communication method used in marketing. At the same time, these modes must appeal to various markets of coffee and tea consumers. These methods must drive traffic and also make people consume coffee and tea at Starbucks. This is how to ensure that a company is using an Integrated Marketing Communication strategy and implementing it well. Since there are different channels of communication, the implementing body must ensure that messages are consistent and remain the same in all media channels. Thus, Starbucks must manage different cases of misinformation if it as different sales force and separate public relations or promotion group i.e., the message must remain the same.
Identification of the organization and the industry in which it exists
Starbucks is leading the world in coffee retailing with more than 13,000 coffee outlets in more than 35 countries. Starbucks serves coffee drinks, coffee beans, other coffee products, and tea. Starbucks owns most of its retail outlets. It does not engage in a price war but rather on customers’ experience at the stores. Its values cover human diversity, differences, and cultures (Kauffrau, 2007).
Starbucks aims at establishing its brand image as a leader in coffee retailing in the world. Thus, its strategy is to continue expanding its coffee outlets throughout the world. It also focuses on developing specialty operations in coffee retailing that will allow it to introduce new coffee and tea products, and engage new channels of distribution.
The coffee retail shop industry of the US alone “includes 20,000 stores with combined annual revenue of about $11 billion” (Kauffrau, 2007). The leading coffee shops include “Starbucks, Dunkin’ Donuts, Caribou, Coffee Bean, and Tea Leaf, and Diedrich (Gloria Jean’s)” (Kauffrau, 2007).
According to Kauffrau, coffee consumers will maintain increasing levels of coffee consumption between 2005 and 2010 (Kauffrau, 2007). The US coffee retail volume sales will increase by seven percent over the forecast period. Per capita consumption of total volume (retail and foodservice) will reach 2.9 kg by 2010 (Kauffrau, 2007). “The espresso-based drink market is showing a 68 percent increase since 2000” (Kauffrau, 2007). There is a growing demand for specialty coffee in the US.
Kauffrau, D. (2007). Coffee Shop Industry – A Strategic Analysis. Munich: GRIN Publishing.
Kotler, P., Wong, V., Saunders, J. and Armstrong, G. (2005). Principles of Marketing, 4th ed. Essex: Pearson Education Limited.