Discuss about the Market Strategy and Plan for Bean Coffee.
In the year 1971, three entrepreneurs in Seattle came together with the idea of selling whole bean coffee from one store and it gained such an enormous popularity that by 1982 the coffee beans were getting sold from five stores (www.starbucks.au, 2016). The whole plan of the Starbucks owners’ was to inform people about fine coffee and introduce them to dark roasted smell of coffee. Howard Schultz selected as the retail and marketing manager tried to inject new ideas in the minds of the owners on ways to improve Starbuck’s operations, but got rejected. He later went on to acquire Starbucks from its initial owners for $4 millions. Schultz wanted to lay a solid base for Starbucks to operate smoothly. Though it experienced losses in the initial years under Schultz for reasons related to expansion costs, he was quick to turn around the tide and increase the amount of sales by a whopping 84%. By 1991 the company was free from any sort of outstanding debts.
A company can segment their market in the following 4 parts:
A consumer market gets segregated into different groups based on income, profession, gender, age and family size. One of the most accepted methods of segmenting the consumer group which takes into account the demographic variables depending upon the needs, wants and customary rates of consumers (Cross, Belich & Rudelius, 2015). Adding to that is the easiness with which demographic factors can be measured as compared to other variables. A very common factor used by companies to slice up the market. Many companies offer a varied range of products for different age groups to go along with diversified marketing schemes. Young adults within the age group of 18-24, account for 40% of Starbucks sales. People falling in the 25-40 age categories are the biggest contributors to the ever increasing sales figure of the Starbucks which stands at 49%. Starbucks targeted every age group in order to expand their market. A market survey has highlighted the fact that around 13% American adults visit Starbucks for just a cup of coffee.
This audience segmentation approach segregates the market into consumer groups in accordance to their lifestyle. It takes into account the expectations of the consumers along with other factors such as the purchasing behavior and attitudes of different consumers (Schlegelmilch, 2016). These attributes if identified properly can lead to successful marketing campaigns modified to customer enthusiasm. Customer behavior and their standard of living pattern changes at every phase of life as change is the only constant thing that prevails in this world. Starbucks generally appeals to the upscale market where probably every customer of it has a college degree with excellent income and a liking towards the sociable atmosphere. Starbucks main focus area is the gastronome section of coffee drinkers and its every strategy is being focused in keeping that division attracted.
Howard Schultz, the man behind Starbucks success stated that in 2011 and 2012 the company has seen the biggest sales in the history of the Starbucks. The late 90s saw Starbucks using the GIS technology and data which did have a positive effect on the figures of Starbucks.
Customer has always been stated as the king and it is on their part to decide on a given brand based on the brand’s image, functionality and the level of extent to which the customer can connect with the particular brand (Johnson, Ringham & Jurd, 2013). Customers do have different criteria in selecting a brand based on their social category and persona (Hassan & Craft, 2012). As mentioned earlier in the report, Starbucks have always targeted the upper pricing level and are blessed with loyal customers who do not hesitate to pay premium price for the same. Starbucks have been successful in keeping people attracted towards its product through a brand image that signifies status symbol. The company is into campaigns where they present their customers with new products or sample pastries, which has been tipped to be a popular customer behavior theory that expects consumers to come out of their normal buying habits and try something new.
|
Segmentation Base |
Advantages |
Disadvantages |
|
Geographic |
For a large company like Starbucks Corporation it is important to consider geographic segmentation which would permit them to judge cultural differences. |
It is based on the assumption that all the customers’ need of a particular geographical area is similar in nature which may not be the case. |
|
Demographic |
Through this approach a company centers its attention on people who are its potential customers. It helps the company in knowing its target area and not losing out key moments on people who are not interested in its products (Ascarza, 2016). Starbucks has been for the up-level market, people who can afford to have a cup of its coffee because it is expensive. |
Marketing based on demographic data is more on assumptions. Guarantee of being successful is missing. |
|
It helps the company in kickstarting its business through proper marketing strategies. |
||
|
Age, gender are certain important factors and Starbucks have made full use of it. Starbucks has never been gender specific, its for all. |
Population is not a constant element. Collecting information constantly consumes a lot of time and shells out a lot of money too. |
|
|
Behavior |
Companies can understand their customers very well. It is important for a company to know what a customer wants out of its product. Retaning old ones and creating new are important aspects. |
A tag expensive and reuires a lot of research work and time. |
|
It helps in anticiapating the wants of the customers. Based on this companies strategise. Starbucks’ idea of a ‘third place’ is one such strategy that is ripping benefits for the company. |
A major challenge faced by companies is educating client about the products. Starbucks have been lucky because all its customers are educated professionals and college goers. |
|
|
Psychographic |
It breaks down the customer into groups which facilitates the company in recognizing which product for which group. Starbucks have different products for different age groups like teenagers, children. |
|
|
It defines class and Starbucks Coffee is one such company which signifies the upper level class of the society. |
The target market depends on the organization’s idea to serve a particular customer group after it is done in defining its market segments (Chen & Lee, 2015). The whole idea of target marketing is to assess the different segments and chose one or more segments to enter and operate. A good company will always target segments which will present it with enough opportunities to grow, create customer value and earn desired profits. Starbucks is no different and it has always worked on maintaining a strong relationship with its customers. The general notion for companies is to select and enter a single segment in the initial stages and then expand to other segments as and when necessary. Starbucks followed the same path and came up with the concept of targeting the parents of younger children which became a huge hit. This was followed by adding up of more segments like the teenager group which allowed it to develop its product range too.
The primary target market for Starbucks is the urban professionals ageing between 25-40. Starbucks has been highly successful in attracting this age group which is evident from the fact that this group makes up around 49% of the coffee chain’s consumers. Starbucks has never been gender specific and it has been liked by both men and women of that group.
The category of secondary target market saw Starbucks focusing on the college going students and individuals involved in post-graduate studies living in the urban areas. These two make up the largest segment of gourmet coffee drinkers. Market survey has shown that education is directly linked with coffee. Education seeking people consumes more coffee than the job holders.
A marketing perception that defines what a business must do to promote its product or service to its clientele. According to Castellucci & Podolny, (2016), the marketing department has the responsibility of creating a brand image for the product it proposes to sell to its consumers. Positioning is mainly produced through product, price, place and promotion. It is an effort on the company’s part to inject positivity about their products in the minds of the consumer and persuade them in buying the same. The more a particular product remains in the mind of the consumer, the more beneficial it is for the company (Urde & Koch, 2014).
Starbucks has been successful in creating an unique market position for its products. A product if offers the same range of utilities as its competitors, will find no buyers (Martens, Matthyssens & Vandenbempt, 2012). Starbucks position in the market is that of a company with high reputation and a brand that defines social class. Starbuck’s marketing position has been such that it creates a window of opportunity for them to lead the market among other available players of the same sector. Starbucks strategies are the reason of its competitive advantage over other coffee selling organizations. The statement of Starbucks which says, ‘ one person, one cup, and one neighbourhood at a time’, defines a lot of logic behind the strategies it puts into the market (starbucks.com.au, 2016). Starbucks has been a champion when it comes to customer satisfaction and employee motivation. Starbucks customer based strategies have provided them with competitive advantage in the market through furnitures, music and layouts. They have involved their employees in decision making regarding business matters and have provided them the job security in transforming them into partners.
Starbucks’ Chairman Schults once famously said that the company is striving hard and putting forward its best steps in becoming people’s “third place”. He added that the third place will be a position where people generally would like to hang out separately from being in the first place (home) and the second place (work). One will find Starbucks everywhere, ranging from bars, restaurants to bookstores- the places where people like hanging out and relaxing apart from their homes and workplaces.
Starbucks believes in being unique and that is what it has been doing over the years. Its uniqueness is not limited to the environment it generates for the customers or the experience it provides them with, but with everything that comes along with it. People feel at home in Starbucks, a place where one can relax, chat with friends or being all by himself. $10 billion revenues that Starbucks generates (www.starbucks.com.au, 2016), every year is a proof of this ‘third place’ idea going down pretty well with people. It is more like ‘ a home away from home’.
Its focus was not only on the population that drank coffee, but also on that substantial part that represented the non-coffee drinkers. It has extended its product line to include this segment as well. As per Tu, Wang & Chang, (2012), it is necessary for Sarbucks to hold on to the brand recognition of its primary products and boost awareness for new ones too. Starbucks idea has always been to be a company that is different from its competitors. Its heart remains at market growth through customer satisfaction.
Conclusion
This report presents a general overview of Starbucks company and how it has positioned itself in the market. Starbucks has been highly successful with its differentiation strategy to capture the imagination of coffee drinkers. Successful adoption of the STP process which signifies Segementation, Targeting and Positioning strategy of the company has been the major factor of it being a market leader.
Reference:
About Us | Starbucks Coffee Company. (2016). Starbucks Coffee Company. Retrieved 25 September 2016, from https://www.starbucks.au/about-us
Ascarza, E. (2016). Retention futility: Targeting high risk customers might be ineffective. Available at SSRN.
Castellucci, F., & Podolny, J. M. (2016). The dynamics of position, capability, and market competition. Industrial and Corporate Change, dtw016.
Chen, M. F., & Lee, C. L. (2015). The impacts of green claims on coffee consumers’ purchase intention. British Food Journal, 117(1), 195-209.
Cross, J. C., Belich, T. J., & Rudelius, W. (2015). How marketing managers use market segmentation: an exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer International Publishing.
Hassan, S. S., & Craft, S. (2012). Examining world market segmentation and brand positioning strategies. Journal of Consumer marketing, 29(5), 344-356.
Johnson, L. W., Ringham, L., & Jurd, K. (2013). Behavioural segmentation in the Australian wine market using conjoint choice analysis. International Journal of Wine Marketing.
Kolk, A. (2013). Mainstreaming sustainable coffee. Sustainable Development,21(5), 324-337.
Martens, R., Matthyssens, P., & Vandenbempt, K. (2012). Market strategy renewal as a dynamic incremental process. Journal of Business Research,65(6), 720-728.
Schlegelmilch, B. B. (2016). Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy (pp. 63-82). Springer International Publishing.
Simons, R. (2014). Choosing the Right Customer. Harvard Business Review,92(3), 48-55.
The Starbucks Story | Starbucks Coffee Australia. (2016). Starbucks Coffee Australia. Retrieved 25 September 2016, from https://www.starbucks.com.au/The-Starbucks-Story.php
Tu, Y. T., Wang, C. M., & Chang, H. C. (2012). Corporate brand image and customer satisfaction on loyalty: An empirical study of Starbucks coffee in Taiwan. Journal of Social and Development Sciences, 3(1), 24-32.
Urde, M., & Koch, C. (2014). Market and brand-oriented schools of positioning. Journal of Product & Brand Management, 23(7), 478-490.
Discuss about the Market Strategy and Plan for Bean Coffee.
In the year 1971, three entrepreneurs in Seattle came together with the idea of selling whole bean coffee from one store and it gained such an enormous popularity that by 1982 the coffee beans were getting sold from five stores (www.starbucks.au, 2016). The whole plan of the Starbucks owners’ was to inform people about fine coffee and introduce them to dark roasted smell of coffee. Howard Schultz selected as the retail and marketing manager tried to inject new ideas in the minds of the owners on ways to improve Starbuck’s operations, but got rejected. He later went on to acquire Starbucks from its initial owners for $4 millions. Schultz wanted to lay a solid base for Starbucks to operate smoothly. Though it experienced losses in the initial years under Schultz for reasons related to expansion costs, he was quick to turn around the tide and increase the amount of sales by a whopping 84%. By 1991 the company was free from any sort of outstanding debts.
A company can segment their market in the following 4 parts:
A consumer market gets segregated into different groups based on income, profession, gender, age and family size. One of the most accepted methods of segmenting the consumer group which takes into account the demographic variables depending upon the needs, wants and customary rates of consumers (Cross, Belich & Rudelius, 2015). Adding to that is the easiness with which demographic factors can be measured as compared to other variables. A very common factor used by companies to slice up the market. Many companies offer a varied range of products for different age groups to go along with diversified marketing schemes. Young adults within the age group of 18-24, account for 40% of Starbucks sales. People falling in the 25-40 age categories are the biggest contributors to the ever increasing sales figure of the Starbucks which stands at 49%. Starbucks targeted every age group in order to expand their market. A market survey has highlighted the fact that around 13% American adults visit Starbucks for just a cup of coffee.
This audience segmentation approach segregates the market into consumer groups in accordance to their lifestyle. It takes into account the expectations of the consumers along with other factors such as the purchasing behavior and attitudes of different consumers (Schlegelmilch, 2016). These attributes if identified properly can lead to successful marketing campaigns modified to customer enthusiasm. Customer behavior and their standard of living pattern changes at every phase of life as change is the only constant thing that prevails in this world. Starbucks generally appeals to the upscale market where probably every customer of it has a college degree with excellent income and a liking towards the sociable atmosphere. Starbucks main focus area is the gastronome section of coffee drinkers and its every strategy is being focused in keeping that division attracted.
Howard Schultz, the man behind Starbucks success stated that in 2011 and 2012 the company has seen the biggest sales in the history of the Starbucks. The late 90s saw Starbucks using the GIS technology and data which did have a positive effect on the figures of Starbucks.
Customer has always been stated as the king and it is on their part to decide on a given brand based on the brand’s image, functionality and the level of extent to which the customer can connect with the particular brand (Johnson, Ringham & Jurd, 2013). Customers do have different criteria in selecting a brand based on their social category and persona (Hassan & Craft, 2012). As mentioned earlier in the report, Starbucks have always targeted the upper pricing level and are blessed with loyal customers who do not hesitate to pay premium price for the same. Starbucks have been successful in keeping people attracted towards its product through a brand image that signifies status symbol. The company is into campaigns where they present their customers with new products or sample pastries, which has been tipped to be a popular customer behavior theory that expects consumers to come out of their normal buying habits and try something new.
|
Segmentation Base |
Advantages |
Disadvantages |
|
Geographic |
For a large company like Starbucks Corporation it is important to consider geographic segmentation which would permit them to judge cultural differences. |
It is based on the assumption that all the customers’ need of a particular geographical area is similar in nature which may not be the case. |
|
Demographic |
Through this approach a company centers its attention on people who are its potential customers. It helps the company in knowing its target area and not losing out key moments on people who are not interested in its products (Ascarza, 2016). Starbucks has been for the up-level market, people who can afford to have a cup of its coffee because it is expensive. |
Marketing based on demographic data is more on assumptions. Guarantee of being successful is missing. |
|
It helps the company in kickstarting its business through proper marketing strategies. |
||
|
Age, gender are certain important factors and Starbucks have made full use of it. Starbucks has never been gender specific, its for all. |
Population is not a constant element. Collecting information constantly consumes a lot of time and shells out a lot of money too. |
|
|
Behavior |
Companies can understand their customers very well. It is important for a company to know what a customer wants out of its product. Retaning old ones and creating new are important aspects. |
A tag expensive and reuires a lot of research work and time. |
|
It helps in anticiapating the wants of the customers. Based on this companies strategise. Starbucks’ idea of a ‘third place’ is one such strategy that is ripping benefits for the company. |
A major challenge faced by companies is educating client about the products. Starbucks have been lucky because all its customers are educated professionals and college goers. |
|
|
Psychographic |
It breaks down the customer into groups which facilitates the company in recognizing which product for which group. Starbucks have different products for different age groups like teenagers, children. |
|
|
It defines class and Starbucks Coffee is one such company which signifies the upper level class of the society. |
The target market depends on the organization’s idea to serve a particular customer group after it is done in defining its market segments (Chen & Lee, 2015). The whole idea of target marketing is to assess the different segments and chose one or more segments to enter and operate. A good company will always target segments which will present it with enough opportunities to grow, create customer value and earn desired profits. Starbucks is no different and it has always worked on maintaining a strong relationship with its customers. The general notion for companies is to select and enter a single segment in the initial stages and then expand to other segments as and when necessary. Starbucks followed the same path and came up with the concept of targeting the parents of younger children which became a huge hit. This was followed by adding up of more segments like the teenager group which allowed it to develop its product range too.
The primary target market for Starbucks is the urban professionals ageing between 25-40. Starbucks has been highly successful in attracting this age group which is evident from the fact that this group makes up around 49% of the coffee chain’s consumers. Starbucks has never been gender specific and it has been liked by both men and women of that group.
The category of secondary target market saw Starbucks focusing on the college going students and individuals involved in post-graduate studies living in the urban areas. These two make up the largest segment of gourmet coffee drinkers. Market survey has shown that education is directly linked with coffee. Education seeking people consumes more coffee than the job holders.
A marketing perception that defines what a business must do to promote its product or service to its clientele. According to Castellucci & Podolny, (2016), the marketing department has the responsibility of creating a brand image for the product it proposes to sell to its consumers. Positioning is mainly produced through product, price, place and promotion. It is an effort on the company’s part to inject positivity about their products in the minds of the consumer and persuade them in buying the same. The more a particular product remains in the mind of the consumer, the more beneficial it is for the company (Urde & Koch, 2014).
Starbucks has been successful in creating an unique market position for its products. A product if offers the same range of utilities as its competitors, will find no buyers (Martens, Matthyssens & Vandenbempt, 2012). Starbucks position in the market is that of a company with high reputation and a brand that defines social class. Starbuck’s marketing position has been such that it creates a window of opportunity for them to lead the market among other available players of the same sector. Starbucks strategies are the reason of its competitive advantage over other coffee selling organizations. The statement of Starbucks which says, ‘ one person, one cup, and one neighbourhood at a time’, defines a lot of logic behind the strategies it puts into the market (starbucks.com.au, 2016). Starbucks has been a champion when it comes to customer satisfaction and employee motivation. Starbucks customer based strategies have provided them with competitive advantage in the market through furnitures, music and layouts. They have involved their employees in decision making regarding business matters and have provided them the job security in transforming them into partners.
Starbucks’ Chairman Schults once famously said that the company is striving hard and putting forward its best steps in becoming people’s “third place”. He added that the third place will be a position where people generally would like to hang out separately from being in the first place (home) and the second place (work). One will find Starbucks everywhere, ranging from bars, restaurants to bookstores- the places where people like hanging out and relaxing apart from their homes and workplaces.
Starbucks believes in being unique and that is what it has been doing over the years. Its uniqueness is not limited to the environment it generates for the customers or the experience it provides them with, but with everything that comes along with it. People feel at home in Starbucks, a place where one can relax, chat with friends or being all by himself. $10 billion revenues that Starbucks generates (www.starbucks.com.au, 2016), every year is a proof of this ‘third place’ idea going down pretty well with people. It is more like ‘ a home away from home’.
Its focus was not only on the population that drank coffee, but also on that substantial part that represented the non-coffee drinkers. It has extended its product line to include this segment as well. As per Tu, Wang & Chang, (2012), it is necessary for Sarbucks to hold on to the brand recognition of its primary products and boost awareness for new ones too. Starbucks idea has always been to be a company that is different from its competitors. Its heart remains at market growth through customer satisfaction.
Conclusion
This report presents a general overview of Starbucks company and how it has positioned itself in the market. Starbucks has been highly successful with its differentiation strategy to capture the imagination of coffee drinkers. Successful adoption of the STP process which signifies Segementation, Targeting and Positioning strategy of the company has been the major factor of it being a market leader.
Reference:
About Us | Starbucks Coffee Company. (2016). Starbucks Coffee Company. Retrieved 25 September 2016, from https://www.starbucks.au/about-us
Ascarza, E. (2016). Retention futility: Targeting high risk customers might be ineffective. Available at SSRN.
Castellucci, F., & Podolny, J. M. (2016). The dynamics of position, capability, and market competition. Industrial and Corporate Change, dtw016.
Chen, M. F., & Lee, C. L. (2015). The impacts of green claims on coffee consumers’ purchase intention. British Food Journal, 117(1), 195-209.
Cross, J. C., Belich, T. J., & Rudelius, W. (2015). How marketing managers use market segmentation: an exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer International Publishing.
Hassan, S. S., & Craft, S. (2012). Examining world market segmentation and brand positioning strategies. Journal of Consumer marketing, 29(5), 344-356.
Johnson, L. W., Ringham, L., & Jurd, K. (2013). Behavioural segmentation in the Australian wine market using conjoint choice analysis. International Journal of Wine Marketing.
Kolk, A. (2013). Mainstreaming sustainable coffee. Sustainable Development,21(5), 324-337.
Martens, R., Matthyssens, P., & Vandenbempt, K. (2012). Market strategy renewal as a dynamic incremental process. Journal of Business Research,65(6), 720-728.
Schlegelmilch, B. B. (2016). Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy (pp. 63-82). Springer International Publishing.
Simons, R. (2014). Choosing the Right Customer. Harvard Business Review,92(3), 48-55.
The Starbucks Story | Starbucks Coffee Australia. (2016). Starbucks Coffee Australia. Retrieved 25 September 2016, from https://www.starbucks.com.au/The-Starbucks-Story.php
Tu, Y. T., Wang, C. M., & Chang, H. C. (2012). Corporate brand image and customer satisfaction on loyalty: An empirical study of Starbucks coffee in Taiwan. Journal of Social and Development Sciences, 3(1), 24-32.
Urde, M., & Koch, C. (2014). Market and brand-oriented schools of positioning. Journal of Product & Brand Management, 23(7), 478-490.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download
