Starbucks Case Study: Delicious Coffee Dominates Industry
Starbucks, an American multinational chain that operates coffeehouses and roastery stocks in over 70 countries, is headquartered in Seattle. As of early 2020, the company has over 30,000 locations across 70 countries.
This blog provides an in-depth analysis of Starbucks’ marketing strategies. It also touches upon its target market and digital presence.
Starbucks: the Giant of Coffee Industry
Starbucks, the largest coffee-house chain globally, is the most representative of America’s second wave of coffee culture. Starbucks coffee houses offer a high range of beverages.
- Hot and cold beverages
- Whole-bean coffee
- VIA is a microground instant coffee.
- Espresso
- Caffe lattes
- Teavana tea products include loose- and full-leaf teas
- Evolution Fresh juices
- Frappuccino beverages
- La Boulange pastries
- Snacks include crackers and chips
- There are also seasonal and local offerings.
The company launched its Starbucks Reserve program in 2010 for single-origin coffees, high-end coffee shops and premium coffees.
It was planning to open 1,000+ Reserve coffee shops before 2020. Starbucks has six roasteries that offer tasting rooms and 43 coffee bars.
Let’s now see how Starbucks has made a name for itself in India.
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Is Starbucks a Success in India?
Starbucks wanted to enter the Indian market in the 2010s. Starbucks wanted to capitalize upon the rising popularity of coffee culture in India by targeting the upper-class segment.
It announced its entry into India in 2007 but pulled out without explanation. In 2011, Starbucks made its grand entrance into India.
The world’s largest bistro chain sought to enter India’s market. They entered into a 50-50 joint venture agreement with Asia’s largest coffee producer, Tata Consumer Products Limited.
After launching their brand successfully, it was important to identify their target audience.
Who Is Starbucks' Target Audience in India?
Starbucks is a premium coffee brand. Its customers are mostly from the upper-income segment, the upper-middle class, and the upper classes.
People are looking for a quiet place to enjoy coffee and reduce stress. These people are typically the highest-earning, high-skilled professionals and business owners.
People who live a busy lifestyle need good coffee and a place to unwind after a long day. Starbucks provides all of these benefits in one place.
Starbucks targets both male and female customers. A large number of them are between the ages of 25 and 45. Target audience of Starbucks is mainly urban, health-conscious, and class-conscious customers.
The company knows exactly who its target audience is at any given moment and has gone to great lengths to serve them.
Their target audience can be summarized as-
- High-income spenders
- Urban chic, always on the move
- Technology early adopters
- Health-conscious professionals
- Flexibility to adapt
- Reach beyond the storefront
Let’s now look at their business and understand the foundation of Starbucks. Then let’s discover the marketing strategies that made Starbucks the global giant today.
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What is the Successful Marketing Strategy of Starbucks?
In India, Starbucks’ initial marketing mix was based on segmenting consumers socio-economically. Focusing on professionals who need a relaxing environment.
Starbucks segments its market by establishing stores in areas where it can reach the demographic and geographic target audiences.
Companies tend to focus on one segment when they enter new markets. If they succeed, they expand into other segments.
Starbucks followed the same approach and catered to teens and young adults by expanding its product line and social media presence.
Starbucks’ marketing strategy has allowed them to establish a unique market position. It’s all about the brand’s differentiated experience. They are a well-respected brand.Â
To reach today’s tech-savvy generation, the company’s marketing mix has increased the use of digital technology and social media to promote the brand and engage customers.
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Digital Expansion
Starbucks is focusing on expanding its digital interaction with customers. Starbucks is looking for new ways to reach digitally registered customers beyond its rewards program.
The coffee chain offers mobile ordering services and leverages Wi-Fi sign-ins at brick-and-mortar shops.
Starbucks Social Media Strategy
Many people are familiarized with Starbucks via social media. Starbucks’ social media accounts are well-known for their unique branding, interactive posts and visually appealing content.
There are many content options, including articles, photos, and features. There’s much more to the content than meets your eye.
You can break down the content into campaigns that aim to increase brand awareness and build community.
Starbucks Product-Based Marketing Campaigns
Starbucks is known for promoting fan-favorite drinks and unique products. They know how popular their flagship products are, but they also know that their customers crave this type of content.
They even have social accounts for their favorite products -Pumpkin Spiced Latte and Frappuccino – to share relevant memes with loyal customers.
User-generated content (UGC) is another option. Images of most Instagram-worthy consumers, such as Unicorn Frappuccino, are often re-shared on the official channels. They also get used in influencer campaigns.
Community-based Campaigns of Coffee Giant
#RedCupArt campaign
Starbucks’ digital strategy also emphasizes individuals and their communities. They use storytelling to highlight acts of kindness and courage in American communities.
Starbucks makes conscious efforts to humanize its company. They share stories on their Instagram account, highlighting employees who play a vital role in securing trust for big brands.
This social aspect makes online coffee content more social than ever, much like how Starbucks invented modern coffeehouse culture.
Festive Marketing
#Starbucks Diwali Blend, for their consumers across the country and select global markets. This new blend was hand-picked from Tata Estates in Karnataka, Tamil Nadu. Starbucks Diwali Blend was created to honor the region’s rich cultural and coffee expertise.
It launched the #SketchTheBlend campaign, where customers can share their creativity on the Diwali blend cup and sleeves and win 5 free drinks.Â
We can fully understand the different strategies that contribute to their high-quality marketing. Let’s dig deeper to analyze their digital presence.
Starbucks Corporate Social Responsibility Campaign
Starbucks uses social change to market itself as inclusive and open-minded. The #ExtraShotOfPride campaign supports LGBT+ communities.
What is the Controversy with Starbucks?
Starbucks Suppports #Black Lives Matter
After receiving criticism, including calls for a boycott of the coffee brand, Starbucks has backtracked on its policy banning store employees from wearing their own Black Lives Matter clothes and accessories.
Additionally, Starbucks Distribute clothing and badges in support of other potentially controversial topics including same-sex marriage and LGBTQ rights.
"Pig" Controversy of Starbucks
On Thanksgiving Day, a police officer placed an order for five coffees, but when they arrived, he noticed that the barista had printed “Pig” on each of the five labels.
The coffee shop manager expressed regret and offered to have the labels printed again, but the chief wasn’t happy with that approach and posted his account on Facebook.
Starbucks Stole Unicorn Drink
In 2017, Starbucks introduced a new item to their menu called the Unicorn Frappuccino, and a cafe claimed that Starbucks had stolen its “Unicorn Latte,” a health-conscious drink.
Starbucks is allegedly selling unicorn, which is Cafe’s trademark drink, with milk and artificial sugars. The coffeehouse demands compensation and an official apology.
How does Starbucks use Digital Marketing?
Starbucks is well aware of its technologically advanced audience, making it crucial for them to develop a strong digital marketing strategy.
Starbucks prefers to market on platforms that allow two-way communication over platforms such as print and television, which are more one-way.
- Instagram – 248K+ Followers
- Facebook – 1.1M+ Likes
- Twitter – 161K+ Followers
- Starbucks updates its social media accounts daily and creates challenges and games to engage customers and grow its fan base.
- All platforms have the same engagement and posts. We believe that this creates an experience rather than just a channel for promotion.
The Flipkart Starbucks Twitter Battle was a great example of how active and social a brand can be. It shows why Starbucks is so popular with its target audience, particularly millennials.
They also post images of family members enjoying Starbucks coffee with friends and high-quality content that promotes seasonal products. Starbucks is now integrated into the social lives of its customers by doing this.
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Starbucks Marketing Strategy During Covid-19?
All of us are aware of the sudden devastation caused by the Covid-19 pandemic. Globally, all businesses were affected by the Covid-19 pandemic.
They had to find ways to survive in such difficult times. Although the pandemic had a severe impact on the Indian market, Starbucks was able to adapt its strategies to minimize the negative economic effects.
These are the steps that Starbucks took during the pandemic, which is a great example of why they’re the most valuable.
Why is Starbucks expanding in India?
Navin Gurnaney, a CEO, announced that they would be launching drive-thrus to encourage people to interact with them and home delivery to ensure they stay connected with their customers during this pandemic.
Ambala Chandigarh Expressway, Zirakpur, was the first drive-thru. Starbucks India has also launched an app called Starbucks India App, allowing customers to navigate the site and buy their products easily.
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Starbucks Social Media Campaigns
Starbucks launched its social media campaign in two phases. The first phase was where they asked their customers to share their ways of reconnecting amidst the pandemic and share their favorite Starbucks memory on their personal Instagram handles with the hashtagÂ
#ReconnectWithStarbucks Campaign
The second phase, “Half Cup Full”, asked customers to leave comments on their favourite beverage. These customers were then sent voice notes by baristas, who holler their names and favorite beverage to remind them about the in-store experience.
This campaign was great because it reminded people of their good times with Starbucks and made them feel valued and important.
#StarbucksAtHome & #StarbucksDance
Starbucks introduced 1 Liter of freshly brewed beverages, which could be ordered through Swiggy or Zomato. 7 flavors were available at Rs.550 each.
Starbucks created the #StarbucksDance challenge to encourage the same. It asked customers to create a dance video using the beverage and upload it to their stories. The winner would receive a year’s worth of Starbucks coffee.
Strategic Alliances for Enhancing the Experience and Reaching
Flipkart launches Signature Merchandise
The pandemic caused a shift in the way people shop. It also encouraged them to shop for locally-grown products rather than imported or foreign-based.
This shift allowed Starbucks to partner with Flipkart to launch Starbucks Signature Merchandise online. This product line included custom mugs and tumblers as well as cold cups.
Customers will soon be able to order their coffee-brewing equipment online. Starbucks was only present in 12 cities. This strategic move was made to reach customers across India from their homes during the pandemic.
It also took advantage of India’s growing dependence on E-Commerce.
Standup Comedy Festival
Starbucks recently announced the #StarbucksComedyFestival, where a few lucky customers can win a free invitation to the comedy festival.
The customer’s invoice will contain the lucky codes. Clients will be more inclined to shop at Starbucks with hosts such as Rahul Subramanian and Azeem Banatwalla.
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Popular products of Starbucks Corporation?
Vanilla Latte
Hot Chocolate
Star Drink
Iced Matcha Tea Latte
Cinnamon Roll Frappuccino® Blended Coffee
Pumpkin Spice Latte
Caramel Frappuccino
What is the Starbucks' Marketing Strategy?
Starbucks was founded in Seattle in 1971. It quickly gained popularity for its high-quality whole bean coffee and fast service. The company has been focused on a brand-centric marketing strategy since its inception.
It strives to create and maintain a distinctive identity around its customer service, comfortable in-store environment, sustainable coffee, and optimal customer service.
Starbucks is achieving this important marketing goal by championing social media marketing and consistently delivering a digital campaign that engages existing and new customers. in fact, these campaigns often utilize user-generated material, which transforms buyers into brand ambassadors.
Starbucks is unique amongst its competitors in that it does not invest heavily in offline promotion. Instead, its promotional communication is primarily limited to print and television.
Instead, the brand invests more in in-store features that enhance customer experience and satisfaction. This strategy is working, reporting revenues exceeding $26.5 billion and profit of $3.6 billion in the fiscal year 2019.
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Business Growth Of Starbucks in Recent Years?
Starbucks has multiple business growth strategies to take advantage of the huge growth potential in the global market. Starbucks focuses on expanding its international market presence and offering high-quality, value-added products. Starbucks adapts the mix of these intensive growth strategies to the current market conditions.
Market Penetration
Market penetration is Starbucks Coffee’s primary strategy for intensive growth. This strategy, known as the Ansoff Matrix or market expansion grid, supports Starbucks Coffee’s intensive growth.
It maximizes revenues from existing markets by using the same or similar food and beverage products. Starbucks is already present in more than 78 countries.
The company uses market penetration to increase revenues and grow in these markets by opening more company-owned shops or licensed/franchised café locations.
Starbucks, for example, aims to open more shops in countries with a low presence, such as Africa and the Middle East. The company must overcome the regulatory and socio-cultural hurdles in these coffee markets.
Starbucks’s Marketing mix of 4Ps supports the market penetration intensive growth strategy. This is especially important for expanding the company’s reach through promotions and strategic locations.
Market Development
Starbucks uses Market Development as its secondary strategy to intensify growth. This strategy helps to support business growth by creating new markets or new market segments and offering current products, such as food and beverages.
Starbucks Coffee, for example, offers its products to more customers by expanding into new markets, such as Africa and the Middle East.
Strategically growing the company’s customer base is a key strategy to maximize market opportunities. This results in a higher volume of food, beverages, and other merchandise sales.
Product Development
Product development is another strategy for secondary intensive growth. It helps Starbucks Corporation grow by creating new products and variants that increase business revenues.
The company, for example, offers ready-to-drink and brewing equipment. Mergers and acquisitions can also lead to product development, as Starbucks did when it started selling Frappuccino after purchasing The Coffee Connection. New products are considered a way to increase sales revenue, particularly in saturated coffeehouse markets.
Starbucks Corporation’s SWOT analysis reveals that the company’s ability to create profitable and attractive products is one of its business strengths. This supports the company’s intense growth and strategic expansion in global markets.
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Conclusion
Starbucks’ dominance in the global market and its leadership make it the leader. Starbucks is undoubtedly a unique coffee shop experience. It offers a warm, inviting environment and unparalleled service.
Starbucks’s retail locations and on-site partnerships have attracted greater responses, making it the mature sector’s market leader. Starbucks has a strong market position due to its comprehensive marketing strategy.
