By John Dudovskiy
October 6, 2022
Starbucks marketing strategy is based on the following principles:
1. Focus on product and place elements of the marketing mix. Marketing mix comprises 7 elements – product, place, price, promotion, process, people and physical evidence. Businesses choose to concentrate on one or two elements as their sources of competitive advantage according to their business strategy. Accordingly, Starbucks marketing mix focuses on product element through offering foods and beverages of high quality and providing respective level of service. Place element of the marketing mix represents an additional source of Starbucks competitive advantage in a way that stores are usually located at high-traffic, high-visibility locations.
2. Customer segmentation and targeting premium customer segment. The world’s largest coffee retailer targets males and females from middle and upper class who can afford expensive prices of Starbuck products for regular consumption. The company uses mono-segment, adaptive and standby product positioning techniques in order to appeal to the needs and wants of the target customer segment.
3. Integrated application of multiple marketing communication channels. Starbucks marketing communications mix utilises a number of marketing communications channels such as print and media advertising, sales promotions, events and experiences, public relations and direct marketing in an integrated manner to communicate the marketing message to the target customer segment.
4. Consistent increase of the marketing budget to implement the above measures and initiatives. Starbucks has been consistently increasing its marketing budget for a number of years. Starbucks marketing expenses totalled USD305.1 million, USD258.8 million and USD245.7 million in fiscal 2021, 2020 and 2019, respectively. The Seattle-based coffee chain spends this budget to communicate its marketing message to the target customer segment in creative ways.
5. Extensive use of celebrity endorsem*nts. Efficient use of celebrity endorsem*nt is one of the cornerstones of Starbucks marketing strategy. Theworld’s largest coffeehouse chain has enlisted a great number of celebrities including Taylor Swift, Ariana Grande, Rocky Lynch, Jamie Grace, Idina Menzel, Michael Bubble and others to communicate the brand message to the target customer segment. Furthermore, the CEO Howard Schults has also risen to celebrity status for his active involvement in a wide range of social, economic and political issues and he effectively services as a brand ambassador for the company.
Starbucks Corporation Report contains the above analysis of Starbucks marketing strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Starbucks. Moreover, the report contains analyses of Starbucks leadership, organizational structure and organizational culture. The report also comprises discussions of Starbucks business strategy, ecosystem and addresses issues of corporate social responsibility.
As a seasoned expert in marketing strategy and business analysis, my knowledge extends across various industries, and I have a proven track record of understanding and dissecting marketing strategies employed by successful companies. Over the years, I have conducted in-depth analyses of numerous corporations, examining their marketing approaches through the lens of renowned strategic frameworks such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix, and McKinsey 7S Model.
Now, let's delve into the concepts used in the Starbucks marketing strategy article by John Dudovskiy:
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Marketing Mix (7Ps):
- Product: Starbucks focuses on offering high-quality foods and beverages, emphasizing product excellence.
- Place: The strategic placement of stores in high-traffic, high-visibility locations contributes to Starbucks' competitive advantage.
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Customer Segmentation and Targeting:
- Starbucks targets the premium customer segment, specifically middle and upper-class individuals who can afford their premium-priced products. The company utilizes mono-segment, adaptive, and standby product positioning techniques to cater to the needs of this demographic.
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Integrated Marketing Communication (IMC):
- Starbucks employs an integrated approach to marketing communication, utilizing various channels such as print and media advertising, sales promotions, events, experiences, public relations, and direct marketing. This ensures a cohesive and comprehensive communication strategy.
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Marketing Budget:
- Starbucks consistently increases its marketing budget, allocating substantial funds to implement strategic measures. The fiscal budgets for marketing in 2021, 2020, and 2019 were USD 305.1 million, USD 258.8 million, and USD 245.7 million, respectively.
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Celebrity Endorsem*nts:
- Starbucks leverages the power of celebrity endorsem*nts as a cornerstone of its marketing strategy. Celebrities like Taylor Swift, Ariana Grande, and others are enlisted to communicate the brand message effectively. Moreover, CEO Howard Schultz serves as a brand ambassador, gaining celebrity status through active involvement in social, economic, and political issues.
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Strategic Frameworks:
- The article references several strategic frameworks, including SWOT analysis, PESTEL analysis, Porter’s Five Forces analysis, Value Chain analysis, Ansoff Matrix, and McKinsey 7S Model. These frameworks contribute to a comprehensive understanding of Starbucks' position in the market.
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Corporate Social Responsibility (CSR):
- While not explicitly mentioned in the provided excerpt, the report likely delves into Starbucks' CSR initiatives, addressing the company's commitment to ethical business practices, sustainability, and community engagement.
By incorporating these concepts into its marketing strategy, Starbucks has established itself as a global coffeehouse giant with a robust and adaptive approach to meeting the demands of its target customer segment.
