Consumer Behavior Analysis: Starbucks and Customer Perception

This report provides a comprehensive analysis of consumer behavior, specifically focusing on its impact on Starbucks' business operations. It identifies and explores two key internal factors: motivation and perception, and their influence on consumer buying decisions. The report includes an extensive literature review to support its arguments, followed by an application of these factors to Starbucks' marketing strategies in the Australian market. It examines how Starbucks leverages these factors to target customers and enhance its market presence. Furthermore, the report offers practical recommendations for Starbucks to improve its customer engagement and marketing effectiveness by addressing consumer needs and preferences. The report analyzes the consumer decision-making process and concludes with a summary of the key findings and insights.

Running Head: Consumer Behavior 1
Consumer Behavior Marketing

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Executive Summary
Behavior of the consumers has strong impact on the business operations of any business.
The consumer behavior impacts on the sale of the product in both positive as well as negative
manner. Consumer behavior is a vital factor of the marketing. This report will analyze the impact
of consumer behavior on the business operations of Starbucks. Report will identify two internal
factors of the customers that affect the buying behavior of the customers towards any specific
product or service. The arguments in the report will be supported by various literature reviews.
Those factors will be implemented in the selected company in order to analyze the behavior of
the consumers towards coffee. Along with this, report will provide some recommendations for
Starbucks in order to target the customers by identifying their needs and requirements.

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Contents
1. Introduction..............................................................................................................................3
1.1 Company................................................................................................................................3
1.2 Product...................................................................................................................................4
1.3 Consumers..............................................................................................................................4
2. Discussion and analysis: Motivation and consumer needs......................................................4
2.1 Literature review....................................................................................................................4
2.2. Application in company....................................................................................................6
3. Discussion and analysis: Perception.........................................................................................7
3.1 Literature review....................................................................................................................8
3.2 Application in company.......................................................................................................10
4. Decision making process........................................................................................................12
5. Recommendations..................................................................................................................13
6. Conclusion..............................................................................................................................14
References......................................................................................................................................15
List of Figures
Figure 1: Consumer Motivation.......................................................................................................5
Figure 2: Consumer Perception.......................................................................................................9
Figure 3: Starbucks strategy..........................................................................................................11

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1. Introduction
Currently, every individual is involved in the purchasing and utilization procedure of the
products and services in the market. The term ‘consumer behavior’ can be defined as the actions
taken by consumers who are engaged in the product purchasing or consuming in the market. It
basically includes mental as well as physical procedures. In other words, consumer behavior can
be described as the decisions of the customers like buying, utilization and dispose of the products
or services offered by various companies. It is essential for the companies to recognize the
behavior of the customers which is helpful in implementing various strategies to penetrate the
market (Mooradian, Matzler & Ring, 2012). Understanding consumer behavior is also helpful in
solving the queries of the customers while purchasing the products. There are some factors
affecting the buying behavior of the customers. Those factors are attitude, motivation,
perception, lifestyle, learning and roles. These factors have significant impact on the buying
decisions of the customers (Schiffman, Kanuk & Hansen, 2012). The objective of this report is to
identify two factors of consumer behavior which impact the decision of the customers while
purchasing the products or services. Along with this, objective of the report is to implement
those individual factors in the selected company in order to enhance the marketing tactics.
1.1 Company
The objective of this report is to observe and examine the impact of various inner aspects
of customers on the purchasing and utilization actions for the particular products and services.
For the discussion in the report, well-known coffee manufacturing company Starbucks is
selected. The report focuses how Starbucks uses internal factors of the customers in order to
target them in the market. Starbucks identifies the consumer behavior factors for achieving high
customer base in the operating market (Krikorian, 2014). In order to understand the thinking and
perception of the customers, it is important to understand their buying behavior. Customers
always have a choice while consuming coffee as they have option of selecting regular, large or
extra large cup of coffee. Starbucks is famous coffee provider company in all over the world.
This is largest coffee producing company in Australia also. The customers always enjoy high
quality coffee products along with smoothing atmosphere of the company (Hajarrahmah, 2011).

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1.2 Product
In the product range of Starbucks, company has quality coffee along with pastries and
other confectionary products. Company has also introduced Trenta cup of coffee in order to
provide more value and quality to the customers. Starbucks basically provides two types of
products i.e. Coffee and Tea and Ready-to-drink. Along with this, company also provides fresh
food including baked pastries, salads, sandwiches, fruit cups and yoghurt parfaits etc (Starbucks
Corporation, 2017).
1.3 Consumers
This report analyzes the buying and consumption behavior of Australians towards coffee
products provided by Starbucks. There are various psychological products which impact on the
consumer decision making process i.e. understanding the needs of the customers, selecting
various alternatives, making final decision for the products and services etc.
The products of Starbucks in Australia will specifically target at young people. The target
market is chosen according to current market situation in Australia including all the business
experts in all over the region including youth. In terms of demographics, the target consumers for
coffee related products would include young business people in the age group from 21 years to
40 years. In the whole working day, coffee is the basic need and by targeting young
professionals, company will be able to achieve higher level of sales and growth. In the
psychographic targeting, the target market will include those customers who prefer expresso
coffee.

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Discussion and analysis: Motivation and consumer needs
Motivation and customers’ need of the customers are related to each other. It is observed
that individual has some needs in daily life. Customers have diverse and unique wants and
requirements so, it is crucial for the companies to recognize the requirements of the consumers
and satisfy them by the unique products and services. The motivation factor of consumer
behavior can be described as the driving factor to satisfy the desires and requirements of the
consumers by providing quality products. In simple words, motivation is the driven force that
pushes the individuals to action. Motivation is the objective oriented behavior according to
various theories. Various literatures have provided different theories and models of motivational
process of individuals (D'Souza, 2010).
2.1 Literature review
It is well known that buying behavior of the customers push them towards the specific
products and services in the market. Their inner motivational factors impact their behavior for
the particular product or service. Motivation is the internal striving condition of the consumers
including wishes, desires, needs and drives. Customers buy the products based on some
economic or mental forces that can satisfy their wants and desires. There are many theories and

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models related to motivation that shows the role and importance of motivation in the consumer
buying process. Most famous theory of motivation is Maslow Hierarchy of needs that is based on
different motivation training exercises.
Figure 1: Consumer Motivation
(Source: Michael, 2013)
There are different types of needs of each individual. Those needs of the customers are
described below:
Psychological and Biological needs- These are the basic needs of individuals including hunger,
thirst, sleep etc. These are the essential needs of individuals and no other need has importance
until these needs are not fulfilled. Under this need, clothes, foods and shelter are most important.
Safety needs- Individuals needs protection for various hazards and this need comes under safety
needs. People want safety from various accidents in terms of family stability and financial
security. These needs are for financial and social rather than physical safety (Michael, 2013).
Need for belongingness- This is the need to establish various relations in the society. This
includes religious organizations, family associations and clubs. These needs are based on group
acceptance, affiliation and identification.

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Esteem needs- self and esteem needs are the other needs of the society. Individual gets self-
confidence while fulfilling these needs. Esteem needs are related to the feelings of
accomplishment and usefulness.
Self-actualization needs- This is the highest level of need of individual. The self-actualization
need is related to identifying the potentials and attaining them. In other words, this need is
related to achieving maximum needs by people in the society.
There are more theories of motivation provided by more researchers that explains the
relevance of motivation in the purchasing procedure of the customers. Those theories are Gestalt
theory, cognitive theory and psychoanalytic theory. Based on the mentioned theories, customers
with the motivation factor are capable to take proper decision about purchasing the products and
services. Motivation is the kind of need which is crucial to satisfy the consumers by the desired
product or service. The intensity of motivation impacts on the purchasing actions of the
consumers. Motivation is directly linked with the various needs of the consumers. The buying
motivation of the consumers is effective in enhancing the transactions and inspiring the
consumers to buy the products and services.
1.2. Application in company
Motivation is the important factor in order to decide the market tactic for the particular
product i.e. coffee at Starbucks. There are many consumers who are obviously inspired for
drinking coffee and evaluating the charges of coffee with other companies. Each individual is
affected or inspired by different perceptions. Consumers are inspired and motivated for drinking
coffee because their relatives and friends are consuming coffee also. For the product of
Starbucks i.e. Trenta Cup of coffee, effective marketing tactics have crucial role in the buying
process of consumer based on attitude and motivation of the consumers (Ferrell & Hartline,
2011). There is need of sense of urgency in the promotional actions with innovative coupons and
discounts. Further, by providing offers and discounts to the customers, these types of programs
allow the customers to use credit card of Starbucks so that they can avail cash back and redeem
their reward points while purchasing coffee. By this tactic, customers are motivated by Starbucks
for drinking coffee by adding value and establishing strong relationship with the customers.
Starbucks is aware about the impact of various external factors of Australia i.e. culture,
demography and society. So, company is focusing on the inner factors of consumers i.e.

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motivation, perception and attitude. By the effective tactics and customer base expansion,
Starbucks is trying to meet the expectations and requirements of the customers in the Australian
market. In the customer purchasing or buying procedure, motivation is a helpful aspect in order
to formulate a better strategy so that the actions of the customers can be understood in the
market. Motivation is useful factor for Starbucks in introducing new products and new range of
coffee for Australian consumers (Lindgreen, 2010).
Motivational reason of customers’ selection for Starbucks
Based on the theories of motivation, there are various reasons by which customer decide
to purchase the specific product or service. Those motivations include branding, guest
motivation, and common impact which force the consumers towards purchasing the products.
There are several societal factors including family social classes, culture and reference group
which decide the actions of Australian consumers for coffee products. Further, customers have
perception that Starbucks is using green marketing (Dahlstron, 2010). Starbucks is operating at
the international level having effective supply chain system in order to purchase fresh coffee.
Along with this, Starbucks has adopted quality management by which it is able to enhance its
quality performance, brand equity and effectiveness in the market (Burge, 2013). Customers buy
coffee of Starbucks rather than its competitors as Starbucks is always successful in satisfying the
customers by identifying their emotional needs. Customers always select to pay as premium
because they are seeking for prestige product from the company. Starbucks always satisfy the
customers by identifying their belongingness and self-esteem needs. Further, the stores of
Starbucks always create a pleasant atmosphere that motivates the customers to buy the coffee.
2. Discussion and analysis: Perception
Next and important internal factor is consumer perception which impact on decision
making process of the consumers while purchasing the products. The factor ‘perception’ can be
defined as the process by which consumers can evaluate the gathered information related to
product or service. Perception is based on the point how the consumers perceive a particular
product or service in the market. It is crucial for the companies to analyzing the perception of the
customers while buying the products. Once, customers are aware about the needs and

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requirements then they start collecting relevant information related to product or service
(Haenfler, Johnson & Jones, 2012).
3.1 Literature review
Currently, customers are now conscious about the companies, information of stores and
product by newspapers, publications and various new media. Based on the information of the
products, they analyze the information and make the decision which is called perception. This is
generally a procedure by which customer choose, collect and analyze the information and make a
image of product based on their understandings. Buyers have different behaviors in the market
for the products and services. Based on various definitions, it is observed that perception
includes three important steps. Although, consumers collect various information related to
desired products and services but few of them are helpful for the consumers to enhance the
awareness about the products and services (Hornik & Giulia, 2009). Many researchers have
provided theories related to perception by which the role and importance of perception in the
buying behavior is analyzed. Among the theories, cognitive theories of perception, and Gestalt
theory of perception are helpful in analyzing the perception factor effectively. According to these
theories, perception is the first impression of the products or services made by the consumers
based on the information they have gathered for the products. That is the reason, perception
impact on the satisfaction level of the consumers based on their buying decisions. There are three
basic factors in the perception of the customers i.e. quality, prices and value (Tam, 2008).
Perceived quality-
Customers can have both positive as well as negative perception for the quality of the
products or services. Quality of the products can be defined as the analysis of the supremacy and
excellence of the particular product. Quality of the product can be analyzed by the physical
characteristics of the product by the customers. National companies always produce the products
with the help of sophisticated procedures and high level of technology and on the other hand,
private companies use less technology while producing the products. So, differentiations in the
products create different perception in the minds of the consumers. Marketers should understand
the consumer perceptions and target them by product align and promotional tactics.
Perceived prices-

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In terms of pricing factor of the products, customers also have various perceptions. Low
income consumers are price conscious and they always switch towards the low cost products
rather than selecting national brands. Further, some customers in the market are price seekers and
they seek for low pricing products. For these types of consumers, buying exclusive product
means getting high value in the society. Apart from this, there are some consumers who are
connected with the low quality and low priced products. For such type of customers, high prices
are the symbol of quality products. So, in the perceived prices, there is the price-quality
relationship (Solano & Arquiza, 2009).
Perceived risk-
Risk can be described as the doubt of the consumers while purchasing the products and
services. The risk perception of the customers is a crucial factor that impact on the choices of the
consumers in the market. Risk in the purchasing procedures can have bad perception in the mind
of the customers. In order to minimize the impact of the risk, customers choose more expensive
products. There are some risks perceived by the customer i.e. financial risk, social risk,
functional risk and physical risk (Yusuf, Fatih & Hayrettin, 2013).
Figure 2: Consumer Perception
(Source: Yusuf, Fatih & Hayrettin, 2013)

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This figure shows the connection among the perceived price, perceived value, perceived
quality and perceived risk. It is observed that price, excellence and worth are connected in the
positive manner and risk is connected in the negative manner. Higher perception for the price
level is the symbol of low perceived risk with high perceived value. Further, high perceived risk
is created due to low perception of price and quality. On the other hand, high perception of worth
and price has good influences on the value of the product perceived by the customers. Lower
perception of quality and price are the symbol of higher perceived risk. Customers who are
perceiving the prices high, then product will get enhanced worth in the market (Kazmi, 2012).
3.2 Application in company
Perception is the important part that impact on the buying behavior of the consumers.
People experience different sensations like taste, sound, texture and sight and based on those
experiences, customers select their products. In case of Starbucks, the promotion tactics are
associated to ecological aspects which are the cause of the success of Starbucks in the
international market. There are various allocation mediums of Starbucks in order to serve the
customers. Company has very flexible marketing plan including effective tactics in order to meet
the expectations of the consumers. The stores of the company have the combination of culture
and pleasant atmosphere for the customers. Starbucks provides consistent quality in the products.
The perception of the customers is influenced by the demography, financial systems and
exclusive civilization under the environmental features (Schultz & Gordon, 2012).
Perception of customers for Starbucks Coffee
In the decision making process of the consumers, there are some steps i.e. data exploring,
recognition, recognition of substitutes, and buying and after buying activities. The consumers of
Starbucks focus on the information search about the products. For Australians, coffee of
Starbucks is like a daybreak pleasure. There are various loyal customers of Starbucks who select
the brand and quality of coffee. Starbucks is known as the best coffee source because of most
convenient location for the customers (Stávková, Prudilová, Toufarová & Nagyová, 2007).
Figure 3: Starbucks strategy