Detailed Marketing Analysis Report: Starbucks Coffee

This report provides a comprehensive marketing analysis of Starbucks, a globally recognized coffeehouse chain. It begins with an introduction to Starbucks, highlighting its mission and values. The report then delves into the marketing mix, examining Starbucks' product offerings, pricing strategies, distribution channels, and promotional activities. The 3 Cs of Starbucks (Company, Customers, and Competitors) are analyzed to understand its competitive landscape. Furthermore, the report explores Starbucks' differentiation and competitive advantages, its approach to commoditization, and its overall product and solution offerings. Market segmentation, service delivery, experiential marketing, customer relations, and experience management are also discussed. The analysis extends to Starbucks' digital marketing strategy, pricing and cost structure, branding, and sustainability initiatives. The report concludes with a summary of key findings and recommendations, supported by relevant references.

Marketing analysis of Starbucks 0
Marketing concepts of Starbucks
Student’s Name

Marketing analysis of Starbucks 1
Contents
Introduction...........................................................................................................................................2
Marketing Mix of Starbucks coffee........................................................................................................2
3 Cs of Starbucks...................................................................................................................................3
Differentiation and competitive advantage...........................................................................................4
Commoditisation and Total product and solution offering....................................................................5
Segmentation of Starbucks....................................................................................................................5
Service delivery of Starbucks.................................................................................................................6
Experiential Marketing; Customer Relations and Experience Management.........................................7
Starbucks digital marketing strategy.....................................................................................................8
Pricing and Cost structure of Starbucks.................................................................................................9
Cost Structure......................................................................................................................................10
Branding of Starbucks..........................................................................................................................11
Sustainability at Starbucks...................................................................................................................11
Conclusion...........................................................................................................................................12
References...........................................................................................................................................14

Marketing analysis of Starbucks 2
Introduction
Starbucks is the world famous leading coffee house chain offering premium quality products
and service to its customers. The company is able to create its market base all over the globe
by bringing innovations and effective leadership done by Howard Schultz. The brand is well
recognized for ethical sourcing, exceptional customer service and a huge variety of
beverages. The company provides a relaxing environment to the customers and uses the
marketing tools to expand its potential market by making new products for the customers.
The main mission of the company is to nurture and inspire the human spirit. The company
focuses on making continuous efforts to deliver value to its customers (Haskova, 2015).
Marketing Mix of Starbucks coffee
The company uses the marketing mix to maintain its brand identity and develop a strong
image in the market. It helps in developing the brand image of the company and expanding
the growth of the business.
Product
Starbucks has the belief of serving the best taste to its customers and the cocoa beans are
produced in diverse regions to provide the best taste to the customers. The company serves a
wide variety of coffee and tea. Some famous drinks served by the company include White
chocolate Mocha Frappuccino, Iced flat white, peppermint mocha, gingerbread latte, and
Teavana tea. The brand also sells coffee mugs and glasses, Coffee fabricators, coffee presses,
grinders, and further equipment (Haskova, 2015).
Price

Marketing analysis of Starbucks 3
The brand adopts the finest pricing policy for its quality products. The company provides
higher pricing than its competitors provide and mainly targets premium segment. It provides
a high-quality product and luxury experience to its customers so the customer does not
hesitate to pay higher prices. The company is able to maximize its profit and maintain a
strong brand image (Harrington, Ottenbacher and Fauser, 2017).
Place
The brand majorly focuses on choosing the locations for its outlet because it aims to develop
the connection between the customers and the brand. It provides a warm and welcoming
environment to its customers, has provided its product at large retail, convenience stores, and
has developed the online channel to provide its product across the globe (Haskova, 2015).
Promotion
It is analyzed that Starbucks uses extensive marketing strategies to promote its brand. It uses
the traditional and the digital method to promote its product. Apart from online stores and
website, the company uses the brand merchandise to promote its product all over the globe. It
has developed loyalty programs to retain its loyal customers and uses various marketing
channels to effectively promote its product and retain the brand image in the minds of the
customer (Haskova, 2015).
3 Cs of Starbucks
This combination determines the main competitors of the brand and describes the main target
market of the brand. It describes the vision of the brand and the competitive advantage of the
company.
Company

Marketing analysis of Starbucks 4
The company is well recognized for providing the best quality products and delivering a
memorable experience to its customers. The company focuses on sustaining its competitive
advantage by introducing a variety of products and delivering a higher experience to its
customers. It adopts the culture where the baristas provide the service with smiling faces. The
main vision of the company is to nurture and inspire the human spirit. It aims to provide a
relaxing environment for its customers (Harrington, Ottenbacher and Fauser, 2017).
Customers
The target market of Starbucks mainly consists of the generation Y and targets the upper
middle class by providing the high price product to its customers. It focuses on making
continuous innovations in its strategies to deliver a memorable experience to its high-class
customers. It strives for customers who are loyal to the brand (Haskova, 2015).
Competitors
The company suffers close competition in the beverages and the food industry. The main
competitors of the company are Mc Donalds Mc cafe, Costa Coffee, Café coffee day, Dunkin
Donuts, Kentucky fried chicken, Tazo, Tetley. The company suffers close competition
because the other brands provide the product at lower prices as compared to Starbucks
(Harrington, Ottenbacher and Fauser, 2017).
Differentiation and competitive advantage
The differentiation helps in determining the unique quality of the brand and the reasons how
the company is able to sustain its competitive advantage. Starbucks provides its unique
quality products with stringent guidelines of how the product will be made; it is able to
sustain its competitive advantage by creating relaxing environment for the customers and

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collaborating with the famous brands such as PepsiCo, Tazo tea, Jim Bean to make its
product available at the wide range (Amanda hale online, 2013).
The company delivers a high-quality product and uses green white cups for differentiation.
Starbucks is able to sustain its competitive advantage by making easy access to its product all
over the world. The company is able to sustain its competitive advantage by being the market
leader in adding innovation to the products and majorly focuses on the quality of food. It
capitalizes on the changing preferences of the customers and delivers the product according
to the preferences of the customers to provide maximum satisfaction (Meng, Liu, and Ngan,
2013).
Commoditisation and Total product and solution offering
Commoditisation refers to the stage where the customers are not able to analyze the
differentiation of a particular brand and shifts to the brand that offers the product at the lower
prices. The company focuses on bringing operational efficiency by introducing automatic
espresso machines to reduce the time in delivery of the products but the company suffered
high risk because the romance and the theatre were disappeared by the use of La Marzocca
machines. It also obstructed the pictorial sight line the customer formerly had to watch the
drink being made, and for the warm understanding with the barista. Addition of high drive
windows and hot sandwiches develop the image of a fast food chain. These innovations in the
design create the Commodification experience for Starbucks as the customers were shifting to
the other brand because Starbucks provides the products at a high price. It provides a wide
variety of products to satisfy the changing needs of the customers and focus on avoiding the
situation of Commoditisation of the brand (Wirtz and Lovelock, 2016).

Marketing analysis of Starbucks 6
Segmentation of Starbucks
Market segmentation refers to the process of dividing the potential customers based upon the
common characteristics of the group. In the demographic segmentation, the company targets
the age group from 25 to 40 high-income individuals and the second target of the company is
from age group 18 to 24 years individuals who belong to rich families (Wheeler, 2017).
The company’s main target market consists of generation Y. In the case of psychographic
segmentation, the company includes the high-class income group and focuses on the
customers who are loyal to the brand. The company uses mass marketing and the segment
marketing in targeting its customers but the targeted customers must be rich and younger in
age. The company targets the group based on socio-economic segmentation on the social
class of people and selects the location based on the education and the coffee lovers (Forbes,
2016).
Service delivery of Starbucks
Starbucks emphasizes on the designing of the products to maintain its differentiation and
develop the high brand image of the company. It focuses on to maintain the quality of the
products by purchasing the coffee beans from the scattered farmers who meet the standards of
the company. It is well known for the capacity and efficiency by providing flexibility to the
employees and meeting the fluctuating demands of the customers. It aims to maximize cost
efficiency by maintaining the workflows and the processes (Helo, Gunasekaran, and
Rymaszewska, 2017).
Starbucks started the mobile ordering delivery option for the public by adding its menu to the
mobile app to provide convenience to its customers and develop a strong connection. The
company provided the mobile order, pay option, and develop the easiest means of paying for

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its customers. It ensures that there would be proper security and convenience for the
customers. The product will be delivered at their places by the green apron baristas to
develop a large market base for the company (Xing and Ness, 2016).
Experiential Marketing; Customer Relations and Experience
Management
Experiential marketing refers to added value on the products and the services to retain the
image in the minds of the customers. It refers to the events that are developed by the
company to deliver higher value to the customers and retain the brand identity in the minds of
the customers. Starbucks focuses on the designing of the store, integrates local aesthetics to
connect with the potential customers, and helps in better understanding of the customers. The
company found ways to bring the interior brand experience to the outdoor lane. The company
developed the two-way live communication videos with the baristas to get the digital
confirmation regarding the food and the beverages (Gupta, Nagpal and Malik, 2018).
The company involved continuous innovations in its menu to assist the fluctuating needs of
the customer and attract more potential consumers towards the brand. It focuses on the
environmental implant by providing the combination of the traditional and the modern coffee
culture through tactile, auditory and visual. It displays pictures of the coffee culture, a large
bar of the tools and the soothing music to provide a relaxing environment to customers. The
company promotes its product by having a strategic alliance with famous brands (Chuang and
Hu, 2017).
The Company focuses on product placement by providing the best quality product to its
customers. It provides the training to the employees and makes them coffee lover to deliver a
higher value experience to its customers. The company has developed the experiential

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campaign for the visitors to provide in-depth knowledge of how and from where the coffee
beans are collected. The visitors are taken to the farms and they are provided with the
knowledge of different brewing methods to provide the real experience and ends up by
providing the taste of the coffee (Nie and Kosaka, 2016).
Starbucks digital marketing strategy
The company has used the social media strategy to position themselves as the quality brand.
It focuses on increasing the customer relationship by delivering value to the customers. The
company uses social marketing for expanding its operations.
MYSTARBUCKSIDEA.COM
The company has developed the website with the help of the sales force to get
suggestions from the customers and develop the products according to the new ideas
given by the customers. It uses this medium to interact with the customers and fulfill
the changing requirements of the customers (Shobeiri, 2016).
WIFI Services
Starbucks for the first to provide a free Wi-Fi facility to its customers to provide them
with a relaxing environment and attract more customers to the brand. Providing such
services enhance the experience of the customers and make them happy and satisfied
(Fox, Nakhata and Deitz, 2018).
Mobile marketing – My Starbucks App
The company launched its app to provide ease to the customers to locate the various
outlets and avail the services. The company also launched the card mobile app where
the customers can purchase the products based on their prepaid balance and provides

Marketing analysis of Starbucks 9
the online facility to purchase the products of the brand (Borel and Christodoulides,
2016).
Charity Campaign
The company has collaborated with Foursquare for a cause that benefited AIDS
awareness. The company decides to contribute $ 1 whenever the customer checked in
across all the stores of the Starbucks. This campaign provides support to the people
who are suffering from Aids (Fox, Nakhata and Deitz, 2018).
Tweet-A- Coffee Campaign
The company started the campaign to provide a $5 gift to the customers who tweet its
friend to have coffee at Starbucks. The customers have to link the Starbucks account
and the credit card to avail the gift voucher (Borel and Christodoulides, 2016).
The company has conducted Blizzard real-time ads, which emphasizes the picture of the
people drinking hot coffee. Such ads create brand retention in the minds of the customer. The
company develops attractive hashtags to provide happiness and joy to the customers and
provides special discounts to attract customers. The increased use of the internet has helped
the company to make a strong brand image and retain the brand identity in the minds of the
customers (Fox, Nakhata and Deitz, 2018).
Pricing and Cost structure of Starbucks
Starbucks is the global market leader of the coffee brand and it adopts the high pricing
strategy and includes quality, authority and relative value to maximize the profit and reduce
the cost of the products.

Marketing analysis of Starbucks 10
Quality
The company sets the price based on a simple idea: high value at a moderate cost.
The company believes that the customers are ready to pay more money for a high-
value product. However, Starbucks focuses on setting a moderate price and providing
high-value products to customers. It mainly targets higher income groups to provide
the products at a high price. The company ensures that the quality standards are
maintained and provides higher customer service to justify the pricing of the products
(Liozu, 2019).
The value of Authority
The company sets the price as how it positions itself as an authority of coffee.
Starbucks charges premium prices for its product because of the strong brand image
retained in the minds of the customers. The customers pay high prices for the new
products without tasting it because of the strong brand name maintained by the
company (Baker, Collier and Jayaraman, 2017).
Relative value
The company uses relative pricing strategy by keeping high price products along with
the low price products of the company. It involves higher risk as the probability of
choosing low priced product can be high (Baker, Collier and Jayaraman, 2017).
Cost Structure
The key cost driver is the price per pound of the coffee beans. The maximum expended
coffee beans are Arabica and Robusta blends which the purchases from diverse scattered
farmers. The company primarily focuses on purchasing Arabica because of milder flavor and

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are easily mixed up with 30 blends of production. The brand makes a high capital
expenditure, boasts strong operating cash flows for the maintenance of the kitchen, and
achieves economies of scale by massive capitalization (Benmiled-Cherif, 2016).
Branding of Starbucks
The company has made a huge investment in creating the standardized look of its stores,
merchandise, food, and beverages. The Siren logo of Starbucks is the most famous logo
across the globe. The company emphasizes to deliver the same experience across all the
stores. When the company decides to use drive through it makes the huge investment in
appropriate designing of the outlets. It creatively designs its place and ensures appropriate
lighting and relaxing environment for its customers. The company adopted new strategies to
compete in the emerging market and has developed the website known as
mystarbuckidea.com to get new ideas from the customers. It develops strategies to meet their
changing preferences. The company has made a huge investment is increasing its digital
presence and expand its market share. The company has developed artificial intelligence for
its customers to give the voice command on the mobile apps. It was able to maintain a strong
brand image by fostering the changing needs of customers. The brand is active on social
media platforms to create more recognition (Johansen, 2018).
Sustainability at Starbucks
Starbucks effectively contributes towards the environment by being responsible towards the
environment and implements the actions that reduce the waste and preserve the natural
resources of the planet. The company focuses on expanding the recycling program by using
environment-friendly cups. It uses renewable resources to make the efficient use of energy
and develops the equipment’s, store design to reduce the use of water. It focuses on building