Marketing Management: Case Study of Starbucks and its Caffè Americano

This comprehensive report delves into the marketing management strategies employed by Starbucks, specifically examining its Caffè Americano product. It begins with a competitive review, analyzing Starbucks' position in the coffee industry and its direct competitors, such as McDonald's and Dunkin' Donuts. The report then explores customer perceptions, target segments, and the customer decision-making process. A detailed product analysis follows, including Starbucks' product mix, product life cycle, and comparisons with competitors. The report also includes a SWOT analysis, an examination of Porter's Five Forces, and Mintzberg's 5Ps, providing insights into the company's strengths, weaknesses, opportunities, and threats. The analysis concludes with strategic recommendations for Starbucks' marketing team, considering the evolving business environment and the need to adapt to maintain its competitive edge in the global coffee market. This report provides a thorough examination of Starbucks' marketing approach for its popular Caffè Americano, offering valuable insights into its market position and strategic considerations.

Running head: MARKETING MANAGEMENT
MARKETING MANAGEMENT: A CASE STUDY OF STARBUCKS AND ITS
PRODUCT CAFFÈ AMERICANO
Name of the Student:
Name of the University:
Author’s Note:

1MARKETING MANAGEMENT
ABSTRACT
This report intends to analyse the concept of marketing management in the particular context
of the Caffè Americano offered by Starbucks. The report begins by shedding light on the
competitive position of Starbucks in terms of the Caffè Americano offered by it and finds that
the concerned coffee-chain and its product Caffè Americano had been able to attain a unique
position because of the high quality of the same. The report next undertakes a review of the
existing segmentation process followed by Starbucks for Caffè Americano and finds that the
concerned coffee-chain focuses on working-class individuals related to the age bracket of 30-
49 years of age and also compares the target markets for the other products offered by
Starbucks with those of its rivals. The report also undertakes a review of the different
products offered by Starbucks while compares them with its rivals and finds that they are
better in terms of quality. Lastly, the report concludes by undertaking an analysis of the
business environment and strategies used by Starbucks and finds that the concerned
enterprise despite holding monopoly faces stringent competition and thus would have to
modify its existing strategies.

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Table of Contents
1.0 Introduction.....................................................................................................................3
2.0 Competitive Review of Starbucks........................................................................................4
2.1 Direct competitors and the focus of their competitive positions......................................4
2.2 Positioning Map and the positioning of Starbucks..........................................................5
2.3 Perceptions of the customers regarding the product........................................................7
3.0 Customer Review.................................................................................................................7
3.1 Target segments of Starbucks for the product..................................................................7
3.2 Customer decision-making process and the customer concerns......................................7
3.3 Starbucks’s integrated marketing communication and the customer concerns...............8
3.4 Comparison with Competitors.........................................................................................9
4.0 Review of Products and Services.......................................................................................10
4.1 Starbucks’s product mix and their target market...........................................................10
4.2 Comparison with Competitors.......................................................................................10
4.3 Product Life Cycle framework.......................................................................................11
4.4 Suggestions to Starbucks’s marketing team...................................................................12
5.0 SWOT and Issue Analysis.................................................................................................12
5.1 Analysis of Strengths and Weaknesses..........................................................................12
5.2 Directions to prepare for opportunities and threats........................................................13
5.3 Porter’s Five Forces.......................................................................................................13
5.4 Mintzberg’s 5Ps.............................................................................................................14
6.0 Conclusion..........................................................................................................................15
7.0 References..........................................................................................................................16

3MARKETING MANAGEMENT
1.0 Introduction
As opined Chernev (2018), an important trend seen within the spectrum of the modern-
day business world is the fact that the business enterprises are not only required to take into
account the requirements of the external business world. Bryson and Atwal (2019) are of the
viewpoint that this is important since the business enterprises need to amend or modify their
business activities or strategies on the basis of the same so as to gain success or for that
matter to enhance their profitability. More importantly, the selection of the right target market
and designing the marketing communication campaigns and also the commodities or services
on the basis of the same has also become imperative for the business enterprises (Li 2018). In
addition to these, the business enterprises are increasingly required to take into perspective
the business competition or rivalry that they face in the business markets of their operation
and also take adequate measures for the mitigation of the same (Wu 2017). In this regard,
mention needs to be made of the global coffee-chain, Starbucks which had been able to attain
a substantial amount of success over the years by taking into account these aspects within the
framework of the business activities followed by it.
Starbucks, founded by Jerry Baldwin, Zev Siegl and Gordon Bowker in 1971, is an
American coffee-chain which is often considered to be one of the most important
representatives of the “second wave coffee” in the global coffee industry (Starbucks.com
2019). As a matter of fact, it is seen that the concerned enterprise is known for the high
quality of the coffee products that it offers to the customers which in turn are prepared from
“dark roasted coffee” that the enterprise brews itself so as to maintain a uniform high-
standard of coffee drinks (Nytimes.com 2019). In this regard, it needs to be said that the real
success started after Howard Schultz, the ex-CEO of the enterprise under discussion here
took over the reigns of the concerned enterprise (Asiatimes.com 2019). More importantly, in
the present times it is seen that the concerned enterprise has more than 30,000 outlets in
around 179 different nations of the world (Starbucks.com 2019). Furthermore, the concerned
coffee-chain is known for the wide variety of coffee and related products that it offers to the
customers like espresso, whole-bean coffee, cold and hot coffee, Caffè Americano, caffe
latte, tea and others which over the years had not been much appreciated by the customers but
as a matter of fact had become a part of their life as well (Nytimes.com 2019). Moreover, the
revenue earned by Starbucks for the year 2018 was more than US$24.71 billion thereby
making it one of the largest business enterprises of the world in terms of the annual financial
returns earned by it (Forbes.com 2019). This report intends to analyse the macro as well as

4MARKETING MANAGEMENT
the micro environment of the business enterprise and also analyse the products offered by it
in terms of the ones offered by its competitors in the coffee industry.
2.0 Competitive Review of Starbucks
2.1 Direct competitors and the focus of their competitive positions
Qian and Xing (2016) have articulated the viewpoint that the business competition or
rivalry forms an integral part of the modern-day business world and this can be attributed to
the fact that the processes of globalisation and the advancements in technology had led to the
mushrooming of the business enterprises in the present times. On the other hand, Harrington,
Ottenbacher and Fauser (2017) have noted that the mushrooming of different business
enterprises had adversely affected the business or the financial prospects of the various
enterprises because of the fact that they have significantly elevated the number of product or
service choices or options that are available to the customers. In the particular context of the
global coffee-chain, Starbucks, it is seen that despite the fact that the concerned enterprise
holds a monopoly in the coffee-chain industry on the score of the high-quality of the coffee
and other related beverages offered by it yet at the same time it is seen that the threat of high
competition wields a significant influence on the business operations of the enterprise under
discussion here (Devia, Aisjah and Puspaningrum 2018). As a matter of fact, it had seen that
the “Caffè Americano” which the concerned coffee-chain had been offering ever since 1982
and which had been one of the best selling coffee products offered by the enterprise is
presenting facing a stiff competition in America and in the other locations of the operations
of the coffee-chain on the score of the fact that the rivals of Starbucks are offering this
particular coffee drink to the customers at a very lower price (Taecharungroj 2017).
As per a report of Ibisworld.com (2019), the key coffee-chains in USA which
specialise in Caffè Americano and for which the customers have shown a higher amount of
propensity are Starbucks, Caribou, McDonald’s, 7 Eleven, Dunkin’s Donuts and others. More
importantly, it had been seen that the concerned coffee-chain also faces stiff competition or
rivalry from local coffee-chains like Coffee Café Day in India and others which as a matter of
fact are posing a significant threat to the business operations of the coffee-chain under
discussion here (Li 2018). As discussed by Martínez-Torres, Rodriguez-Piñero and Toral
(2015), one of the most important frameworks which is being used by the majority of the
contemporary business enterprises is Bowman’s Strategic Capsule so as to position their
products in an adequate manner which in turn will help them to attain a unique market

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position and thereby gain competitive advantage and also maximise profitability. In this
regard, Shirdastian, Laroche and Richard (2017) have noted that as per the concerned
framework, the business enterprises have two options, namely, they can either position their
products on the basis of the quality of the products or in terms of the price of the concerned
product. As a matter of fact, it had been seen that the different competitors or the rivals of
Starbucks in the particular context of the Caffè Americano offered by it take the help of
different positioning strategies for the attainment of a competitive positioning within the
coffee-chain industry (Susanty and Kenny 2015). For example, it had been seen that the
coffee-chain McDonald’s uses light coffee seeds so as to enhance the quality of the Caffè
Americano offered by it and thereby to attain a unique competitive position in the coffee-
chain industry in terms of quality. On the other hand, it had been seen that coffee-chains like
Dunkin’s Donuts, 7 Eleven and others are taking into consideration the factor of cost or price
for the Caffè Americano to attain a unique competitive position with the industry under
discussion here (Ronald and Amelia 2017). In contrast to these, it is seen that the coffee-
chain Caribou Coffee focuses on the quality of the Caffè Americano which it offers to the
customers so as to attain a unique competitive position on the basis of the quality. In addition
to these, it had been seen that the kind of experience that the customers in the different
coffee-chains is another factor which helps the coffee-chains to attain a unique positioning
and the resultant effect of this is that the majority of the coffee-chains are presently taking
into account this aspect to attain a unique competitive positioning (Ponce and Cordelier
2019).
2.2 Positioning Map and the positioning of Starbucks
Koapaha and Tumiwa (2016) have articulated the viewpoint that the coffee-chain
Starbucks over the years had focused on the attributes of both quality and price in the
particular context of the coffee, especially Caffè Americano and other beverages offered by it
so as to attain a unique competitive e position within the coffee-chain industry. This aspect of
the positioning strategy used by the coffee-chain under discussion here become apparent from
the below-given positioning map of the concerned coffee-chain-

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Figure 1: Positioning Map of Starbucks for the Caffè Americano offered by it
Source: Winarti 2018
The above figure clearly indicates that the coffee-chain Starbucks holds a unique
competitive position within the coffee-chain industry on the score of the high-quality of the
Caffè Americano and also because of the unique experience that the customers are being able
to get within the outlets of the concerned coffee-chain. As a matter of fact, it is seen that the
concerned coffee-chain in order to provide high quality Caffè Americano to the customers
takes the help of specially brewed dark-roasted coffee seeds keeping into account the taste
requirements of the customers. However, at the same time it is seen that despite the high
quality of Caffè Americano offered by the concerned coffee-chain the price charged by it are
comparatively lower than the ones charged by the other coffee-chains (Liu and Gui 2017).
This in turn had enabled the concerned coffee-chain to attain a unique position within the
industry under discussion here. On the other hand, Koapaha and Tumiwa (2016) have noted
that one of the most important aspects which affects the loyalty of the customers is the kind
of experience that they get within the coffee outlets or for that the manner in which they are
being treated. In this regard, it needs to be said that the coffee-chain takes special care to
ensure that the customers are being treated in an adequate manner through the usage of
effective customer service and also by creating the right kind of ambience within its different
outlets.

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2.3 Perceptions of the customers regarding the product
I would like to say that had I been a customer of the Caffè Americano offered by the
coffee-chain Starbucks I would have a very high perception of the concerned variety of
coffee. In this regard, I would like to say that for me two of the most important aspects which
makes a product or service worth using are its price and the kind of experience that I get
while buying the concerned product or service in the stores. In the particular context of the
coffee-chain Starbuck, I feel that the Caffè Americano offered by the concerned coffee-chain
is not only superior in quality but at the same time lower in price as well. More importantly,
the attendants in the coffee-chain under discussion try their best to offer the right of
experience to the customers and the ambience which exists within the outlets is another factor
which propels me to go to the outlets of the concerned coffee-chain.
3.0 Customer Review
3.1 Target segments of Starbucks for the product
Akgün and Yalım (2015) are of the viewpoint that some of the major variables of the
process of segmentation are demographics of the customers, their psychographics or lifestyle,
geographics, behaviour and others. As discussed by Fitzpatrick (2017), the resultant effect of
this is that the contemporary business enterprises are increasingly taking into consideration
these variables of the process of segmentation for the selection of the right kind of customer
base or target market for the products or services that they offer. In the particular context of
the Caffè Americano offered by Starbucks it is seen that the concerned enterprise follows the
premium pricing policy and thereby it targets those demographics of the population who
belong to the working-class background and also to the age bracket of 30-49 years of age
(Susanty and Kenny 2015). More importantly, this particular product of Starbuck is specially
made for the individuals who like to drink strong coffee because the concerned product is
made from specially roasted dark coffee seeds which are stringer than the normal coffee
seeds (Shirdastian, Laroche and Richard 2017). In addition to this, it is seen that the coffee-
chain Starbucks does not specifically targets any specific geographical location for the
product under discussion and it is available at all the major outlets of the concerned coffee-
chain.
3.2 Customer decision-making process and the customer concerns
Lemus et al. (2015) have articulated the viewpoint that the customer decision-making
process usually consists of five steps or phrases through which a customer normally

8MARKETING MANAGEMENT
undergoes before finally buying any product or service, namely, need recognition,
information search, evaluation, purchase and post-purchase evaluation. In the particular
context of the Caffè Americano offered by Starbucks it is seen that the customers undergo
through these five stages or phases for the decision-making process and the decision of the
customers to opt for the concerned product greatly depends on the questions or the concerns
that they face at the different stages of the process. For example, it is seen that one of the
most important questions that the customers have at the stage of need recognition is whether
they should opt for Caffè Americano or some other variety of coffee (Ronald and Amelia
2017). In the second stage, that is, the information search, the customers ponder regarding the
coffee-chain whose Caffè Americano they should opt for. In the third stage, evaluation, the
customers weigh the different aspects of the Caffè Americano offered by Starbucks with the
ones offered by other coffee-chain and at this stage some of the major concerns of the
customers are the price, quality, experience and others (Winarti 2018). In the fourth stage the
customers actually undertake the action of buying the Caffè Americano and in the fifth stage
the different attributes of the Caffè Americano that they have purchased from Starbucks with
the ones offered by other coffee-chains that they have tried in the past. According to Qian and
Xing (2016), it is on the outcome or the results of the post-purchase evaluation the decision
of the customers whether or not to opt for the Caffè Americano offered by Starbucks next
time greatly depends.
3.3 Starbucks’s integrated marketing communication and the customer concerns
Harrington, Ottenbacher and Fauser (2017) have noted that the marketing
communication advertisements created by the different business enterprises should not only
be intended to promote the various products or services offered by a business enterprise but
should also try to resolve the different questions or the concerns faced by the customers
during the decision-making process. This even holds true for the different marketing
communication advertisement campaigns used by Starbucks which not only promote the
Caffè Americano offered by the concerned coffee-chain but at the same time intend to resolve
the questions or the concerns that the customers during the decision-making process for the
purchase of the same. In this regard, mention needs to be made of the advertisement
campaign of the concerned coffee-chain “The Snow” (2013) which highlights the reasons
why the customers should opt for the coffee offered by Starbucks specially the Caffè
Americano and thereby helped the customers to make up their mind during the need
recognition stage (Asiatimes.com 2019). Furthermore, to resolve the concerns of the

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customers during the information search stage the concerned coffee-chain took the help of the
advertisement campaign “#theredcupcontest” in 2014 which intended to provide the Caffè
Americano offered by Starbucks a unique edge through the usage of red coffee cups
(Forbes.com 2019). More importantly, to ease the dilemma of the customers regarding
whether or not to opt for the coffee offered by Starbucks, it took the help of the “Tweet-a-
coffee” (2015) which offered the customers the opportunity to order coffee sitting at the
comfort of their home. This facility offered by Starbucks was a unique one which was not
offered by the other coffee-chains (Nytimes.com 2019). On the other hand, the “Meet me at
Starbucks” was used by Starbucks to emphasise on the unique experience and the ambience
that the customers are going to get at the coffee outlets of Starbucks and thereby helped the
customers to make the final decision to buy the products offered by it (Devia, Aisjah and
Puspaningrum 2018). Lastly, in order to earn the loyalty of the customers, Starbucks took the
help of the “Charity Campaign” wherein the coffee-chain declared that for every cup of
coffee that it sold it would give $1 in charity (Nytimes.com 2019). This philanthropic act of
the coffee-chain not only helped it attract numerous new customers but enabled it to earn
their loyalty as well.
3.4 Comparison with Competitors
The competitors or rivals of Starbucks like Caribou, McDonald’s, 7 Eleven, Dunkin’s
Donuts and others hardly take the help of any marketing communication advertisement
campaigns which are intended to resolve the questions or the concerns of the customers that
they face during the decision-making process for the purchase of the coffee and related
beverages (Ponce and Cordelier 2019). In this regard, it needs to be said that the majority of
the marketing communication advertisement campaigns used by these enterprises are
primarily intended to offer information to the customers regarding the benefits or the
advantages that they can derive through the purchase of the products offered by them (Bryson
and Atwal 2019). As a matter of fact, it is seen that the majority of the marketing
communication advertisements used by these enterprises are intended to help them to attain
or achieve the marketing objectives or goals that they have formulated. It is precisely because
of this inability of the coffee-chains like Caribou, McDonald’s, 7 Eleven, Dunkin’s Donuts
and others to address the questions or the concerns of the customers that they commonly face
during the decision-making process for the purchase of the Caffè Americano that the
concerned drink offered by Starbucks and the coffee-chain itself had been able to attain

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competitive advantage and also a unique market position in the coffee-chain industry (Li
2018).
4.0 Review of Products and Services
4.1 Starbucks’s product mix and their target market
As opined by Wu (2017), one of the most important factors which have contributed
towards the success attained by the coffee-chain Starbucks is the large variety of coffee and
other related beverages that it had been offering to the customers over the years. In this
regard, some of the most important products that the concerned enterprise offers are espresso,
whole-bean coffee, cold and hot coffee, Caffè Americano, caffe latte, tea and others. For
example, the espresso is primary intended for the customers who belong to the working-class
background and in the age bracket of 24-38 years of age (Ronald and Amelia 2017). The
espressos are stronger in caffeine content than the normal coffee offered by the coffee-chain
and therefore is not as popular as the other beverages offered by the concerned coffee-chain
(Susanty and Kenny 2015). On the other hand, it is seen that the hot coffee is the largest
selling product of the concerned coffee-chain and is generally intended for the coffee-lovers
who like to drink the traditional style of coffee (Devia, Aisjah and Puspaningrum 2018).
Furthermore, the cold coffee offered by Starbucks is intended for the customers who like to
drink coffee but not the hot ones offered by it (Asiatimes.com 2019). On the basis of these, it
can be said that the different varieties of coffee and other beverages offered by the concerned
coffee-chain have been designed keeping into account the needs or the requirements of the
different target markets or the customer segments that it focuses on.
4.2 Comparison with Competitors
The below given table shows a comparison of the product portfolio of Starbucks and
its competitors and also the target market that they focus on for the same-
Product Starbucks
(Target
Market)
Caribou
(Target
Market)
McDonald’s
(Target
Market)
Dunkin’s
Donuts
(Target
Market)
7 Eleven
(Target
Market)
Hot Coffee General
customers
who like to
drink coffee
General
customers
who like to
drink coffee
General
customers
who like to
drink coffee
General
customers
who like to
drink coffee
General
customers
who like to
drink coffee

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Cold Coffee For the
customers
who do not
like hot
coffee but
prefer to
drink coffee
Teenagers
who like to
drink coffee
as a
substitute for
the beverage
that they
drink
For the
customers
who do not
like hot
coffee
Youngsters
or teenagers
For the
coffee lovers
who want to
try out
something
new and
different
Espresso For the
customers
who like to
drink
stronger
coffee
Customers
who require
a higher
amount of
caffeine
For the
customers
who do not
traditional
coffee
For the
customers
who like to
drink
stronger
coffee
Customers
who require
a higher
amount of
caffeine
Caffè
Americano
Working-
class
individuals
related to the
age bracket
30-49 years
of age
For the
espresso
lovers
For the
customers
who do like
traditional
coffee
For the
espresso
lovers
For the
customers
who want to
try out
different
flavours of
coffee
The above table clearly indicates although similar kinds of coffee and related
beverages are being offered by Starbucks and its rivals yet at the same time it is seen that the
target segments that they follow are very different from each other. This is important since
the target market that these coffee-chains are focusing on had in turn created the differences
in the marketing campaigns used by these coffee-chains and thereby the different levels of
success attained by them.
4.3 Product Life Cycle framework
The hot coffee which is presently being offered by Starbucks was introduced by the
concerned coffee-chain in 1971 and as a matter of fact it was one of the first coffee drinks
offered by Starbucks (Starbucks.com 2019). In this regard, it needs to be said that the high
volume of sale of this coffee drink and also the aggressive marketing campaigns undertaken