Starbucks: Segmentation, Targetting, and Positioning

If you are a coffee lover, chances are that Starbucks is one of your preferred coffee houses. Besides the diverse range of flavors and products it offers, this coffee chain boasts a comprehensive and extensive marketing strategy, which encompasses Market segmentation, Target identification, and Product Positioning (STP). This article uncovers the methodology utilized by Starbucks.

Market Segmentation

Starbucks’ market segmentation strategy encompasses four variables:

1. Demographic

Starbucks targets both males and females, including professional employees and students, aged between 22–60 years. The company also targets single individuals, older married couples with children, and young children under and over six years old.

The following statistics represent the the greatest percentage of their category:

2. Geographic

Geography is another key consideration in Starbucks’ targeting approach, with the company serving multiple chains worldwide. Therefore, wherever a Starbucks chain exists, it is included in the geographic aspect of the targeting. This includes various regions across the globe, such as Latin America, the US, Canada, the Middle East, Europe, China, Africa, Asia, and the Pacific.

3. Behavioral

Starbucks uses behavioral segmentation to target their regular morning customers with an incentive to get them back in for another purchase later in the day. Since these regular users will likely have an afternoon coffee on occasion, Starbucks uses email marketing and push notifications within their mobile app to offer happy hour events.

Some customers are compelled by the convenience of ordering through the mobile app and their beverage being prepared and paid for when they come in to pick it up. Mobile app makes online ordering and payment easy. The mobile ordering system acts as a digital marketing tool, allowing customers to see new items much in advance of launch. The Starbucks app provides users an inviting and innovative personalized experience, just like the coffee chain itself. The convenience of using an app acts as a powerful driver of loyalty.

Home Page

Starbucks gathers information on customers habits, interests etc. thus empowering them to offer more relevant perks & communication to customers. The app offers customers convenience while clearly communicating how customers can earn rewards points (stars) and what they will get with them. A strong gamification strategy fueled by exclusive customized offers, has helped the brand stay top of mind for customers.

Starbucks offers one of the most sought-after loyalty programs ‘Starbucks Rewards’ program that offers freebies and discounts to members giving them plenty of reasons to choose Starbucks over other players. ‘Starbucks Rewards’ program represents a significant portion of the coffee chain’s recent fiscal growth.

1. Customers have multiple benchmarks to cash in their stars for rewards. They can get rewards faster, option to make minor customizations for free in exchange for 25 stars. Some of the most popular rewards are as below:

• 25 stars: an espresso shot, dairy substitute or additional flavor
• 50 stars: brewed hot coffee, hot tea or bakery item
• 150 stars: handcrafted drink, hot breakfast or parfait
• 200 stars: lunch sandwich, protein box or salad
• 400 stars: select merchandise or at-home coffee

2. Starbucks rewards will form a single-level program, where all members can begin to earn stars toward free rewards from the day they join.

3. Points will not expire for customers, who attach the loyalty program membership to their Starbucks rewards visa credit card or a prepaid card.

4. When a customer walks in a Starbucks store, any purchase they make can be used towards rewards.

5. Free Starbucks birthday drink, this could be a complimentary handcrafted beverage, or one complimentary ready-to-drink bottled beverage or one complimentary food item.

6. Opportunity to earn bonus stars on monthly double stars days.

Psychographic

1. Starbucks is involved in the arts and charitable initiatives, while also striving to be environmentally and socially responsible.
2. The company has participated in AIDS benefits across all its stores and set up shelters for underprivileged children, alongside making monetary donations. Through its participation in various positive events and causes, Starbucks aims to gain favorable exposure.
3. Starbucks is a big fan of psychographic segmentation, and this largely defines their relatability as a brand. For example, they have the,

Starbucks campaigns per psychographic segment

• “Non-coffee drinkers who still want to socialize” (catered too by selling Frappuccino's and sandwiches in-stores), and the
• “Serious coffee drinker” (who has a higher income, and is catered too by presenting their top-quality beans from around the world)

Target

1. Starbucks targets “High-Income Big Spenders”

Starbucks focuses on high-income spenders with earnings of $90,000 and above. This is the reason behind the presence of Starbucks cafes near every plush area. But at the same time, there are middle-income neighborhoods around these cafes.

2. Starbucks targets “Busy Suburbs”

Starbucks also targets the urban or city population and now has numerous cafes located in the outskirts and suburbs of cities, sometimes over 60 miles away from urban settlements. The suburban population, which Starbucks also targets, tends to have busy lives, commuting by car daily to places such as work, children’s centers, stores, and gyms. These individuals often embrace urban styles despite not living in the city, and their frequent commutes through traffic make them more likely to indulge in coffee purchases.

3. Starbucks targets “Technology Adopters”

Starbucks’ target audience is primarily tech-savvy, with a range of ages from 22 to 60, including a growing number of teenagers. The use of smartphones is prevalent in the 50–60 age group. In 2015, Starbucks launched its app, allowing customers to order and pay via their phone, which turned out to be highly successful.

Since 2002, Starbucks has also been offering free Wi-Fi to the public, positioning itself not only as a rest stop but also as a mini-office where customers can work on their laptops while enjoying coffee and snacks.

4. Starbucks targets “Health-Conscious Professionals”

The target audience includes educated diet-conscious people who stay abreast of the latest news. Considering how these customers are aware of the health trends, Starbucks extends a range of different teas besides its various coffee drinks. Green tea, decaf tea, wellness tea, Teavana bottled blends, and Royal English Breakfast tea latte are some of the beverages preferred by this target audience. Starbucks acquired Evolution Fresh, Teavana, and Tazo Tea Company to add juices and teas to its menu.

5. Starbucks targets “Socially Aware People”

Starbucks is committed to eco-friendly practices and social responsibility. Its efforts include LEED-certified stores, farmer support centers, sustainable coffee production, recycled cups, reduced carbon footprint, and community enhancement programs.

6. Starbucks targets “Drivers of Change”

Starbucks’ adaptable and open-minded target audience embraces change and views it as an opportunity for growth. The company recently partnered with Uber Eats to extend its delivery service, aiming to reach new customers. Additionally, Starbucks plans to provide more convenient drive-thru options to avoid parking concerns.

Brand Positioning

Starbucks has positioned its brand around its coffee culture and world-class retail environment, leveraging its strengths to stand out from competitors. Through its brand and marketing strategies, Starbucks has created a unique identity as a coffeehouse and established itself as a market leader by prioritizing the distinct flavor and aroma of its products.

The Starbucks brand embodies values such as quality, consistency, and reliability, and seeks to inspire and nurture the human spirit one individual, one cup, and one neighborhood at a time. Customers expect to find top-notch coffee, welcoming service, and a comfortable atmosphere when they visit Starbucks locations.

Starbucks Coffee uses the following types of positioning:

• Mono segment positioning: The coffee chain giant targets premium customer segment only i.e. individuals who are willing to pay extra for the quality of products and services.
• Adaptive positioning: Due to the tendency of increasing consumer health awareness, Starbucks Coffee developed coffee beverages with less calories such as Chai Tea Latte (103 calories) Caffe Misto (63 calories) and Iced Americano (11 calories).
• Standby positioning: Certain Starbucks beverages such as Frappuchino had to await changes in the market for certain period of time to find demand.
• Sustainability positioning: Starbucks, the biggest coffee shop chain in the world, is striving to divert its customers’ focus towards the sustainability aspect of its business operations by transforming its branches into “Starbucks Greener Stores.” This store model is designed to lower carbon emissions, decrease water consumption, and reduce the amount of waste sent to landfills.

What does Starbucks represent?

• Quality — Starbucks’ commitment to quality is reflected in the consistent production of good coffee. Their emphasis on quality extends to the preparation of each drink, with employees trained to use the best techniques and equipment.
• Consistency —Consistency builds trust at Starbucks. Customers rely on the company to deliver the same taste and experience every time, with a great selection of fresh products and friendly staff providing quality service.
• Reliability — Starbucks is dependable and operates with reliability, which increases customer satisfaction. They offer consistent hours of operation and convenient locations.

How does Starbucks stay true to its brand?

To ensure the quality of their coffee products, Starbucks employs quality control measures throughout the supply chain. They conduct regular testing of their coffee beans at various stages, starting from roasting to distribution, and even in retail locations. In case any sample fails to meet their quality standards, they reject the entire lot and reorder the coffee to maintain consistency and the highest level of quality possible.

Does Starbucks stay true to its brand?

Starbucks stays true to its brand by maintaining consistency in its offerings and utilizing resources effectively. This includes investing in new technology to enhance productivity and delivering excellent customer service to ensure satisfied and loyal customers.

Starbucks Brand Differentiation

• Customer Centricity
  Starbucks’ customer-centricity approach focuses on delivering a great experience to its customers by providing clean bathrooms, comfortable seating, delicious food, and friendly staff. This ensures customer satisfaction and encourages repeat business.
• Commitment to Community
  Starbucks values its employees and believes in treating everyone with respect and providing equal pay for equal work. The company encourages its partners to prioritize their well-being by getting enough sleep, eating well, exercising, and taking breaks.
• Coffee Beans Roasting Process
  Starbucks positions its brand based on the quality of its coffee beans, which are roasted only a few times a year at a single location. Roasters carefully monitor the temperature and humidity to ensure consistency and quality. The beans are then cooled and stored until they are ready for shipment.
• Open Doors Policy
  Starbucks has an open-door policy that allows customers to enter their locations without prior permission. Restroom availability inside the store is indicated by a sign, and if not available, the store manager directs customers to use public facilities outside.
• Free Wi-Fi Connection
  Starbucks offers free Wi-Fi access to customers who can use it to browse the web, check email, or chat with friends while waiting for their orders. Customers can access the network by scanning their ID cards without paying any additional fees.
• Customer Service
  Starbucks’ customer service involves treating customers with respect and politeness, without any pushy upselling. Customers can expect helpful hints about preparing their drinks and using reusable cups.

Conclusion

So, in a nutshell? Starbucks’ STP strategy is like that perfectly brewed cup of coffee. Every detail, every flavor note, carefully thought out — just like how they serve up their marketing. Cheers to that!