The Starbucks Case Study

Starbucks Corporation, based in Seattle, Washington, is an American global coffeehouse and roastery business. As of early 2020, the firm has over 30,000 outlets in 70 countries across the world.

This blog is a comprehensive examination of Starbucks’ marketing techniques, including their target market, social media strategy, marketing mix, digital marketing presence, campaigns, and marketing activities throughout the ongoing pandemic.

About Starbucks

In the 1980s, all-out espresso offerings in the United States were on the decline. Strength espresso, on the other hand, grew in popularity and accounted for 10% of the market in 1989, compared to only 3% in 1983. By 1986, the group had six locations in Seattle and had only recently begun selling coffee. By 1989, Starbucks had 46 locations across the Northwest and Midwest, and each year it brewed more than 2,000,000 pounds (907,185 kg) of coffee. Starbucks had 140 locations with $73.5 million in revenue at the time of its first public offering (IPO) on the stock exchange in June 1992, up from $1.3 million in 1987.

At this stage, the organization’s fair market value was judged to be $271 million. The sale of a 12% stake in the company earned roughly $25 million for the company, resulting in a two-fold increase in the number of outlets over the next two years. Starbucks’ offer cost had risen by 70% to more than double times the income per component of the previous year by September 1992. In July 2013, over 10% of in-store purchases were made via the Starbucks app on customers’ phones.

Starbucks is ranked 132nd on the Fortune 500 list of the largest companies in the United States by revenue as of 2018. Starbucks said in July 2019 that their “monetary second-quarter total compensation of $1.37 billion, or $1.12 per share, up from $852.5 million, or 61 cents for each offer, a year earlier.” In the middle of 2019, the organization’s fair assessed worth of $110.2 billion increased by 41%. In the third quarter, earnings per share were 78 pennies, significantly more than the forecasted 72 cents.

Starbucks, as the world’s largest coffeehouse chain, is often regarded as the face of America’s second wave of coffee culture. Starbucks coffee houses serve:

• Hot and cold drinks
• Evolution Fresh juices
• Whole-bean coffee
• Caffe lattes
• Microground instant coffee known as VIA
• Frappuccino beverages
• Espresso
• Full- and loose-leaf teas including Teavana tea products
• Snacks including items such as chips and crackers
• La Boulange pastries

And also, some offerings are seasonal or specific to the locality of the store.

Starbucks in India

Starbucks was interested in entering the Indian market in the 2010s. By focusing on the specific upper-class demographic in India, the firm hoped to profit from the development of coffee culture.

Starbucks Corporation and Tata Coffee announced plans to launch Starbucks stores in India in January 2011. Despite a phony start in 2007, Starbucks said in January 2012 that it will form a 50:50 joint venture with Tata Global Beverages named Tata Starbucks Ltd., which would own and operate shops labeled “Starbucks, A Tata Alliance”. In 2007, Starbucks attempted to enter the Indian market. It did not, however, offer a rationale for the cancellation. The company launched its first store in a long time on October 19, 2012, a 4,500-square-foot location at Horniman Circle, Mumbai. In 2013, The company launched its first cooking and wrapping factory in Coorg, Karnataka, in order to service the company’s customers.

Tata in 2017–18, The company added 25 locations, and in 2018–19, it plans to open 30. From June 2020, according to CEO Navin Gurnaney, Tata Starbucks will utilize solely biodegradable and recyclable wrapping materials across its entire shop network. On August 7, 2019, Starbucks announced its arrival in Gujarat. The next day, the group launched five outlets in Surat and Ahmedabad. The state’s largest company location is in Prahlad Nagar, Ahmedabad, and it provides more vegan options than other Indian locations. In the 2019–20 fiscal year, Navin stated that the company will open more than 30 outlets, 11 of which have been opened.

Following the successful launch of their brand, the next critical stage in guaranteeing their long-term viability was to pinpoint their target demographic.

The Target Market of Starbucks

Starbucks is a high-end coffee company with a clientele that is predominantly from the upper-middle and upper classes. The brand is aimed at customers who desire a relaxing environment to consume coffee and unwind. These are primarily higher-wage professionals, company owners, or other high-end clientele between the ages of 22 and 50. People who live fast-paced lives desire delicious coffee and a quiet place to unwind after a long day. The company provides all of these benefits in one convenient location. Starbucks’ target demographic comprises both male and female consumers, with the majority of these customers falling within the 25–45 age bracket. Those who are mostly urban, health-conscious, and class-conscious consumers.

The target audience that Starbucks usually looks for are:

• Urban-ish, on the go
• High-income spenders
• Reaching Beyond the storefront
• Health-conscious professionals
• Technology early adopters
• Flexible to change

The Marketing Strategies of Starbucks

Starbucks’ first marketing strategy in India was to segregate customer segments based on socioeconomic status. Working professionals and their demand for a relaxing environment are the focus of this project. The company additionally separates its market based on geography and demographics by establishing locations that cater to the aforementioned target clientele. Most businesses start out in a new market by focusing on a particular section and then expand into other categories if they succeed. The company followed suit, expanding its product line and social media marketing presence to target teens and young adults as well.

This marketing mix has helped The company to develop a unique market position for its products which has thereby differentiated the brand’s overall experience and has positioned itself as a highly reputed brand. This marketing mix strategy to target the modern and tech-savvy generation has thus helped in the growth of the use of digital technology as well as social media for promotions and customer engagement.

The Rapid Digital Expansion

Amongst the several key priorities of Starbucks, expanding the brand’s digital reach to interact with its customers is of utmost importance. In order to keep up with the customers, it is implementing new ways to attract digitally registered customers beyond Starbucks’ rewards program. For instance, the coffee chain is offering mobile order services and leveraging Wi-Fi sign-ins at its brick-and-mortar stores.

• Starbucks Social Media Strategy: Several people are aware and familiar with the social media pages of The company. The company’s social media pages stand out amongst the rest because of their distinctive branding, interactive posts, and visually pleasing content. It also has a diverse range of content includes recipes, photography, articles, and features; however, this stream can be broken down into a sequence of campaigns pitched at creating a better sense of brand awareness and community.
• Starbucks Product-based Marketing Campaigns: Starbucks promotes one-of-a-kind and fan-favorite drinks. The brand is well aware of how popular their flagship goods are, but more significantly, they are also aware that their target audience is hungry for this type of material. They’ve also built social pages for their most popular drinks, like Pumpkin Spiced Latte and Frappuccino, where they share pertinent and relatable memes with their devoted fans. User-generated content (UGC) plays a role here as well. Consumer photographs of more Instagrammable items, like the Unicorn Frappuccino, are frequently chosen to be re-shared via official channels and utilized in influencer marketing.

Starbucks Corporate Social Responsibility-Based Campaign

The company positions itself as open-minded and inclusive by using social change as a marketing strategy. The #ExtraShotOfPride campaign, which promotes the LGBT+ community, is one example.

• Community-Based Campaigns: Starbucks’ digital approach also places a premium on spotlighting individuals and communities. Consider the #RedCupArt campaign, which not only boosts interaction but also creates a library of user-generated material. They localize the information by using narrative to demonstrate examples of bravery and charity in American neighborhoods. The company makes a conscious attempt to humanize the firm by publishing tales on their Instagram account that emphasize the employees that play an important role, particularly when it comes to customer service. This sense of belonging also makes online coffee content sociable, just like they did when they effectively founded contemporary coffeehouse culture.
• Festive Marketing: Starbucks has also launched a new seasonal whole-bean coffee, the #StarbucksDiwaliBlend, for customers in the United States and certain international markets. Hand-picked and obtained from Tata Estates in Karnataka and Tamil Nadu, the current exquisite mix is a must-try. Starbucks Diwali Blend pays homage to the region’s rich coffee legacy and skill. It created the #SketchTheBlend promotion, in which consumers could win 5 free drinks by sharing their creativity on the Diwali Blend cup and sleeve.

Let’s dive deeper and analyze their overall digital presence.

Digital Marketing Presence of Starbucks

The company recognizes that its customers are digitally savvy, making a solid digital marketing plan essential. The company clearly favors marketing on platforms that allow for two-way contact over channels that only allow for one-way communication, such as print and television.

• Instagram — 248K+ followers
• Facebook — 1.1M+ likes
• Twitter — 161K+ followers
• Starbucks updates its social media accounts on a regular basis and creates challenges and games to engage customers and grow its fan base.
• The content and engagement are consistent across all platforms, and the company believes in providing an experience rather than merely a route for marketing.

The Marketing Strategy During Covid-19

We’ve all seen how quickly the Covid-19 outbreak spread over the world. Overnight, every business in the world was impacted. And they had to figure out how to stay afloat in these uncharted waters. The epidemic had a significant influence on the Indian market, but The company was continually improving to lessen the economic impact. These were the actions performed by the coffee behemoth during the epidemic, demonstrating why it is the most valuable:

The Expansion of The company

CEO Navin Gurnaney indicated that they will open drive-thrus to encourage people to interact with them, as well as home deliveries to keep in touch with clients during the epidemic. The first drive-thru was at Ambala Chandigarh Expressway in Zirakpur. The company has launched its app as well — Starbucks India App so that customers can easily navigate and purchase their offerings.

Starbucks Social Media Campaigns

• #ReconnectWithStarbucks campaign:
  
  The company’ social media campaign was launched in two stages. Customers were urged to submit their means of reconnecting despite the epidemic and their favorite Starbucks memory on their personal Instagram accounts with the hashtag #ReconnectWithStarbucks in the first phase. They encouraged their consumers to remark on their favorite beverage on the post in the second phase, “Half Cup Full.” They then sent these consumers audio memos with their favorite beverage and baristas yelling their names to remind them of the famed in-store experience. This was an excellent advertisement since it not only reminded consumers of their fond recollections of Starbucks, but it also made them feel good about themselves.
• #StarbucksAtHome and #StarbucksDance:
  
  The company has launched a 1 liter of freshly brewed drinks that can be ordered through Swiggy and Zomato for takeout or delivery. Seven flavors were introduced, each costing Rs.550 per bottle. The company announced the #StarbucksDance challenge to advertise the drink, asking consumers to film a dance video with the drink and post it to their personal accounts. They guaranteed the winner a year of free Starbucks.

Strategic Alliances to Enhance the Experience and Reach

• Signature Merchandise Launch with Flipkart:
  
  The epidemic changed people’s shopping habits and pushed them to buy locally produced goods rather than imported or foreign-made goods. The company took advantage of this transition by teaming up with Flipkart to sell Starbucks Signature Merchandise on the online marketplace. Custom mugs, tumblers, cold cups, and other items were available. Customers will be able to order coffee-making equipment from the convenience of their own homes in the near future. The company only had a presence in 12 cities; thus, this was a calculated effort to reach out to customers in their homes across India during the epidemic, taking advantage of the country’s growing reliance on E-Commerce.
• Stand-up Comedy Festival:
  
  The company has launched the #StarbucksComedyFestival, which will give select fortunate customers a free ticket to the comic festival. On the customer’s invoice, the fortunate codes would be present. Customers would be excited to shop m now that they have a prominent line-up of presenters including Sapan Verma, Azeem Banatwalla, and Rahul Subramanian.

Conclusion

In summary, Starbucks is the market leader because of its dominant worldwide presence and leadership. Because of its intimate ambiance, inviting environment, and unrivaled service, a customer’s experience at a Starbucks store is undoubtedly unlike any other coffee shop. Their welcoming “perfect coffee shop atmosphere” should be a long-term competitive advantage. The company’s retail outlets and on-site collaborations have earned higher response rates, putting them in front of the pack in the mature business. As a result of its all-encompassing marketing approach, Starbucks enjoys a strong market position.