Complete 4Ps Marketing Strategies of Starbucks with 360 Company Analysis

 

The Starbucks Corporation is an American multinational chain of Coffeehouse and Roastery reserves that is World famous for its Premium Quality coffee. Starbucks has 32,600 coffeehouse chain stores in 83 countries around the world. Starbucks offers varieties of coffee Since 1971.

In this blog, we shall be discussing the marketing Strategies of Starbucks Let us start with getting to know the company better first.

About Starbucks

The first store Starbucks was started in Seattle, Washington on March 30, 1971, by three partners who were students at the University of San Francisco. In 1987, the original owners of Starbucks sold the company to Howard D. Schultz, an American businessman who redesigned Starbucks and began the expansion of the company. In 1992, Starbucks Corporation filed its first Initial Public Offering (IPO)  and by September 1992 the share price of Starbucks had risen by 70%. The rest is history, with the company going on to become a worldwide chain.

Current News:

1. Starbucks Union Plans to Strike Over Pride Décor and Labor Practices. Walkouts were called at more than 150 stores in the next week after workers said Pride Month decorations had been banned in some, a claim the company denied.

2. In January 2017, Schultz released an official statement announcing that Starbucks would be hiring refugees after President Donald Trump issued an executive order that banned people from several Muslim countries from entering the United States. 

3. BOYCOTT STARBUCKS WAS ALL OVER THE INTERNET- On the morning of 10th May 2023 Starbucks India launched an ad on its social media handle focusing on transgender rights which divided the internet into 2 parts. The ad started with the tagline ‘It Starts With Your Name’.

4. Workers at the country’s first unionized Starbucks store in Buffalo staged a walkout on Wednesday to protest what they described as “unsafe working conditions” due to an ongoing COVID-19 case surge. Starbucks Workers United walked out just weeks after employees at the Elmwood Avenue store voted to form the union. 

5. Starbucks Facing Legal Battles in China- Starbucks, a coffee shop leader around the world, is facing legal troubles in the Chinese marketplace.

Buyer’s Persona

Now that we understand the origin and operations of Starbucks, let’s dive into the marketing mix of Starbucks.

Marketing Strategies of Starbucks

A company’s marketing mix is a series of actions or techniques, that it employs to promote its brand or product in the marketplace. Price, Product, Promotion, and Place are the four Ps that make up conventional marketing strategies at Starbucks.

Let’s start with the first P of the Marketing strategies of Starbucks.

Product Strategy of Starbucks

The Product is the value offered by a brand to its customer. Starbucks is a brand that is renowned for its premium quality coffee. It offers more than 1000 varieties of food items including coffee, smoothies, cookies, tea, muffins, pastries, doughnuts, fresh fruit juice, blended beverages, and much more.

A Simple Coffee cup with the Handwritten name of the customer on it is the unique product design strategy of Starbucks which is a signature favorite among customers. Starbucks commits to the “Barista Promise “ in which they make their coffee and drinks in the way that customers desire. Customers can request customized drinks.

Thus, the product categories in which Starbucks deals are:

1. Coffee
2. Tea
3. Baked Goods
4. Frappuccino
5. Smoothies
6. Starbucks Merchandise (Mugs, Instant coffee, etc.)
7. Other food items and beverages.

Price Strategy of Starbucks

The pricing of a product is a delicate decision that matters to consumers the most. The price of a product is set by keeping in mind the brand image and the demand for the product in the target market. Starbucks adopts the Premium Pricing Strategy. The purpose behind this strategy is to cultivate a sense in the market that their product is superior to others.

Starbucks sells its products at high prices to its target audience. The company satisfies its customers and justifies its prices by providing excellent service and ambiance at its stores. 

Starbucks’ price strategy is focused on customer experience and product quality which also helps them stand out from the competition and thus becomes a status symbol for its customers.

Place Strategy of Starbucks

The place and distribution strategy is a component of the marketing strategy that plays a vital role in the success of any business. The location where the business runs its operations is a crucial factor.

Starbucks’ place strategy has played a huge role in the success of the chain stores.  It has more than 30,000 stores in around 83 countries across the globe. Starbucks offers the maximum number of its products at its stores. However, they also have the following chains of distribution for their products.

• Coffeehouses
• Retailers
• Mobile applications
• Starbucks highly focuses on the design and environment of its coffeehouses where customers enjoy a premium experience. They open their stores at “it” places like Malls and Popular Markets.
• Starbucks also sells its merchandise with different brands and retailers
• The company also has an e-commerce presence integrated with e-payments. Customers can easily order their coffee from the Starbucks app and pick up their order from the store.

Starbucks in India also collaborates with food delivery partners like Swiggy and Zomato. Customers can order their coffee from these apps and get easy delivery to their homes.

Promotion Strategy of Starbucks

The promotional strategy refers to the unique blend of advertising, sales promotion, public relations, social media, and e-commerce used to promote a product. The promotion strategy is a part of the marketing mix that refers to informing, persuading, or reminding target audiences about a company’s products.

Starbucks promotes its products through the following mediums:

• Advertising
• Offline
• Online
• Social media
• Sales promotions
• Word-of-mouth marketing.
• Starbucks promotes its products via both offline and online mediums of advertising.

It uses big banners for the promotion of its beverages and ongoing offers. The Starbucks marketing team regularly runs different ad campaigns on online advertising media platforms like Google ads and Facebook ads. 

Starbucks is highly active on various social media platforms like Instagram, Facebook, Twitter, Snapchat, etc. The company promotes its products on each platform with very deliberately designed images and videos that easily connect with its audiences. It also provides many offers at its coffeehouses. They also issue discount coupons in collaboration with payment apps. All of these are sales promotion incentives.

Word-of-mouth marketing is the strategy in which your existing customers become the biggest promoters of your brand. Starbucks’ brand image helps immensely in this regard. By focusing on customer relationships and customer satisfaction, they have been able to successfully bank on consumers’ recommendations. The chain of recommendation from one customer to another is the strategy that boosts their sales organically.

Traditional Marketing Strategies of Starbucks

1. The Red Cup Campaign: Every year during the holiday season, Starbucks introduces its iconic red cups with different designs and messages. The campaign aims to create a festive mood and celebrate the spirit of giving.

2. The Frappuccino Happy Hour: In 2010, Starbucks launched a promotion that offered half-price Frappuccinos from 3 to 5 pm for two weeks. The campaign generated a lot of buzz on social media and increased sales by 17%.

3. The Tweet-a-Coffee: In 2013, Starbucks partnered with Twitter to allow customers to send a $5 e-gift card to their friends by tweeting “@tweetacoffee” and their friend’s username. The campaign was a success as it generated more than 27,000 tweets and $180,000 in sales.

4. Charity Campaign: When we combine charity and customer engagement with any social media platform – the empathy-stuck success is always assured. And, Starbucks pulled the right string. Starbucks donated to FourSquare, an AIDS awareness organization. Every time someone checked into one of their coffeehouses in the US and Canada, $1 would be directly donated to them. Then, Starbucks set a limit of $250,000 on its donations during this campaign. Before that, they donated around $10m to the RED charity’s fight against AIDS movement.

Initially, Starbucks’ marketing mix in India was segmenting consumer markets on a socio-economic basis. Concentrating on working professionals and their need for a soothing workspace. Starbucks also segments its market on a geographic and demographic basis by setting up stores where they can find its target audience mentioned above.

Most companies enter a new market by focusing on a single segment, and if they happen to achieve some success, branch out into more segments. Starbucks did the same and now caters to teenagers and young adults as well, by developing its product range and social media marketing presence. Starbucks’ marketing mix has helped the brand develop a unique market position for its products, where it’s about the brand’s overall differentiated experience. They have positioned themselves as a highly reputed brand.

Digital Marketing Strategies of Starbucks

Starbucks coffee logo:

Starbucks knows its audience is technologically advanced, which makes it imperative for them to have a strong digital marketing strategy. It’s clear how Starbucks prefers marketing on platforms where they have two-way communication instead of platforms like print and television which are more of one-way communication.

• Instagram – 248K+ followers
• Facebook – 1.1M+ likes
• Twitter – 161K+ followers
• Starbucks posts daily on its social media handles and comes up with challenges and games to engage its customers and increase its fan base
• The posts and engagement are consistent through all platforms and believe in creating an experience as compared to just a promotion channel

The recent Flipkart-Starbucks Twitter battle was an example of how active and fun a brand like Starbucks is and shows exactly why the brand is sought after by its target audience, especially the millennials. Outside of campaigns, they show numerous images on their platforms of friends and family enjoying drinks of Starbucks coffee together, interspersed with high-quality content that promotes seasonal products. By doing this, Starbucks has integrated itself into consumers’ social life.

Most people are familiar with Starbucks on social media. The company’s many social media accounts are known for their distinctive branding, interactive posts, and visually pleasing content. The diverse range of content includes recipes, photography, articles, and features. But there’s more than meets the eye. The stream of content can be broken down into a series of campaigns geared at creating a greater sense of brand awareness and community.

Community-based campaigns:

#RedCupArt campaign

Another facet of Starbucks’ digital strategy is its emphasis on highlighting individuals and communities. Take a look at the #RedCupArt campaign, which not only increases engagement but also provides them with a library of UGC content. They use storytelling to show acts of courage and kindness in American communities, localizing the content.

Starbucks puts in conscious efforts to humanize the company by sharing stories on their account which highlights the employees who play an essential role especially when consumers are distrustful of big brands. This sense of community also makes online coffee content social, very similar to how they practically invented the modern coffeehouse culture back in the day.

SEO Strategies- Starbucks has a website with a domain authority of 44. The website ensures complete user-friendliness and is easy to navigate.

Top 5 Competitors of Starbucks

1. Dunkin’ Donuts is a chain of coffee and baked goods restaurants with over 9.5 thousand stores in the USA.
2. Costa Coffee is the second-largest worldwide coffee shop behind Starbucks and the leading coffee shop in Europe.
3. McCafé, the dedicated coffee shop brand introduced by McDonald’s and expanding internationally.
4. Peet’s Coffee, Caribou Coffee, and Pret a Manger, are brands owned by JAB that put considerable pressure on Starbucks.
5. Tim Horton’s, Lavazza, Yum China, Café Coffee Day, Folgers, Maxwell House, and The Coffee Bean, are other coffee shops and coffee product brands that compete with Starbucks.

Some Failed Campaigns of Starbucks

1. #RaceTogether:

Perhaps the most scandalous Starbucks marketing campaign, Race Together, started with CEO Howard Schultz pointing out the importance of the conversation that should surround race issues. That ended up in the initiative of evoking a conversation with the Starbucks barista. Each cup had the #Racetogether written on it to encourage customers to talk about these issues with the barista.

The idea seemed noble, however blindly stupid. If you’re a customer, you probably don’t have the time or the motivation to discuss 400 years of oppression while paying for your latte. If you’re a barista, you’re in the same situation just as you’re making the latte. And there’s a line behind you, and it’s 8 am. I mean… What were they thinking?

The campaign hit a backlash on social media and was terminated in six days. 

2. #SpreadTheCheer

The #SpreadTheCheer social media campaign was introduced in time for Christmas. All it called for was to spread cheerful holiday messages to everyone. As it happens with Starbucks, they went a bit further than your usual Twitter campaign would go – they broadcasted #SpreadTheCheer tweets live on the wall of the ice rink at the National History Museum. It was part of the deal for sponsoring an event at the Museum.

Unfortunately, the timing was absolutely off. They introduced the campaign after they had cut wages for some employees and apparently had not been paying the corporation tax in England in full. So you can see how the thing would have backfired. In short, the hashtag was hijacked by angry users and used to confront the company on taxes, maternal leave, wages, and whatnot. 

3. Every name’s a story

In 2020, Starbucks launched an ad to support its transgender customers. Promoting the hashtag #WhatsYourName, the advert follows a young man called James. The 90-second advert follows him throughout the day as he’s continuously referred to as “Jemma” and clearly struggles with his identity.

It ends with James walking into a branch of Starbucks and being asked what his name is. The smiling boy responds with “It’s James” before the name is written on his cup. Things round off as the words “Every name’s a story” appear on the screen.

The ad itself is great, but what followed was not so positive for the brand. In a wave of controversy, former and current Starbucks employees went to Twitter to expose the latent transphobia within the company’s rank. Stories ranged from refusing requests for gender reassignment surgery to simply changing your name on a company login. 

Better Campaign Suggestions for Starbucks

1. Starbucks INDIA, like Starbucks US, can provide colorful coffee glasses throughout the month of Diwali, much as they do during the holiday season in the US.
2. Starbucks can sell coffee at a 50 percent discount on any national or festive day in any country. It generates the impression that an international brand accepts the culture of the place in which it operates.
3. Starbucks might also prioritize social responsibility and sustainability by lowering its environmental effects, helping local communities, and donating to charitable organizations.

Conclusion

After taking a hard look at all 4Ps strategies of the marketing mix of Starbucks, we conclude that the Starbucks Corporation is a successful chain of coffeehouses around the world that excels at its marketing. Starbucks has maintained its product quality and brand image efficiently over many years. It opens its stores at places that are engaging and attractive to its targeted audiences.

Starbucks maintains its unmatched presence via public relations through social media where they actively engage with their target audiences that are the best promoters of their brand. All in all, Starbucks surely has a well-rounded, all inclusive marketing mix that still continues to be perfected.

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