Starbucks Marketing Mix (4Ps)

Starbucks Marketing Mix (4Ps)

StarbucksMarketing Mix (4Ps)

StarbuckCompany is one of the leading coffee chains in the globe. As at June2015 Starbucks had 21878 stores in different locations around theglobe with more than 14,000 in America (Starbucks Inc., 2015). Closeto half f the stores are owned by the corporation while the otherhalf is licensed to different entities in various parts around theglobe (Starbucks Inc., 2015). Over the years Starbucks Company hasmade deliberate efforts to make their stores a great place forcustomers to relax, meet with other people and have a good time(Patterson,2010).The company commenced its operations in 1971as a coffee bar inSeattle and ss at 2015 Starbucks was the largest coffee retailers inthe globe with operations in more than 60 states (Starbucks Inc.,2015). On average, the company’s employee commonly referred to aspartners help the Starbucks sell more than 2 billion cups of coffeein a calendar year (Starbucks Inc., 2015). Starbucks coffee companymarketing mix has played a key role in not only supporting the firm’sposition in the industry as the number one coffee retailer in theglobe but also achieves its short-term and long-term goal (Patterson,2010).This paper will provide comprehensive elements of Starbucks marketingmix.

Product

Toprovide a first-class product in the coffee and retail industry,Starbucks strives to provide high-quality coffee. This is attainedthrough the provision of innovative products and offering exceptionalservice that is combined with memorable experience (Patterson,2010).To ensue the best coffee is sold to customers, Starbuck coffeepurchases travels to coffee plantation in Africa, Latin America andAsia to choose the best quality coffee beans. These are used in thecompany’s roasting plants, where specialists ensure a balance of inflavor (Starbucks Inc., 2015). Through innovation, Starbucks hascontinued to introduce new products in the market to capture moremarket share. At the moment Starbuck provides the followingcategories of products:

  • Coffee

  • Tea

  • Smoothies

  • Frappuccino beverages

  • Pastries and

  • A variety of merchandise (cups, and instant coffee)

Starbucksproduct mix has been extended from the original eight key categoriesof drinks and seven food types to numerous categories to keep pacewith the changing consumer preferences and needs. Starbucks hascontinually introduced new products in the market to keep thecustomers happy and satisfied. Some of the most conspicuous productsinclude VIA flavored coffee, Tazo tea, Frappuccino coffee, Starbuckscoffee, and ice zongzi. The Tazo tea was introduced to catch theattention of tea drinkers in United States, Canada and other overseacountries such as China where the consumption of tea is very high(Rahmanietal.2015). Starbucks has also provided a special category of nonfat milkto meet specific customer needs in their stores across the globe.There are also seasonal offerings such as Frappuccino cream in thesummer and ginger loaf during the festive season, particularlyChristmas (Rahmanietal.2015).

Starbuckshas also made frantic efforts to guarantee brand richness. One of themost important moves has been to put in place a quality andingredient control and to ensure that all the firm’s workforce arealways drawn in and sentient of its overall objectives and mission(Starbucks Inc., 2015). Starbucks area of expertise is its“specialty” to redress specific customer needs. For example,China is well known for its tea history and deeply-rooted practicethat goes past five hundred years (Starbucks Inc., 2015). The companyhas adopted a localized brand of coffee and tea to fit the traditionand needs of its market segment in China and other Asian nations. Forexample, the most recent localized tea brand ‘go glocal’ has beena favorite of many Chinese (Rahmanietal.2015). Besides, Starbuck had recognized that coffee alone cannotachieve the intended goal in the Asian market without food. In thislight, Starbucks introduced ‘ice zongzi’ and releasing localproducts in Asian countries with different tastes that match withcustomers touch (Rahmanietal.2015).

Starbucksprovides over 100 different categories of coffee beverages (StarbucksInc., 2015). Many of these coffee beverages are designed n a mannerthat they have tastes that customers in the local market in questioncan identify and value. From concocted coffee to Frappuccino blendedbeverages Starbuck gives a broad variety of drinks to customers, andthis provides a platform from which everyone’s needs and tastes aremet. On average every Starbuck shop provides 15-30 different kinds ofcoffee beverages and this has been the key strategy in its marketingmix that has given Starbuck an edge over other brands in the marketboth in the United States and abroad (Starbucks Inc., 2015). Themajority of Starbucks coffee shop provides a traditional menu made upof filtered coffee, cappuccino, mocha, latte, americano andmacchiato. These categories have different tastes and are dressedwith unique dressings.

Price

Normallythe quality and price of a given product is what determines its valuein the market. Starbuck has put remarkable effort to offer high-valueproducts to their clients in various parts around the world(Starbucks Inc., 2015). Starbucks attains this significant milestoneby buying high quality coffee beans from farmers and making sure thatthe workforce has efficient and effective skills and training to makethe an excellent products that meet the needs and preferences ofcustomers (Hines,2008).More importantly, Starbuck has created a conducive environment in thecoffee shop where customers can enjoy and have a good experience.Ultimately Starbucks clients have to cover for this cost and hencethe company’s products are more expensive than that of theircounterparts in the retail industry. To maintain a competitive edgein the retail business, Starbucks initiated a program where customersare offered $1 bottomless cup of coffee that can be refilledcountless times and 50 cents below the standard price charged forother Starbuck products (Hines,2008).Based on the information provided on the company website, Starbucksis rolling up a program to execute other value added services suchas, launching the $3.95 breakfast pairings that also encompassesbreakfast items together with coffee (Rahmaniat al. 2015).This is a strategy that is meant to appeal to customers who areconscious of the high price that Starbucks charges for its productsin the coffee shops.

Inmarkets in the Asia and Africa, Starbuck brand is a luxury for theselected few in the society with the monetary ability to pay forhigh-priced coffee and tea. For example, Starbuck does not decreasethe price of coffee in China and other markets in the world. This isprecipitated by the fact that coffee is not grown in large scale,especially Arabica that forms the main ingredient for Starbuckscoffee products, meaning coffee demand is still very high (Rahmanietal.2015). Nonetheless depending on the location and cost of acquiringmaterials used to make the final product, Starbucks adjust pricesaccordingly (Chalisa&amp Mahāwitt, 2014).For example, a latte that costs a person in America $4.5 s sold at$3.5 in the Chinese market. This is precipitated by the fact thatmaterials used to prepare such products are imported in America butare acquired in the local market in China. Conversely, a “grandelate” costs about $3.75 in the United States and $4.1 in China forthe reason aforementioned (Rahmanietal.2015). It is also important to note that some of the prices inforeign nations are different from that in the U.S as a result ofcurrency fluctuation. These are some of the main justification forhigher prices for Starbucks products, and they depict the way thatpricing strategy has been used to support the company’s productsimage in the market (Rahmanietal.2015).

Starbucksemploys a premium pricing approach. This means that Starbucks takeadvantage of the customer behavioral predisposition to buy morepricey products on the grounds of supposed connection between highprice and quality and great value (Stokes&amp Lomax, 2013).As aforementioned, Starbucks coffee is relatively more expensive ascoffee from other competitors in the retail industry such as McDonald’s. Even so, the firm has maintained this risky pricingstrategy to support its specialty image (Chalisa&amp Mahāwitt, 2014).This has formed the core of Starbucks marking mix, and it correlatesdirectly to its generic strategy, and evidently it has played acrucial role in helping Starbucks maintain its brand image (Stokes&amp Lomax, 2013).

Thecompany’s pricing approach is pegged to value, quality, anddifferentiation. The company provides products of high quality andoutstanding services to clients, and hence customers are willing andready to incur an extra cost for great value, better quality, andservices (Chalisa&amp Mahāwitt, 2014).The pricing strategy is meant to differentiate Starbucks from otherfirms in the business. On the whole, Starbucks is a well-builtinternational brand positioning itself as a coffee connoisseur, andits products are priced is aligned to match the upscale imageconnected to the brand (Stokes&amp Lomax, 2013).

Place

Byand large, Starbucks supply chain can be described as direct(producer to final consumer). In the line of business in the retailindustry that Starbucks operates, such a direct supply chain ispivotal as it helps the company maintain a close and personalrelationship with its customers in the local market and abroad(Chalisa&amp Mahāwitt, 2014).In the United States particularly, the company coffee bars can befound in any neighborhood where there is a high- traffic of people.Coffee bars can also be found in numerous big chains stores. Theprincipal objective is to establish the stores in highly noticeablesettings. Such locations are ideal for customers who are on the go,and those that are out for a break in their busy lifestyle (Chalisa&amp Mahāwitt, 2014).

Byopening stealth outlets, where the names of the streets are usedrather than the name of the company, the firm has aimed to advancetheir localization strategy. In such locations Starbucks has alwaysmanaged to cope up with the high-traffic of people, while ensuringcustomers needs and preferences are attained (Chalisa&amp Mahāwitt, 2014).This is one of the aspects that have given Starbucks a competitiveedge over the other competitors in the industry. It is important tonote that Starbucks has spent enormous sums of money in training itsworkforce to serve customers better and ensuring client satisfaction(Stokes&amp Lomax, 2013).In oversea market, Starbucks stores have the same features as thosein the United States, although they also strive to maintain a balanceso that they concur with local culture. For example, in ChinaStarbucks had to position its coffee bars in exposed areas sincemajority of Chinese have a negative reaction towards coffee (Rahmanietal.2015). This means that the coffee bars are predominantly in largecities such as Beijing where residents have been exposed more toforeign elements vis-à-vis those in the suburbs. In open economiesin Europe, the stores are in a location with high traffic of peopleso as to be visible to as many people as possible. Most of the firm’sproducts are offered through the Starbucks cafes (Stokes&amp Lomax, 2013).This element of the marketing mix determines the locations at whichthe clients can access the firm’s products line. In the case ofCoffee, these are the main outlets for the distribution of Starbucksproducts.

  • Cafes

  • Retailers

  • Starbucks APP and

  • Online store

Formany years the company has been selling its products through cafes,but after the arrival of internet and development of onlinemarketing, the company now provides some of its products via theonline platform (Stokes&amp Lomax, 2013).Also, some of the merchandise is sold through retailers, and thecompany’s app enables clients to place orders. The company hasadapted accordingly to changing environment and technology so as notto lose market share to competitors in the market.

Promotion

Formany years advertising has formed an important but not critical rolein the company’s marketing mix strategy. The primary strategy forStarbucks is not to spend colossal sums of money on advertisement butto use it to get the best spots in the locations they launchoperations (Stokes&amp Lomax, 2013).For example, while Starbuck has only used an average of $16.6 millionin ads, MacDonald’s has used a whopping $727 million. Starbucksuses large sums of money to organize community events before theyopen an outlet in a given locality (Stokes&amp Lomax, 2013).Through such events, the company is able to highlight the personalityof each location and act accordingly. Such details are embossed ont-shirts and cups product endorsement activities. Starbucks alsocreates a close collaboration with a popular local celebrity whoserves as the firm’s emissary to endorse their brand (Spring,2014).The ‘race together’ events have contributed immensely toexpanding brand recognition and image in new markets in differentparts of the globe.

Starbuckspromotional mix encompasses the following main components:

  • Public relation

  • Advertising

  • Sale promotions

Starbuckshas also used sale promotions, particularly the Starbucks card. Theseare given to treasured customers who have displayed brand loyalty.These not only provide free promotion but they also attract newcustomers. Starbucks also advertises its brands through print media,TV and on the internet. In addition, the company offers its servicesto all forms of business and offices of any size devoid ofrestriction (Stokes&amp Lomax, 2013).This promotional mix has not only improved the brand image of thecompany in the market but has also increased the appeal of thebusiness to diverse people and increased responsiveness in localcommunities.

Conclusion

Themarketing mix that primarily encompasses the 4Ps (product, place,price and promotion) identifies the key elements of the company’smarketing plan. Starbucks employs its marketing mix as a means ofadvancing its brand and reputation. The company boasts of having thestrongest coffee brand in the industry and it has depicted how aneffective marketing mix can play a crucial role in helping an entitymaintain its competitive edge in the market, and make its brand thebest in the world. It is important to note that the company has notbeen complacent over the years but keeps on changing it to enable thefirm to evolve a variety of features to maintain competitiveness.

Starbucksendeavors each day to provide its customers with an experience thateveryone would want to make a routine in the daily lives. This iswhat has enabled Starbucks to create one of the most recognized andesteemed brand in the globe.

References

Chalisa,S., &amp Mahāwitt, T. (2014). Analysis of using marketing strategyof branding starbucks in Thailand. Pathum Thani, Thailand: TheFaculty of Journalism and Mass Communication, Thammasat University.

Hines,N. ( 2008). `Starbucks attacks competition with the $1 bottomlesscoffee` The Sunday Times.http://www.timesonline.co.uk

Patterson,P., Scott, J., &amp Uncles, M. (2010). How the local competitiondefeated a global brand: The case of Starbucks. AustralasianMarketing Journal (AMJ),18(1),41-47. http://dx.doi.org/10.1016/j.ausmj.2009.10.001

Rahmani,K., Emamisaleh, K., &amp Yadegari, R. (2015). Quality FunctionDeployment and New Product Development with a focus on Marketing Mix4P model.&nbspAsianJournal of Research in Marketing,&nbsp4(2),98-108

Spring,C. (2014). Starbucks: Examining Brand Equity Through Effective SocialMedia. JournalOf Purdue Undergraduate Research,4(1),94-95. http://dx.doi.org/10.5703/1288284315471

StarbucksInc. (2015). StarbucksCompany Profile.Retrieved from :http://globalassets.starbucks.com/assets/F62C45CD8A8B4699BEFC60A2618F0431.pdf

Stokes,D., &amp Lomax, W. (2013). Marketing:A brief introduction.S.l: Thomson.