Integrated Marketing Plan: Starbucks - Essay Example

? Integrated Marketing Plan Company Background Starbucks is a global coffee house.It is present in more than 50 countries with over 17000 stores worldwide. Starbucks started off as a single store in Seattle. Since the start of its journey, Starbucks has embarked on the path of expansion. Though the company specializes in coffee but it has managed to integrate other products as well with the changing consumer needs and changing social trends. Starbucks follows the Italian tradition and tried to bring the Italian tradition of coffee to United States. According to the Italian tradition coffee houses are like a place for conversation and that provides the customers with a sense of community. From the very beginning Starbucks has been a very different company. The company has not only celebrated the coffee and rich tradition but also successfully brought a feeling of connection. The company endeavors to bring an exceptional experience to the lives of its target market (Clark, Taylor 2007; Starbucks Corporation 2011) Starbucks coffee is a globally acclaimed coffee brand. The brand boasts about its quality and charges a high premium based on this product attribute. The famous coffee brand is in its maturity stage. Many competitors have entered the marketplace when they saw the first coffee house growing. Quality and high prices are not just the only attributes of the product of Starbucks Coffee. Starbucks coffee is of high quality and it is ensured that there is a consistency of quality and taste throughout the globally operating chain (Bussing-Burks, M. 2009) It is because of its high quality that the brand charges a high premium for its products. There are several other product attributes, other than the price and quality that contribute towards the image of the products offered under the brand name of “Starbucks”. Target Market Starbucks’ target audience mainly comprises of the upscale coffee drinkers. The coffee chain provides an opportunity to its customers to take a break from the busy and hectic lives and spend some time in a relaxing atmosphere. Starbucks has a very well defined target audience. It has a target market in each age segment whether its adults, young adults or kids and teens. The primary target market of Starbucks consists of men and women aged between 25 to 40 years from urban areas and usually with high incomes. This target segment accounts for almost half the sales of the Starbucks. In order to appeal this target audience Starbucks works keep its products current and position them in such a way that they become a status symbol. Then comes the target market of young adults aged between 18 to 24 years. This segment accounts for 40 percent of the sales of the company. This target audience looks up to Starbucks because it positions itself as place where college students can hang out and socialize with new people. Starbucks appeal to this consumer segment by introducing new technology and by projecting a cool image of the brand. A current example of new technology would be the installation of Wi-Fi that the company has managed to introduce in all its stores. It makes it easier for the students whether they want to hang in there and work on their projects or it can be that they just want to hang in there to enjoy the coffee. The relaxing atmosphere provided by the Starbucks stores is an appealing factor to both the adult and young adult target audience. Now moving to the third target market segment that Starbucks is serving, comprising of kids and teens aged between 13 to 17 years. Though this segment is not large and accounts for only 2 percent of the total Starbucks sales, but still the company focuses on this segment. The main reason for the focus is that it is mainly the parents who purchase items for their kids. There are several products that Starbucks has just made for the kids and teenagers. Starbucks do not target the kids segment directly but it does make sure that its products are kid-friendly. The company also offers special child sizes in order to attract the kids (Starbucks Corporation 2011) Starbucks has formed a strong brand image in the minds of its target audience. It has used the selective specialization, product specialization and market specialization techniques for selecting its market segments. Target audience of Starbucks trusts the brand and associates it with high quality. There are certain requirements that the target market has from this famous brand as they look up to it with great admiration. The store has created a sense of convenience in the minds of its customers. Almost where ever they go, especially in United States they’ll found a Starbucks franchise within the respective vicinity. This means that there are several places still left that do not cater to the target audience. These places do not have a Starbucks franchise and customers have to travel a greater distance in order to enjoy the Starbucks coffee experience. The fortunate thing is that such customers do not hesitate in traveling because they believe that having a Starbucks’ cup of coffee is worth traveling such distances. No wonder Starbucks has been able to acquire a large number of loyal customers through its service and quality since 1971. Convenience is just one of the few factors that target audience requires from the company. Other factors include new products, latest technology, customer feedback and fulfillment of the customer needs. The target audience of Starbucks requires it to fulfill their needs in the best possible way. They want that with their changing needs and wants Starbucks mould its products and services. Especially from the point of view of the young adults who want new technology, Starbucks need to incorporate the latest technology in its procedures and also provides its customers with the latest technology. They have managed to provide the Wi-Fi technology to its customers so that they can work and have a good time simultaneously. Starbucks is a globally renowned brand. There are several countries that lack the presence of Starbucks Coffee. These countries do have the relevant target market of the Starbucks coffee have yet not been exploited. The unexploited target audience requires from the company that it should try to cater to their needs as well by opening up franchises in the relative countries. Last of all is the most important requirement by the target audience that is customer feedback. Target segments of the Starbucks Coffee have an urge of interacting with the company. They believe that this way they can voice their opinions and guide their favorite coffee brand how to give the best quality and service to its customers. Plus the target segments believe that if their voice is being heard it gives them a sense of prestige. It makes them feel more positive about the brand and has a positive impact on their purchasing patterns and attitudes. The company connects with its customers in a culturally relevant way (Starbucks Coffee Company 2011; Starbucks Corporation 2011) Brand Strategy in relation to the Target Market Starbucks has a very well defined target audience. It has a target market in each age segment whether its adults, young adults or kids and teens. The founder of the coffee house wanted to fulfill the needs of all its target audience (Schultz, H., & Yang, D. J. 1997) The founder wanted Starbucks to be a place where people could take a break from their hectic lives and socialize (Schultz, H., & Yang, D. J. 1997) The company used an aggressive strategy to meet the needs of its target market. It basically came up with three strategies to cater to the needs of the target market. It started off with the strategy of Market Penetration where the company tried to increase its market share for the present products in the present market. This was done through greater marketing efforts. The second strategy used was Market Development where Starbucks explored into new markets. It went global and started offering its products in many different locations across the globe (Clark, T. 2007) Starbucks exploited new target markets in these locations. Thirdly, the strategy that was used by Starbucks to meet the needs of its target market was Product development. Starbucks invested in its Research and Development team and began with the process of innovation. It kept a track of the changing consumer trends, and devised products accordingly (Clark, T. 2007) New products were made and were offered to the current target audience and also to the new markets. These strategies have been mostly used by Starbucks in a combination. For example while following the strategy of Product Development, the company kept on looking for new markets simultaneously which means that at the same time it followed the strategy of Market Development. There are several other strategies but these are the core ones that have been used by Starbucks to satisfy the core coffee needs of its target audience (David, F. R. 1993; Kotler, P., & Kotler, P. 2009) Point of Differentiation Starbuck is fortunate to have a first mover’s advantage in the coffee business. The company not only delivers ready-to-drink coffee to its customers but also provides a range of coffee powders, made from the finest coffee beans from all across the world, to its customers. Starbucks has differentiated itself on the attributes of the quality. For years Starbucks has not only been differentiating itself on the quality of its coffee but also the experience that it gives to its customers. It has developed itself as a place where people can hang out and relax. There are other competitors entering the traditional coffee market but none has been able to give such experience to its customers. This sense of great experience not only gives Starbucks an edge over its competitors but also help in creation of a deep bonding with its customers. The company has also differentiated its products on the basis of the prices that they charge. Starbucks charges high premium because it knows that it is delivering a quality product and service. Despite of the increasing competition, Starbucks has not cut down on its prices and have been able to retain its customers. The name of Starbucks is still in the limelight because people consider it as status symbol. Product Positioning Map Other than quality and high premiums product attributes of Starbucks coffee include taste, richness, features, design, style, innovation and customer service. These together combine to support the brand image. But for the product positioning map, there are two primary attributes that have been focused upon. The first attribute is the innovation and the second attribute is the customer service. Innovation is necessary for the positioning of the product because customer needs and wants change with time and the only way to meet the changing demand is through innovation. Customer service is also a primary aspect of positioning because it always adds value to the customers’ coffee experience at Starbucks. If innovation is not present, then the brand might fail to serve its target market in the long run. It cannot come up with new products and cannot create demand of its new products which simply means that it will fail to make use of the opportunities available. Customer service on the other hand is a very important attribute that can help retaining the customers and attracting prospective. Consumers always want to go for the products that provide with the customer service. Starbucks incorporates both these primary attributes into its products. Starbucks specializes in gourmet coffee and there are several competitors that have entered the market of specialized coffee. Upcoming competitors include McDonald’s and Dunkin Donuts. The reason for choosing these competitors is that they do not charge as high a premium as does Starbucks though the product category is same. Plus these are food chains that provide with many other products as well, whereas Starbucks specializes mainly in coffee. Starbucks heavily invests in its customer service because it believes that loyal customers are the backbone of its success and it is the most effective way of acquiring more loyal customers. For the attribute of innovation, Starbucks has made its own Research and Development team (R&D). The type and level of investment that Starbucks make in its R&D team is notable. It gives a lead to the brand but this gives a direction to the competitors as well because they can wait to imitate the products. Innovation at Starbucks and also the customer service are high. At McDonald’s customer service is high but innovation of the coffee product is low. Dunkin Donuts is low on both the attributes. It is low on the innovation attribute and also the customer service attribute. Following is the product positioning map of Starbucks with respect to its competitors. Customer Service High Starbucks McDonald’s Innovation Low High Dunkin Donuts Low Starbucks is present in the upper right corner of the product positioning map which means that it is both high in innovation and customer service. Similarly McDonald’s is present in the upper left corner meaning that it is high in customer service but low in the attribute of innovation. And finally the Dunkin Donuts which is present in the lower left corner of the map, meaning that the coffee brand is both low on innovation and customer service. Role of Branding Branding plays a major role in creating a meaningful image of the brand. Without the presence of branding, the brand is likely to lose its essence. What the brand exactly wants to convey to its audience cannot be done without this important aspect of the marketing campaigns. The role of branding helps to form a strong and effective brand image. It gives a meaning to the brand, a meaning that can be interpreted by the consumers in a positive manner. Role of marketing communication and branding are said to be successfully fulfilled when the consumers grasp the same meaning of the brand as it has been conveyed to them. If there is a misinterpretation it means that the whole efforts of marketing communication and branding have gone vain (CHARTERED INSTITUTE OF MARKETING. 2005) But first of all there is need to understand the exact meaning of branding. Branding is a branch of the marketing communications because the messages are related to a single brand only and the emphasis is on making use of the every possible opportunity available to impress the customers. Branding is changing the thinking of the consumers about a brand and this need to be done in an optimistic manner. Marketing communications and branding, together deliver messages that help to build up a brand recall in the minds of the consumers (PELSMACKER, P. D., GEUENS, M., & BERGH, J. V. D. 2007) Starbucks has used its brand name and logo to build its brand. The logo of Starbucks represents a mermaid. The reason for using the mermaid as a symbol was that mermaid is a sign of seductive mystery. Starbucks created a mystery amongst its world consumers about its products and provided with a sense that the company will provide with an ultimate and worthwhile experience to its customers through its products. IMC plan Marketing has always been an important issue for Starbucks. Looking at the past marketing trends of Starbucks, the company has always relied heavily on the positive word of mouth. But with the entrance of new competitors, e.g. McDonald’s and Dunkin Donuts, Starbucks changed its way of advertising and started taking it more seriously. Starbucks Coffee is relying very heavily on social influence or viral marketing using networking media such as Twitter, Face book, LinkedIn, YouTube and other sites to do give away promotions, to communicate with followers and to influence consumer choices. Specialty of Starbucks is its coffee. It needs to position its coffee so that competition does not hurt it in any way. Over the last few years Starbucks has discovered the tremendous efficiency of eMarketing techniques. The most significant benefits of using eMarketing; business blogs, email marketing, SEO, business social networking, and Pay Per Click Advertising are the low cost of generating sales leads. When implemented correctly, the return on investment from eMarketing can far exceed that of any traditional marketing strategies.  eMarketing produces more qualified sales leads at less expense than traditional marketing. No specialty coffee business can ignore the role that eMarketing and integrated marketing communications plays in their marketing mix. The Internet is a force that cannot be ignored. For a small business it can be a means to attract new direct and wholesale customers, distributors and reps who are on-line searching for products. Starbucks key of success is the ability to change the concept consumers had about drinking coffee. It has developed a well-integrated marketing program in order to maximize their brand awareness and establish themselves as the most recognized and respected brand in the world and within their target market. Their marketing plan utilizes the four elements of marketing mix to satisfy the needs and wants of its target market. Starbucks product-mix expanded from 30 varieties of whole bean coffees to eco-friendly cappuccino, coffee makers, and other Starbuck equipment. Its product offerings have also expanded beyond pastries and coffee to oatmeal, smoothies, and wraps to keep up with the competition and satisfy more customer needs. The company also offers Starbucks coffee and cappuccino makers for consumers who wish to replace their existing home coffee makers. The company is also implementing "value strategies" that would emphasize more on inexpensive coffee products rather being perceived as unaffordable to price-skittish consumers. As stated earlier, Starbucks can be found in any neighborhood where there is a perceived high traffic for its stores. Starbucks outlets can also be found in-store of various large chains. Their locations are extremely conducive for individuals that are on the go and for those who enjoy reading or listening to music. Starbucks has also been recently testing "stealth outlets", where the store is named after the street it is located on. The new stores attempt to "localize" Starbucks stores with no Starbucks logo on any of the products being offered there, and instead have the specific street address as the brand name. Starbucks has implemented numerous promotions to reach its target markets. One of the promotions that Starbucks has used is the Starbucks Card. Starbucks Card is an initiative that offers customers the opportunity to promote company's products through a referral system. When a customer purchases a gift card, it not only shows brand loyalty, but it also provides the company with free advertising, and brings in new customers. Starbucks also provides a card for corporate sales, which are used for extrinsic rewards to show employee appreciation for a job well done, or a gift to client or a vendor. Coffee services were delivered to offices without coffee size restrictions. Starbucks appealed to a diverse customer base by offering international teas and coffees to accommodate those customers that want a taste from home or for locals that enjoy tea. Starbucks also used philanthropy as a means for promotion - Starbucks contributes to several non-profit organizations as a way to improve brand image and awareness in local communities. Starbucks changed its logo too in order to attract its target audience. This proposal comes up with a new Integrated Marketing Plan which could be used by Starbucks over the next two years. Implementation of this new plan will help Starbucks to tackle the competition faced by it in the coffee industry in a better way. Posters Starbucks can go for the opening of more stores and these stores should serve the coffee products only. Before these stores are opened, the advertising campaign should start 4 to 6 weeks before the Starbucks store actually opens. The first 2 weeks should be used to make the target groups curious. Their attention should be drawn and make them wonder and think about what is going to happen. Also Starbucks should involve them in the whole implementing process. This will be internally referred to as Phase 1. The next 2 to 4 weeks, or Phase 2, the ads will be altered slightly to include more information, such as the date of the grand opening and perhaps a general location. In Phase 3, which will take place 2 weeks before the grand opening, the opening of the new Starbucks store will be revealed. The exact location will be announced. The opening should be made opening really important so that it builds up curiosity throughout the first part of the campaign, and once the audience becomes interested interested, give away the rest. Internet The internet is a good medium to use because the primary target market has proven to be almost completely computer literate. Hotmail is a popular service with the age group and allows segmentation in terms of marketing. When users sign up, they enter their full address. Therefore, it is possible only to place banners on Amsterdam students’ sites. This lowers the CPM (cost per thousand), and effectively targets the primary target market. The banner ads used online will follow the same timeline and look as billboards, only in a different format. This ensures the strength of one single message, rather than confusing consumers with varying messages, which individually would be more difficult to remember. Ads Advertisements placed in school newspapers and other student publications will also be synchronized with the other mediums. The goal is to place an ad in the same part (ideally, the same page) of the paper, changing the insertion based on the phase of the campaign. Whether it is the posters or the internet ads or the print ads, all should focus on the single product and that is coffee. The ads for the opening up of new stores may present with a delicious and tempting cup of coffee but initially do not carry any logo, symbol or name. When the audience gets interested the posters should start appearing with logos etc. Similarly in the case of internet a website for coffee products should be developed by Starbucks. Coffee products not only include the ready-made coffee but also packed coffee and coffee beans etc. These products should be available online for the consumers worldwide so they can purchase coffee products online. Print ads can show different captions. Pictures of different celebrities drinking Starbucks Coffee will be a very strong approach that could be used. Change of Logo Another thing that could be done is that Starbucks can change its logo. It should not change it altogether but make some slight changes to it just as it has been doing since the start of its business. Cost insertion The advertising portion of the marketing plan has a budget of $45,000. This is to be distributed among the three media that have been selected. Billboards will receive the highest portion of the budget as a result of its wide reach, approximately $25,000. The internet ads will have a budget of $10,000, and the remaining $10,000 will go towards print ads. These two allocations are based on cost of insertion (internet is much cheaper than print ads), but also based on reach. Print ads will be reaching a much more specific, targeted audience. Print ads will mostly be placed in the food and fashion magazines. Flighting For all three mediums, posters, internet, and print ads, the flighting will be the same. Due to the nature of the campaigns, whereas they are three phases of the same ads, it is necessary to maintain even flighting throughout the campaign. During the third phase, an additional advertisement will be used with only the relevant information: a logo, address, and an announcement about the grand opening party. These will be placed in the same types of locations as the other ads, but refocuses the audience on the important ‘when and where’ information. References LYON. J (2005) "'think Seattle, Act Globally'." Cultural Studies. 19.1 (2005): 14-34. Print. STARBUCKS CORPORATION. Heritage. 2011 STARBUCKS CORPORATION. Our Company. 2011 < http://www.starbucks.com/about-us/company-information> STARBUCKS COFFEE COMPANY. Starbucks Company Timeline. 2011 < http://assets.starbucks.com/assets/aboutustimelinefinal72811.pdf> STARBUCKS COFFEE COMPANY. 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