Howard Schultz, Starbucks' visionary leader, has transformed the company one store at a time. With his sound business strategies, the company has achieved market leadership in the specialty coffee industry.
This paper enumerates the different marketing strategies utilized by Starbucks in order to achieve the position that it has held today. It evaluates the different marketing mixes that contributed to the success of the company. The paper focuses on the product & services positioning strategies, pricing strategy, distribution channels and promotion strategies.
In order for a business to grow and achieve market leadership, it must create a strong market orientation. The company must seek to understand the customer needs and develop its marketing strategies in response to those needs. The strategies should aim at attracting, satisfying and retaining target customers. (Best, 1997)
When Starbucks initially started, their product portfolio includes dark-roast, whole bean coffee and manual coffee pots and equipments. The company is in the retail business of offering their products to customers who like to brew at home. Their target market is the people from Seattle who are educated on fine coffees. These are type of people who love quality brewed coffees.
When Schultz joined Starbucks, he envisioned the company as becoming the Third Place. The Third Place is considered as the place between home and work. The company was now engaged in serving coffee to customers similar to Italian espresso bars. It is in this stage of the company's life cycle that their target customer also includes people who are educated with college degrees and high annual income. The market segment responded positively to the Starbuck's marketing strategy such that the company grew rapidly.
Schultz and his management team strategically positioned Starbucks as a strong brand that not only spells quality coffee beverages but also a unique experience in which the customer longs for and competitors cannot match. The company tagged this experience as the "Starbucks experience." (Sinha, 2007) The company focused on creating customer loyalty and gaining bigger customer base through product quality, service quality and image quality. Starbucks has positioned itself as the leader in retailer, roaster and brand of specialty coffee in the world. (Annual Report, 2007)
Products and Services
The goal of product positioning is to attract the target customers and to create a good source of cash flow for the business (Best, 1997). Therefore, a key factor in the success of product positioning and marketing mix strategies is achieving a certain level of market share. Product positioning involves product line strategies, branding strategies and new product developments.
Starbucks' original product lines of specialty coffee beans and brewing equipments have expanded to include several coffee beverages, Frappucinos, CDs, and even movies. From an early positioning strategy of becoming the Third Place, the company has aimed to build Starbucks into a destination. All of its products support the foundation of the Starbuck's coffee experience that the customers have come to love and enjoy.
As the company expands globally, Starbucks has created strong brand equity that lends a competitive edge. The brand Starbucks has become the company's core strength that has built a reputation for the quality of its products and consistent customer experience (Datamonitor, 2009).