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Running head: MARKETING STARBUCKS 1 
Marketing Starbucks 
T.L. Dashner 
UOP MKT/571 
August 27, 2014 
Mr. Mitch Korolewicz...
MARKETING STARBUCKS 2 
Marketing Starbucks 
In this document the market segmentation of the Starbucks with its target mark...
MARKETING STARBUCKS 3 
The Early Years1 
During the early years, Starbucks targeted affluent customers, well-educated cons...
MARKETING STARBUCKS 4 
McDonald’s and Dunkin Donuts. (2.) The company continues to 
focus on its original product bundle t...
MARKETING STARBUCKS 5
MARKETING STARBUCKS 6 
Psychographic. Psychographic segmentation splits the market into customer groups according to 
life...
MARKETING STARBUCKS 7 
Geographic and Behavior Characteristics. Howard Schultz (“Howard Schultz: 
Redefining the Role and ...
MARKETING STARBUCKS 8 
Conclusion 
This document has charted the marketing endeavors of Starbucks both nationally and 
glo...
MARKETING STARBUCKS 9 
its growth globally and its marketing dynamics is just one factor in the mix that makes that 
happe...
MARKETING STARBUCKS 10 
References 
Our Heritage | Starbucks Coffee Company. (n.d.). Retrieved August 19, 2014, from 
http...
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Starbucks positioning

  1. 1. Running head: MARKETING STARBUCKS 1 Marketing Starbucks T.L. Dashner UOP MKT/571 August 27, 2014 Mr. Mitch Korolewicz Author Note This document charts the marketing endeavors of Starbucks both nationally and globally.
  2. 2. MARKETING STARBUCKS 2 Marketing Starbucks In this document the market segmentation of the Starbucks with its target market, demographic, psychographic, geographic, and behavioral characteristics are discussed in detail. A positioning statement for the company with careful consideration of its brand strategy is underscored and evaluated for success or failure in today’s global markets. What Starbucks is all about Starbucks has a fairytale beginning. It all began with a fresh brewed cup of coffee in Seattle, Washington in 1971. Starbucks (“Our Heritage | Starbucks Coffee Company,” n.d.) had a single store in the city’s historic Pike Place Market. The name, Starbucks, inspired by the classic, Moby Dick, induced the mystery of the high seas and the seafaring ways of the early coffee traders. Howard Schultz (current CEO) in 1981, walked into a Starbucks store and took a sip of the rich flavored Sumatra and became a believer. Schultz came aboard a year later. Schultz traveled to Italy in 1983 and became mesmerized with Italian coffee bars. He brought the Italian coffeehouse experience to the United States. He hoped that Americans would come to know it as a place for friendly chats and a sense of community—the number three place between the office and home. Schultz left Starbucks to start his own coffeehouses but returned in August 1987. He hoped, with the help of investors, to purchase Starbucks. From the beginning, Starbucks differentiated itself as a special kind of company—one that celebrated good coffee and brought a real sense of connection and community. In 2014, with more than 21,000 stores in 65 countries, Starbucks is the top tier roaster and retailer of specialty coffee in the entire world.
  3. 3. MARKETING STARBUCKS 3 The Early Years1 During the early years, Starbucks targeted affluent customers, well-educated consumers, white collar groups, and ages 25-44. As time passed by, Starbucks realized that opportunities for expansion also existed in a number of other market segments. The company stretched its target market to include younger, less-educated, and low-income customers. Starbucks discovered that a large segment of coffee connoisseurs lived in urban areas of America. Urban areas contained a higher number of educated, working professionals who were looking for that “third place” between work and home. Later Starbucks discovered that it could appeal to just about every age group. Starbucks reached beyond its initial target group and found success in rural areas, ethnically diverse neighborhoods, kiosks in grocery stores, and with multiple stores in single cities. According to a Forbes article dated April 25, 2013: Starbucks rode the baby boomer trend in the 1990s, the swelling ranks of mid-age professionals that created the need for a ‘third place,’ an ‘affordable luxury’ where people could share and enjoy a cup of coffee with friends and colleagues, away from work and home. The chain has inserted itself into the American urban landscape more quickly and craftily than any retail company in history, and has forever changed the way Western companies market themselves to consumers, with a four-fold strategy: (1.) Right market segmentation. The company has stayed with the upper-scale of the coffee market, competing on comfort rather than convenience, which is the case with its closest competitors,
  4. 4. MARKETING STARBUCKS 4 McDonald’s and Dunkin Donuts. (2.) The company continues to focus on its original product bundle that includes good coffee, quality service, and a nice environment to hang around. (3.) A superb leadership. Company founder, Howard Schulz, who continues to come up with innovative products to expand the company’s product portfolio, leads Starbucks. (4) China expansion. As is the case with the Japanese, Chinese people live as extended families in small houses. This means that there is a strong demand for Starbucks as a ‘third place.’ Last year [2012], Starbucks opened 500 new stores in China, bringing the total to 1500 (Mourdoukoutas, 2013, para 3). Starbuck Market Demographic. Coffee in America is a mainstay. There are two legal drugs in America that are purchased every morning, noon, and night in America: Caffeine and Sugar. Starbucks supplies both at the demand of every customer for a upscale coffee and sweet-roll. In fact, “fully 60% of all U.S. households use either whole or ground coffee beans at home. The average U.S. household that uses whole or ground coffee consumes 4.2 cups per day. In total that’s about 280.5 million cups of coffee consumed at home by Americans each day or about 102 billion cups per year. 13% of American Adults go to Starbucks. Starbucks consumers are 11% more likely to be registered Independents and 11% more likely to be registered Republican.” (“Demographic and Preferences of Coffee Drinkers in America | Marketing Forward,” 2009, par. 1),
  5. 5. MARKETING STARBUCKS 5
  6. 6. MARKETING STARBUCKS 6 Psychographic. Psychographic segmentation splits the market into customer groups according to lifestyles. It considers influences on purchasing behavior, including attitudes, expectations, and activities of customers. If these attributes are discovered, then marketing campaigns may be customized to customer motivations. For example, lifestyle patterns and customer behavior may change through different stages of life. Customer opinions, views on the environment, and cultural ideas have a large impact on the merchandise they purchase, such as a demand for organic foods and soft on the environment. Mainly, Starbucks customers have college degrees with advanced incomes who like a gregarious atmosphere. Starbucks focuses on only one group: the gourmet coffee drinker and expands its product to keep that segment interested.
  7. 7. MARKETING STARBUCKS 7 Geographic and Behavior Characteristics. Howard Schultz (“Howard Schultz: Redefining the Role and Responsibility of a For-Profit, Public Company | Starbucks Newsroom” (2014, August 21), has stated that a more disciplined, data-driven approach to store openings have shown very different results over the past two years. In short, he said that the store openings of 2011 and 2012 had produced some of the best sales in the history of the company, with a sales–to-investment ratio of 2:1, very strong compound growth, and average per-store volumes at record levels. Starbucks started using GIS technology and data in the late 1990s. In regard to consumer behavior, customers decide on a particular brand based on its functionality, emotion connection or both. The functionality of the brand is important to customers, but they also select a particular brand because customers can express their personality or social status. Starbucks prices for its products are on the upper end of pricing. Loyal customers have no problem paying the premium price without much information about alternative brands. Starbucks wants its customers more involved in its products and does this in several ways: (1.) Starbucks is marketed as a status item and has more economic, psychological, and social risk than, say, off brand coffee or less expensive coffee from McDonalds. (2.) The company uses a number of campaigns, like offering new products, coffee flavors, or sample pastries. This is a positive use of customer behavior theory that predicts customers may change buying habits just to try something new. Starbucks Positioning A positional statement or brand strategy, is a corporate declaration which clearly defines its place in the market. With a target audience in view, it describes not only the primary benefits of the company’s product, but also differentiates the company from competitors, essentially sketching a picture of how the company wants its customers to perceive and relate to its brand.
  8. 8. MARKETING STARBUCKS 8 Conclusion This document has charted the marketing endeavors of Starbucks both nationally and globally. More specifically, it has documented the market segmentation of the Starbucks with its target market, demographic, psychographic, geographic, and behavioral characteristics are discussed in detail. A positioning statement for the company with careful consideration of its brand strategy is underscored and evaluated for success or failure in today’s global markets. At a time when many companies are cutting benefits, Starbucks has invested in its employees by spending $250 million in healthcare benefits for eligible full and part-time employees, sharing $234 million in pre-tax stock gains with partners, and matching $50 million in 401(k) contributions. Since the company started offering equity to partners in 1991, it has shared more than $1 billion in value in the form of stock with its stakeholders. Starbucks is poised to sustain
  9. 9. MARKETING STARBUCKS 9 its growth globally and its marketing dynamics is just one factor in the mix that makes that happen.
  10. 10. MARKETING STARBUCKS 10 References Our Heritage | Starbucks Coffee Company. (n.d.). Retrieved August 19, 2014, from http://www.starbucks.com/about-us/our-heritage Mourdoukoutas, P. (2013, April 25). Starbucks And McDonald's Winning Strategy - Forbes. Retrieved from http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-and- mcdonalds-winning-strategy/ Demographic and Preferences of Coffee Drinkers in America | Marketing Forward. (2009, December 1). Retrieved from http://www.experian.com/blogs/marketing-forward/ 2009/12/01/demographic-and-preferences-of-coffee-drinkers-in-america/ Howard Schultz: Redefining the Role and Responsibility of a For-Profit, Public Company | Starbucks Newsroom. (2014, August 21). Retrieved from http://news.starbucks.com/2014annualmeeting/howard-schultz-2014-shareholders-speech
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Graduate paper for MKT/571 UOP

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