Starbucks has been delivering specialty coffee and drinks to the mouths of diverse clients since its humble start at Pike Place Market in 1971. Starbucks began in Seattle, Washington, but in 1996 it went globally into Japan, and just a few years later, it joined the thriving markets of China and Europe. They have since then spread to the Middle East and Africa. Throughout their diverse growth, they have kept their hearts and eyes on the mission they developed from the beginning. Its mission is: ‘to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.’ Starbucks is committed to providing customers with high-quality coffee while being environmentally conscious. They make purposeful steps to reduce their carbon footprint and waste and bring in extra fresh water. Starbucks’ marketing plan can be analyzed under different approaches such as competitive analysis and advantage and marketing strategies.
A competitor analysis, also known as competitive analysis, is the method for identifying and investigating competitors in one’s industry’s various marketing techniques. A corporation can use this information to determine its firm’s strengths and shortcomings concerning each competition. While analyzing competitors, a corporation may discover companies it was previously unaware of or did not believe to be competitors (Stevens et al., 2021). Understanding who their counterparts are is the first step in outperforming them. A careful analysis of what their competitors are offering may also assist them in identifying areas where their market is neglected (Stevens et al., 2021). If companies discover loopholes between what their competitors offer and consumers’ needs, they can take the initiative and develop their own offers to meet those consumer needs.
Therefore, Starbucks can find competitors who produce near-equivalents through category membership. Dunkin’ Donuts, Yum China, McDonald’s, and Peet’s Coffee are just a few competitors. Starbucks’ industry competitors, as measured by factors such as the extent of internationalization, the number of sellers, market dominance, and measure of product variety are Yum China and McDonald’s (IAC, 2020). Looking through the market perspective, rivals are companies that serve the exact client needs, which would reveal to be Dunkin’ Donuts and Peet’s Coffee.
Starbucks has developed numerous strengths over the years. Starbucks has employed a vertical integration approach, which allows the corporation to retain control of the value generated by the production cycle. Starbucks has had considerable success in terms of profitability as a result of this strength. Starbucks has been a learner of its customers, demonstrating its capability to adjust to their tastes and purchasing and consumption patterns. Starbucks’ capacity to create experiences for customers is another strength. Starbucks’ CEO, Howard Schultz, made it plain that the company prioritized its customers, that it was a business first and foremost that happened to offer coffee (IAC, 2020). Starbucks was named “the number one venue to take a person on a first date” shortly after Schultz joined the company in 2015 (Liu et al., 2022). Finally, Starbucks’ legacy, which began in 1971, has provided them with the power of longevity (Khushman, 2019). However, one of Starbucks’ main competitors, Dunkin’ Donuts, has been serving coffee to customers for 23 years longer than Starbucks.
Starbucks has tackled its faults in addition to its strengths. Starbucks has one of the highest labor expenditures of any café. These high labor costs are due to the corporation paying more significant compensation to their staff, which forces them to charge higher pricing for their products. That also puts them at a competitive disadvantage in the marketplace because corporations like McDonald’s have lower wages to pay out, allowing them to offer lower pricing (Khushman, 2019). Another problem stems from high labor expenses, and increased costs are that Starbucks cannot be as cost-effective as competitors such as Mcdonald’s due to their costs.
Starbucks has used marketing methods to increase its international customers. Over the years, their sales team has examined commercial viability in specific nations to discover one that would be significant for them to enter and hypothesized the demand in that country (Khushman, 2019). After determining which country to enter, Starbucks must analyze its products to decide if they need to be altered to meet the new culture. For example, when Starbucks entered the Chinese retail sector, it made a concerted effort to acquire regional technology and offer indigenous items on its menu.
A four Ps marketing strategy assists the organization in determining its marketing action plan. Therefore, the four Ps are product, place, price, and promotion (Stevens et al., 2021). Products can be more than just an object or service; they can provide the consumer with an experience. Starbucks retail outlets sell coffee, tea, baked goods, and packed snacks. They also sell things such as cups and coffee machines, and their stores provide consumers with an experience. Introducing new items may enable the marketing team to improve their strategy to customize marketing to the recent worldwide audience.
A place can be defined as a location on Earth. Although, what if an individual thought of a place as “a method of seeing, recognizing, and comprehending the interplay between persons and their environment (Stevens et al., 2021)?” Starbucks uses a variety of distribution routes to provide its products to customers. They stay true to their beginnings by keeping many physical storefronts and distributing merchandise through supermarkets. Starbucks has also experimented with new distribution mechanisms, such as smartphone payments. That is made possible via their smartphone application that allows you to order your things at the touch of a button. The software has proven beneficial, as mobile payments accounted for 11% of their revenue in 2013.
Price is associated with a given commodity or service depending on its link with demand and supply; this price will allow the company to benefit. Multiple retail prices have shown to be helpful to many businesses, which is why Starbucks has implemented the same technique for their tea and coffee products (Stevens et al., 2021). Another way Starbucks optimizes earnings is through value-based marketing and price increases on commodities with the lowest margins. For example, about a month ago, Starbucks increased the price of their most miniature-sized cup by 1%. They determined that they were required to boost the cost of the small or big since they had the smallest profit margin (Liu et al., 2022). They thought that by raising the price, buyers would notice the increment and be more motivated to improve their size cup to a selection with a more considerable profit margin.
Promotion encompasses a wide range of marketing actions, which can be compared to how advancements provide an individual a higher earning, more responsible position. Advertisements for goods or services can help a company build methods for promoting its products and rewarding its customers (Stevens et al., 2021). Businesses can use traditional marketing to promote their items or services to a varied population. For example, Starbucks has used conventional marketing methods such as television, outdoor marketing such as posters, and magazine for advertisements. In addition, it has utilized billboards to draw customers’ attention to new goods or promotions. Starbucks’ usage of television advertisements is an opportunity to entice a customer to want the encounter that Starbucks can deliver rather than market a new product. Starbucks’ innovative usage of magazine adverts allows them to highlight its mission and vision statement with vibrant, eye-catching designs and more legible information for the user.
Starbucks has hopped on board to advertise its new items as the modern era of technology has turned into a marketing utopia. Starbucks employs search engine adverts for digital marketing purposes. Starbucks benefits from algorithms and cellphone awareness and comprehension of their surroundings without them focusing on pushing out adverts on certain websites and pages (Liu et al., 2022). Starbucks has also established a presence on twelve social media sites for digital promotions and client involvement. Starbucks employs a variety of social media platforms, including Instagram, Twitter, Facebook, and YouTube. The Starbucks web page, which allows users to visit and get information on what they are searching for, is the most basic type of digital promotion.
Starbucks has faced competition since its doors first opened, and they have managed to thrive in areas where its competitors fall short while being mediocre in others, allowing them to maintain its rate of return. Starbucks has mastered the concept of having a wide range of items to suit a wide range of client tastes. Apart from the varied product assortment, they make sure to focus on personnel training to aid customers in selecting an item that they would appreciate (Khan et al., 2018). Starbucks has concentrated on providing the most outstanding quality coffee to its consumers while offering a diverse range of items. Those are some ways Starbucks outperforms its competitors in terms of integrated marketing products.
Another area where Starbucks has an advantage over its competitors is digital promotions. According to research, Starbucks uses digital advertising channels to support its mission of environmental sustainability while also sustaining its brand image (Liu et al., 2022). When defining Starbucks as a place of employment, they successfully ranked sixteenth in the Fortune 100 Best Companies to Work for in 2007 (Khan et al., 2018). Starbucks, identified as a coffee or tea shop to encounter community, has increased in comparison to competitors as they adjust its storefronts to changes in society’s patterns. Because the environment Starbucks has established is welcoming and gives satisfaction, their coffee establishments become packed with people from all walks of life. Starbucks’ pricing approach is one area where it falls short of competitors. Starbucks is at a competitive disadvantage since it cannot be as price-sensitive as competitors in the market.
Starbucks has developed to be a globally recognized brand that has remained competing in the high-quality tea and coffee business for fifty years. They become the well-known brand they are today by skillfully marketing themselves, utilizing their strengths and flaws to their advantage. Starbucks excels at creating a wide range of goods that appeal to both loyal consumers and new and curious customers. Starbucks’ digital marketing promotional actions can pique the interest of new customers. And while the organization has its own set of limitations and dangers, it can capitalize on its strengths and explore prospects for growth and prosperity. Therefore, Starbucks is maintaining its own well and successfully utilizing its resources to continue closely monitoring competition to improve itself.
IAC Publishing. (2020). What distribution channels Does Starbucks Use? Reference. Web.
Khan, S. K. B. N. Z., Yusop, Y. B. M., & Baharudin, F. B. W. (2018). Starbucks Market Segmentation and Targeting. International Journal of Business and Management Invention (IJBMI).
Khushman, A. (2019). An Evaluation of Entrepreneurial Activities and Growth Strategies–The Case of Starbucks Coffee House. Available at SSRN 3594916. Web.
Stevens, R. E., Loudon, D. L., Wrenn, B., & Warren, W. E. (2021). Marketing planning guide. CRC Press. (2nd ed.) Web.
Liu, X., Li, J., & Lin, C. J. (2022). A Study on Starbucks’ Promotion Strategies in the Chinese Market from 1999 to 2009. In 2022 International Conference on Social Sciences and Humanities and Arts (SSHA 2022) (pp. 1117-1120). Atlantis Press. Web.