In the modern highly competitive market marketing activities play an important role in any company, because it allows to establish the optimum relationship between the organization and its environment. Today marketing is understood as an expression of market-oriented and customer-oriented style of thinking, which is characterized by creative, stable and often aggressive approaches. The marketing activities of the company should focus on its long-term existence, competitive position on the market, its stability, strong and lasting connection with consumers or other market participants. (Lamb et al., 2012)
To achieve these objectives, it is necessary to answer the questions that reflect the essence of marketing:
- To determine what products are needed in the market, and in what quantity?
- Determine the segment of the market and potential customers.
- At what price to sell products to cover costs and make a profit?
- How to promote a product or service to the market?
The answers to these questions are obtained in the market research, and based on data analysis it is possible to develop a program of marketing, focused on a specific market segment and a group of customers. There are many types of marketing strategies, and each company based on its needs selects the most suitable.
In this work it is necessary to consider marketing activities on the example of Starbucks company, which is considered to have one of the most successful marketing approaches, which ensured its success around the world.
Successful marketing strategy of Starbucks
The history of Starbucks marketing strategy is known around the world. It all began in 1983, when Howard Schultz tried to create in America a real European cafe. He was convinced that “people need to relax, to enjoy the aroma of coffee and enjoy life”. That is why Schultz created Starbucks, a coffee house chain in America, a company that taught Americans to enjoy coffee in full. Starbucks does not just sell regular coffee – it sells the experience, and that is the main marketing idea. (Kotler 2003)
Now Starbucks is positioned as a brand of high quality loved by all Americans that is why its sales and earnings grow every year. In 2100 Starbucks stores are visited by nine million customers every week, and 10% of them come twice a day. Over the past five years its total sales increased by more than 34% per year, while profit increased by 68%. (Lehrer 1999)
What is the secret of success and what does the company need to compete successfully in today’s market? According to Ph. Kottler, the success of the company is its ability to create and provide targeted consumers with valuable products.( Kotler 2003) So a company must offer a product with high value for the consumer and provide him benefits. That is why focusing on the customer, Starbucks is always looking for ways to add value to their products by providing more benefits to customers. “Our goal is to add value product”, said Schultz in an interview with Fortune magazine in 1998. (Kotler 2003)
For example, marketers thought of a rapid ordering system, which allows customers to order coffee over the phone and pick it in the nearest cafe «Starbucks». Vice president of Starbucks Bedberri Scott once said: “Consumers hardly believe that there is a huge difference between products.” Therefore, the task of Starbucks was to establish “emotional appeal” to people. That is why Starbucks tried to adapt to the natural habit of people – to drinking coffee in cozy atmosphere with friends. (Michelli 2006) Use of this human habit makes the brand attractive for clients and creates an atmosphere within the cafes: the familiar green logo has a pleasant association with smell and taste of coffee, a warm cup, and cozy atmosphere with light music. And all of this exists in the vast network of Starbucks cafes, scattered around the world.
One of the secrets of Sturbuck’s marketing strategy is to properly present the product: to convince customers that they propose the best coffee and that good coffee is what you need and want. This approach is based on the conviction and appeal to the customer’s feelings. (Michelli 2006)
Also, Howard Schultz proposed the mass consumer a new product – high quality coffee, which before was available only to a small number of clients of expensive restaurants. But Schultz offered to consumers democratic coffee shop, working on the principle of self-service, which offered more than just good coffee, but a variety of tastes: latte, cappuccino, espresso, mocha, macchiato and other. At the same time Starbucks offered to the consumer freedom of choice – to choose the type of cups size, type of milk (regular or fat-free) and so on. This approach gave consumers the opportunity to order a completely customized drink. And even the fact that the coffee shops worked on the principle of self-service did not deterred customers. Because a significant portion of orders in the U.S. (and later in other countries) was “take away” coffee (in the U.S. – 75% of orders), then even a large number of consumers did not make a pandemonium in the stores.
However, it is not just a quality product at a reasonable price that Starbucks could offer its consumers. (Michelli 2006)
The success of Starbucks is not only an effective marketing, but an unusual approach to the psychology of consumers. Without it, Starbucks would have remained a regional network in which people would be going only to drink coffee. Indeed, except for the coffee Starbucks offered customers a warm and friendly atmosphere with good music, the opportunity to sit on a sofa, chair or at the tables. Now the majority of Starbucks cafes in the U.S. have high-speed wireless Internet connection, and customers are welcomed to come and stay, no matter how long.
Finally, an important part of the marketing positioning has become a recognizable symbol of coffee shops – Starbucks green signs have long been part of the urban landscape of many cities around the world. And now Starbucks is one of the ten best global brands, and only few small businesses can be less than twenty years to grow so much – the company started in 1985 with a cafe, but today there are more than 8.5 thousand coffee houses. All the more surprising that the company spend not so much on advertising and marketing? For example in the mid-1990s, when Starbucks began to enter overseas markets, its annual advertising budget was only $ 15 million. (Michelli 2006)
The secret of the company’s success are exceptionally successful marketing steps and strategy that accurately takes into account the psychology of its clients, their needs – that is customer-oriented marketing.
Barron K. “The Cappuccino Conundrum”. Forbes, February 22, 1999, p. 54-55.
Lehrer Eli. “When Starbucks Takes over the World”. Insight on the News, July 19, 1999, p. 4
Kotler Ph. Marketing management. Prentice Hall, 2003
Lamb Charles W., Joseph F. Hair and Carl McDaniel. MKTG. South-Western College/West, 2012
Michelli J. The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary. McGraw-Hill 2006
Schwartz Nelson D. “Still Perking After All These Years”. Fortune, May 24, 1999, p. 203-210