Health Trends and Their Effects On Consumers’ Starbucks Order Decisions

Health Trends and Their Effects On Consumers' Starbucks Order Decisions

By: Vivian Nguyen, Olivia Alstott, Darriel Sanders, Lindsay Beveridge, and Lala Du

INTRODUCTION AND BACKGROUND

Starbucks is known for being the No. 1 coffee retailer offering drink and food items in countries all over the world. This coffee company that has become a staple in the lives of many was founded in 1971 in Seattle, where it served the first Starbucks Caff? Latte. In 1995, it began serving Frappuccino blended beverages. By 2015, the Frappuccino accounted for 17 percent of sales, but in 2018, the Frappuccino only accounts for roughly 11 percent of sales.

This past June, according to Newsweek, S tarbucks accused health and wellness trends of causing a decrease in sales of Frappuccinos. Frappuccinos are drinks that often are highest in sugar and calories in comparison to the other drinks on the Starbucks menu. The ingredients of these blended drinks typically include coffee, milk, syrup, ice and an optional topping of whipped cream. A "grande" frappuccino with 2 percent milk is 16 ounces and ranges between 220 and 410 calories before adding whipped cream. The sugar content is extremely high, with a grande Caffe Vanilla consisting of 69 grams, which is nearly three times the daily amount of added sugar recommended by the American Heart Association1.

The decrease in sales and popularity of the Frappuccino appears to correlate with consumers becoming more health conscious about their food and drink choices. However, employing both primary and secondary research of the Starbucks consumer base, their lifestyles and their beverage choices at Starbucks provided information on the opportunity Starbucks has to increase sales by developing more lower-sugar drinks and healthier options to better serve the needs of its consumers.

EXECUTIVE SUMMARY

The aim of this public relations campaign is to ultimately increase sales for Starbucks by researching the relationship between Starbucks customers' order choices and current health trends. The research can provide information on how consumers define "healthy" in terms of drink consumption, how this has changed over the past 10 years and how ingredients in specific Starbucks drinks have evolved over the past 10 years to accommodate health preferences. Through the research conducted, it is found that customers' tendencies to choose healthier alternatives contribute to the need and opportunity Starbucks has to move in the direction of offering healthier drink choices including those with less sugar and more milk alternatives. By conducting focus groups, a quantitative research analysis and extensive secondary research, we can prove to Starbucks the value of offering healthier options on its menus to fit the needs of its consumer base.

1 Andrew, Scottie."STARBUCKS CEO: SALES ARE DOWN BECAUSE PEOPLE ARE TOO HEALTHY TO BUY FRAPPUCCINOS". Newsweek.

SWOT ANALYSIS

Strengths As one of the leading coffeehouse companies, perhaps the biggest strength of the Starbucks brand is its ability to be known globally through its extensive supply chain. It's a strong brand image that is recognized by millions is based on its unique logo and iconic drinks. The advertising and marketing team of Starbucks continuously curates new and innovative drinks every year that retain loyal customers. Starbucks is also known for the numerous benefits it offers its employees such as health coverage, stocks and savings opportunities, paid time off, and even offering to cover tuition for any eligible partner seeking a bachelor's degree. Starbucks is a diverse company that is continuously expanding its market especially with the recent acquisition of 100% of its stores in East Asia.

Weaknesses While Starbucks offers quality drinks that are loved by its loyal customers the price point is high in order to maximize profit but this then decreases the affordability of its products. With high prices, this makes it easier for competitors to offer a cheaper option and deliver products that are comparably the same as the products Starbucks offers. Since Starbucks is primarily known to be a coffee company, those that do not consume coffee will not likely come into the store for its other products like pastries and sandwiches, therefor the company is limited with who they market to.

Opportunities As seen in the company's past, it has the opportunity to continue to expand its enterprise globally. Perhaps it should explore possible partnerships in South America and continuous its expansion in Asia. Starbucks can expand the consumer it reaches by diversifying the products it offers. For example, it currently offers a select amount of tea and food products, however if it expands its products it can appeal to people who do not consume coffee as well. Also starbucks can market off of the growing health conscious trend by offering healthier product options that can appeal to a wider audience.

Threats A major threat to Starbucks is the increasingly over saturation of the coffee chain industry. Starbucks has to compete with major restaurant chains and local coffee houses that can undermine the company by offering a competing price for their products. Starbucks should also be weary of the specific locations of each of its stores. By opening up Starbuck Stores right across from each other, it raises the risk of competing for sales among its own stores.

Strategically placing the stores in areas where there are no Starbucks will prevent that problem. Bad publicity also threatens the Starbucks brand as a whole. How the public views Starbucks can greatly affect its sales.

RESEARCH PROBLEMS AND OBJECTIVES

Starbucks has been around for many years, so it is crucial for them to stay ahead of health trends in order to meet the demand of their consumer base. In recent years, we have seen young americans develop a growing passion for a more healthy lifestyle, so we were curious to see

what effects it has on the coffee/tea industry..Our research problem surrounds the question of if

Starbucks options are appealing to "health-Conscious" individuals and how can they continue to grow their audience to appeal to the growing health conscious population? Our research objective was to uncover the relationship between current health trends and consumer beverage preferences to uncover the value of Starbucks expanding their menu to appeal to a more health conscious individual. Important methodologies appropriate to this research include focus groups (to get an in-depth look at what comes into play when deciding Starbucks orders), quantitative research analyses (to look for a correlation between lifestyle choices and Starbucks orders through online surveys), and extensive secondary research on Starbucks nutrition (to explore Starbucks drinks, health, and lifestyle trends). We will use this information to see if we can prove to Starbucks the value of offering healthier options on its menus to fit the needs of its consumer base.

PRIMARY RESEARCH FINDINGS

SURVEY

We created an online survey conducted on October 23 through October 25 containing eight questions using UF Qualtrics. It surveyed 132 students who volunteered to participate from the people who saw it in the UF Facebook groups each of us are a part of and put it in. The eight questions were split into two pages. The first four focused on current lifestyle and dietary trends. The second four questions focused on Starbucks preferences. Our goal was to see if there is a correlation. The results from the survey are shown and summarized below.

Question Set 1: First four questions analyzing current dietary trends

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