Gabystephenscom.files.wordpress.com



Art of Marketing and BrandingModule code: ARTD 3033Gabrielle Stephens An illustrated critique of the nature of brand design and its value to StarbucksIntroduction?After 46 years of business, Starbucks is one of the biggest American coffeehouse chains internationally.? Three friends, Gordon Bowker, Jerry Baldwin and Zev Siegel founded Starbucks in 1971 opening the first ever Starbucks in Seattle USA.? Not only did they want to open their own coffee shop selling high quality coffee beans, they wanted to be able to sell?specialty?coffee equipment too. ?The three friends were inspired by Moby Dick, which “ evoked?the romance of the high seas and the seafaring tradition of the early coffee traders’. (Starbucks.1, 2016)After 10 years of business a man named Howard Schultz became head management at Starbucks. Howard had fallen in love with the romance of the European coffee experience. Howard had a vision to bring the traditions of the Italian coffee house, a place for conversation and sense of community, back to the USA. Schultz had an idea for Starbucks; he wanted to create a third place between work and home. This idea is?one of the main reasons for Starbucks outstanding success. It isn’t just a cappuccino on the way to work or a latte when your thirsty, Starbucks offer an experience!?"Starbucks Coffee is the #1 purveyor of coffee in the world.? We are here to educate and enhance the best possible customer experience - Howard Schultz" (Dollinger, 2008)04173855Figure 10Figure 10163068000By 1980 Starbucks was the largest coffeehouse in Washington. Although Schultz left Starbucks for a short period of time, he was back in 1987 and purchased Starbucks with the help of local investors, for 3.7 million. ?Starbucks first expansion out of the USA was in Tokyo, Japan in 1996 (wiki, 2012) and later the United Kingdom in 1998. Starbucks is now a recognisable and well-loved brand known all around the world, renowned for its espresso based coffee, but even more so for its brand position. ?In this essay I will analyse and critique the coffeehouse chain ‘Starbucks’, looking at its company portfolio, performance, positioning, competitors and value within the market and giving my critical perspective on the company.037465000Competitors28994102520950049911013779500-1215390463550Figure 20Figure 22842260499745Figure 4 0Figure 4 441960469265Figure 3 0Figure 3 51435004272280Figure 5 0Figure 5 5143500192405000In England Starbucks are among the top three leading branded chains, which are Costa, Starbucks and Caffe Nero. Last year they had 53% share of the branded share market worth 3.3 billion. The Coffee market is a high riser at present and has seemed to replace the pub as the “primary social venue”(Davidson, 2015).? According to the statistics Costa is the leading coffee chain in England, having more than 1500 stores. Last year Costa sold 169 million cups of coffee but what has made them the leading company and what strategies do they use different from Starbucks? Firstly, they are cheaper, but one huge marketing strategy that stands out for Costa is ‘costa express machines’, which were introduced in 2011. Other competitors for Starbucks include; non-specialist coffee chains and independent coffee shops as well as other branded chains. Greggs have also upped their game for coffee having 1621 coffee shops in the UK in 2015(Appendix A). Andy Harrison the chief executive of Costa-owner Whitbread said, “last year the coffee shop market grew by 5pc throughout the recession even in the most economically challenged parts of the UK” (Davidson, 2015). This means that even though there is a recession, people are replacing high street shopping with online shopping and spending more time in coffee shops with their friends. Coffee shops continue to be a daily necessity and a growing industry. Another competitor for Starbucks is McDonalds who have been targeting the lower-priced coffee market with their McCafe’s. ?Position StatementThe Starbucks ‘experience’ is for anyone, from any walk of life, ethnicity and background. Whatever your age, if you have a love of high-quality coffee, gourmet snacks, socializing or you just love soaking up the ambiance of a community, Starbucks has a place for you! They offer more than just coffee it’s a? ‘Third place between work and home’. No matter what country you’re in, their high quality standards and excellent customer experience never change!Segmentation, Targeting and Positioning“Market Segmentation is a process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviour that might require separate products or marketing programs is called Market Segmentation” (Kotler and Armstrong, 2006).? Starbucks market segmentation hasn’t always been the same. They targeted Geographic, Demographic and Psychographic segments. To begin with, Starbucks marketing strategy was to aim their business based on social class and lifestyle and they targeted ‘well educated’ and ‘business people’, aged between 25 and 44. For instance, in America they mainly built stores in urban areas because that was where the higher class, well-educated people lived. Starbucks were only targeting a small segment of people by doing this, offering a ‘rich’ experience, but they weren’t looking at different groups of people with different needs. Starbucks marketing strategy was weak and they saw they needed to change their marketing strategy in order to achieve a long-term market growth.“To succeed in today’s competitive market, companies must be customer centered. They must win customers from competitors and then keep and grow them by delivering greater value” (Kotler, 2015, pp.81-82). Starbucks now target a lot more segments within the market. They wanted to offer a ‘Third place’ from work and home and not just for well-educated and higher-class people. They had a vision to create a venue for all types of people from different backgrounds, who wanted a place to socialize, work or just relax.?Geographically they expanded their stores. They built them in town centres, service stations/rest stops, ethnic neighborhoods and rural areas. By doing this they expanded their target market. This meant that they were targeting?a much wider range of?psychographic segments as they were making gourmet coffee accessible to a whole host of social classes and lifestyles. Starbucks now provides safe haven for mums to meet for coffee with friends, people shopping to stop for a break, and students a quiet place to study in-between home and class. I believe the non-discriminatory?targeting of every market segment is what makes Starbucks the well-known brand that it is today.Starbucks have positioned themselves as a third place from work and home. They have differentiated themselves from their competitors by offering not just coffee but an experience and an atmosphere.? I believe they offer an experience, which satisfies not just the customers’ needs but the customers’ wants, and this is what gives them their position within the market industry.Marketing Mix When Howard Schultz took over Starbucks in 1987 he promised local investors he would aim to open 125 stores with in a 5-year period. The company exceeded these expectations and instead he had opened 165 stores in that time frame. Now there are more than 20,000 stores in over 50 different countries. In England alone there are 414 licensed stores and 428 company operated stores (Appendix B).? Starbucks operates in the United States, Europe, South America, North America, Asia and Africa. One country that Starbucks do not operate in is Italy because as everyone knows, the Italians do coffee best.01988185Figure 6 0Figure 6 011239500“The marketing mix constitutes the company’s tactical tool kit for establishing strong positioning in target markets”(Kotler.2, 2015. Pp.77). When it comes to Starbucks coffee, they are renown for their high quality bean. They only use 100% ethically sourced coffee beans. Starbucks practice C.A.F.E (coffee and farmer equity), which they believe? “help farmers grow coffee in a way that’s better for both people and the planet” (Starbucks.2, 2016). Starbucks practice 4 key components (Appendix C) “Quality, Economic accountability, social responsibility and environmental leadership” (Starbucks.2, 2016). “Starbucks sources Arabica coffee from three key growing regions, Latin America, Africa, and Asia-Pacific”(Pashman, 2015). ?In 2013 Starbucks brought a coffee farm in Costa Rica where they not only source their coffee beans from but they do research and development that helps them “Develop Sustainable farming practices”(Starbucks.2, 2016). In my opinion it is quite clear that Starbucks use of ethically sourced products and their commitment to helping farming communities around the world is a major strength in their marketing strategy, making them more appealing than some of their competitors and strengthening their brand position within the market. This is yet another example of Starbucks satisfying customer wants as well as needs. ?Starbucks offer a wide range of products in store. As well as?16 different Espresso based beverages, they also offer 10 different types of tea, 9 different Frappuccino blended drinks, 3 different hot chocolates, and a range of other cold refreshments. Starbucks also offer cakes and pastries, as well as a large range of breakfasts and lunches and food to ‘Grab & Go’. In store you can purchase Starbucks merchandise (Mugs and syrups for example), Coffee roasts, teas and coffee equipment. They also have an online store that you can purchase everything you need to make the perfect cup of coffee, including the perfect cup for you to drink it in! The use of online sales makes it more convenient and accessible for customers from an even larger market to purchase Starbucks products. In my perspective this is yet another very clever marketing strategy to increase sales and brand awareness.?Starbucks offer more than a beverage and a snack, they sell “The Starbucks experience- one that enriches customers lives”(Kotler.3, 2015. Pp.231). It’s all the little things that contribute to this experience, the smell of coffee roasting, the comfortable sofas and chairs, the hissing of the frothy milk and the chitter chatter of the coffee community. `I believe this is one of the most important aspects for Starbucks. I think it is how they differentiate themselves from their competitors and is how they find their positioning in the pared with their other branded chain competitors, Starbucks sells the most expensive beverages. For example a large cappuccino is ?2.95 in England, compared with ?2.65 in their leading competitor Costa. (Appendix C). Starbucks have a loyalty card, which makes you think you are getting more value for money. Their loyalty card offers rewards and special offers. Every time you use your loyalty card you earn a star and for every 15 stars you collect you get a free cup of coffee. This strategy is clever, making the customer believe they are special and will be rewarded for their loyalty to the brand. McDonalds also offer a coffee loyalty card, when you purchase a beverage from their Mc Café range. However, they offer a free coffee every 6 cups you buy in comparison to Starbucks’s 15 cups. There is also a very big price difference as a McDonalds cappuccino only costs ?1.49, which is almost 50% cheaper than Starbucks. I am a loyal McCafé drinker and there are two main reasons for this, it's cheap and it's convenient. This is possibly an area for Starbucks to expand further as if there was an express Starbucks machine in my local co-op (like there is a costa coffee express machine) I would probably purchase my coffee from there instead. This is because a Starbucks cappuccino is a much more gourmet cup of coffee, and even though McDonalds is cheaper, I would pay the Starbucks prices for a better product.034321750001365250Figure 7 0Figure 7 09715500Starbucks have also succeeded with their smartphone app and social media marketing strategy, relevant to their tech savvy customer base. A unique selling point (USP) of a Starbucks Loyalty card is, that it can used as a “quick and easy payment”(Starbucks.3, 2016) card. You just top up with your mobile app and can purchase items from Starbucks with it. This forward thinking technology not only encourages brand loyalty but also allows customers who have forgotten their credit card or cash to purchase their daily cup of coffee. It is also making buying a cup of coffee even quicker and more convenient, cutting waiting times and appealing to the busier lifestyle. Starbucks have a clear and strong online presence. Their website is easy to use and they have made it very clear where their products come from. They sell not just a product but also a story. They have a strong social media presence, promoting products and connecting with their costumers in a modern way that’s engaging to a younger generation. -15875001468755Figure 8 0Figure 8 When it comes to advertising Starbucks use more traditional methods. You don’t see television ads unless it’s in association with another company. Howard Schultz believes traditional is best because if a product is that good how can you not go and tell people about it? He also said “our stores are our billboard”(Williams, 2015). Starbucks advertising is predominantly word of mouth and brand recognition. Their cups and packaging have the ‘Starbucks’ logo on and seeing hundreds of people walking around advertising a good cup of coffee brings customers into stores. Starbucks coffee cups can even be seen on the television show ‘Sex and the city’.? I believe it is clearly a strategy that works for Starbucks considering the success of the business. Starbucks have a successful social media strategy, ie, good PR. However, Starbucks PR hasn’t always been good and brought controversy in 2012 when Starbucks were accused not paying “corporation tax in the UK during the past three years”(Neville, 2012). Other companies were accused of avoiding the tax but “according to pollsters at YouGov's BrandIndex, Starbucks has suffered the deepest damage to its image”. Starbucks have now paid “?20m of UK corporation tax in the past two years — a voluntary agreement it made following the avoidance claims”(Houlder, 2015). This is a bit suspicious if you ask me and would have lost a few loyal customers.I think Starbucks are unique with their business strategy when it comes to their employees. Everyone who works at Starbucks is called a partner and there are great benefits to being a partner. “All partners receive something called Bean Stock which is a scheme that makes all our partners shareholders in the business. Restricted Stock Units (RSU) is awarded every year to all partners based on their role and eligibility”(Starbucks.4, 2016). Starbucks believe all partners have the opportunity to grow their careers and to grow as people. It seems Starbucks do everything bigger and better than most coffee companies. Becoming a partner involves a very lengthy process. It is clear Starbucks only want to employ the best staff possible. These partners will have a passion for high quality customer service and have excellent knowledge of Starbucks coffee. The senior vice president of Global Strategy for Starbucks, Beto Guajardo said “In a survey of all the people who consider purchasing at Starbucks because of brand appeal, they do so because: 47% love the Starbucks brand because of the connection between partners and customers; 27% say they love the way Starbucks treats its people; 26% love the coffee”(Guajardo, 2015). I believe this shows how good Starbucks employment strategy is by gaining customer loyalty from excellent customer service.? It is a large aspect of their marketing strategy that they excel in. ?Brand Performance“Key to our success is investing in our partners and with coffee we have the opportunity to ignite our partners’ passion every single day. There’s never been a more exciting time to be in specialty coffee, an industry we helped establish over 40 years ago and have been innovating in ever since”(Seawell, 2015).From my analysis of Starbucks, after more than 40 years, the company has reached maturity but is still growing. In 2009 Starbucks reported their first ever decline, which was short lived when Schultz returned to the company. He restructured the business and re-fitted the coffee shops. Since then the company has grown very successfully, despite considerable competition.? There is definitely room for improvement when it comes to “brand evolution, food offering and convenience”(Szczerba, 2014). Helene Mills, Associate Director at specialist retail and consumer consultancy Pragma Consulting believes this is where Starbucks, compared to its competitors is under-performing.Last year information was released about the growth and progress of Starbucks at their annual meeting for shareholders. Starbucks chairmen and chief executive officer Howard Schultz said “23 years ago, at the time of our IPO, we had 125 stores and a market cap of $250 Million.?Today there are 22,000 stores in 66 countries. Starbucks has reached a record high market cap of $70 Billion and stock price growth of 1,200% and 13x shareholder growth since 2008” (Schultz, 2015). I think this is an astonishing amount of growth for one company and I think it will continue to rise especially if Starbucks carry out their new 5-year growth strategy that they have developed.I believe that Starbucks are not a declining company nor static at this stage of maturity. The BCG matrix would suggest Starbucks is in the high growth and high share star quadrant. I believe this is because they have “high market Growth and high Market Share” (Essays Uk. 2013). The Ansoff matrix supports this theory because it suggests Starbucks are expanding their existing products and entering new markets.Starbucks have successfully entered the coffee industry in the United States, building on the products they already have and expanding the amount of stores was clearly only one phase in their business strategy. They are very successful in market development, as they have branched out to over 50 countries.01697355Figure 9 0Figure 9 04000500They have also diversified by the development of a cold beverage line, which can be purchased in convenience stores everywhere, and with their online shop. What’s next for Starbucks and what will carry on their excellent brand performance? Over the next 5 years they are aiming to open another 8,000 stores worldwide but half will be in China where “China is Starbucks fastest growing global market” (Culver, 2015). Like their leading competitor ‘Costa’, Starbucks aim to bring express coffee machines in areas that are highly populated by business people. This is so they can deliver even faster service to the fast paced people. This is an area where Starbucks are falling behind and I think will add value to there brand performance. Starbucks also aim to open more drive-thru venues as this has been a success in the United States.46863002350135Figure 12 Figure 12 46863004572000002457450Figure 10 Figure 10 04572000022860002378710Figure 11 Figure 11 228600045720000Brand Illustration“Brand is a name, term, sign, symbol or design or a combination of these that identifies the goods or services of one seller or group of sellers and differentiates them from those of competitors”(Kotler, 2000).Over time Starbucks pictorial mark hasn’t changed much but the design has evolved and became contemporary (fig 1,2 and 3). The pictorial mark is actually a siren based on a sixteenth- century Norse woodcut (Brand Autopsy, 2011). The two- tailed mermaid was meant to be “as seductive as coffee itself” (Brand Autopsy, 2011). The Starbucks logo we know today is Green and circular in design, much like the original and they have focused on a more current pictorial mark of the siren, having dropped the ‘Starbucks’ word mark. The Starbucks logo isn’t just used to separate it from its competitors it has a major function within the company. The logo is significant to the company because it is one of Starbucks main way of advertisement as they only use traditional forms of advertisement. Because of this its value to the company is priceless and one of Starbucks many strengths within the market. ConclusionStarbucks marketing strategy is brilliant and they have developed a strong marketing mix, which delivers customer satisfaction and gives them their strong position within the market. Starbucks differentiate from their competitors by offering much more than customer needs, targeting customer emotions and offering a customer experience that is targeted at all age groups. By expanding their target markets they have gained new customer base, which then creates new customer loyalty to the brand. Starbucks are clearly excellent performers and I believe their growth will keep rising the while the coffee industry is booming. With their advanced technology and current marketing strategy, I believe they can achieve their goals. Their brand is highly valuable to them because it gives them all the tools they need to gain new customers, as it is one of their main forms of advertising. I have also picked up on a few weaknesses in their company and their main challenge is their leading competitor Costa. I believe Starbucks are falling behind their UK competitor because they have not ventured into new products and strategies like express coffee machines and better food. I believe this is why they are not the leading chain in the Uk and will allow more share growth. Although Starbucks are expensive I do not think this is the reason they aren’t the leading chained brand. Customers pay the price for a luxury product but I do think they should look into student discount, as students make up a good percentage of their customer base, but this is just a minor factor. Overall I believe the Starbucks brand design is the most important aspect to the company because it offers familiarity and quality to people wherever they go in the world. It is a globally recognisable status symbol. References Brand Autopsy. (2011) The evolution of Starbucks logo. [Online] Available at: [Assessed 17 Jan. 2016]Culver, J. (2015). Complete recap of Starbucks 2015 annual meeting of shareholders. [Online] Available at: [Assessed 16 Jan. 2016]Davidson, L. (2015). Mapped: the spread of coffee shops across the UK. [Online] The Telegraph. Available at: telegraph.co.uk/finance/newsbysector/retailandconsumer/12033580/mapped-the-spread-of-coffee-shops-across-the-uk.html [Accessed 18 Jan. 2016]Dollinger, M. (2008). Starbucks “The third place,” and creating the ultimate customer experience. [Online] Article. Available at: 887990/starbucks-third-place-and-creating-ultimate-customer-experience [Accessed 5 Jan. 2016]Essays, UK. (2013). Marketing Strategies Of Starbucks Analysis Marketing Essay. [Online] Available at: [Assessed 15 Jan. 2016Guajardo. (2015). Complete recap of Starbucks 2015 annual meeting of shareholders. [Online] Available at: [Assessed 16 Jan. 2016]Houlder, V. (2015). Starbucks tries to draw a line under tax controversy. [Online] Available at: cms/s/0/1e092a96-a419-11e5-873f-68411a846.html#axzz3xepkRE1K [Accessed 18 Jan. 2016]Kotler,P. (2000). Marketing management: millennium edition. [Book] International Ed. Prentice Hall InternationalKotler, P. & Armstrong, G. (2006), 'Principles of Marketing', (11 ed.). New Jersey: Prentice Hall International, Inc.Kotler, P., Armstrong, A., (2015) Marketing an introduction [Book] Pearson Education Limited. Pp.77Kotler, P., Armstrong, A., (2015) Marketing an introduction [Book] Pearson Education Limited. Pp.81-82Kotler, P., Armstrong, A., (2015) Marketing an introduction [Book] Pearson Education Limited. Pp.231Neville. S. (2012). Starbucks wakes up and smells the stench of tax avoidance controversy. [Online] Available at: [Assessed 18 Jan. 2016]Pashman, H. (2015). Do you know where your coffee beans come from? [Online] shape magazine. Available at: blogs/fit-foodies/do-you-know-where-your-coffee-beans-comeSchultz, H. (2015). Complete recap of Starbucks 2015 annual meeting of shareholders. [Online] Available at: [Assessed 16 Jan. 2016]Seawell. (2015). Complete recap of Starbucks 2015 annual meeting of shareholders. [Online] Available at: [Assessed 16 Jan. 2016]Starbucks.1. (2016). Our heritage, [Online] Available at: starbucks.co.uk/about-us/our-heritage [Accessed 3 Jan. 2016]Starbucks.2. (2016). Ethical sourcing: coffee, [Online] Available at: responsibility/sourcing/coffee [Accessed 4 Jan. 2016]Starbucks.3. (2016). My Starbucks Rewards. [Online] Available at: starbucks.co.uk/card/rewads [Accessed 5 Jan. 2016]Starbucks.4 (2016). Working at Starbucks. [Online] Available at: starbucks.co.uk/careers/working-at-starbucks [Accessed 8 Jan. 2016]Szczerba, M. (2014). Business analysis. [Online] Available at: mercial-awarness/business-analysis/the-corporate-life-cycle-maturity-starbucks [Accessed 17 Jan. 2016]Wiki. (2012). Starbucks-Expansion to new markets and products, [Online] Available at: En.wiki/Starbucks [Accessed 3 Jan. 2016]Williams, J. (2015). Why Starbucks chose to forego traditional advertising for so long. [Online] Available at: 2015/10/why-starbucks-chose-to-forego-traditional-advertsing-for-so-long/ [Accessed 16 Jan. 2016]ImagesFigure1- Starbucks store.[Available at: ] Figure 2- Costa Coffee Logo.[Available at: ]Figure 3- Caffe Nero Logo. [Available at: ]Figure 4- McCafe Logo/McDonalds. [Available at: é-Logo.svg ]Figure 5- Costa Express Machine. [Available at: ]Figure 6- Starbucks Costa Rico Coffee Farm. [Available at: ]Figure7- Starbucks Loyalty Card. [Available at: ]Figure 8- Starbucks Branded Cup. [Available at: ]Figure 9- Starbucks Bottled Drinks. [Available at: ]Figure 10- Starbucks logo- 1971-1987. [Available at: ]Figure 11- Starbucks logo- 1992-2011. [Available at: ]Figure 12- Starbucks current logo- 2011- Today. [Available at: ]Appendix Appendix A – Coffee Shops. [Available at: ]Appendix B- Starbucks Stores in the United Kingdom.[Available at: ]Appendix C- C.A.F.E. [Available at: ]Appendix D- Price List. [Available at: ] Appendix E- Other sourced Information that helped with the essay. [Available at: ]Appendix F- Cost of coffee per year. [Available at: ] Appendix G- Coffee house loyalty score- [Available at: ] ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download