Marketing Strategy of Starbucks

| Updated: August 25, 2019

Starbucks Marketing Strategy

Starbucks Marketing Strategy.

A Unique Marketing Strategy that Starts from Premium Quality Products

Starbucks has a unique marketing strategy that starts right from its products. It has differentiated itself from others based on the premium quality of its coffee.  From its humble origins in Seattle, the brand has  spread throughout the world to become the number one coffee retail brand. It’s a multinational brand and the newest chapter in its international growth story is the Asian part. Starbucks has used the formula of quality based product differentiation which has resulted in higher popularity and customer loyalty. However, its marketing strategy is not limited to only products but Starbucks is equally great and unique in other aspects of its marketing and promotions.

Product quality must be considered the central pillar of its marketing efforts. Great quality has several benefits. First of all, it helps with brand image and reputation. Great taste and quality means higher recognition and popularity in the fast food industry. As a brand, Starbucks has built great reputation over time for the quality of its products, their flavour and for unequalled customer service. A lot of marketing takes place at those stores and through brand merchandise. Great customer service has also added to the brand’s positive reputation. In the recent years, investment in marketing and advertising has resulted in better sales and increased brand awareness.

Positioning:

Starbucks has positioned itself as a premium coffee brand based on an overall premium experience designed to take the coffee experience to the next level. Apart from great quality coffee, the brand’s value proposition is also based on a great customer experience supported by excellent store environment meant to drive fatigue away and give the guests premium space to relax.

Segmentation:

Since Starbucks is a premium brand, its customers are mainly from the upper economic strata or the upper middle class and upper class. The brand targets people who want a peaceful space to drink coffee and shake fatigue away. These are mostly higher wage earning professionals, business owners or other higher end customers in the 25-60 age group mainly.  People with a fast moving life style want good quality coffee and premium space to lose stress. Starbucks offers all these privileges at a single place.

Excellent Brand Merchandise and Unconventional marketing Tactics

Starbucks Marketing.

Brand merchandise are an important part of any brand’s marketing strategy. They also play an important role in customer retention and driving customer satisfaction higher. Starbucks logo is printed on the brand’s merchandise. Attractive looking merchandise are always pleasant and add value to a brand’s products and customer service. A perfect cup of coffee cannot be perfect if the cup is imperfect. This is a strategy most customer focused brands employ. Starbucks has also employed unconventional techniques for marketing its brand. Traditionally, Starbucks has not relied on conventional marketing and advertising methods. It did not advertise its brand in traditional places like billboards, posters, or advertisements in the common places like Newspapers or television. However, it was still able to generate very high level of publicity and popularity.

An Ethical Brand

To market itself as a responsible brand, Starbucks focused on its long term branding as a quality focused, customer oriented and ethical business. Apart from great looking stores where the customers can sit comfortably and enjoy a great cup of coffee amid excellent service, Starbucks has focused on the other parts of its business operations to create a unique and strong brand image. Ethical sourcing is also an important part of its business strategy. Starbucks sources 99% of its  coffee ethically from suppliers around the world. This strengthened the ethical image of Starbucks which proved favourable in terms of marketing as well as customer loyalty and retention. The image of an ethical and accountable brand can be a major advantage in the 21st century. Customers are more loyal to brands that are environment-friendly and accountable.

Now Investing in Advertising

Till some years ago, Starbucks was known for not investing in marketing. All the marketing was based on its brand image and the fame it had earned by offering premium quality products. In the recent years however, it made some changes to its marketing strategy and started investing in advertising. Now, its ads are visible on television, print and other digital channels too. In 2015, it invested more than $351 million in marketing and advertising.  Its TV commercials highlight the newest and most romantic flavours available at the Starbucks stores.  However, advertising and paid promotions are not a central focus at Starbucks. Compare its marketing budget with other celebrity brands like Coca Cola or Nike and its marketing expenses are much less.

Till 2006, its focus was to spend more on having talented people onboard and sourcing only good quality raw material than on using advertising gimmicks for enormous growth. Its 2006 annual report states it clearly – “When we set out to become the world’s leading purveyor of fine coffee, we didn’t put all of our focus on how large we’d become or just how much profit we intended to make. Intuition told us that our ultimate success would depend less on clever advertising gimmicks than it would on the special individuals we’d bring onboard, one by one, as we worked to make our dream a reality”. That’s how they rolled till 2006, but in later years, the company started spending on marketing and advertising. However, the budget has never touched even half a billion. Starbucks has always kept its marketing budget under control.

Check how its marketing budget has grown in recent years.

STARBUCKS ADVERTISING COSTS AND MARKETING BUDGET 2007-18 (MILLIONS)

YEARADVERTISING COSTS ($ MILLION)MARKETING ($ MILLION)
2007$103.5 M
2008$129 M
2009$126.3 M
2010$176.2 M$198.7 M
2011$141.4 M$244 M
2012$182.4 M$277.9 M
2013$205.8 M$306.8 M
2014$198.9 M$315.5 M
2015$227.9 M$351.5 M
2016$248.6 M$378.7 M
2017$282.6 M
2018$260.3 M
Starbucks Marketing on Social Media.

Social Media Marketing

Apart from the methods outlined above, Starbucks markets itself from the social media platforms. There are more than 500 interesting and engaging videos of Starbucks brand and products on YouTube. It has released videos of its products, supply chain and various other aspects of its business operations.  The coffee brand started an animated series with cute characters about life inside a Starbucks store. This animated series is named ‘first  and main’.   The  series was very popular among the Starbucks’ audience. Twitter has also become a favourite social media channel for marketers. It has helped them address a very large  audience without any significant investment. Starbucks has made more than 87,000 Tweets and has more than 11.8 million followers. From its new products and inside the store stories, the brand shares all the exciting things that happen at Starbucks on Twitter. Even its CSR achievements and  all the critical milestones it has achieved are shared on Twitter regularly. A critical thing that Starbucks has achieved over time is its millions of fans and followers. They also share updates about Starbucks all the time. Brands that  have invested in brand equity have added real value to marketing and it is worth learning from them. Starbucks has also proved that to make a real difference you must be focused on customers and do things that  matter for them.

Starbucks Marketing Strategy main points: 

  1. Quality based differentiation – premium quality tea and coffee.
  2. Excellent customer service.
  3. Consistent brand experience.
  4. Use of unconventional techniques for marketing and branding.
  5. Image of an ethical brand.
  6. Excellent brand merchandise.
  7. Customer orientation.
  8. High brand equity.
  9. Unconventional social media techniques of establishing consumer connection.
  10. Creating real customer value.
  11. Near no or less use of traditional methods for marketing (till some years ago; now it is using a mixed strategy).
  12. Good quality products and customer service – higher word of mouth marketing.
  13. Investment in advertising for last 4-5 years.
Abhijeet Pratap

I am Abhijeet Pratap, editor of notesmatic. I am an MBA with marketing (major). Apart from writing on various topics in business management, marketing and English literature, I like to read and write about technology.