Marketing Strategy of Starbucks

Author- | Posted- | Updated: May 30, 2020 |

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. The world’s best coffee brand has utilized quality-based differentiation to differentiate itself from rivals.  From its humble origins in Seattle, Starbucks has spread throughout the world to become the number one coffee retailer. It’s a multinational brand and the latest chapter in its international growth story is the Asian market. Starbucks has used the formula of quality based product differentiation to achieve higher popularity and customer loyalty. However, its marketing strategy is not limited to just products but Starbucks is equally great and unique in other aspects of its marketing and promotions.

Product quality can be considered the central pillar of its marketing strategy. Great quality has several advantages. It is a time tested formula used industrywide by the industry-leading brands. First of all, it strengthens the brand image and reputation. Great taste and superior quality mean higher brand recognition and popularity in the industry and market. As a brand, Starbucks has built a great reputation over time for the quality of its products, its large assortment of unique flavors, and for unequaled customer service. A lot of marketing takes place inside the Starbucks stores and through its brand merchandise. Great customer service has also strengthened the brand’s positive reputation. In recent years, increased investment in marketing and promotions has resulted in higher sales and improved brand awareness.

Positioning:

Starbucks has positioned itself as a premium coffee brand offering a premium coffee experience. Apart from great quality coffee, the brand’s value proposition also includes a great and unequaled customer experience. The store design and environment of its retail stores are meant to drive fatigue away and offer the guests, premium space to relax and enjoy their coffee.

Segmentation:

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

Excellent Brand Merchandise and Unconventional marketing Tactics

Starbucks Marketing strategy.

Brand merchandise also plays an important role in the marketing of a brand as well as customer retention and customer satisfaction. Starbucks logo is printed on all the company merchandise. Attractive and pleasant looking merchandise adds value to a brand’s products and customer service. A perfect cup of coffee is more perfect in a perfect looking cup. This is a strategy most of the 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 as others in the food and beverage industry do. Beverages and fast food brands use billboards, posters, and outdoor advertisements in plenty apart from media advertising. However, Starbucks was able to generate a high level of publicity and popularity without running elaborate marketing campaigns.

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 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 has proved favorable in terms of marketing. It also drives higher customer loyalty. The image of an ethical and accountable brand can be a major advantage for a business in an industry marked by heavy competition. Customers are generally more loyal to brands that are environment-friendly and socially responsible.

Now Investing in Advertising

Till some years ago, Starbucks was known for its zero marketing investment. All the marketing was based on its brand image and the fame it had earned by offering premium quality products. In recent years, it made some changes to its marketing strategy and raised its investment in advertising. Now, its ads are visible on television, print media and on digital channels too. In 2015, it invested more than $351 million in marketing and advertising.  Its TV commercials highlight the latest and most romantic flavors 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 you will see its marketing budget is a small fraction of theirs.

Till 2006, its focus was to spend more on having talented people on board and sourcing only good quality raw material than on using advertising gimmicks to achieve enormous growth. Its 2006 annual report stated 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 on board, one by one, as we worked to make our dream a reality”.

Starbucks Annual Report 2006.

That’s how things happened inside Starbucks until some years ago, but in recent years, the company has 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 2007-19 (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
2019$245.7 M
Starbucks Marketing on Social Media.

Social Media Marketing

Apart from the methods outlined above, Starbucks markets itself from social media platforms. There are more than 500 interesting and engaging videos of Starbucks brand and products on YouTube. It has released videos related to 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 favorite social media channel for marketers. Companies can reach a large audience of fans and followers in real-time without spending a penny. 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 happening at Starbucks in its Tweets. 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 earned real value from it in terms of marketing and it is worth learning from them for others. 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

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.