Target Market Segmentation, Positioning Strategy, And Marketing Mix Elements For Starbucks

Identification of target market segments

Marketing plays an important role in generating competitiveness for the business organizations. This is due to the reason that in the current competitive business scenario, effectiveness of the marketing helps the organizations to tap the target market effectively along with generating more brand identity and value among the customers (Paley, 2017). However, initiation of the marketing plan involves determination of different elements such as identification of the target market, designing the positioning strategy and evaluation plan. Determination of the target market is important due to the reason marketing approach is designed in accordance to the taste and preference pattern of the target customers. On the other hand, marketing mix is another major and important element in the marketing plan (Lamb & Crompton, 2017). This is due to the reason that marketing mix elements help in determining the product attributes along with their respective pricing, distribution and promotional strategy. Similarly, implementation and evaluation plan is much important in the market plan due to the fact that success of the marketing plan is depending on these factors.

Starbucks is one of the leading chains of café in the world with having their presence in different countries around the world. The first store of Starbucks opened in 1971 and currently, they are having thousands of stores across the world (starbucks.com, 2018). However, in the recent time, number of new entrants entered in the global market and posing challenges for Starbucks. Thus, an ideal and effective marketing plan will help Starbucks in creating positive business environment.

This report will discuss about the target market segments of Starbucks along with their targeting and positioning strategy. In addition, the marketing mix elements for Starbucks will also be discussed including the major four elements. Lastly, evaluation and implementation plan will also be discussed along with proper time frame. This report will conclude with a few recommendations for Starbucks in their future strategic intent.

It is identified that Starbucks follows both differentiated and concentrated marketing strategy. This is due to the reason that products of Starbucks are not targeted towards the mass market rather it is more targeted towards a particular niche target segment (Cross, Belich & Rudelius, 2015). Thus, differentiated and concentrated marketing strategy helps Starbucks to design the marketing approach in accordance to the particular customer segments. The following sections will discuss about the different customer segments based on these elements.

In terms of age groups, the target segments for Starbucks are customers between the ages of 18 to 45 as the primary target market. Younger age group is targeted due to the reason that younger set of customers are having more preferences for café culture. In addition, the updated products offered by Starbucks are also presented in accordance to the taste and preference pattern of the younger age groups (Sandy, Gosling & Durant, 2013). However, on the other hand, secondary target market for Starbucks includes the children below the age of 18 and elders above the age of 50. Teenagers below the age of 18 can be targeted due to the reason that in case of family outing, children are also present. In addition, there are significant amount of elderly people who prefers café for their business meeting. In terms of gender, both males and females are being targeted due to the fact that coffee is having equal acceptance from both the genders (Hess & Doe, 2013).

Demographic segmentation

In terms of social status, only the top of the pyramid customers are being targeted and products and services of Starbucks are being positioned as more status symbol. Thus the value creation for the customers of Starbucks is not only the taste of the coffee but also the social status and class attached with them. Mainly the professionals are being targeted along with college goers (Rupp,Kern & Helmig, 2014). This is due to the reason that professionals are having busy daily schedule and they mainly come to café for leisure. On the other hand, college goers are targeted due to the reason that they prefer café for occasional outings. In terms of income level, premium customers are being targeted with the exclusive and premium products of Starbucks.

In terms of lifestyles of the customers, people with having active lifestyles are being targeted. This is due to the reason that customers with active and updated lifestyles will be more aware about the café culture and they will be more updated with the latest offerings of Starbucks (Park & Jang, 2014). In terms of adopter categories, early adopters and early majority customers are being targeted. This is due to the reason that early adopters prefer the products of Starbucks as trying something new while on the other hand, the major follows the trend in the market, which falls under the early majority category.

In terms of geographic segmentation, customers from the tier I cities are being targeted. This is due to the fact that Starbucks stores are only having their presence in the metropolitan cities around the world. In addition, Starbucks is having their stores mainly in the developed countries and a few in the developing countries (Yu et al., 2016). Thus, customers only from these countries are being targeted. Urban customers are only being targeted and involved in the marketing approach of Starbucks.

The major unique selling proposition for Starbucks is unique taste, aesthetic value and distinctive service offerings. Coffee of Starbucks is known for their rich and strong taste and aroma. Thus, it is important for Starbucks to more focus on their product attributes in generating unique selling proposition. In addition, aesthetic value including the store ambience and service quality can also be leveraged in gaining the competencies (Khan, 2013). This is due to the reason that logo and green color used by Starbucks now became synonymous and brand recall for the customers is also high. Added with the high social value, the status quotient offered by Starbucks is well ahead of their competitors and it can also be considered as their unique selling proposition.

Currently, the positioning statement or slogan of Starbucks is “rewarding taste buds”. This refers to the fact that taste is the major positioning factor for Starbucks and their product offerings are designed in accordance to different tastes. Positioning strategy of Starbucks is based on different elements such as product attributes, meeting need not fulfilled by the competitors, social class and exclusivity. Product attributes for Starbucks include taste and design of the service offered to the customers. Apart from coffee as core offerings, there are number of other offerings such as cappuccino and bakery items are offered by them, which are unique in terms of tastes and their service delivery process. Some of these products are only being offered by Starbucks only. Thus, they are positioning their products based on these attributes.

Psychographic segmentation

Some of the factors such as exclusivity and social class are not being fulfilled by majority of the competitors for Starbucks. This coupled with the premium pricing of the products of Starbucks is offering an added social or status symbol for the customers. It is also helping Starbucks in positioning their products as more premium in the market by offering less distinctive products over their competitors.

Currently, the positioning location for Starbucks is higher pricing and higher product attributes. This refers to the fact that target customers are from the top of the pyramid and they are getting attracted only with the product proposition offering by Starbucks irrespective of the price. However, in the above strategic map, it is shown that offering more competitive price along with offering higher product attributes will help Starbucks to cater to larger customer segments and more sales revenue (Derdenger & Kumar, 2013). This is due to the reason that even though the premium pricing is maintaining the exclusivity of Starbucks but it is also restricting the market potentiality for them. The above positioning map is showing that Starbucks is not posing any challenge for other major competitors due to the differences in the pricing level.

The main product line for Starbucks consists of range of coffee, tea and other beverages, while the secondary product line includes baked pastries, salads, sandwiches and fruit cups. Secondary product line of Starbucks mainly acts as the complimentary offerings over their primary products. However, primary and secondary product line of Starbucks is all in the same category of bakery and café. One of the major attributes of the products of Starbucks is packaging due to the fact that distinctive packaging and package design of Starbucks helps them in branding and offering unique servicing to the customers (Helm & Gritsch, 2014). Furthermore, the top quality ingredients used in making the food and beverages helps in maintaining their taste. However, it should be noted that Starbucks maintains global product strategy with having focus on the market adaptation.

Another major product element for Starbucks is their deep product assortments. This is due to the fact that in terms of beverages and baked food, Starbucks is having is huge variety in size and flavors. This is helping them in catering to different taste and preference pattern of the customers from a certain segment. Though the product offerings are being initiated according to their global approach, service delivery approach is differentiated according to the target market needs. Some of the most popular items of Starbucks are Seattle coffee, Caffe Misto and Iced Brewed coffee. On the other hand, in the food category, the major items are almond croissant, chicken strips, Butterscotch cookie and Blueberry muffin (Mintz & Currim, 2013). These new products will help Starbucks in diversifying more customer segments apart from their existing customer base. In the comparison to the product portfolio of Starbucks, competitor’s products are less assorted. For example, Costa Coffee is also offering similar brew of coffee as Starbucks but the variants offered by them is less than that of Starbucks.

Geographic segmentation

Figure: 1

Blueberry Muffin

Figure: 2

Butterscotch cookie

Figure: 3

Almond croissant

Figure: 4

Iced Brewed coffee

Figure: 5

Caffe Misto

Pricing structure should be based on retail price. This is due to the reason that in order to make the products of Starbucks more competitive, retail market price level should be considered. Thus, price differences between the products of Starbucks and their competitors will get reduced and more customer segments can be targeted. However, it is also being recommended that a premium should be maintained over the retail price in order to have the existing brand identity. In this case, the selling price will be determined by means of adding the cost price and the premium value initiated (Li, Xu & Li, 2013). The cost price will be fixed and premium will be variable. In terms of pricing strategy, geographic pricing and product bundling pricing will be maintained. This is due to the reason that pricing of Starbucks should be based on the economy of the target market. For instance, products can be sold in more premiums in the developed countries over the developing countries.

Adaptation strategy will be followed in providing discounts due to the reason that trend of festive discounts will be different in different regions. Thus, the festive discounts will be offered based on the timing of the festivals in different regions. Price of Starbucks will be adjusted based on the geographical price zones due to the reason that change in the price level will determine the change in the pricing level of the products. This will also enable Starbucks to align their pricing level with the market economy.

The new positioning slogan for Starbucks will be “something more for everyone”. This depicts the larger target segments for Starbucks with having the fact that value proposition will be more compared to their competitors. The new advertisement approach will be more emotional and comparative, which will help to find the right chord with the emotional attachment of the customers. Moreover, comparative approach will aware the customers about their distinctive value proposition. Choice of media will include both offline and online media (Gangwar, Kumar & Rao, 2013). Social media will be used to tap the younger segments and determining the feedback of them. On the other hand, traditional media such as TV and print media will be used to communicate the newly launched products and offers.

In terms of loyalty programs, Starbucks cards will be provided to the customers in which, loyalty points will be stored with every purchases. This will enhance the external push of the customers in buying more from Starbucks. Customer and customer support will be given more focus due to the fact that service quality will determine the satisfaction level of the customers. They will have live chat options along with having dedicated community in the social media. Thus, customers will have less time incurred in getting the response in case of their queries.

Starbucks will follow exclusive distribution strategy due to the reason that it will help to maintain their existing positioning in the market. In addition, this will also help in maintaining the certain standards of the service delivery of Starbucks. Currently, the tier I cities are being catered by Starbucks and there are number of metropolitan cities where they currently do not have their presence. These new cities will be covered. Direct distribution channels will be used due to the presence of exclusive distribution strategy (Chen & Sheih, 2016). Thus, the entire channels in the distribution process will be in control of Starbucks. Social media will mainly be used in gathering the market data and information for the product strategy.

Identification of positioning strategy

The evaluation and control aspect of the Marketing Plan tends to play a great role whereby it helps the organization in successfully ensuring whether they will be able to abide by the designated plans and see to it whether their staff and other resources are working in alignment with one another. If the evaluation and control aspect of a plan does not work appropriately, it becomes very difficult for the organization to ensure and see to it that they form specific evaluation as well as control plans which will assist them accordingly. Hence, with respect to this, the given section of the marketing plan will be highlighting the different monitoring and evaluation metrics which Starbucks can deploy into the organization in order to ensure that it is successfully able to control its plan. The evaluations will be carried out every 3 months in January 2019, June 2019 and in January 2020. The evaluation which will be carried out in the year June 2019, will determine the success of the marketing plan and to check whether the Starbucks in India will be successful.  

Implementation and Schedule

In order to ensure that the expedition of Starbucks in India is successful, the organization is required to take considerable steps which will go a long way in assisting the organization to achieve success in the long run. The 4Ps of marketing are the primary essentials need to be finalized before any adequate step is taken. Every department needs to understand the roles which they are required to take in order to ensure smooth implementation of the plans. The evaluation aspect of the strategies as well as promotions will be assessed every 3 months in order to ensure the growth as well as the development prospects.

Conclusion

Therefore, from the given analysis it can be rightfully stated that the given Marketing plan of the Starbucks has taken into consideration various aspects of the external environment as well as the internal market along with the consumer and market development aspects. The report defined the background of the company which was then followed by the analysis of the marketing environment. The latter half of the report outlines the Marketing mix of the organization which is then followed by the Monitoring, Evaluating, Control and the Implementation strategy. If these steps in the marketing plan are followed, the company will be able to achieve long term success in the market.

However, it can be rightfully recommended that for India, it first targets the capital cities as they have a larger population base which has a huge purchasing power and thus they will be able to afford the product. Moreover, it is also recommended that in order to ensure its brand name prevails it needs to make use of the exclusive premium pricing which shall then assist it to achieve long term success. The promotional activities should be followed by appropriate feedback which shall assist in monitoringand controlling.

Reference 

Chen, C. W., & Shieh, S. (2016). Does exclusive dealing matter? Evidence from distribution contract changes in the US beer industry. The Journal of Industrial Economics, 64(3), 411-435.

Cross, J. C., Belich, T. J., & Rudelius, W. (2015). How marketing managers use market segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer, Cham.

Derdenger, T., & Kumar, V. (2013). The dynamic effects of bundling as a product strategy. Marketing Science, 32(6), 827-859.

Helm, R., & Gritsch, S. (2014). Examining the influence of uncertainty on marketing mix strategy elements in emerging business to business export-markets. International Business Review, 23(2), 418-428.

Hess, M., & Doe, P. (2013). The Marketer’s Dilemma: Focusing on a Target or a Demographic?: The Utility of Data-Integration Techniques. Journal of Advertising Research, 53(2), 231-236.

Khan, T. (2013). STP strategy for New Product Launch-a Work in Progress. International Journal of Business and Management Invention, 2(3), 56-65.

Lamb, C. W., & Crompton, J. L. (2017). Analyzing marketing performance. In Marketing the Public Sector (pp. 173-184). Routledge.

Li, Y., Xu, L., & Li, D. (2013). Examining relationships between the return policy, product quality, and pricing strategy in online direct selling. International Journal of Production Economics, 144(2), 451-460.

Mintz, O., & Currim, I. S. (2013). What drives managerial use of marketing and financial metrics and does metric use affect performance of marketing-mix activities?. Journal of Marketing, 77(2), 17-40.

Paley, N. (2017). How to Develop a Strategic Marketing Plan: A step-by-step guide. Routledge.

Park, J. Y., & Jang, S. (2014). Psychographics: Static or dynamic?. International Journal of Tourism Research, 16(4), 351-354.

Rupp, C., Kern, S., & Helmig, B. (2014). Segmenting nonprofit stakeholders to enable successful relationship marketing: A review. International Journal of Nonprofit and Voluntary Sector Marketing, 19(2), 76-91.

Sandy, C. J., Gosling, S. D., & Durant, J. (2013). Predicting consumer behavior and media preferences: The comparative validity of personality traits and demographic variables. Psychology & Marketing, 30(11), 937-949.

starbucks.com. (2018). Starbucks – The Best Coffee and Espresso Drinks. Retrieved from https://www.starbucks.com/

Yu, R., Gelfand, A., Rajan, S., Shahabi, C., & Liu, Y. (2016, February). Geographic segmentation via latent poisson factor model. In Proceedings of the Ninth ACM International Conference on Web Search and Data Mining (pp. 357-366). ACM.

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order