How Starbucks Became Popular
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Principles of Marketing MKT 321U-01
“Starbucks Case Study”
21 April 2004
Executive Summary
A few years ago if someone wanted an iced, venti, non-fat, no-foam, caramel macchiato, one
might think they were talking in a foreign language. Today, Starbucks coffee shops have become as
common as espresso, and the Starbucks language is ubiquitous. Starbucks brand coffee is extremely
popular, and recently the Company has expanded beyond just offering coffee in its retail
stores—expanding the brand beyond a beverage choice, and into a lifestyle choice. The Company must
decide whether it can successfully develop new products without alienating its core consumers.
Not Just a Cuppa-Joe
For Starbucks’ most faithful consumers, coffee is not just a beverage; it’s a ritual, a habit, a treat,
and a satisfying reward. This target market is mostly comprised of young professionals, who typically
have higher incomes, and stressful jobs. Most live in suburban areas, but commute to urban areas daily.
These customers are technically savvy—a Starbucks coffee cup is a common site in Internet startups, and
technical services companies.
Starbucks core customers stop in before or after work for a pick-me-up. They would rather pay a
higher price for coffee, than take the time to brew coffee at home, or drink from the office coffee klatch.
Many see the coffee as a small reward for working hard, and earning good money. Many perceive that
Starbucks coffee tastes better than home brewed coffee. The company meets the demands of these
consumers by placing stores near higher-end residential areas, and near major office parks.
Starbucks saw an opportunity to sell additional products to these core consumers, and expanded
its product line beyond coffee. Now, stores offer a variety of food—including cookies, muffins,
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doughnuts, sandwiches, and muffins. It also offers additional beverages, including teas, organic milk,
ginger-ale and soy-based drinks. In addition to food products, the retail stores also sell music CDs, coffee
making equipment, party games, and seasonal products such as potted plants in Spring, and Christmas
ornaments for the holidays.
Starbucks hopes these products appeal to its core consumers, and will help bring in other
consumers who are not interested in coffee. Some of these efforts will be effective, others may not
survive the test of the consumer dollar. By offering additional food, and beverage choices, Starbucks will
bring in customers who may use shop in the same way as its current core consumers. Professionals who
do not drink coffee may begin stopping by Starbucks in the morning for tea, and both these customers and
the current coffee connoisseurs may also pick up a muffin or sandwich. The other products may not sell
as well, Starbucks is not typically considered a destination for potted plants, board games, or Christmas
ornaments.
The music played in Starbucks is targeting a mellower, older consumer. By dressing the shopping
experience with soothing jazz or blues, the stores appear more inviting than a frenetic local coffee shop or
diner. While music CDs, and whimsical stuffed animals may be purchased on impulse, the higher prices
for the other products may prevent this line from being a success.
Would you like some Starbucks with that?
In addition to its traditional retail outlets, Starbucks is also expanding its brand into consumer
products. Starbucks brand coffee is available in grocery stores, gourmet cafes, and airports.. One can
purchase Starbucks ice cream at the local grocery store, and pay with a Starbucks-branded Visa card. By
branching out into new products, the Company hopes its brand name will be enough to sell additional
products, in non-traditional outlets.. Starbucks hopes it can entice new consumers by exclusive airline
contracts, and sell more products to its current fans via the grocery store and café product lines.
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While airline passengers are a captive audience-- introduced to the flavor of Starbucks coffee
whether they want to try it or not, Starbucks will have a harder fight enticing customers in a grocery store.
Starbucks is banking its brand name alone will draw its target market away from a myriad of other
popular choices. Through its credit card, Starbucks has created both a loyalty program, and a strong
statement about the strength of its brand name. The Starbucks Duetto card works as a regular credit
card—where each purchase earns the customer money towards free coffee, and as a debit card in
Starbucks retail stores. Customers can add money to a card on the Starbucks website, and use the card for
any purchase in the retail store.
Conclusion
In a very short time Starbucks has gone from a young professional’s morning treat, to a
household name. People joke about a Starbucks store on every block. People do not discuss making
coffee after dinner, they discuss going down to the local Starbucks. As the Company expands in
popularity, it is also trying to expand its product lines and offerings. It hopes to entice new consumers
into its stores by offering non-coffee products, and light food. Starbucks also hopes its target consumers
will be interested in bringing the Starbucks brand home with grocery store coffee and gourmet ice cream.
Starbucks rewards its loyal customers with credit cards, and discounts on its website.
Whether Starbucks will be successful in this horizontal expansion is yet to be seen. Some things
will likely fail—such as selling coffee on its website, and selling potted plants in its stores, because these
items are very far removed from what consumers associate with the Starbucks brand name. Other moves,
such as offering its coffee on airlines, and offering light food in its retail stores, are likely to help the
Company. All that is for certain is the morning lines for a venti, white chocolate, half and half, mocha are
longer than they used to be.
2006-12-06 11:20:10
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answer #5
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answered by Anonymous
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1⤋