Starbucks Marketing Mix

Successful organizations understand the importance of a strong marketing strategy to satisfy customers and sustain growth. Making the right decisions depends on several variables. The purpose of this paper is to describe the four elements of marketing mix and share how Starbucks has implemented an effective and powerful marketing strategy to become the world’s largest coffeehouse chain.

MARKETING MIX DEFINED

A marketing mix helps an organization simplify the process and help marketing managers make decisions. The marketing mix is composed of four elements: product, place, promotion, and price (also known as the four Ps). The purpose of the marketing mix is to build a marketing strategy around a target group, and focus the strategy to create a campaign that will persuade, influence and motivate the identified customer (Perreault, Cannon, & McCarthy, 2009).

The first ‘P’ of the marketing mix is the product. Product, in this case, refers to both physical products and intangible services. Forethought and research is important to create the right product or service that the target audience desires at the appropriate time (Perreault, Cannon, & McCarthy, 2009).

The second component is place. This is the location where the product is delivered and can be purchased by a consumer. A business must determine the most effective way to distribute its product by developing a supply chain management system that includes recognizing the best channel partners, warehousing, inventory management, order processing, and transportation (Perreault, Cannon, & McCarthy, 2009).

The third element is promotion. Promoting products is the effort of the marketer to inform and persuade potential customers to purchase the product or service. The organization can choose to use advertisement through different forms of media, sales promotions and salespeople to promote the specific product to the target market. Often the elements are combined to offer the best chance of reaching customers.

The fourth and final ‘P’ is price; the most difficult element to determine. The organization must consider its requirement for net income and its objectives for long-term market control to influence the pricing strategy. Pricing is a quantifiable way of measuring the value a consumer places on the product or service (Perreault, Cannon, & McCarthy, 2009). If the cost is too high or too low, it will not generate the expected volume or revenue for the company. An organization can have different pricing for different regions based on several factors but must be cautious of using this strategy so it does not alienate consumers.

STARBUCKS MARKETING MIX

Starbucks is a brand name recognized worldwide; not only for its coffee but also for its commitment to the environment and local communities wherever the stores are located. The first Starbucks opened in Seattle and 39 years later there are more than 16,000 locations in more than 50 countries (Starbucks, 2010). Few organizations have achieved the kind of success Starbucks has; the marketing mix has contributed largely to the growth of the company. Starbucks website states that its customers are “people of diverse ethnic, income and age groups with varying tastes and interests” (Starbucks, 2010, para. 1). This diverse customer base makes marketing a challenge but Starbucks has found the formula to do it successfully.

Starbucks marketing strategy revolves around the four elements of the marketing mix. Starbucks mission statement is to “inspire and nurture the human spirit one person, one cup and one neighbourhood at a time” (Starbucks, 2010, para. 3). As an organization, Starbucks fulfils its mission statement beginning with its products. It starts with more than 30 blends of single-origin premium arabica coffees, hand-crafted beverages that include hot and cold choices, teas and a wide variety of fresh food products (Starbucks, 2010). Starbucks also sells merchandise from espresso machines, cups, books, music, and books. Offering multiple products caters to the various clientele who frequent the coffeehouse giant. Behind the products are the baristas who work behind the counters and are encouraged to know the regular customers and his or her favourite beverage. Providing legendary customer service is as important to Starbucks as the product itself.

Location is everything and Starbucks has the formula for finding ideal places that are highly visible with heavy traffic. Starbucks can be found in shopping malls, airports, grocery stores, office buildings, and stand-alone stores with drive through convenience. The company has also created an inviting atmosphere for its customers to check e-mail, read, study, or socialize. Unlike some restaurants, Starbucks wants the customer to linger on the comfortable chairs, couches, or sit at a table.

Promoting products is something Starbucks does differently from most businesses. It does not bombard the public through advertisements. Instead, Starbucks competes on the merits of its products and services in all sales and advertising. Communications with current and potential customers are truthful and accurate; everything must be substantiated and cannot disparage its competitors (Starbucks, 2010). The majority of advertising campaigns have been directed to customers who have registered to receive e-mails and other notifications.

As a part of the local community and promoting environmentally friendly practices is another important aspect of its marketing campaign for brand recognition and reputation. The Starbucks Foundation was created in 1997 to support communities around the globe. Some of the projects include nurturing young leaders, supporting coffee, tea and cocoa development projects, providing access to clean water in third world countries, fostering education in China, and most recently rebuilding the gulf coast after the devastating hurricanes Rita and Katrina hit the area (Starbucks, 2010). The latest environmentally friendly initiative is to have recycling available in all of its stores where it controls waste collection and serve 25% of beverages in reusable cups. In 2009, Starbucks hosted a Cup Summit in Seattle with all facets of the paper and plastic cup manufacturers to agree upon criteria for a comprehensive recyclable cup product (Starbucks, 2010).

The last and hardest element to manage is price. The price reflects the importance that a consumer places on a product. Like most global companies, Starbucks prices its products based on geographical areas and how well the economy is doing in that specific area. The cost also includes the manufacturing and distribution of the products around the world. The loyal customer base keeps coming back regardless of the rising prices over the past several years because of the increased costs of coffee beans because of natural disasters and other factors. Starbucks has been cautious not to raise its prices too high; the increases have been relatively small as compared to other sectors.

CONCLUSION

Without a strong strategy, organizations will struggle to satisfy customers and identify the right products at the right time. The marketing mix will help a business develop strategy and tactics to build a successful marketing plan to recruit and then retain new customers (Kotler & Keller, 2009). Marketing professionals understand without the four Ps, an organization will grapple with fulfilling the needs and wants of a customer. By using the four Ps, the marketers can create a favourable response from the target market and meet the varying needs and other dynamics of the marketing environment.

References

Kotler, P. & Keller, K.L. (2009). Marketing management (13th ed.). Upper Saddle River, NJ: Prentice-Hall

Perreault, W.D., Cannon, J.P. & McCarthy, E.J. (2009). Basic marketing: A marketing strategy planning approach (17th ed). New York, NY: McGraw Hill

Starbucks Corporation. (2010). Company information. Retrieved January 6, 2011 from http://www.starbucks.com/about-us/company-information