25A – What’s Next?

Existing Market:

What’s next in terms of products and services for my venture: What I think is next in terms of products and services for my venture is creating and developing strategic business units specialized in certain products regionally, such as tea for England and mooncakes in China. Starbucks currently incorporates strategies to reach diverse populations and cultures by conducting extensive research on the history, culture, and the locals’ taste preferences to best adapt their products. The corporation’s localization strategy is to blend local products with innovative store designs to fully adapt to the country’s culture. When Starbucks entered the market in China, they knew it was not about the coffee, but about reviving a tea house culture that existed for thousands of years. In China, the brand started by serving tea at Starbucks locations before coffee was sold, enabling the market to become accustomed to the brand. Starbucks was also not localized, or branded as a Chinese drink brand within China, due to the fact that local consumers are more trusting of foreign food & beverage brands. This is a result of food scandals within the country, and localizing could have potentially harmed Starbucks growth within the country. In Japan, Starbucks initially launched by selling American foods, which were too sweet and too large in serving sizes. The brand remediated this issue by adapting their menu and offering localized food and drinks with smaller serving sizes and reduced sweetness. One of the corporation’s goals is to create new and innovative products to attract new customers along with maintaining a loyal customer standing while expanding the global retail business and increase markets.

Interview 1:

Is there anything that would motivate you to visit or shop at a Starbucks store now rather than in the future?

Interviewee: I think the only that would encourage me to go to a Starbucks now would be a surprise assignment. As mentioned before, I usually only go to Starbucks for coffee, so really, I would only go if I needed to get caffeine.

How frequently do you go to, or visit Starbucks?

Interviewee: So, I usually visit Starbucks more often when I’m really stressed, so around exam days or when a lot of projects are due. Normally when I’m that stressed out, I might visit two to three times a week at most.

What is your current impression of Starbucks?

Interviewee: It’s not a bad place to get coffee, mostly because of how popular it is on campus and how many locations they have available. I don’t really have a sense of nostalgia for Starbucks. As for the price, the drinks that I normally get tend to be the cheaper ones, so regular coffee or a simple expresso drink. Those tend to be well priced, like $2 to $3. However, for some of the more special drinks, like the seasonal drinks, I personally think they’re a bit overpriced for what I get out of it.

How does Starbucks make you feel?

Interviewee: It gives me the caffeine that I need and that’s it. Occasionally the sugar that I crave.

What words do you associate with the brand when you hear “Starbucks?”

Interviewee: It’s like, hip, trendy, same thing. Decent, I guess?

Do you think Starbucks has an advantage in the market compared to their competitors?

Interviewee: At least on campus, I think Starbucks has the advantage because it is effectively the only place that has coffee. While there are a couple of smaller places around campus that also have coffee, for example, let’s say in the POD Market and in the New Engineering Building, there is a coffee place called Java City, the majority of places that I normally hang around tend to have Starbucks.

What do you think has contributed to the success of Starbucks?

Interviewee: I think their popularity on social media, and I suppose also just how they’re so prevalent on college campuses or at least the ones that I have been to has greatly contributed to their popularity among college aged Americans.

Interview 2:

Is there anything that would motivate you to visit a Starbucks store now

rather than in the future?

Interviewee: I don’t think that there is anything now compared to the future that would affect my choice to go to Starbucks.

How frequently do you visit Starbucks?

Interviewee: Maybe once a week.

What is your current impression of Starbucks?

Interviewee: It gives the general coffeeshop vibes, but sometimes the atmosphere can be very busy due to its popularity.

How does Starbucks make you feel?

Interviewee: It makes me feel good knowing that people are working hard to make me the very best drink they can. And it’s a nice atmosphere when it’s not busy.

What words do you associate with the brand when you hear “Starbucks?”

Interviewee: Quality coffee, chill vibes, nice people.

Do you think Starbucks has an advantage in the market compared to their competitors?

Interviewee: Yes, I feel that they have an advantage because they have a larger market share. I think that this happened in part because they are everywhere. It is the only store where if you go to a city like New York that you can see two on the same block.

What do you think has contributed to the success of Starbucks?

Interviewee: The great drinks, especially the variety they offer. They have everything for every taste.

Interview 3:

Is there anything that would motivate you to visit a Starbucks store now

rather than in the future?

Interviewee: What would motivate me to visit a Starbucks store now rather than in the future depends on my exam schedule. I usually stop by the stores every once in a while, to get a pick-me-up if I’ve had a busy or long day and need the caffeine.

To start, how frequently do you go to, or visit Starbucks?

Interviewee: I’d say probably about once a week.

What is your current impression of Starbucks?

Interviewee: I like their coffee and their establishments.

How does Starbucks make you feel?

Interviewee: They have good coffee, and I love the experience one gets when in Starbucks. It’s very quiet and a good place to study.

What words do you associate with the brand when you hear “Starbucks?”

Interviewee: Coffee, green, busy.

Do you think Starbucks has an advantage in the market compared to their competitors?

Interviewee: Yes, because of how well known they are. They have a solid reputation as coffee shops go.

What do you think has contributed to the success of Starbucks?

Interviewee: Millennials, their good marketing and quick, reliable service.

Path for the Future: Based on my own expectations and the feedback I received from customers, what makes the most sense for my venture in terms of growing in my existing market is for Starbucks to offer items from their international menu in other countries and to adapt not only the exterior, but also the interior of stores to the country’s culture. Similar to McDonald’s Around the World promotion, Starbucks could offer popular beverage flavors such as the Sakura Blossom Cream Frappuccino in Japan. While Starbucks has accommodated for localizing the exterior of their stores to suit a country’s culture, the interior of every store is consistent, and follows that of a traditional coffeehouse, even in places such as Mexico. The consumer market for Starbucks is predominantly located in North America, followed by China and Japan. The corporation can expand in Chinese and Japanese market, the two largest markets after the North American market and focus on the rising coffee demand in South Asian markets. The geographics for Starbucks consists of three regional divisions for the global market, Americas, China and Asia-Pacific, and Europe, Middle East, and Africa. Starbucks corporation has the most stores in the Americas, but is also heavily focused on China, where it has opened around 1,400 stores. The new and potential target audience in China has great potential, with same-store sales growths outpacing the segment. By pushing a coffee culture in China, the reward will be healthy, long-term, profitable growth for decades to come due to increasing the existing market.

A path for the future consists of expanding the global retail business and increase the market share in a systematic manner by opening stores in new and existing markets and retaining superior customer service as well as the “Starbucks experience,” which is attractive to a segment of the target market. The core marketing strategy focuses on segmentation, targeting, positioning, and differentiation. Starbucks also utilizes the extended marketing mix, with beverages being the most profitable for the corporation. From a consumer point of view, the Starbucks industry has a revenue of $47.7 billion. This places the corporation in the mature stage as it has a 1.4% annual growth rate. However, Starbucks is constantly adapting to changing consumer tastes, due to trends, such as the “unicorn trend” which targets a younger and more tech savvy audience. As customers purchase more coffee, the brand is switching towards premium and higher-quality coffee. The brand can increase the market share of non-coffee or caffeine-free drinkers by introducing product lines targeted towards this segment and repositioning one of its current products, the Frappuccino, to include a crème variation with no coffee, handing out free samples of select beverages at locations such as college campuses and sponsoring events by providing bakery products for participants at the event, and expanding tea offerings in Asian markets due to China being one of the largest tea-drinking markets in the world and encompassing familiar flavors for consumers. The market problem for Starbucks is that it has reached a saturation point in its home market, and not attracting new people.

New Market:

Radically Different Market: A radically different market from what I’m currently planning to target consists of young people ages 12 to 30. The target market is low to high-level income consumers, and the typical consumer is a middle-class teenager, perhaps in college and with a job. This is due to the fact that most teenagers do not have a lot of cash, even when they are working. According to psychographics, the target audience has an openness to new cultures and senses and a love for local products, services and people who support their neighborhoods and communities. Consumers who purchase the product are thinkers, experiencers, or strivers. Thinkers tend to look for durability, functionality, and value. Teenagers purchase the product due to its functionality, the fact that it’s easy to obtain and consume with very little effort as a result of its portability, and its acceptable as a beverage in various occasions, such as parties, meetings, or just as a casual refreshing beverage. The Prizm Segment that should be targeted are the Striving Selfies, because they are “among the most tech savvy segments” and are a younger generation “that shows signs of greater potential” as they mature and get older due to technology use. The psychographic profile revealed that this audience has grown up in a world that emphasizes convenience, choices, and budget-friendliness, depending on their level of income. The target audience are young, enthusiastic, and impulsive consumers who seek variety and excitement. The product is an affordable, family-friendly beverage than anyone can purchase and enjoy, along with share.

Creating value for the market: I think my venture concept might be able to create value for people in the market because the target audience should maintain its strong sense of brand loyalty, which has been fortified by the corporation through its delivery of high-quality products throughout the years. The brand currently dominates the beverage market with several types of products that appeal to different demographics. The company accentuates a unifying message- that their products can be enjoyed by everyone, which is denoted through the brand’s underlying notion of happiness. The product also has recognizable packaging, it identifies with a green theme to associate the distinctive green color with the brand for the target audience. The consumers should value the brand due to its quality and the emotional satisfaction, happiness, it gives to its users. The main message we want the target audience to receive from all campaign materials is that the brand encourages its customers to maintain loyalty, even with the changing atmosphere within the soft drink industry. The brand’s products generally receive positive feedback via blogs and reviews, with a multitude of the comments highlighting the product’s quality and culture with an emphasis on the spirit of collaboration among people. First and foremost, the campaign should stress the importance of brand loyalty due to the fact that it constitutes a large portion of the brand’s continued success. From there, the tone should be approachable, refreshing, and fulfilling. Use of the brand’s vivid and distinctive packaging will support the primary message for the campaign and target the new market audience.

Interview 1:

How frequently do you go to, or visit Starbucks?

Interviewee: Zero times a week. The only time I go to Starbucks is if I go there for free water or napkins at Marston. So, I went to Chipotle and I was going back to Marston to study and eat, but I forgot a spoon and realized right when I entered Marston. Then I went to Starbucks to get a free spoon. 

What is your current impression of Starbucks?

Interviewee: It’s overrated. I don’t go there enough to have sufficient or valid judgement.

How does Starbucks make you feel?

Interviewee: Out of place.

What words do you associate with the brand when you hear “Starbucks?”

Interviewee: Capitalism and coffee.

How has Starbucks advertising impacted you?

Interviewee: I have never seen a Starbucks ad. I’ve only seen Starbucks stores.

Do you think Starbucks has an advantage in the market compared to their competitors?

Interviewee: Yes, there’s like ten just on campus.

What do you think has contributed to the success of Starbucks?

Interviewee: Don’t know, I have no idea how a coffee shop became so prominent. Maybe they used the same strategy as McDonald’s.

Interview 2:

How frequently do you go to, or visit Starbucks?

Interviewee: I go rarely. I know there are a lot of Starbucks on campus, but I would rather go to Dunkin’ because of the prices. Starbucks is a bit too much for my budget.

What is your current impression of Starbucks?

Interviewee: I think they are kind of overrated. Dunkin’ has like the same products at a cheaper price and Starbucks is just everywhere; it’s annoying.

How does Starbucks make you feel?

Interviewee: Starbucks has good coffee and all, but, yet again, I find it annoying how their drinks are overpriced and their establishments are everywhere. Its overrated.

What words do you associate with the brand when you hear “Starbucks?”

Interviewee: Overrated and overpriced.

How has Starbucks advertising impacted you?

Interviewee: I feel that Starbucks is everywhere.

Do you think Starbucks has an advantage in the market compared to their competitors?

Interviewee: Yes, they have established themselves everywhere, so they are pretty much unavoidable.

What do you think has contributed to the success of Starbucks?

Interviewee: The fact that they are everywhere.

Reflection: What I learned about this new market is that they drastically differ from the existing market. The target audience for Starbucks are men and women ages 25 to 40. The target market is affluent or high-income consumers, but multiple Starbucks are also surrounded by middle-income neighborhoods, due to these people spending their discretionary income on the brand’s beverages. The corporation targets the working class, or people who are occupied in their daily lives. Due to their immersive lifestyles, customers can grab a drink “on the go,” and Starbucks also offers bottled drinks for convenience. The radically different market are young people ages 12 to 30. The target market is low to high-level income consumers, and the typical consumer is a middle-class teenager, perhaps in college and with a job. This is due to the fact that most teenagers do not have a lot of cash, even when they are working. According to psychographics, the target audience has an openness to new cultures and senses and a love for local products, services and people who support their neighborhoods and communities. What surprised me the most was the difference in psychographics, for Starbucks the existing market is involved heavily on arts and charity and making great efforts to be environmentally and socially responsible, will participate actively in AIDs benefit in every store, and it targets those that are “serious coffee drinkers” or prefers an upscale coffee market. The psychographic profile revealed that this audience has grown up in a world that emphasizes convenience, choices, and budget-friendliness, depending on their level of income and are young and enthusiastic. 

My expectations and assumptions were correct for the new market because they were radically different compared to the existing market. The target audience are young, enthusiastic, and impulsive consumers who seek variety and excitement. The brand is an affordable, family-friendly beverage than anyone can purchase and enjoy, along with share with peers. This new market appears to be as attractive as my existing market because as customers purchase more coffee, the brand is switching towards premium and higher-quality coffee. Starbucks has also begun to incorporate food, such as sandwiches and bagels, into their menu, transforming the coffee shop into a one stop shop. Starbucks offers a large variety of products including specialty coffees, foods, teas, and coffee accessories. To appeal to the target audience and encourage them to purchase merchandise, the products should be highlighted through social media posts or viral marketing campaigns. Partnerships and collaborations with more brands and retailers can also be done, such as deepening partnerships with overseas businesses in order to significantly elevate the “Starbucks experience” for foreign customers who are new to the brand and integrating multiple platforms across both the Starbucks and foreign market ecosystems, enabling a user-friendly interface and personalized experience. This would also appeal and increase the market share of non-coffee or caffeine-free drinkers. The employees of Starbucks are also trained to be personable with customers and providing a superior experience that clients of Starbucks have expected due to their multiple visits. The brand has also begun to appeal to those outside of their target markets by offering other products, such as food.