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Market Segmentation, Target, and Positioning of Starbucks

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The company I have selected is Starbucks. It has started in 1971 in Seattle, Washington by three people. Actually, it was supposed to sell coffee beans and equipment. In 1983, after another partner named Schultz joined, he thought they had to sell coffee and espresso drinks like other shops. However, other partners didn’t agree with him because they thought it would disturb their initial goals which concentrated on selling coffee beans. Therefore, Schultz ran his own coffee store and started to sell coffee from that time. In 1987, the original three owners of Starbucks decided to sell their company to Schultz. Starbucks became bigger and bigger, and finally the largest coffee company in the world today.

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It sells coffee, beverages like Frappuccino, various kinds of teas, and food such as bakery, yogurt, and fruits. People can have not only drinks, but also meals at Starbucks. In addition, it provides services like ‘Starbucks at home’, ‘membership card’, and ‘mobile application’. We can have products of Starbucks at home or company using delivery service. Also, there is a reward system that customers can earn stars and get a free drink or gifts with certain number of stars. All of these services can be viewed through its mobile application. It provides registering new member account, payment system, finding locations for stores and so on. In natural perspective, Starbucks tries to preserve environment. If customers want used coffee grinds, they can get it for enrichment of soil. Also, Starbucks aim to reduce pollution in nature so it makes paper bags and napkins with recycled content.

I was curious that how Starbucks could succeed in marketing area even though there are many competitors. So, I searched about marketing strategies of Starbucks and am going to write about it concentrating upon market segmentation, target, and positioning in order.

Market Segmentation

The companies normally segment the market into demographics, geographic, psychographics, and behavioral things. Starbucks may also segment the market in many groups but especially divides the market into geographic, and psychographic segmentation.

There are three groups in geographic segmentations. People have different taste and quantity of food by countries. Also, climate and seasons vary due to geographical features. Therefore, First of all, the company can make a group of seasonal products. It can develop special products for the certain period. Secondly, food preferences among people are important in the market. Some people want healthy and nutritious food while others want favored food even though it is not good for health. The criteria of deciding food are different by people. Finally, the amount of food per a person can be one of groups. It is apparent in the size of drinks of Starbucks. In venti sized iced americano, it is 591ml in Korea while it is almost 709ml in USA.

In psychographic point, lifestyle is the key to forming groups. Some employees such as office workers, entrepreneurs have coffee every morning before they go to work. These kinds of people regularly have coffee so they can get free drink with reward service. And for the people who want to protect environment and use their own bottles, Starbucks sells limited edition tumblers. Most of tumblers have different designs and it’s hard to get after selling season. So, there are many people who collect tumblers with unique designs. Some people even queue to get them before being sold out.

Market Target

As I mentioned, there are many groups that Starbucks made to target customers. It can make new products using with cultural sources or seasonal fruits focused on segmented groups.

First of all, Starbucks provides ‘local delights’ which shows cultural characteristics among people. For example, in Singapore, there are menus like ‘Sedap lah’ pandan gula melaka cake and ‘mai hum’ chicken laksa pie. These are the products that combined traditional foods with bread. People can buy these products only in Starbucks in Singapore. If there are people who are not used to other food, they can try ‘local delights’ because these are made with familiar ingredients to them. In addition to this, people who are traveling other countries can have these at Starbucks so that they can try the country’s local food in special ways.

Secondly, there are seasonal products that customers can only get them in specific seasons. For example, Korea has all seasons like spring, summer, fall, and winter. Therefore, fruits that can be cultivated a lot in the certain season are different. Also, Starbucks thinks about which food ingredients will suit each season.

Lastly, according to the various criteria of customers, it has a lot of menu that people can choose with their preferences. For people who think the nutrient is the most important, Starbucks shows the tables of food and drink nutrition like calories, fat, fiber, protein, and sodium in its website. Also, it summarized products that are under 200 calories and 350 calories. People who don’t want to have heavy calories can refer this information. Additionally, There is dairy-free options that customers can choose soymilk, almond milk, and coconut milk with extra pay.

Market Positioning

Starbucks makes effort to establish its image for not only delicious taste of coffee but also pleasant place, social commitment, and protection for environment. Therefore, customers can appreciate its contribution to society and nature with quality of products.

About place, It provides free wifi services and comfortable ambience that people can study or take a rest for a while in every stores. Furthermore, it has ‘drive thru’ in some stores that customers can buy products without entering stores. They can buy foods staying in their own cars. These are famous for better services than its competitors so people find Starbucks a lot.

For the taste of coffee, baristas who are hired for a retailing have to attend the training class no less than 24hours in the first two to four weeks. The training class includes history and knowledge of coffee, drink preparation, any services for customers, and retail skills. In addition to these, they should participate a workshop named ‘Brewing the perfect cup’.

In the case of social impact, it focuses on community. The company gives opportunities to many people such as hiring refugee, providing career and education for youth, military commitment of hiring veterans and military spouses. Starbucks also uses ethical sourcing by supplier diversity program. It has a goal of 100% ethically sourced tea and cocoa by 2020.

Starbucks aims to protect environment with selling products. It tries to adapt LEED to structure of buildings which means Leadership in Energy and Environmental Design. More specifically, when applying it in building stores, Starbucks uses recycled coffee grounds in table, materials that are in low releasing harmful chemicals for paints, adhesives, sealants, and coating. Also because of LED lights, it can save lighting energy power up to 45%.

Conclusion

Starbucks is the largest coffee store in the world. It divides market into demographics and geographic aspects. With these segmentations, it targets customers in cultures, seasons and preferences. And, Starbucks makes effort to differentiate its brand providing good atmosphere at stores, tasty coffee, and considering society and environment as well as its profits.

As I have searched for Starbucks, I get to know a lot of things about it. Actually, I thought of it as just coffee shop but after knowing that it is trying to not only develop new products but also find ways to protect nature and contribute to society, I realized that why so many people prefer Starbucks the most. By doing so, it can be the best for a long time.

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