Starbucks Situation Analysis

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A target market is a specific part of the qualified available market the company, here Starbucks US, tries to pursue. (Kotler) The first thing one has to do is divide the market into segments. Market segments have to be measurable, substantial, accessible, differentiable and actionable. Then one has to choose a strategy to pursue these segments. Starbucks has developed a multiple segmentation managing approach instead of just focusing on one segment. When distinguishing segments in a market, segments are a group of customers sharing the same need, one can use several variables to do so. Amongst them are: -Geographic segmentation

-Demographic segmentation
Age, life (-cycle) stage, gender, income, generation, social class -Psychographic segmentation
Lifestyle, Values
-Behavioral segmentation
Decision roles, behavioral variables (occasions, benefits, user status, usage rate, buyer-readiness stage, loyalty status, attitude), conversion-attitude

After the segmentation (that means after defining the characteristics of the segment based on the above variables) one can start to target one or more of the segments. The choice depends on the segments attractiveness in terms of growth, competitive intensity, market access, and so forth. Afterwards, a company determines profitability and its position in the market (see next chapter).

The brand Starbucks radiates a certain lifestyle – the environment of their coffeehouses, the Italian coffee names, the internationality, simplicity and closeness (“partners”). This is referred to as being “the third place”. Hence, lifestyle is a big factor to consider in narrowing the target market. Furthermore, to which occasions do people come to Starbucks? The following exhibit shows that a lot of people enter Starbucks only for a coffee-to-go (US).
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