Starbucks Marketing Strategy

Topics: Coffee, Espresso, Marketing Pages: 12 (3701 words) Published: February 9, 2012
Prepared for: Starbucks Coffee

Submitted: Thursday, 2nd February 2012

Prepared by:
• Velisya (551496)
• Aktalisa Tifany (548994)
• Steffany Ciputri (551288)
• Gabriela Tiffany (546561)

Executive Summary

This essay discuss about how Starbucks utilizes its marketing mix in order to gain market share. Starbucks, which has been in the coffeehouse industry for 41 years, face higher competition than before. Even so, Starbucks is able to not only survive through this, but they are able to be “one of the most valuable global brands” (Theodore 2002). In its maturity stage, they are capable of expanding their consumer base despite the fact of increasing competition.

Through the augmentation of their products they could gain consumer loyalty. Starbucks uses price-skimming strategy in which they set higher price compared to others to indicate higher quality. Thus, this shows that Starbucks utilizes its pricing as their signaling device. In addition, Starbucks does not frequently use traditional means of advertising. In fact, they do not spend a lot on advertising and only depend upon their customer through their word of mouth advertising. Starbucks distributes their product widely in places that enables consumers to easily reach them and for them to reach their customers. It uses vertical marketing system in which it distributes their product through direct and indirect channel. Therefore, by using their marketing mix efficiently, Starbucks is able to increase its consumer loyalty, brand equity and also the rate of adoption.

Table of Contents

Cover Page1

Executive Summary2

Table of Contents3


The External Environment4

Customer Analysis & Evaluation5

Marketing Mix6-10








Starbucks, which first originated from Seattle in 1971, is a company that specializes on its coffeehouses. Providing high quality coffee, good ambience and genuine service to their customers. Over time, Starbucks diversify its products into tea, ice creams, juices and savory delights. However, this essay will only focus on its coffee products.

Being the largest in the coffeehouse industry, Starbucks coffee receives massive competition from other producers. This essay will discuss how Starbucks uses its marketing mix to sell and compete against other competitors.

The External Environment

With its high level of competition, Starbucks needs to utilize its marketing mix in an even better way. Some of its direct competitors include Gloria Jeans, Hudson’s Coffee and Coffee Beans. Its indirect competitors being Redbull, Monster and Nescafe bottled coffee. Major competitors in the future could be Gloria Jean’s that is now expanding in the market.

Starbucks should take into account the replacement products that may threaten the future of their products. These include energy drinks such as Redbull and Monster. Since it is more widely distributed in convenient stores and has a longer shelf life, these products tend to attract more consumers from the younger generation. As Starbucks has good positioning in the market, it will be difficult for replacement products to take over its market share. Most coffee houses are not only about its coffee anymore, they are also widely known as places for people to socialize, and therefore the location of the Starbucks shops should be easily found and the place should be comfortable. Since it is dealing with food and beverages, it is important for Starbucks to ensure the quality and taste of its products. Once customers have positive experience with Starbucks, people may spread the positive feedback and promote to people around them, minimizing the need to use mass media promotion. In addition, due to high competition in the coffee house industry, Starbucks has to be cautious in setting its prices. If the...

References: BBC News. 2012. ‘Starbucks profits rise 10%’. Retrieved January 27, 2012, from
BBC News. 2011. ‘Starbucks drops its name and the word coffee from logo’. Retrieved January 6, 2011, from
Karolefski, J. 2002. ‘Starbucks: Conquering New Grounds’. Retrieved 30 Jan 2012,
Lofthouse, R. (n.d.) 2011, ‘HOW ONE BRAND CHANGED THE WORLD’ - CNBC Business. Financial & Business News - CNBC Business. Retrieved January 31, 2012, from
Moon, Youngme, and Quelch J. ‘Starbucks: Delivering Customer Service’. Harvard
College. Boston: Harvard Business School, 2003. 1-20.
Starbucks Company, ‘Starbucks Company Profile’ (PDF file), downloaded from, accessed 31 January, 2012.
Tewell, K., Odom, B. & Snider, K. 2006. ‘Starbucks Marketing Plan’. Retrieved December 12, 2006, from
Theodore, S. ‘Expanding the coffee experience: Starbucks keeps sales brewing with new products, innovation and global expansion [Electronic version]’. Beverage Industry, 2002. P. 57- 62.
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