Starbucks opened in Seattle’s Pike Place Market in 1971 with hopes of creating a "third place" between home and work. Starbucks was created to produce premium coffee, while adhering to various core principles during economic growth. "The company has realized that people don’t only come for coffee; they come for the atmosphere," (Kembell). Customers are able to socialize, read, study or enjoy music while drinking coffee. Starbucks strategically positions each store with hopes of matching the specific location, helping to create a unique atmosphere. Throughout this paper, I will analyze Starbucks’ current domestic and international marketing strategy through SWOT (strengths, weaknesses, opportunities and threats) analysis, to provide new ideas, leading to market segmentation.
Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006 (Starbucks Marketing Plan). The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. On average, Americans drink 3 cups of coffee per day, though it is hard to make an accurate guess because every customer has their own personal rate. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible. Providing consumers with the option of purchasing brewing equipment such as espresso machines, coffee filters and cleaners, Starbucks can now advertise in residential areas outside of the store.
While McDonald’s, Coca-Cola and Nike fill up TV commercial time to a national audience, Starbucks has chosen to take an unconventional approach to marketing. According to Brad Stevens, Starbucks’ lead marketing executive, "So much of the relationship with the company exists between you and that barista behind the bar. We haven’t been able to conceive of a way for TV advertising to repeat that, to capture the heart and soul of the company," (Allison). Starbucks does however buy holiday-season advertising as well as weekly full page ads in The New York Times, focusing on environmental awareness. In 2005, Starbucks spent $87.7 million on advertising, or 1.4% of revenues. In the same year, Coca-Cola spent $2.5 billion and Nike $1.7 billion on advertising, each about 11% of revenues.
The macroeconomic opportunities and threats that the Starbucks Corporation handles on a daily basis include: sociological forces and demographic factors. The porters five forces model will help identify where improvements can be made through the current competitive force, threat of potential entrants, bargaining power of buyers, bargaining power of suppliers and the threat of substitute products.
Starbucks makes it clear in the mission statement that sociological forces are important through the improvement of environmental issues present in today’s society. "Starbucks doesn’t just rest on its laurels, it demonstrates it through participating and organizing...