Market Segmentation

Market Transitioning
Market Positioning

S T A R B U C K
S
By Pratham Arora
BBA LLB 3-A

Contents
I. Introduction

II. Market Segmentation analysis

III. Market Transitioning analysis

IV. Market Positioning analysis

V. Conclusive End notes

VI. Research resources

Introduction
Starbucks is a multinational chain of coffeehouses that has grown to
have nearly 28,000 stores in 75 countries worldwide. The company
has achieved this success by having a precise knowledge of who its
target audience is and catering to their specific needs, wants, and
preferences. In this project, we will focus on Starbucks' market
segmentation, transitioning, and positioning strategies to
understand how the company has been able to stand apart from its
competitors and maintain its position as a leading coffee brand.
Market segmentation is the process of dividing a market into smaller
groups of consumers with similar needs or characteristics.
Starbucks' market segmentation is typically divided into four
variables: demographic, geographic, behavioural, and
psychographic. The company has created a unique market
positioning that effectively distinguishes its products from competing
brands and provides them with an excellent strategic edge in their
target markets. Starbucks' positioning strategy is customer-based,
giving more than what the customer needs. Besides producing
great coffee, it promotes a good reputation to its target market
through excellent store ambiance, environmental protection, and
social commitment.
In this project, we will analyse Starbucks' market segmentation,
targeting, and positioning strategies to understand how the
company has been able to maintain its position as a leading coffee
brand. We will also explore the company's recent Reinvention plan,
which aims to drive value for partners, customers, and shareholders
while managing costs, improving margins, and elevating the
Starbucks Experience for all stakeholders. Finally, we will examine
Starbucks' digital expansion and social media strategy, which have
been critical to the company's success in the modern era.

Through this project, we hope to gain insights into Starbucks'

effective marketing strategy and learn how to navigate through
these marketing approaches. We will explore the company's market
segmentation, targeting, and positioning strategies, as well as its
recent Reinvention plan, digital expansion, and social media
strategy. By the end of this project, we will have a better
understanding of how Starbucks has been able to maintain its
position as a leading coffee brand and how we can apply these
strategies to our own businesses.
Market Segmentation
analysis
Starbucks’ market segmentation strategy encompasses four
variables:
The market segmentation of Starbucks is typically divided into
four variables - demographic, geographic, behavioral, and
psychographic. These variables will be the basis for specifying
a company's target market. Every company has various variables
for its marketing strategy; however, since Starbucks is a
global company, it is proper to tackle several categories with
its marketing plan.

The elements under Starbucks' targeting section typically

answer and specify the four variables mentioned in the market
segmentation section.

Starbucks' diverse customers can still be broken down into more

specific aspects.

Starbucks focuses on males and females, professional employees,

and students for demographics. Professionals and employees can
include the older age bracket; hence they target those aged 22-
60. Single people, older married couples with children, and
youngest children under and over six years old are also
included in its targeting approach.

Geography is also one of Starbucks' target considerations since

it serves several chains worldwide. Wherever there is a
Starbucks chain, it should be included in the geographic aspect
of the targeting. This includes Latin America, the US, Canada,
the Middle East, Europe, China, Africa, Asia, and the Pacific
regions.
Psychographic elements of Starbucks' targeting approach include
customers from a specific societal class and different
lifestyles of customers.

As has been previously mentioned, the positioning of Starbucks

is customer-based, allowing the company to provide the best
customer service. Besides its customers, Starbucks also
promotes its social commitment by hiring refugees and families
of veterans and military and giving career and education
opportunities to its employees. It may not be that evident to
everyone, but the company also participates in environmental
protection initiatives.

Starbucks classifies its market based on demographic, geographic,

behavioral, and psychographic. They then use a product
differentiation approach to satisfy varying customer groups. As with
the geographic segmentation, the company has retail outlets in
several locations, where each outlet reflects the preferences and
tastes of the local market. The outlets might have similar designs
but vary in product categories, such as baked food and coffee.

Market Transitioning
analysis
Starbucks offers a diverse range of products that cater to various
consumer preferences. From a business point of view,
understanding these product categories and types is essential for
effectively meeting customer needs and driving revenue. The main
categories of Starbucks products include:

1. Coffee: Starbucks is renowned for its high-quality coffee,

offering a variety of blends, roasts, and flavours to cater to different
tastes. This includes brewed coffee, espresso, and specialty drinks
such as lattes and cappuccinos.
2. Tea: In addition to coffee, Starbucks provides a selection of
teas, including classic black, green, and herbal teas, as well as
specialty tea beverages like iced tea and tea lattes.

3. Pastries: Starbucks offers a range of pastries, cakes, and

baked goods to complement its beverages. This includes items
such as croissants, muffins, cookies, and seasonal treats.

4. Frappuccino Beverages: A popular product category,

Starbucks' Frappuccino beverages are blended drinks made with
coffee, milk, and ice, available in various flavors and toppings.

5. Smoothies: To cater to health-conscious customers, Starbucks

offers a selection of fruit smoothies made with real fruit and yogurt,
providing a refreshing alternative to coffee-based drinks.

6. Merchandise: In addition to consumable products, Starbucks

sells a variety of merchandise, including branded mugs, tumblers,
and other drinkware, as well as packaged coffee, tea, and related
accessories.
From a business perspective, this product diversity allows
Starbucks to appeal to a wide range of customer preferences and
occasions, from morning coffee runs to afternoon snacks and
evening treats. By continuously innovating its product mix,
Starbucks can capture more of the market and adapt to changing
consumer tastes and lifestyle choices
Different consumers have different preferences for Starbucks
products based on various factors such as age, lifestyle, health
consciousness, and personal taste. From a business point of view,
understanding these preferences is crucial for tailoring the product
offerings and meeting the diverse needs of customers. Here are
some examples of how different consumers prefer different types of
products at Starbucks:

1. Age: Younger consumers, such as millennials and Gen Z, tend

to be more inclined towards Frappuccino beverages and iced
drinks, as they prefer refreshing and fruity flavors. Older
consumers, on the other hand, may lean towards traditional coffee
and tea-based beverages.

2. Lifestyle: Health-conscious consumers may prefer smoothies

and other healthy drink options, while those with a sweet tooth
might opt for more indulgent Frappuccino beverages and desserts.
Additionally, environmentally conscious consumers may appreciate
Starbucks' efforts in sustainability and support its eco-friendly
initiatives, leading them to choose the company over competitors.

3. Personal Taste: Some customers have a strong preference for

specific drink flavors, such as pumpkin spice or peppermint mocha,
and may visit Starbucks regularly to satisfy their cravings for these
seasonal favourites. Others may prefer the comfort of a familiar
morning routine, such as a tall drip coffee, and consistently choose
the same drink each time they visit the store.

4. Occasion: Starbucks' product categories cater to different

occasions, from morning commutes to afternoon breaks and
evening socializing. For example, busy professionals may rely on
Starbucks for their daily coffee fix, while families may visit for a
weekend treat or to celebrate a special occasion.

By understanding these consumer preferences, Starbucks can

continue to tailor its product offerings and create targeted marketing
campaigns to appeal to different customer segments. This approach
helps the company maintain its competitive edge in the market and
ensures that it caters to the diverse needs of its customers.

In summary, Starbucks' product categories encompass a wide

range of beverages, food items, and merchandise, allowing the
company to meet the diverse needs of its customer base. This
product diversity, combined with a focus on quality and innovation,
has been instrumental in Starbucks' success as a leading global
coffee brand.

Brand Positioning analysis

Starbucks has positioned its brand around its coffee culture and
world-class retail environment, leveraging its strengths to stand out
from competitors. Through its brand and marketing strategies,
Starbucks has created a unique identity as a coffeehouse and
established itself as a market leader by prioritizing the distinct flavor
and aroma of its products.

The Starbucks brand embodies values such as quality, consistency,

and reliability, and seeks to inspire and nurture the human spirit one
individual, one cup, and one neighborhood at a time. Customers
expect to find top-notch coffee, welcoming service, and a
comfortable atmosphere when they visit Starbucks locations.

Starbucks Coffee uses the following types of positioning:

• Mono segment positioning: The coffee chain giant

targets premium customer segment only i.e. individuals
who are willing to pay extra for the quality of products and
services.

• Adaptive positioning: Due to the tendency of increasing

consumer health awareness, Starbucks Coffee developed
coffee beverages with less calories such as Chai Tea Latte
(103 calories) Caffe Misto (63 calories) and Iced
Americano (11 calories).

• Standby positioning: Certain Starbucks beverages such

as Frappuchino had to await changes in the market for
certain period of time to find demand.

• Sustainability positioning: Starbucks, the biggest coffee

shop chain in the world, is striving to divert its customers’
focus towards the sustainability aspect of its business
operations by transforming its branches into “Starbucks
Greener Stores.” This store model is designed to lower
carbon emissions, decrease water consumption, and
reduce the amount of waste sent to landfills.

What does Starbucks represent?

 • Quality — Starbucks’ commitment to quality is reflected in
the consistent production of good coffee. Their emphasis
on quality extends to the preparation of each drink, with
employees trained to use the best techniques and
equipment.

• Consistency —Consistency builds trust at Starbucks.

Customers rely on the company to deliver the same taste
and experience every time, with a great selection of fresh
products and friendly staff providing quality service.

• Reliability — Starbucks is dependable and operates with

reliability, which increases customer satisfaction. They offer
consistent hours of operation and convenient locations.

How does Starbucks stay true to its brand?

To ensure the quality of their coffee products, Starbucks employs

quality control measures throughout the supply chain. They conduct
regular testing of their coffee beans at various stages, starting from
roasting to distribution, and even in retail locations. In case any
sample fails to meet their quality standards, they reject the entire lot
and reorder the coffee to maintain consistency and the highest level
of quality possible.

Conclusive End notes

Starbucks' STP gives the company a competitive advantage. The
company has differentiated its product which makes the brand
unique from the competing coffee industries. The company offers
premium quality products, localized menu items, and the use of
technology to connect with customers. Starbucks maintains quality
by connecting directly with coffee growers.

Some may find Starbucks' marketing segmentation, targeting,

and positioning unusual; however, the company has been reaping
the fruits of that strategy for decades now. The discussion above is
an overview of how extensive and comprehensive the coffee chain
has conducted its marketing strategies over the years. Starbucks is
a global company catering to diverse customers worldwide. It
divides the market into geographic and demographic elements. The
company can target customers in seasons, cultures, and
preferences effectively through segmentation. Starbucks has
successfully differentiated its brand from other coffee chains with
excellent store ambiance, tasty coffee, giving importance to societal
and environmental initiatives, and gaining profits in the process.
Bibliography