Have you ever gone out of your way to visit a Starbucks because it’s the only place that can give you that top-shelf caffeine fix with the exact drink you like? Whether or not we realize it, Starbucks’ brand positioning is so effective that it has become an integral part of modern culture. So much so, that it isn’t going anywhere anytime soon.
Over the past three decades, this coffee giant has gone far beyond just being a great coffee provider. By examining how Starbucks became a global brand—from their products and services down to their messaging and reputation—entrepreneurs can learn how powerful brand positioning can be for a business’s future.
To begin with, let’s take a look at the history of Starbucks coffee.
Business partners Gordon Bowker, Jerry Baldwin, and Zev Siegl created the company in Seattle in 1971. At first, they were only selling whole bean coffee in one store in Seattle, similar to other coffee retailers at the time.
But by 1982, the company had expanded significantly, with five locations selling the beans, a roasting place, and a wholesale operation for local restaurants. Then, when current Interim CEO Howard Shultz was hired as the head of marketing, part of his duties was to attend houseware shows.
He was in Italy when he saw about 1,500 coffeehouses in Milan alone. Because of this, Shultz was inspired to make Starbucks a national coffee chain. So, he pitched this idea to the owners but was quickly turned away.
In 1985, Shultz left Starbucks to establish Il Giornale. As a result of his ideas, Il Giornale expanded to multiple cities.
Later, when Bowker and Baldwin decided to sell Starbucks, Shultz sprang into action and bought the company, retaining its name. From then on, Starbucks became what it is today—a successful global company with a strong brand identity worldwide.
Starbucks Marketing Strategy
Part of the reason for its massive success is that Starbucks has implemented a differentiation brand strategy, which aims to produce goods or services that are distinct from other coffee brands. In a nutshell, this strategy seeks to gain an advantage by providing better goods or services than its competitors at a similar or higher cost.
There were a lot of coffee shops in the United States when Starbucks first opened, so the company aimed to differentiate itself from the competition from the very start. To do this, Schulz intended to innovate and recreate the experience of the Italian coffee bar culture. Essentially, the marketing plan of the coffee shop was to launch new products while opening new stores in the U.S. and abroad.
Additionally, Shultz wanted new customers to treat Starbucks as the third place—a place you enjoy spending time in aside from your house or work.
Starbucks Market Segmentation
According to Investopedia, market segmentation is the process of organizing potential customers into groups, or market segments, based on similar needs and responses to market actions. By taking the time to research different customer profiles, companies can better understand the needs of their target audience and create a more tailored approach for connecting with them.
At first, Starbucks’ marketing strategy involved socioeconomic segmentation and mostly focused on social class. It later developed to focus on office workers who wanted a cup of coffee in a pleasant ambiance with excellent amenities.
The company also classified its customer base into geographical and demographic subgroups, which allowed them to choose Starbucks store locations where they could attract the most educated coffee lovers.
Starbucks Target Marketing
Target marketing assesses each market segment’s attractiveness and chooses one or more categories to target with marketing campaigns. By creating a tailored message for each segment, businesses can more effectively reach their desired customers and build relationships that will last.
As part of Starbucks’ original brand positioning strategy, the company chose to target parents in their initial advertising and marketing campaigns. However, it later added more segments, including students and teenagers, and expanded its product line to include products that cater to the different segments.
Starbucks Brand Positioning
Based on Amazon’s definition, brand positioning describes the distinctive value that brands offer to their target audience. It’s a marketing technique developed to communicate the value proposition, or why a buyer should choose a brand over the main competitors, while also establishing their brand identity.
In short, if a product is exactly like every other on the market, consumers have no reason to purchase it. That’s why a value proposition is essential to building a business. Starbucks’ positioning strategy includes a value proposition that focuses on customer experience by delivering superior service beyond what its clients expect.
Further, the third place concept that Starbucks developed for its strategy helped them make company decisions based on their consumers’ needs, which allowed them to provide the best music, layout, and furniture to help them stand out among coffee shops. Also, Starbucks chose to make their employees partners and allowed them to participate in business decisions from the beginning, which was very different than other coffee companies at that time. As a result, the company has gained quite a competitive advantage over their opponents in the coffee world, especially when it comes to employee and customer satisfaction.
Related: What is Brand Recognition?
Starbucks Marketing Mix
A marketing mix is a group of variables that can be managed by a business to persuade customers to buy its items. Starbucks was able to develop a compelling marketing mix that propelled the name of the company to great heights.
Starbucks initially just sold coffee but has now expanded to sell a variety of products, including reusable coffee cups, teas, and cold brews. They’ve also expanded over the years to include seasonal drinks like Peppermint Mocha and their famous PSL (Pumpkin Spice Latte). In order to ensure the success of new products, the coffee company has always taken measures to ensure their loyal customers approve before launching new products.
Although Starbucks’ prices are higher than other coffee shops, their customers have always been willing to pay the premium because of the establishment’s upscale reputation and brand image. Equally important, Starbucks is able to support their higher prices by providing premier facilities, the highest quality coffee, and rewards like free food and drink items for their loyal customers.
Another reason Starbucks’ brand positioning has been so successful is because as part of their mission to uplift the human spirit, the company has made sure its staff is made of friendly people who are well-equipped to engage with customers.
At first, Starbucks refrained from using advertising as a promotional strategy. Instead, it relied on customer loyalty referrals and public relations to reach its goals.
It wasn’t until after Starbucks had tasted some success as a coffee chain that it made a move to develop a social media presence to help them engage with current and new customers.
Related: The 10 Best Branding Books
Conclusion for Starbucks’ Brand Positioning Strategy
All in all, the brand positioning strategy Starbucks has used over the decades is highly effective and it can be boiled down to a few key points.
Primarily, the company focuses on providing a unique and premium experience that can’t be found anywhere else. Also, Starbucks lets its customers be a part of product development, ensuring that every product they launch is successful. Finally, this coffee corporation ensures they never over-promise and under-deliver – a mistake that many companies tend to make.
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Market Segmentation: Definition, Example, Types, Benefits from Investopedia
What is brand positioning and why is it important? from Amazon Ads