Starbucks’ key of success is the ability to change the perception consumers had about drinking coffee. With more than 6, 500 outlets across the world and the intention of increasing in the near future, the company has transformed coffee into a lifestyle accessory with as much elegance as the latest fashion. However, their way to success was not so easy and if we go back in 1971, we will find that coffee didn’t look like it was a great business. There were no signs of getting better, either. Coffee consumption in the United States had peaked in the 1960s, but by 1971 it was on the decline. Most Americans drank something called “coffee” that came ground up very finely in vacuum-sealed tins. Nevertheless, there was a tiny Seattle based chain with an innovative idea of how to do business, and in a few years the small chain changed the vision about the process of drinking coffee not only in United States but worldwide. Starbucks has evolved into a great success due to their implementation of Integrated Marketing Communications.
One of the primary motivations why Starbucks and many more companies move towards IMC is the reduction in costs through this approach. The rise in some media costs, most notably television through 1990s, the proliferation of media opportunities and the splintering of audiences has led to a review of the communications strategies used by organizations and a reformulation of their promotional and media mixes. By reducing their reliance on above-the-line media and by attempting to move towards the use of media-neutral mixes to deliver consistent messages that cut through the increasing clutter, Starbucks has moved towards some form of integrated marketing communication activity.
Agreeing a definition of IMC is proving elusive but one of the more popular, simple and intrinsically satisfying views of IMC is that the messages conveyed by each of the promotional tools should be harmonized in order that audiences perceive a consistent image of a product or organization. One interpretation of this perspective is that the key visual triggers used in advertising should be replicated across the range of promotional tools used, including Point-of-Purchase and the sales force. At another level IMC is about the integration of some of the promotional tools. One such combination is the closer alliance of advertising with public relations. Increasing audience fragmentation means that it is more difficult to locate target audiences and communicate with them in a meaningful way, but by utilizing the power of public relations to stimulate word-of-mouth communication about brands and advertisements eliminates this task.
Basically, we see that Starbucks’ success was built on two things: the store experience and image, and the quality of its product – it really is a better cup of coffee. The first one is so sacred that on Starbucks employee’s initiative, the chain even prohibited smoking in its stores in Vienna, where cigarettes and coffee are inseparable, because Starbucks doesn’t want anything to interfere with the seductive scent of fresh-brewed espresso. That’s why top-management of Starbucks deeply believed that employees make the store that they work in. A Starbucks employee needed to be very knowledgeable, communicative, and helpful to the customers. Customers need to know the difference in the new roasted coffee Starbucks will offer. Well-educated employees will surely handle this requirement. Starbucks need to use strong cultural incentives to drive the identification of opportunities.
In Starbucks, all employees are called “partners,” signaling a level of responsibility maintained by few companies with sales in the billions of dollars. Anyone who has an idea uses a one-page form to pass it to the senior executive team–and gets a response. When the company pursues an idea, its author, regardless of tenure or title, is typically invited to join the launch team as a full-time member. New-style marketing organizations, by contrast, hire marketers not for jobs but for two broad kinds of roles: those of integrators and specialists. Integrators are marketers with broad skills who coordinate the delivery of products and services to the market from beginning to end. Specialists–more narrowly focused marketers with specialized skills–can be mobilized quickly to provide the particular expertise a given opportunity team requires. Starbucks is one of them and finding its way of capturing the market it will surely pay high attention to the recruitment process.
Starbucks mission statement begins like this: “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow”. The development of the mission statement was the start of the company’s marketing management initiative. Starbucks overall objective in the eye’s of the leaders was defined. This mission does not want to jeopardize the quality, ambiance, or service due to expansion into a global marketplace.
Besides writing a mission, Starbucks has outlined their guiding principles, which they follow in their business:
Provide a great work environment and treat each other with respect and dignity.
Embrace diversity as an essential component in the way we do business.
Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to our communities and our environment.
Recognize that profitability is essential to our future success.
There can be little doubt that the elements of the marketing mix, however configured, also communicate. The price and associated values; the product, in terms of the quality, design and tangible attributes; the manner and efficiency of the service delivery people, and where and how it is made
available, for example the location, retailer/dealer reputation and overall service quality, are brand identity cues with which recipients develop associations and images, which in turn through time may shape brand reputations. It is suggested, therefore, that IMC cannot be achieved just by saying the same message through a variety of promotional tools. Effective communication underpins the stability and quality of relationships. While the origins of IMC might be found in the inadequacies of the prevailing structural conditions, an understanding of what IMC is or should be, is far from being resolved and is evolving everyday as the industry matures. The elements involved in IMC are many and numerous.
Depending upon the perspective an individual might adopt, those elements might range from a simple configuration of the promotional mix through to a fully integrated and culturally driven mission and corporate strategy.
Starbucks chose Product Concept and their success over the past 25 years has a lot to do with the quality of the product, which has attracted a loyal and growing following among consumers. The retail strategy has been to put a coffee shop on every corner and to make fresh-brewed coffee by selling only the highest-quality products and charging a premium price. However, the product mix has changed significantly over the years, with beans accounting for about 15% of the chain’s sales. Meanwhile, Starbucks is expanding its offerings, with a line of ice cream for supermarkets and a joint venture with Pepsi Cola to market Frappuccino.
At the same time, the company continues to develop sales in alternative outlets, including foodservice and non-traditional retail sites as United Airlines, Holland America cruise line, Seattle Kingdome, an Alliance with Barnes & Noble bookstores, among others. Stoking the niche for seasonal drinks, Starbucks added caramel apple cider and white chocolate mocha just in time for the holiday and winter months. This year’s lineup of new summer beverages will be announced within a few weeks.
The last cornerstone of the marketing strategy of Starbucks is clustering. The company locates stores within close proximity in the world. Clustering is becoming important because company’s objective is to become a household name and it can be reached by fierce expansion and high coverage. Once consumers experienced Starbucks service, quality coffee, and ambiance of their stores there would be a great switching cost for the consumer to go anywhere else. The success of becoming a household name worldwide is now close to reality. To keep up with this expansion Starbucks opened three manufacturing plants to relieve itself of the large transportation and storage costs. This decision really improved Starbucks’ distribution of the product. Starbucks could now distribute faster, fresher, and more products to many more of their stores.
The plants also allowed them to enter the supermarket coffee sales industry in the spring of 1998. Two thirds of the world’s coffee is sold in stores for home consumption. Not only will they be able to reach millions of coffee consumers, but also this will ensure a great distribution channel that will help lock out some potential competitors. Consumers can now enjoy great quality coffee at home or by stopping in a local store. This is a key step in ensuring that Starbucks becomes a household brand name. The only adjustment Starbucks must consider is that they are in a new industry with huge competitors such as Maxwell House, Folgers, and many others. Starbucks must make sure that the organization stays with its mission statement.
In accomplishing the market development strategy of promoting the company’s range of services to a wider audience, the work group fitted to the theory of the Kotler’ marketing mix, the allocation of the 4 P’s, product, price, place and promotion.
Starbucks is not a perfect company. But it is a company who has managed to make the voyage to success without compromising key principles of the guiding vision. They have overcome many obstacles and achieve much, but the voyage ahead is more treacherous. Will Starbucks be able to maintain the integrity of its vision? Let’s hope so.
[Accessed 15 May 2004]
Starbucks’ homepage contains information about the company coffee and even provides a store locator.
2. Starbucks Corporation
[Accessed 17 May 2004]
This site provides key numbers, people, industry information, top competitors, and rankings for Starbucks.
3. Integrated Marketing Communications
[Accessed 17 May 2004]
This site’s article covers the basics of integrated marketing communications, including its eight key elements and how they are combined “into a single program or plan to express a consistent and effective marketing communication effort.” The article concludes with nine ways to evaluate if an integrated marketing communications plan is getting results.
4. Creating an Integrated Marketing Communications Plan
[Accessed 18 May 2004]
This website defines Integrated Marketing Communications and explains how the planning process, target audience, marketing strategy are involved.
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