Background Report on Starbucks Current Marketing Strategy - Paper Example

An efficient marketing strategy is effective to increase the volume of sales and widen the profit margins of any given firm. Starbucks employs various strategies to remain competitive in the industry. However, the strategies change over time since the world is rapidly changing and so is the market. Currently, the corporation has put into place various strategies aimed at widening its market coverage and increasing its sales. It has laid down strategies for growth such as the loyalty program coupled with digital methods of payment, the initiation of reserve stores and also the establishment of expansion plans. The corporation is interested in increasing the number of stores through expanding the footprint and also making changes in the store mix. Starbucks has started drive- thus in addition to the several dine-in restaurants which it has established. Express stores have also been established in various areas to increase the store penetration (Turban, Strauss and Lai, 2015).

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The marketing strategy of Starbucks largely counts on the extension of digital engagement. In the United States, Starbucks derives about one-quarter of all payment of transactions from mobile payments. Starbucks has employed the Mobile Go and Pay, the most recent innovation which has already yielded results despite its recent introduction. The loyalty program of the company was also changed from an emphasis on frequency to focus on the amount which has reduced the habits of splitting orders and the many queues associated with such behavior. The mobile application used by the company has reduced pressure on the stores as people can order from the comfort of their residences or workplace (Schoultz, 2013).

The company has also ventured in the elevation of coffee experience for the customers. It offers much customized and elevated coffee experiences and its customers are guaranteed of the best coffee experience. The roasteries target the premium customers and there is a prospect of very high returns for the company. Starbucks has partnered with Princi to provide food to the restaurants in addition to the beverages offered. It has also focused on reserve stores for the purpose of meeting the demands of the upper middle class and providing a premium experience for a relatively lower price (Turban, Strauss and Lai, 2015). The company overcomes the challenge of competition and ubiquity by providing the best quality coffee to customers.

Starbucks has also ventured into the establishment of new partnerships by introducing a complementary coffee and food menu (Schoultz, 2013). The sale of foods in Starbucks is on the rise and leads to a lot of income for the company. The company has partnered with other different companies to enhance the satisfaction of customers in matters concerning foods. The company in collaboration with Princi provides Princi foods in the premium restaurants. It has also collaborated with the Macys stores whereby the presence of the company is felt in around 50 of Macys stores.

There are many new customer occasions which are frequently updated in Starbucks. The company introduced improved foods and other fresh products coupled with the strengthening of the tea subdivision of the restaurant. The corporation has also invested in the nitro cold brew in an attempt to entice and attract more customers using very innovative foods and beverages. There is also the driving at home coffee share and occasions which make use of the K-cups. The company has co-operated with different companies to offer ready to drink products (Schoultz, 2013). The organization has improved the ready to drink category even though it is still the leading provider.

Starbucks has introduced the Teavana and is a great driver of the profit margin of the company. The Teavana is very popular especially in china and approach and will give the company a great boost to the company (Turban, Strauss and Lai, 2015). The move is also likely to increase the sale of the premium Teavana brewed and iced teas all across the stores owned by Starbucks. This strategy will increase the average amount of money that a customer might spend on beverages.

The SAVE Technique in Relation to the Traditional 4Ps and Starbucks

The SAVE technique is a recent phenomenon which works to replace the traditional marketing mix. The traditional marketing mix focuses on the 4Ps, the Product, Price, Promotion, and Place. The SAVE framework, on the other hand, deal with solutions, access, value and education of products. The strategy, however, had a lot of limitations which caused organizations to focus on the SAVE technique. The SAVE strategy encompasses the 4Ps but with a much wider approach. The 4Ps can, therefore, be swapped and replaced with the SAVE acronym (Hair and Lukas 2014).

The SAVE uses Solution in the place of a Product. The features that the product bears are not significant to a consumer for as long as they dont solve their problems. In the traditional model, businesses put an emphasis on features, functions and the superiority of their product in comparison with the products of the competitors. Customers, however, need products which are capable of giving them desired outcomes and not merely the features they possess. There is no need therefore for a product to have great features which cannot meet the needs of the customers. The SAVE approach is solution based and aims at having products which are capable of meeting the needs of customers (Gummesson, 2014).

There is the emphasis on access in the SAVE technique instead of Place. The application of internet on business through the use of online marketing is very high hence the place of where products are is no longer a big issue. There is more regard on how the customers entire purchase journey will take place but not just where the deal for sale will be sealed. The idea of access is far much beyond the promotion of a product and customers desire that the business should be accessible (Hair and Lukas 2014). Customers will focus more on seeing the support department engage with other clients as a sign that the business will be there in case something goes wrong.

The SAVE strategy also place a greater emphasis on Value instead of the Price of a product. The customers might be concerned about the value of a product but they regard it when they have known the value of the product. A business increases its pricing power by communicating clearly about how beneficial a product will be (Gummesson, 2014). Instead of focusing on the tangible price of a commodity, there should be a focus on the value of the commodity since the customers highly regard the value of a commodity.

The traditional models of marketing put a lot of emphasis on Promotion while the SAVE approach considers Education. There is a possibility of getting involved in the lives of potential customers by providing information and advice that is valuable to their lives. A sense of familiarity is created through the use of the education strategy in a business. Promotion in most cases entails how the business will inform consumers on the availability of a commodity and convince them to buy it while education will be more concerned with equipping the potential customers with the skills and advice they need to make an informed decision to not only buy the product but also apply the skill in general life (Hair and Lukas 2014).

Starbucks can apply the SAVE techniques in its marketing strategies so as to remain updated. There are aspects of the SAVE strategy which have already been implemented in Starbucks. The coffee products that the organization offers are not just mere products but solutions. The organization was started to provide the best quality of coffee to people and that is exactly what it does (Schoultz, 2013). Starbucks meets the demand and needs of the local population through providing the much-wanted beverage and related snacks.

Starbucks provides high-quality products which are highly valued by the customer regardless of their price. The products of this organization are also highly accessible through the availability of online ordering or the use of the mobile application. The location of a Starbuck outlet is no longer a concern as customers can order from the comfort of their homes and workplace through the application and the product of choice will be delivered (Turban, Strauss and Lai, 2015). However, the organization has not invested a lot on the educational needs of the consumers. The company does a lot of promotion to see an increase in the number of sales.

Starbucks should, therefore, enhance its promotion mechanism through the enhancement of customer education. Engaging the customers more is essential to ensure customer satisfaction and attraction of more customers through the provision of appropriate information necessary for daily lives (Gummesson, 2014). The organization is also in a position to embrace the SAVE strategy and implement it to enhance its marketing. It can make more innovative ways of reaching to customers through their mobile phones. In addition to the mobile app, mobile messaging could also be introduced to reach the customers but with caution to avoid communication overload.

5S of Internet Marketing and Application to Starbucks

Sell - Grow sales

Digital marketing applies different strategies to ensure success in product promotion and the provision of goods to customers. Chaffey and Smith developed the 5Ss of digital marketing, Sell, Speak, Serve, Save and Sizzle. The approach helps an organization to cover the whole digital marketing and not just focusing on sales. The first aim is to grow the sales as per the strategy and a business ought to start with the great transactions that have a better prospect of bringing revenue and profit. The main focus of a digital marketing strategy is to increase the volume of sales so as to earn a lot of profit (Chaffey and Smith, 2017). Starbucks has a role in boosting its sales online to earn a lot of profits. The organization can achieve this function through boosting trust of the customers. The online app for ordering services can be made more accessible and the process of purchasing online simplified. Starbucks can also enhance the free delivery services for orders placed to enhance customer satisfaction.

Speak - Get closer to customers through dialogue and participation

Speaking is another component of the Chaffey and Smith and involves effective communication to the customers and other parties interested in the organization. Digital connections are excellent channels of communication for any given business (Zook and Smith, 2016. Consumers, both potential and actual desire that an organization should adequately communicate to them well concerning their products. They also expect that there will be adequate information and feedback concerning any queries that they may have about the organization or its products. Prompt addressing of grievances that customers may have is essential in maintaining the reputation of the organization. Starbucks applies the speak component of digital marketing via the integration of both the traditional communication techniques and its website together with the mobile application.

Serve - Add Value

Provision of the best service is a major need that customers have. In digital marketing, the business should have a forum with a social customer service whereby customers can have their questions and grievances addressed (Chaffey and Smith, 2017). Customers have a lot of information which they need to obtain from the prospective seller before and after the sale deal is complete. The services which the business offers should be in a position to serve the customers while adding value to the products. Pro...