Starbucks Targeted The High Income Customers

Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.

In addition to the trade-offs Howard Schultz and Starbucks made. Another consists of the company’s management deciding to invest a significant amount of capital to provide the highest quality coffee products for their customers. Providing quality coffee requires extreme dedication and

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

The current strategy of the company is to enter foreign markets and to succeed there. The corporate main strategy is to provide high quality product to its customers.

A competitive strategy, or business-level strategy, is the way a business used to successfully enter and penetrate into a market (Eastwood et al, 2006), and also, to succeed in this chosen market against its competitors (Johnson et al, 2014). A company needs to develop and apply appropriate strategy to help the company to generate distinctive competences (David, 2007). Compared with the strategies implemented in other levels of operation, competitive strategy is more focused on the competition against other competitors and strategic choices to better attain market share (Harrison and St. John, 2009). According to

A strategy is a plan that is targeted over the long run. Business level strategies refers to strategic alternatives that an organization chooses from as it conducts business in a particular industry or market (Griffin,2002). A corporate level strategy means that a company manages its operations simultaneously across many industries and markets. Netflix operates across both a business and corporate level strategy. The main areas across which Netflix operate on in their corporate level are business portfolio and partnerships.

On the other hand, Starbucks pricing strategy is based on, differentiation, quality and authority value. Starbucks deliver high value to the customer through buying quality coffee beans, assuring their staff to be well trained, and create an environment for customer to enjoy coffee. Although the price of a cup of coffee in Starbucks is higher than other coffee shop, but customers are ready to pay more for the coffee and luxurious image with all the facilities inside the store.

Additionally with its growth strategy Starbucks seemed to have lost the ability to communicate its values to its customers. Note that Starbucks research team discovered that between 2000 and 2001 there was an increase in customers who felt that Starbucks primarily cared about making money and building more stores. This is an indication that the company lost sight of the components making up its value proposition. Customer service was a major component of Starbucks value proposition but according to the research team by 2002 it discovered that Starbucks was not meeting expectations in terms of customer satisfaction. In fact the data collected by the research team indicated that 10% of customers would like to see improvements in service especially speed of service and 19% would like to have friendlier more attentive staff.

Starbucks customers are diverse, well educated, young business people looking for a quick and easy way to grab coffee on their way to work. Starbucks values a strong relationship with their customers so they are

As a well-established coffee retailer and over 35 years of success, Starbucks is at the maturity stage in the product life cycle. It is in this stage that Starbucks needs to shift gears and focus on marketing program modifications by increasing the number of customers and customer visits (Kotler, 2009, pg. 185). While improving service will attract first-time customers and retain current ones, further marketing modifications will need to be made if it wants to continue to grow. More advertising, distribution, sales promotions, and personal selling are a few of the ways to modify the marketing program.

Starbucks provide a large in store seating with free wi fi and a take-out service which only a few retail shops offer. The main target customers for Starbucks are office workers, with enough income, whom are able to afford the high prices of their products (Gaudio, 2003). The company has worked hard to establish itself as the brand leader with its branding as the most frequently drank coffee and noticeable brand logo. Introduction of promotions like the Starbucks Card, allows a more convenient way for a person to
pay for
your
drinks
and
earn
rewards
for
your purchase (Starbucks Coffee Company, 2011).
Furthermore, in‐store
promotions
accompanied
by
new
products and
amenities like free internet use are all strategies that Starbucks use to maintain their position in the market (Vasudha, 2011).

Starbucks is competing in an industry where marketing principles has to follow the differentiator strategy or they will lose market share. The company goal is to create high value for its customers, or the customers will simply find another place to spend their money. Starbucks marketing principles are the basis of the company's competitive advantage within the coffee industry. Starbucks products are associated with high quality, and the company dedicates itself to producing high quality products. Because of this association with high quality, Starbucks has been able to charge a higher price or premium for its products. As long as the company can protect its reputation for high quality and strong values, it will be able to maintain its premium prices.

When Starbucks started their target market were people who enjoyed coffee not just for an energy boost from the caffeine, but people who enjoyed sitting down and drinking a well-prepared cup. Upon visiting Italy and falling in love with the coffee bars and the experience that they offered, Schultz envisioned a place between your home and work where you could sit and enjoy your coffee. Starbucks wanted to control their coffee from “raw green beans to the steaming cup” this meant that they had to talk with their farmers to make sure the quality was up to their standards. They were getting coffee from different places around the world that had different characteristics that would attract the type of coffee drinkers they wanted and tasted good. When preparing the coffee they first would ground the roasted beans, this was one of the ways that they attracted people to drink their coffee because it was freshly grounded before brewing. They used manual coffee pots to brew their coffee, which is more time-consuming but showed how dedicated they were with the quality of their product unlike other big companies. Starbucks was priced as a premium cup of coffee compared to other coffee shops, because of the steps they took to make a high-quality cup of Joe from start to finish. They put a lot of time and effort making sure that the atmosphere of

Starbuck’s missions, values, and principles are directly related to their generic strategy of broad differentiation. Each one of these elements explains how Starbucks is just not offering just coffee, but an experience. In the stores, they complement this by bringing several items to the table (product variety). In addition, Starbucks has positioned themselves in the focus differentiation and treacherously close to best supply category. Starbucks has used the Verismo to position themselves back into the focus section because it is a specialty item that Starbucks aficionados might want in their home. However, Starbucks is going against the grain with the Via products because of its low costs. This is risky because people buy Starbuck for the experience and the high quality coffee, not because it is cheap.

Corporate Strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of business.[1] In the case of Starbucks the corporate strategy they have implemented is unique to their industry which has allowed them to differentiate from their competitors and is summarized best by Howard Schultz CEO of Starbucks, “We’re in the people business serving coffee,[2]” high quality specialty coffee and related products in a European café environment. It is clear Starbucks is in a growth strategy utilizing three key techniques that support its Mission, “to inspire and nurture the human spirit – one person, one cup and