Starbucks Marketing Strategies
Introduction
With a one-third US market share of specialty coffee shops and significant penetration of international markets, Starbucks has proved to perform excellently in the global markets by maintaining a coffee-drinking culture traditionally in countries like Japan, Thailand, Indonesia, and China. These international markets may be where Starbuck’s greatest growth opportunities lie. The IT strategies should be tailored to adapt our recommendations to these key overseas markets: China, Brazil, India, and potential growth markets in Mexico and Japan.
Starbuck’s is still an active entity among the closest rivals; such established chains include Dunkin’ Donuts, Tim Horton’s, and regional powerhouses like Peet’s (California). In a nutshell, there seems to be enormous potential for new entrants in the North American market, but internationally these competitors have not seen to be a significant threat.
1) International Markets and Supply Chain Inputs: Coffee beans and roasting costs are still the primary input cost in Starbucks ‘ value chain, and IT can be used to implement a good hedging strategy for obtaining the best local prices. There are no real substitutes for beans, but price fluctuations can be dealt with by options and swaps strategies, store housing supplies, and bypassing the fair trade market, which is inherently costlier and unlikely to have much appeal in China, India, or Brazil. Starbucks can add more value by adhering to local tastes in bean grind, roasting darkness and local flavors in milk, cream, and sugar and snacks. IT market analysis can provide the optimum mix for the local host country market.
` Another area where IT intelligence gathering can be used to refine strategy for new products and concepts is through marketing abroad (and vice versa). According to Lagosi, Janta and Watson (2012), there is less risk to reputation of an critical Starbucks brand and product when testing anew variation on an old theme, trademark or marketing technique when the home office, Starbucks Seattle, tests out these new or odd products and approaches in a foreign market, where less blowback from a failed campaign is likely to occur.
- “Another growth sector is its packaged coffee packets and iced beverage products”– “Starbucks has great growth opportunities in Tea and Fresh Juice products mix…” All of these new retail products can also build growth in the International markets with correct tuning by IT data analysis. The key to international market expansion can also be found in this mixed product sector of tea, juice, and iced beverages. According to Chua (2013), social media data can be used to build a “customer knowledge management” database in individual markets; Starbucks has already established its IT proficiency in this type of customer data acquisition and CKM (customer knowledge management). The IT strategy in new markets can use all of the standard data sources to track local social media practice (Google, Facebook, and twitter fan pages where customers are posting comments, new apps for mobile devices (mobile cell devices are now a more common tool in coffee shops than laptops), and downloading of Starbucks IT-generated games and puzzles that are “location-based and context-sensitive” (Dhar and Varshnay, 2011).
- Mobile Apps, Rewards and International Growth: The third recommendation for future Starbucks IT strategy is to apply the above-recommended CKM tools to improve customer service, speed up delivery times and streamline the payment process with use of mobile payment systems, which are more prevalent in many third world markets (mainly India, China, and Africa. The IT team can also use the existing customer database to “push” market the products of the entire Starbucks cancellation of goods and services. This ability ties into the Location-Based Market noted above, where store staff could know where the customers are located, how far they are traveling, and when they are expected to arrive. In this way, Starbucks can personalize its products and marketing strategies to fit the local environment. In turn, customers can directly access context-sensitive information about the store, such as the waiting time in lines, availability of particular specialty products (Dhar and Varshney, 2011).
More advanced features that location-based marketing and social media make possible is a growing concept of home delivery. Using a two-way application, stores in markets where local delivery is far cheaper than having customers going two ways with a wait in-between can send out the order to mobile delivery vendors. Particularly in large urban centers where traffic is impassible (e.g., large Indian cities like Mumbai and Delhi), bicycle and porter systems are widely used to expedite delivery of food orders, in the same manner as a pizza delivery location in Seattle or custom grocery delivery as a universal service in Manhattan.
Mobile IT, by integrating Starbucks mobile applications with such capabilities as custom orders, changing menus, and customer loyal programs (Starbucks has all these features in
Various international markets), can help drive sales, speed wait and delivery times, and improve social media operation and communications on many fronts. The IT team can easily customize the system to best fit the local mobile device and social media culture, including multiple languages, personal and collective profiles for customer knowledge management, and games, contests, and news broadcasts for existing and prospective customers.
Today, traditional coffeehouse menus and service have gone onto the internet and mobile phone networks, and customers are using IT to link up to their favorite shops, Stores, and social media groups. By customizing CKM data and taking in new data (customer comments, advance orders, building games, and creating events to entertain waiting patrons, a unified “location-mobile” communication network becomes a new type of social media. From the perspective of the owner-operator, a mobile IT strategy can also help control costs, manage the supply chains, and take CKM to another level. That marketing and customer information can also be sent upstairs from international and regional locations to help the home country headquarters better understand where the real opportunities for overseas and distant rural growth exist. With large global markets like China opening more and more, IT and its handling of customer knowledge can drive growth for the company, even in declining domestic demand. (Sholihah et al., 2016)
References
Chua, A. Y.K., And Banerjee, S. (2013) Customer knowledge management via social
media: The case of Starbucks. Journal of Knowledge Management, 17 (2),.March 29.
ISSN: 1367-3270 DOI: 10.1108/13673271311315196
Dhar, S. and Varshney, U. (2011), Challenges and business models for mobile location-based
services and advertising, Communications of the ACM, 54, (5), pp. 121-127.
Lugosi, P., Janta, H., and Watson, P. (2012. Investigative
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Sholihah, P. I., Ali, M., Kawsar, A., Prabandari, P. (2016).The strategy of Starbucks and its
effectiveness on its operations in China: a SWOT analysis Asian Journal of Business and Management, 04 (5)
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Starbucks Home Page. Online, WWW. 11 January 2020 URL:
[http://www.starbucks.com/]