MARKETING & BRAND MANAGEMENT

FINAL PROJECT
GIOVANNI MORRA

Starbucks
Strategic Marketing Plan

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SITUATIONAL ANALYSIS
Introduction
The Starbucks corporation brand is ranked 88 on the Interbrand’s 2012 ranking worth $4.06 billion which
is up 11% year over year (Interbrand, 2013). The situational analysis to be conducted will be on the
Starbucks coffee brand and will engage the 5C’s methodology of marketing examining the Company,
Collaborators, Customers, Competitors and Climate (Winn, 2011).

Company
Starbucks Corporation is an international coffee and snacks Company started in 1971 in Seattle,
Washington USA and now operates in 67 countries with more than 22,000 retail locations with 64%
located in North America. (Starbucks.com, 2016). See figure 1.1 & 1.2 for Starbucks brands and product
mix. Starbucks Corporation’s core identity is based on their unique consumer experience of the Italian
espresso style bar (Michelli, 2006:28). The company’s main strengths are its leading market position,
high global brand recognition, strong financials, product quality and their customer base loyalty. Some
weaknesses include expensive product pricing, coffee bean commodity price volatility, market saturation
from rapid expansion and increasing competition in the industry.

Collaborators
Starbucks primary product line is coffee which is sourced from many companies worldwide so one of its
key collaborators are farmers. Starbucks promotes their coffee as being 95% ethically sourced with a
focus on sustainability and investment in various farmer support programs (Starbucks.com, 2013).
Starbucks has also partnered with Apple to support their technology platform to provide digital
customer rewards and payment through innovative new Apple apps and free access to the Apple iTunes
online store at all Starbucks locations over Wi-Fi.

Customers
Starbucks main target customers are adults (age 25-45) who tend to be professional with high income
with a focus on social welfare which account for 49% of sales (Dominus, 2006). This segment is what the
company refers to as its “core customers” average age of 42, educated, and earning an average income
of $90,000 (Dominus, 2006). Their secondary target customers are young adults (age 18-24) normally
college students which account for 40% of sales (Dominus, 2006). The coffee and snack industry has a
total market revenue of $40 billion with an annual growth rate of 4.6% from 2011-2016 (IBIS, 2016).
Starbucks customers are motivated to purchase the brand due to the tangible benefits of getting the
best in class products sourced and quality controlled with the highest of standards. Starbucks customer’s
intangible benefits include a unique value proposition that includes functional, emotional and self-

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expressive benefits situated in a relaxing in welcoming atmospheres and the pride of being a part of a
distinguished society emitted by their strong brand image (Integrated Brands, 2013).

Competitors
Starbucks is considered the industry market leader holding a market share of 37%, while their closest
competitor Dunkin Brands holds 25% and other competitors including Seattle’s Best, Peet’s, Caribou
Coffee and Costa Coffee holding the remaining 38% (IBIS World, 2014). Some indirect competitors of
Starbucks are fast food and convenience stores including McDonald’s, Wendy’s, Burger King and 7-
Eleven. Potential competitors include restaurants, privately owned coffee houses and other popular
brand restaurant chains including brand spin offs like McCafe designed specifically to enter the café
industry. The majority of Starbucks competitors other than the small privately owned coffee houses are
positioned as low price alternatives that offer customers an acceptable product at a low price. The
Starbucks brand quality and image is its main point of differentiation from its competitors. The main
strengths of Starbucks competitors lies in their value offering to customers not in the high income
brackets unwilling to pay for Starbucks premium brand. The main weakness of Starbucks competitors is
the lack of retail stores and brand following that Starbucks commands in the industry. The core
competence of Starbucks has been its ability to leverage brand quality and customer focus to create a
unique ‘Starbucks Experience’ resulting in repeat loyal customers and somewhat of a cult like following.

Climate
The highly competitive retail coffee and snack product industry which is driven by the economy linked to
consumer discretionary spending and other economic factors that affect household disposable income.
Coffee bean prices are mainly driven by supply and demand and are projected to decrease between the
years 2013-2018 which should result in higher profitability for companies in this sector (Trading
Economics, 2016). The overall business cycle including the fluctuation of interest rates, inflation and
other macroeconomic indicators can affect the demand for Starbucks products as they are linked to
customer discretionary income. Political and regulatory factors affecting Starbucks include the importing
and ethical sourcing of coffee beans. Import laws regarding commodity based products can change due
to mounting political pressure to support the ethical and fair trade treatment of farmers and the
sustainability of coffee bean sourcing. Both of these factors could affect the supply and pricing of
Starbucks coffee products. Government policies around the acquisition of retail real estate space can
also affect Starbucks as their growth strategy is to cluster stores to increase brand awareness and drive
out competition. Government regulations regarding the use recyclable and compostable packaging can
also affect Starbucks as they use a high volume of disposable packaging materials.

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Social factors affecting Starbucks include the trend towards a healthy eating lifestyle and high
consumption of caffeine and sugar found in a variety their products contain these ingredients.
Technology through the expansion of home use coffee brewers with single pod capability is also offering
customers alternatives to the coffee house experience and could offer both opportunity and challenges
to Starbucks in the future.

Alignment of Strategies
The Starbucks business strategy focuses on product quality and differentiation coupled with providing a
superior service experience in order to attract and retain customers. Starbucks also employs a unique
business strategy for expansion by clustering its branches to create the impression in customers minds
that ‘they are everywhere’ which compels customers to shop at their stores.

The Starbucks overall marketing strategy is founded on providing superior customer service through
their highly trained employees they refer to as ‘partners’. They extensively train their coffee servers in
the art of being a ‘barista’ which has its roots in the traditional Italian espresso bar service experience.
Customer service focus resulting in word of mouth recommendations is the foundation of their
marketing strategy as the company only spends 1% of revenues on advertising (Starbucks Investment,
2014).

The Starbucks brand strategy is customer and people focused rather than specific to the products being
offered. The Starbucks brand logo is an image of a seductive and mysterious Siren Mermaid symbolizing
folklore of the past and emotional storytelling inspiring the future (Starbucks Blog, 2016). Starbucks uses
social media channels like Twitter, YouTube and Instagram to engage closely with their customers and
also to advertise these personal connection stories which further creates a deep emotional bond to the
Starbucks brand.

The Starbucks business, marketing and brand strategies are all aligned around being customer focused
and quality driven. Although, the Starbucks brand is expensive in comparison to its competitors, the
brand influence determines the perceived value to customers which increases demand and makes their
products less substitutable (Rocha, 2014). This is necessary to maintain their brand differentiation,
perceived brand value and overall financial profitability (Ducker, 1999). The company’s business strategy
is focused on creating customer value through their marketing and branding efforts. The risk if all
strategies are not aligned between the business units is that the company will not be working towards
the same goals and objectives thereby negatively affect their brand offering which will ultimately result
in loss of market share due to lower sales demand, revenue and a decline in profitability (McNamara,
1972:51).

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Starbucks International Expansion into Italy

In order to compete with competitors, maintain steady growth and increase profits, expansion into
international markets is necessary. Starbucks will venture into the untapped Italian market where
ironically this is where the original concept of the Italian espresso bar experience was founded and
where coffee consumption is one of the highest in the world at over 350,000 tons or 6kg per capita per
year annually (Table 2.2 & 2.3) (ECF, 2014).

The New Product

Starbucks will launch the new product, Starbucks branded frozen yoghurt in Italy that will appeal to the
segment of new generation Italians and tourists alike. The product is a healthier option to ice cream and
gelato but with less fat and sugar and more overall health benefits. The new product line would
complement their current brand promise of providing premium quality products with superior customer
service. Frozen Yoghurt is a perfect complement to the Starbucks brand main product, coffee, because it
a cold dessert with sales mainly higher during warmer temperatures versus coffee sales that normally
rise during cold temperatures so the risk of sales cannibalization is low. (Table 2.1 for 2013 Global Stats).
The Frozen Yoghurt industry growth from 2011-2013 was 74% versus the ice cream industry at 3.9%
indicating increasing demand for the product (Figure 2.4).

Market Research Approach

The market research approaches for determining the demand for the new product will be to use
quantitative data collection in the form of surveys as well as qualitative research through field testing
and market panels. Surveys methods will be most effective in determining the relevant market segments
for the new product providing relevant consumer data to identify behavioral, psychographic and profile
variables needed to determine marketing mix strategies (Jobber & Chadwick, 2013:266). Surveys will be
used to gather relevant market data from existing industry analysis, census and consumer data
(secondary sources) as well as from respondent data (primary sources) to determine market
characteristics and buyer perceptions (Lapin, Figioni & Sloan, 1994). Field testing and market panel
research will also be used to determine causal and predictive factors including consumer attitudes to the
new product as well as market climate (Lapin, Figioni & Sloan, 1994). The areas of market demand to be
examined through these research methods are current brand strength, buyer behaviour and the buying
process as well as customer segment characteristics.

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Brand Strength
Starbucks current brand strength in North America is strong allowing them to command higher prices for
their products. In order to test the potential brand strength for the new Italian market expansion,
primary source research surveys will be conducted at Starbucks branded kiosk locations setup in Italy
asking respondents to describe their perceptions, awareness and willingness to purchase both a generic
frozen dessert product and the new proposed Starbucks branded Frozen Yoghurt measured by using the
five-point Likert scale of brand equity from strongly agree to strongly disagree as described by Yoo et al,
(2000).

Buyer Behaviour and the Buying Process

The decision for buyers to purchase a particular product over another, especially in the case of Frozen
Yoghurt, where the product is simple and easily replicated needs to be researched as to what motivates
buyer behaviors. This illustrates how the traditional consumer decision journey is changing to include
various touch points mainly influenced by brand equity (Court et al, 2009). Field testing of buyer
behavior will need to be conducted through opening test stores initially to observe and survey
customer’s behaviors including their attitude, satisfaction, need and perceived value of the new product
offering. Market panel studies will also need to be conducted to gather more in depth responses to
gauge applicable customer choice criteria relating to the target consumer’s needs versus the new
product value proposition.

Customer Segment Characteristics

In order to determine the customer segment characteristics for the demand of the new Starbucks
branded Frozen Yoghurt in Italy, existing secondary source market analysis data and primary source
panel studies will be employed that is relevant identifying the existing demographics (i.e. age, gender,
income) as well as the needs or benefits to the new target buyers of the product (Boyd, 1989). The
frozen desserts market in Italy is well established so gathering existing customer data should be easily
accessible through secondary sources. Field testing will also be required to determine how target buyers
will specifically react to the new product to be conducted through opening test kiosks providing samples
of the product and gathering feedback from respondents separated into the applicable customer
segments to be used for analysis compared to existing generic frozen dessert customer data.

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MARKETING PLAN

Starbucks Frozen Yoghurt Market Segmentation

Children & Teens

Prefers
Low income Impulse taste
Age 5-19 or parental Students Social Trendy
buyer over
support nutrition

Adults

Middle to
Age 20-45 high Impulse Health
Employed Modern Social
income buyers conscious

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Starbucks Frozen Yoghurt STP Analysis

Brand Equity Strategic Plan

The creation of brand equity to develop a value proposition through STP (Segmentation, Targeting and
Positioning) is critical to the success of the overall marketing strategic plan for the new Starbucks Frozen
Yoghurt product. The market for Starbucks Frozen Yoghurt has been segmented using three main groups
including behavioural, psychographic and profile variables that will help to identify marketing decisions,
benefits sought, purchasing behaviour, as well as consumer lifestyle and socio-economic factors that
affective price sensitivity (Figure 3.1) (Jobber & Chadwick, 2013).

In order to create or increase brand equity, the marketing strategy for the new Starbucks Frozen Yoghurt
will include variables to promote brand awareness, loyalty and the perception of product quality
(Seetharaman & et.al, 2001, p.245). The outline for the strategy to create brand equity for the new
product, Starbucks Frozen Yoghurt will be to segment the market into two main groups, target each
group based on their individual needs (Dibb and Simkin, 1991) through the use of television and online
digital advertising and then to position the new product as a premium, fun, innovative trendy, healthy
product that is offered with superior customer service in an upscale environment

Segmentation Strategy
Children & Teens Segment
The Children and Teens segment is aged 5-19, are mainly students, tend to impulse buy, have low
income or parental support and normally prefer taste over nutrition. The needs of this segment are
mainly enjoyment of a fun, great tasting and trendy product with the ability to customize for self-
expression. This segment prefers social and modern environment. This segment has a tendency to
impulse buy so is not very sensitive to price although due to the young age grouping of this segment
despite the low income or parental support.

Adults Segment
The adults segment is aged 20-45, middle to high income, employed, impulse buyers, modern, social and
health conscious. The needs of this segment is to experience new, innovative products that are
perceived to be healthy and can be customized for self-expression. This segment prefers a relaxed,
modern and social environment. This segment also prefers premium quality products, have middle to
high income and tend to impulse resulting in low price sensitivity.

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Targeting Strategy
The target marketing strategy to the children and teens segment will involve the use of colourful, bright
packaging and the sub brand name for the product geared towards children and teens being “Starbucks
FroYo”. The sizing of the product will be smaller than the adult size and therefore more affordable. The
product will also be made to order with select toppings geared towards children and teens. Advertising
to this segment will be mainly through commercials and internet web based as this would be most
effective because they spend the majority of their free time watching TV and on the internet thus
promoting maximum brand awareness.

The target marketing strategy to the adult segment will involve the use of trendy, upbeat packaging with
famous sayings or inspirational quotes written on it geared towards adults. The product will be
customizable, new flavours of the month, be made to order with fresh fruit toppings with calorie and
nutritional information clearly visible. Advertising to this segment will be mainly through social media
channels like Facebook, twitter and Linkedin, internet content marketing and digital loyalty rewards.

This target marketing approach would be most effective as this segment is more socially engaged and
spend the majority of their free time online and engaged in various digital forums. The strategy
addressing the demographic profiling and lifestyle indicators to fulfill the needs of the segments will use
the essential criteria of measurability, substantiality, accessibility, differentiability and action ability to
further increase brand equity (Kotler et al, 2012). Furthermore, targeting through television and online
content marketing via digital newsletters, web promotions and social media will effectively promote
brand awareness and therefore increase brand equity.

Positioning Strategy
The new Starbucks Frozen Yoghurt positioning strategy to the children and teens segment will be to
emphasize the product features including being a great tasting, fun and customizable product. The main
benefits of the product will be positioned around being a healthy alternative as parents will be the main
income providers for children and teens. The value offering for this segment will be lower price due to
smaller sizing for a higher quality product. The product differentiation from competitors with similar
offerings of frozen novelties like ice cream will focus on the quality, freshness and being an alternative
healthy choice. This strategy will be effective as it addresses both the perceptions of the child and the
adult that is providing the income source by being a fun yet healthy product.

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The new Starbucks Frozen Yoghurt positioning strategy to the adults segment will focus on the value
proposition to offer a unique custom made premium, healthy product served in a relaxed environment
offered at a medium to high price point. The main benefits of the product will be positioned around
being a high quality, fresh, innovative great tasting product that is better for your health than the
alternatives. The product differentiation from competitors with similar offerings of frozen novelties like
ice cream will focus on the quality, freshness and health benefits of the product along with the unique
lounge like, relaxing, modern atmosphere that feels like ‘home away from home’. This strategy is
effective as the segment represents impulse buyers who are social and not price sensitive to a product
perceived to be of premium quality offered as a unique ‘customer experience’ differentiating itself from
competing products.

This product positioning strategy will be effective by building brand equity through brand image and
customer perception by emphasizing the distinctive characteristics/features of the product that make it
different from the competition and appealing to customers (Riesand Trout, 2001). For the new Starbucks
Frozen Yoghurt product, the brand positioning strategy will be based on six key multi-dimensional
positioning variables that include features/attributes, product class/benefits, use/application,
user/usage, competitors and price/quality (Berkman & Gilson, 1987).

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Starbucks Brand Marketing Mix

Product
The Starbucks branded products are marketed as premium, superior quality and customizable to create
unique varieties of their products enabling customer expression and strong differentiation from
competitors (Dominus, 2006).

Price
The pricing strategy of Starbucks is to maintain its brand image and quality offering through premium
pricing of their products. Starbucks also defends their premium pricing through their fair trade initiatives
of paying coffee bean farmers fairly and reinvesting in farmer sustainability practices worldwide
(Starbucks, 2016). Their customer proposition of offering excellent customer service and a unique
experience allows price differentiation between their competitors which is used to target their core
segment of high income earners.

Place
The company distributes its product through four traditional channels: retail stores, licensed stores,
consumer packaged goods stores and foodservice operations as well as online internet and mobile
applications (Starbucks Corporation SWOT Analysis, 2015). The retail store channel is the most important
as they represent the highest percentage of sales than the other channels (Mourdoukoutas, 2013).
Starbucks operates in 67 countries with more than 22,000 retail locations with 64% located in North
America (See Figure 4.2 – 2013 World Map) (Starbucks.com, 2016). Nonetheless, there is opportunity to
expand further internationally, especially in Europe where they hold 34.7% of the hot drinks market
share worldwide (Table 4.3) (Hot Drinks Industry Profile, 2015).

Promotion
Starbucks brand promotion revolves around their unique yet simple brand positioning focused on
quality, experience and social responsibility rather than price. This strong customer focus builds brand
credibility through initiatives like educating customers about products, providing free Wi-Fi and engaging
in constant customer feedback mainly via online forums. Their low cost advertising strategy focusses on
more local markets and the use of social media rather than mass marketing campaigns. Brand
experience occurs through daily interactions (tweets, status updates, content shares and conversations
between customers), for example, there are over 19 million tagged photos on Instagram with #Starbucks
(Brown, 2015).

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Starbucks Frozen Yoghurt Marketing Mix

Product
The new Starbucks Frozen Yoghurt product will be a premium quality product made with the highest
quality ingredients that can be customizable with a variety of ingredients and toppings. The product will
be served in Starbucks branded logo environmentally friendly cardboard bowls similar to the coffee cups
offered to promote brand association.

The product will serve to target their existing market segments and the new niche customer segment
being the children of the core Starbucks customers. The product will aid in their expansion into the
Italian Market as table 4.1 illustrates how Italy is the highest consumer of ice cream related products in
Europe (EICA, 2013). The Starbucks brand may be perceived by Italians as ‘american style’ so through
offering a healthier alternative to the highly consumed Gelato, it will gain credibility to the brand
proposition overall in Italy.

Price
The pricing strategy for the new Starbucks Frozen yoghurt will be to offer a high quality product at a
premium price point with smaller sized offerings at a reduced price point for the children and teens
customer segment. The lower price positioning strategy of the smaller sized offering will aid in targeting
the children and teen segment who are spending their own income as they can be more price sensitive
than the core adult segment (Jobber & Chadwick, 2013).

The pricing strategy will be supported by the focus on quality and unique product differentiation through
customization while maintaining high margins. Starbucks Frozen Yoghurt will be positioned as offering
more health benefits and unique customizable flavour options warranting the premium price.

Place
The new Frozen Yoghurt in the Italian market will be distributed primarily in retail store outlets that will
be located near offices, shopping centres, attractions, colleges and universities. The strategy to enter the
Italian market with the new product will be to open a large number of retail outlets near the main
customer’s target segment place of work, school and enjoyment to follow the brand promise of being
the customers ‘third place’ away from home and the office (Harrison, J. et al, 2005).

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Promotion
The promotion strategy for the new Starbucks frozen Yoghurt will focus on mobile promotions, personal
selling and the use of digital marketing. In order to promote brand awareness in the new Italian market,
mobile Frozen Yoghurt trucks with the Starbucks branding logos will be used to offer free samples of the
new product to promote both the product and brand awareness which should be received well in the
new Italian market with the warm climate. In the retail outlets, personal selling techniques will be used
to encourage customers to purchase the new products through the use of individual personalized
customer interactions. Customers will also be encouraged to sample the product in stores to encourage
impulse buying especially towards the new niche children segment.

The new product will use online Social Marketing (Talpau, 2014) through the use of social media
platforms like Facebook, Twitter and Linkedin to encourage customers to share their customer
experiences. Another digital strategy that will be used is content marketing which can be defined as a
type of marketing that involves the creation and sharing of online material that does not explicitly
promote a brand but is intended to stimulate interest in its products or services (Oxford Dictionary,
2016). The content marketing strategy will involve using an online website for customers to blog,
participate in contests and also provide information on product features including health information
and product benefits. These promotional strategies will enable customers to connect emotionally with
the brand and further promote brand loyalty (Peterson, 2014).

Evaluation
The Starbucks marketing mix has the right mix of P’s that is aligned to their basic model of marketing
which revolves around forming lasting consumer brand relationships. The Starbucks marketing mix forms
these consumer brand relationships through creating brand satisfaction, commitment, passion and
equity with their focus on quality rather than price (Fritz et al, 2014).

The new Starbucks Frozen Yoghurt marketing mix is effective to build brand equity in the new Italian
market as it focusses on relationship building through personal connection and interaction with the
customer both in person and online to build and sustain the customer brand relationship. The new
marketing mix will be different from other Starbucks products as it will be more focused more on
building brand trust, intimacy and consumer brand interdependence in the product launch phase
through focus on customer service and promotion in the Italian market (Fritz et al, 2014).

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Starbucks Competitive Advantage

Strategic Plan
Introduction
The success of the Starbucks organization and brand depends on their efforts to increase and sustain
competitive advantage. Michael Porter identified three main types of avenues to achieve sustained
competitive advantage through the use of differentiation, cost and focus (Porter, 1979). Starbucks can be
seen as the market leader in the industry so the strategy of differentiation is the best method for the
company to gain competitive advantage through providing an excellent customer experience and
premium quality products (Kurtz, 2012).

The Starbucks brand can be considered to be approaching the mature stage of its life cycle as it has seen
sales grow steadily from 2011 to 2015 from $11.7B, $13.3B, $14.9B, $16.5B to $19.1B (MarketWatch,
2016). As sales appear to be beginning to peak for Starbucks, the strategic marketing objective should be
to protect market share through focussing on brand loyalty, customer retention and promotions (Jobber
& Ellis-Chadwick, 2013:413).

The Value Chain

The value chain is a useful method for determining areas of competence and potential sources of
differentiation for a company (depicted in figure 5.1) consisting of two main activities including primary
and support functions (Porter, 1985). Primary functions include Inbound Logistics which involves the
selection of coffee bean producers and other product suppliers. This includes establishing strategic
relationships with farmers, wholesalers and packagers (Clark, 2007). Operations functions are in charge
of running retail outlets in 65 countries in both company and licenced formats (Starbucks Annual Report,
2014). Outbound logistics at Starbucks is in charge distribution and sales of all product offering. Service
is the primary mission of Starbucks and the company is regarded as a service oriented company.
Marketing and sales efforts are driven mainly by their customer focus through digital and word of mouth
promotions.

The support functions of the value chain consist of infrastructure, human resource management,
technology development and procurement in which all areas are well established within the Starbucks
business framework. In order to translate these core competencies into a differential advantage, they
need to be linked to three main strategies that will be used to increase the Starbuck’s company and
brand competitive advantage which will consist of product differentiation, customer service and
innovation.

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Product Differentiation
The Starbucks frozen yoghurt strategy of product differentiation will focus on high quality standards for
its ingredients using fresh healthy fruit and organic ingredients sourced sustainably and ethically from
reputable suppliers and further differentiated by offering various customizable ingredients combinations.
Starbucks main competitors are more focused on price so Starbucks must offer specialty and premium
products to maintain its premium pricing and high customer value offering. In order to execute this
strategy, the resources needed will include inbound and outbound logistics, operations as well as
marketing and sales with secondary support from processes to be implemented by the procurement
division. The effectiveness and performance of this strategy can be measured by continuous product
quality control testing, inspection of farms, warehouses and retail store products as well as monitoring
of inventory stock levels.

This strategy supports overall corporate business strategy to increase competitive advantage as product
diversification is one of the main driving factors behind the strength of Starbucks brand as they compete
on value offering rather than price with their competitors. The strategy also supports their marketing
initiatives of offering only the best premium products in the industry to increase their brand satisfaction
leading to more brand loyalty.

Customer Service
Starbucks customer service strategy will be to increase its competitive advantage through offering a
unique and superior experience. Starbucks employees will focus on customer relationship building by
calling customers by name and frequent customer interactions. The customer experience will also be
enhanced by renovating their retail stores as required to make the environment more relaxing and
trendy. Store atmosphere will use comfortable lounge like seating and fixtures such as fireplaces to
create a warm feeling of being a home away from home atmosphere. To further promote the customer
experience, local musicians will be invited to perform live in Starbucks stores to add to the ambience.
The essential resources needed to execute this strategy include operations and service with secondary
support for training employees supplied by human resource management. The performance of the
customer service initiatives can be measured through customer feedback surveys and online forums.

This customer service strategy supports overall corporate business strategy to increase competitive
advantage as the Starbucks business is service oriented and built around their service offering through
dedication to human resource training of employees, retail store acquisition and design. This customer
service strategy also supports the Starbucks core marketing strategy of building customer relationship
through word of mouth referral and emotional brand connection.

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Innovation
The use of innovation to build competitive advantage will be through the frequent launching of new
products and the use of technology to enhance the customer buying experience. Product innovation for
the new frozen yoghurt will focus on offering new and exotic ingredients in the form of exotic fruits and
vegetables from round the world. The use of technology innovation is already on the forefront for
Starbucks through the use of the Starbucks Digital Network in partnership with Yahoo (figure 5.2), they
deliver premium content to customer over their existing free Wifi network (Buvat & Welch, 2013).

Further innovation strategy to gain competitive advantage through enhancing the customer experience
will be to partner with Apple to offer customers media lounges that will include mobile electronic
charging stations and the use of Apple Ipads for reading, web browsing, watching movies or listening to
music. The essential resources needed to execute these strategies include operations, marketing and
sales as well as service with secondary support from procurement as well as research and technology
development departments. To measure the performance of this strategy, the use of customer web
analytics can be used to measure buyer behaviour inside stores and the internet that correlate to
revenue as well the use of product sales data to measure the success of products before and after
innovation implementation.

This innovation strategy supports overall corporate business strategy to increase competitive advantage
as the Starbucks business model uses innovation through its strategic partnerships with companies like
Apple and Yahoo to increase its customer value proposition apart from its main competitors. This
strategy also supports the overall marketing strategy to increase competitive advantage through the
creation of brand awareness via multiple customer touch points including in store and online channels.

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Marketing & Brand Management Debate

Introduction
The topic of content marketing, its use and its effectiveness has become an ongoing debate in the
marketing realm. The increase in internet usage has led to the rise in digital branding strategies like
content marketing, due to its cost effectiveness and huge potential for exposure as it is estimated that
almost 3 billion people which is over 40% of the world’s population uses the internet (Internet Live Stats,
2015). This debate is of great interest to marketers as with the onset of the digital era and the increasing
use of electronic media platforms away from traditional media channels, it seeks to answer the question
of whether or not content marketing is an effective use of limited marketing resources to increase brand
equity especially when measuring against criteria that has limited business context.

Article Reviews
The article, Content Marketing, The Fundamental Tool of Digital Marketing by Baltes (2015), seeks to add
clarity to the debate as it describes the most important tool in digital marketing but probably the least
understood to be the use of content marketing (Baltes, 2015). The notion of content marketing as
described in the article is “the marketing and business process for creating and distributing relevant and
valuable content to attract, acquire, and engage a clearly defined and understood target audience - with
the objective of driving profitable customer action” (Content Marketing Institute, 2015). The article
explains how content marketing is in effect very different from product advertising and is not used to
support direct sales but rather is used for brand positioning through increasing brand awareness,
building customer relationships, creating a need for a specific product, and gaining customer loyalty
(Baltes, 2015). The article concludes that content marketing is needed in all scenarios to have an
effective digital marketing strategy to develop relationships with customers thereby gaining brand trust
and admiration through targeting specific audiences (Baltes, 2015).

Another viewpoint discussed in the article, Putting the ‘Strategic’ into Strategic Content Marketing by
Pophal (2015), argues content marketing should not be used unless there are clearly defined goals that
are set to target specific audiences to meet strategic business objectives. The notion that company’s
think the decision to adopt content marketing is a strategy in itself will not achieve the desired
marketing outcome without focused content based on using clear goals, defining brand voice and
personality attributes, creating audience profiles and identifying appropriate channels (Pophal, 2015).

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The article, The State of Content Marketing by Pophal (2016), discussed a similar viewpoint on the topic
by contending that almost every company employs some sort of content marketing strategy but just 30%
are successful as their efforts are built as campaigns rather than strategic ongoing initiatives to build
audiences and brand loyalty (Pophal, 2016). Furthermore, in order to deploy an effective content
marketing strategy, the article argues that content marketing cannot be used as an individual platform
but must be used in conjunction with other digital marketing tools including SEO (Search Engine
Optimization), Web 2.0 employing more user generated content and SNS (Social Network Sites) (Pophal,
2016).

Debate
In my opinion, I agree with the notion that an effective marketing plan should include the use of
effective digital platforms including content marketing in order remain competitive as more customers
are using online shopping tools either to educate or purchase products. Nonetheless, I think content
marketing can only work if it is strategically deployed, meaning that the content is structured around
achieving clearly defined goals to ultimately meet business objectives. Content marketing is a key
strategic tool in online relationship building to create brand awareness through both B2B and B2C
marketing channels. Although, one could argue that content marketing is even more effective used in
B2B marketing strategies as these are more relationship driven through education and awareness
techniques. Content marketing may seem like a new concept but in the realm of traditional marketing,
the concept has been around for many years. This concept illustrates the age old art of ‘pitching’ your
product to a customer without actually attempting to sell but for more informational purposes.
Marketing through the dissemination of information has been used by many companies in the past like
in 1904, Jell-O’s distribution of their free cookbooks which led to their sales increasing over $1 million
dollars in the next 2 years (Keyser, 2013).

Starbucks is an example of a brand that uses content marketing effectively to build somewhat of a cult
like following through the effective use of online content to target a specific audience. Starbucks uses
online content like the popular ‘Meet Me at Starbucks’ campaign to promote their brand narrative
through inspired storytelling building lasting audience connections (Morrison, 2014). Starbucks has gone
so far with content marketing as to announce the launch of their own media company that will produce
longform TV and film documentaries about social issues important to the brand (Taube, 2015). This is a
very strategic move for Starbucks Marketing as they are basically using content marketing to create their
own audience and culture through the use of ‘creative storytelling’ (Rainey, 2015).

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Conclusion
The issue with the use of digital content marketing is how to use it effectively and how to measure its
effectiveness. The overall business strategy of a company should be aligned to its marketing strategy but
how can one demonstrate that online marketing efforts are translating into bottom line profits,
specifically content marketing when there are no true sales indicators? The challenge for marketers
today is to bridge this gap to demonstrate the effectiveness and tangible ROI for this type of marketing
strategy with no specific sales data to reference (Lopresti, 2014). The issue of measurability for content
marketing initiatives was brought to light at the 2014 Content Marketing Association Summit where the
debate was focused on the challenge of using content marketing effectively to understand the consumer
journey and effectively deploy content marketing initiatives despite direct linkage to immediate business
criteria that is measurable (Peat, 2015). There are key metrics that can be considered to evaluate the
effectiveness of content marketing including website visits, page views, number of newsletter
subscribers, social media followers, bounce back rate and time spent on company website (DeMers,
2014). The phenomena of ‘content shock’ also needs to be considered whereby the simple economics of
supply of content on the internet becomes too much for the average person to consume (Figure 6.1)
(Schaefer, 2014). This can create barriers to entry for smaller content marketing producers as larger
companies can overwhelm the market with content making it difficult for consumers to find the smaller
competitors.

There are many arguments that can be made to support the notion that content marketing should only
be used by large companies or in certain situations due to the uncertainty of its effectiveness but I would
argue that this is not the case. It is important for companies to build their brands using strategic content
marketing campaigns that connect with their audience through emotion and telling the brand story.
Building customer relationships through the use of structured targeted online content marketing is a
necessity in this era for all companies to enable strong brand positioning by gaining customer awareness,
trust and loyalty in effect building strong brand equity.

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Appendix
Figure 1.1
Source: (Xiaomeng, 2013)

Figure 1.2
Source: (Starbucks Menu, 2016)

Starbucks brands include Starbucks Coffee, Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, La Boulange,
Ethos Water and Torrefazione Italia Coffee (Starbucks.com, 2016).

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Appendix

Table 2.1
Source: (Unilever, 2013)

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Appendix
Table 2.2
Source: (ECF, 2014)

Table 2.3
Source: (ECF, 2014)

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Appendix
Figure 2.4
Source: (Mintel, 2014)

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Appendix

Figure 3.1

Behavioural Profile
• Prefers Premium Quality • Age 5-45
Products
• Low to High Income
• Impulse Buyer
• Trend Setter
• Seeks Unique & Innovative
Products • Modern

• Status Seeker
Psychographic
• Health Conscious

• Social

• Extroverted

• Trendy

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Appendix
Table 4.1
Source: (EICA, 2013)

Figure 4.2
Source: (Villenueve & Johnson, 2013)

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Appendix
Table 4.3
Source: (Hot Drinks Industry Profile, 2015)

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Appendix
Figure 5.1 - The Value Chain
Source: (Porter, 1985)

Figure 5.2 – Starbucks Digital Network

Source: (Business Wire, 2011)

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Appendix
Figure 6.1 – Content Shock
Source: (Schaefer, 2014)

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