Running Head: MARKET ANALYSIS OF STARBUCKS COMPANY 1

The Market Analysis OF Starbucks Coffee Company

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The Market Analysis OF Starbucks Coffee Company

Introduction

An effective market strategy must include market segmentation, targeting and

positioning. These marketing strategies are aimed at determining an effective group of people

among the general population as the prospective customers. This segment is targeted through the

positing of products and services that reflect the needs and wants of that segment. In other words,

segmentation, targeting and position are jointly used to decide whom to sell to and, consequently,

position products accordingly. Market segmentation is a crucial marketing strategy for any

business organization. It helps in identifying segments of markets that would be targets of

business' marketing strategy and plan. It applies not only to demographic segmentation, which

entails segmentation based on gender, age, ethnic background, but also geographic segmentation,

which considers different regions of the world. Every market must undertake an effective

marketing strategy to be noticed by customers. The paper herein seeks to analyze the Starbucks

market in terms of market segmentation, targeting, and segmentation. However, the paper will

begin by exploring background overview of the company.

Background of the Starbucks Company

Starbucks coffee company was founded in 1971 in Seattle. The company started by

selling whole coffee beans, but later it grew tremendously and started operating restaurants and

coffee stores around the world. Altogether the business started only as a small coffee shop but

drastically grew to be a global corporation. The initial aim of the company was to educate

individuals regarding the finest coffee and to experience the feeling of the smell of the dark

roasted coffee (Chuang, 2019).

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Currently, Starbucks is the world’s biggest coffee retailer. Today, the corporation

operates more than 10,000 coffee stores/shops in at least 50 countries worldwide. Its objective

has always been to ensure it is recognized as a renowned coffee brand. In the bid to succeed in

long-term growth, it has been using an effective marketing strategy. The company is hugely

depends on retail expansion and quality services to keep succeeding in the industry. To succeed

in these strategies, Starbucks has made diverse efforts by opening new stores in the existing and

new markets (Alwaleed, et al., 2016).The fundamental market strategies that Starbucks has

significantly utilized to gain a competitive advantage in then coffee industries entails effective

market segmentation, targeting, and market positioning.

Starbucks' Market Segmentation

Market segmentation entails the entire process of subdividing a market into distinct

groups of buyers with diverse characteristics, behaviors and needs (Liu, et al., 2019). These

groups usually demand different marketing programs and separate programs. The main strategy

of Starbucks use to gain a significant dominance in the industry is understanding the concept

market segmentation. Initially, the company was based on socioeconomic segmentation since it

concentrated on the social class, specifically high-income people. It had segmented the market

by selecting ethnic groups, and locations of educated coffee lovers. However, today Starbucks

has segmented its market demographically and geographically to accommodate individuals in all

social classes, including those in the lower, middle, and upper classes. According to Starbucks'

demographic segmentation, the first market segment is people with high incomes between the

ages of 25 to 40 years (HENG, 2019). . The second segment consists of individuals between 18

to 24 years who belong to richer families. A bigger proportion of the Starbucks customers

consists of those who belong to generation.

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Based on Psychographic segmentation, a significant number of customers belong to well-

off customers, and the upper-middle class, who are well educated. Starbucks' marketing strategy

focus on segmentation enables the company to target a broader public. By setting strategies to

accommodate a wider coverage of the market segment, including those from low-income growth,

the company has realized tremendous growth. Moreover, the company has segmented the market

by selecting a location with rich people and coffee lovers.

Starbucks’ Targeted Market

Market targeting refers to analyzing all the available market segments and choosing one

or more segments to enter. After any company has analyzed market segments for entry, it should

make appropriate decisions regarding which customer groups to target. The approach of target

marketing is the philosophical concept of the market. A business organization needs to target

market segments, which can assist it in generating the highest customer value an, which can

sustain it in the long-term. The target market for Starbucks comprises of middle-class to high-

class office staff with a taste of purchasing premium products. The CEO of the company wanted

to develop Starbucks as a place that could allow their customers to relax, meet, and mingle with

one another. As a result, the organization became more vigilant of its quality to meet the

expectation of customers.

Additionally, it is worth noting that several corporations get into a new market while

serving one segment. When it proves to be successful, they end up adding other segments. This

is what Starbucks initially did as its first target was parents with young children. When the

business proved successful in this market, the company added more segments, including

teenagers (Fischer & Roy, 2019).

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Starbucks’ Market Positioning

The next step a company undertakes after determining the market segments to enter is

identifying the position it desires to possess in those particular segments. Generally, market

positioning entails arranging how the product will occupy a distinctive, and clear location, based

on the products perceived in customer’s minds. Starbucks has established a unique market

position for its coffee products through product differentiation. The company has also positioned

itself in the industry as a highly trusted brand. As a result, Starbucks has planned its positioning

to distinguish its products from those of competing companies. This gives them a competitive

advantage. The positioning is customer-based, which enables them to surpass customer

expectations. Furthermore, Starbucks has adopted adaptive positioning, in which the company

has increased consumer health awareness. In a bid to achieve this aspect, the company developed

coffee beverages with fewer calories, such as Americano (11 calories).

Conclusion

In conclusion, marketing has a powerful force that influences various aspects of business

competitiveness. Starbucks has employed effective marketing strategies of market segmentation,

targeting, and position to competitive advantage in the coffee industry. This is enhanced through

stronger connections with customers, an effective strategy of new products, and product

differentiation. It has established a market that has a high demand for coffee products.

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References

Alwaleed, N., Al Huwail, N. H., Singh, S., & AlMejhem, A. (2019). A Case Study on

STARBUCKS. Journal of the community development in Asia, 2(2).

Chuang, H. J. (2019). Starbucks in the World. HOLISTICA–Journal of Business and Public

Administration, 10(3), 99-110.

Fischer, D., & Roy, K. (2019). Market Entry in India: The Curious Case of Starbucks. Rutgers

Business Review, 4(2).

HENG, G. (2019). ANALYSIS ON THE NETWORK MARKETING AND STRATEGY

OPTIMIZATION OF STARBUCKS IN CHINA (Doctoral dissertation, SIAM

UNIVERSITY).

Liu, J., Liao, X., Huang, W., & Liao, X. (2019). Market segmentation: A multiple criteria

approach combining preference analysis and segmentation decision. Omega, 83, 1-13.

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