Starbucks Digital Marketing Strategy: An In-Depth Analysis
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Introduction: Starbucks Digital Marketing Strategy: An In-Depth Analysis
One of the main reasons behind conducting this study is to shed light on the various concepts related to online marketplace and integrated marketing communication. In order to do the study, the company that will be highlighted in the study is Starbucks. The study has been divided into various segment where theories and models related to digital marketing environment Environment Analysis, Integrated Marketing Communication and Integration of Online (Digital) and Offline (Traditional) Media will be discussed in detail. Overall, the study will help in understanding the overall online presence of Starbucks and how they are utilising digital marketing concepts to cope with the competition worldwide.
Company Profile
About the company
Starbucks, founded in 1971, is an international network of coffee shops in America. Its headquarters are in Seattle, Washington, and it operates in more than 32,000 sites throughout more than 80 nations. Starbucks is well renowned for its delicious coffee, tea, pastries, and other refreshments. Starbucks has a market worth of more than $120 billion as of 2021, making it one of the most well-known and valuable brands in the world. As given in the below picture, most of the market share comes from America, that is around 69%.
Figure 1: Starbucks Revenue by Region
Functioning sector
Starbucks is a company that works in the food and beverage business, more especially the coffeehouse sector. High-quality coffee, tea, and other drinks, as well as foods like pastries and sandwiches, are the company's main priorities. The worldwide coffee market was valued at $102.02 billion in 2021, and it is anticipated to expand during the following years (Statista, 2021).
Company stage in the capability pyramid and any implementation of big data analytics
Starbucks is most likely at the advanced stage of the capability pyramid given its size, worldwide reach, and level of technical expertise. This indicates that the business has already attained a high degree of operational effectiveness and is now concentrating on utilising technology to foster innovation and development (Gartner, 2021). Starbucks has been leveraging data and analytics to enhance its operations and customer experience in relation to the introduction of big data analytics. Data from many sources, including as point-of-sale systems, mobile applications, and social media, is gathered and analysed by the business using a centralised data platform (Datafloq, 2021). Starbucks has been able to improve its loyalty programme, personalise its goods, and streamline its supply chain by using this data (Forbes, 2021).
Online Marketplace: Digital Marketing Environment Analysis
An online marketplace is a digital platform where many merchants may post and offer for sale to clients their goods or services. It is a kind of online platform for commerce that facilitates interaction and transactions between customers and sellers. Online marketplaces are a crucial avenue for companies to attract new clients and increase their online presence, according to a review of the digital marketing landscape (Entrepreneur, 2021).
Micro-Environment Analysis
Customers
Starbucks operates in a highly competitive sector, as can be demonstrated by applying Porter's Five Forces analysis to the firm. In that situation, customers are crucial to Starbucks' success on a worldwide scale as well as in the UK. Starbucks has established a reputation for serving premium coffee and offering a distinctive in-store experience that draws people in. The COVID-19 epidemic has changed consumer buying patterns in the UK, with many people turning to online ordering and delivery services. The focus on convenience and value for money will certainly return to in-store shopping when limitations loosen. 52% of UK customers said in a recent poll that they would be more inclined to visit a coffee shop if it had a loyalty programme (Statista, 2021). This emphasises the value of cultivating client loyalty and giving them a tailored experience. Consumers are increasingly looking for businesses that prioritise sustainability and ethical sourcing, and this trend is expanding. Overall, it can be said that, knowing customer behaviour and preferences is essential for Starbucks to continue competing in the UK market. Customers are key to the company's success. Starbucks can continue to give its consumers a distinctive and tailored experience by utilising tools like Porter's Five Forces and remaining aware of consumer trends.
Competitors
Starbucks competes with a number of other businesses in a very competitive market. McDonalds and Costa Coffee were two of Starbucks' primary rivals in the UK market, according to this report. A significant participant in the coffee sector, Costa Coffee is well-known in the UK. As both businesses battle for market dominance, Porter's Five Forces study reveals that Costa Coffee offers a serious danger of competitive competition to Starbucks. Since there are numerous choices for consumers to buy coffee and related items, Costa Coffee's bargaining strength is minimal because they are not a large supplier to Starbucks. McDonald's, with its McCafe brand of coffee and drinks, is another important rival to Starbucks. By using Porter's Five Forces analysis, it can be observed that McDonald's and Starbucks fight for consumers seeking coffee and quick-service restaurants, posing a modest danger of competitive competition to each other. because to the fact that McDonald's supplies a large portion of Starbucks, their negotiation power is great (Goyal, 2022). Additionally, the danger of alternatives is high because to the broad variety of food and beverage options available at McDonald's. According to a recent research, Costa Coffee, McDonald's, and Starbucks were the top three coffee businesses in the UK (Alleven, 2021).This underscores the fierce rivalry between these businesses and emphasises the necessity for Starbucks to keep developing and provide a distinctive customer experience.
Figure 2: Competitors analysis
Suppliers
Suppliers are essential to Starbucks' success since they offer the ingredients and raw materials used in its products. By using Porter's Five Forces analysis, it can be determined that Starbucks' suppliers have little negotiating strength. This is because Starbucks has substantial scale and purchasing power, enabling it to bargain with suppliers for advantageous terms and pricing. Additionally, Starbucks has developed direct connections with many of its suppliers, decreasing the need for middlemen and boosting its leverage in negotiations (Mukherjee & Hsu, 2022).
Macro-Environmental Analysis
The SLEPTS method is a crucial framework for examining the macro-environmental elements that have an impact on a company's success. Social, Legal, Economic, Political, Technological, and Sustainability are its initials. Three of these elements that have significantly impacted Starbucks during the past two years will be the subject of this investigation.
Social/Cultural
Changes in customer choices and attitudes towards sustainability and healthy eating are only two examples of the social and cultural issues that have an influence on Starbucks. Consumers are increasingly searching for ecologically friendly products, and there has been a rising trend in recent years towards healthier food and beverage alternatives. In response to this trend, Starbucks has expanded its menu to include plant-based milk substitutes and implemented sustainability programmes that include the usage of reusable cups and waste reduction (Zheng & Wang, 2020).
Legal
The growing legal oversight of the food and beverage sector, particularly in terms of health and safety, has had an influence on Starbucks. Strict laws governing food safety, labelling, and advertising are in place in many nations. Concerns about topics like workers' rights and the ethical procurement of raw materials are also growing. As a result, Starbucks has put in place a number of programmes and practises, including procuring Fairtrade coffee and tea and routinely auditing its suppliers (Dudley, 2021). Starbucks has had legal difficulties relating to labour practises and discrimination, in addition to restrictions relating to food safety, labelling, and advertising. The business was sued for racial discrimination in the US in 2018, and in California, a class action lawsuit concerning overtime compensation for store managers was brought against it in 2020 (Scheiber, 2020). These legal battles may harm the business's brand, cause financial losses, and have an adverse effect on customer and staff loyalty. Starbucks has responded to these difficulties by enacting diversity and inclusion programmes, such as required unconscious bias education for all staff members, and by enhancing accountability and transparency in its labour practises.
Economic
Starbucks's financial situation has been harmed by the ongoing COVID-19 epidemic, which has seriously disrupted the world economy. Lockdowns, travel bans, and other restrictions have forced numerous eateries and coffee shops to close their doors and reduced traffic in Starbucks locations. By allowing consumers to purchase and pay for their beverages and meals online, pick them up in-store or have them delivered, Starbucks has been able to lessen the effects of the pandemic (Lin, 2021). In addition to this, the world economy has been significantly impacted by the COVID-19 epidemic, and Starbucks has not been spared. Along with a decline in customer traffic to retailers, the pandemic has also disrupted the supply chain, which has impacted certain items' availability. Additionally, the economic repercussions of the pandemic have impacted consumer spending in the food and beverage sector by causing job losses and financial uncertainty for many customers. Starbucks has responded to these difficulties by enacting cost-cutting measures, including the closure of failing locations and a reduction in staff hours, while simultaneously investing in its e-commerce and smartphone ordering systems to boost sales and convenience for consumers.
Overall, from the above analysis, it can be said that in the last two years, Starbucks has seen a considerable change as a result of social, cultural, legal, and economic considerations. Starbucks has been able to keep its position as the top international chain of coffee shops by anticipating these issues and acting proactively to address them.
Integrated Marketing Communication
In order to provide a consistent, coherent message to its target audience, a company's marketing communications are coordinated across all of its many facets (referred to as integrated marketing communication, or IMC). To make sure that all marketing communications work together to establish a strong and distinct brand image, IMC integrates a variety of promotional tactics, such as advertising, public relations, personal selling, sales promotion, and direct marketing.
A company's use of a variety of communication techniques to reach its target market and spread its message is referred to as its marketing communication mix. The framework known as the DRIP model (Differentiate, Reinforce, Inform, and Persuade) may be used to examine and assess the efficacy of various marketing communication mix components. Advertising, sales promotion, and direct and digital marketing are three crucial elements of the marketing communication mix for Starbucks UK.
Advertising
Advertising is an effective strategy for increasing brand recognition and developing a positive brand image. To reach its target demographic, Starbucks UK employs a variety of advertising channels, including television, print, and social media. The distinctive coffeehouse experience that Starbucks delivers is highlighted in the company's advertising efforts to set it apart from rivals. Starbucks, for instance, promotes the concept that it is a location where people may congregate and interact with one another with its "Meet Me at Starbucks" promotion. With 28 million YouTube views and a good social media buzz, the campaign was successful in establishing an emotional connection with consumers (Snyder, 2015).
Sales Promotion
Offering incentives or discounts to consumers in order to persuade them to purchase a good or service is known as sales promotion. To boost sales and strengthen its brand image, Starbucks UK employs a variety of sales promotion strategies, such loyalty programmes, gift cards, and limited-time deals. My Starbucks Rewards, the company's loyalty programme, is an important factor in customer retention and repeat business. Due to the program's personalised rewards based on past purchases, users are more likely to remain loyal to Starbucks. Starbucks also uses time-limited promotions to boost sales, like the Unicorn Frappuccino. The short-lived beverage created a lot of talk on social media and increased foot traffic in Starbucks locations (Bhasin, 2017).
Direct and Digital Marketing
Communication with clients using platforms like email, social media, and mobile applications is a component of direct and digital marketing. Starbucks UK employs digital marketing to let customers know about new offerings, specials, and upcoming events. For instance, consumers may buy and pay for their beverages in advance using Starbucks' mobile app, which saves them time and makes purchasing easier. Customers receive personalised discounts and incentives through the app based on their past purchases, which encourages them to go to Starbucks more regularly. Starbucks UK uses social media as an additional tool for connecting with customers and enhancing its brand image. Starbucks UK, n.d.). The company's Instagram account, which has over 15 million followers, highlights new items and promotions while showcasing the Starbucks experience.
Thus, it can be identified from the above discussion that the advertising, sales promotion, direct, and digital marketing parts of the marketing communication mix play a crucial role in Starbucks UK's overall marketing plan. It is possible to observe how these components operate together to set Starbucks apart from rivals, bolster its brand image, let consumers know about new goods and promotions, and urge them to visit Starbucks more regularly by utilising the DRIP model to assess the efficiency of these components. Starbucks UK has established a devoted consumer base and developed a strong brand image via the use of a variety of communication tactics.
To engage customers, Starbucks has successfully used advertising, sales promotion, and direct and digital marketing. Advertising initiatives for the business, such the "Meet Me at Starbucks" campaign, have contributed to building a solid brand image and raising brand recognition. Sales promotions, including the well-known "Happy Hour" promos, have proved effective in boosting foot traffic and sales. The Starbucks Rewards programme and the company's mobile app are two examples of direct and digital marketing strategies that have been successful in fostering client loyalty and raising engagement. Starbucks has been able to develop a complete marketing plan that engages customers via a variety of channels by utilising a mix of these technologies.
Integration of Online (Digital) and Offline (Traditional) Media
Analysis of how the company integrates online and offline media using relevant examples
Marketing campaign decision
Starbucks has had success utilising data analytics to guide decisions about its marketing campaigns, especially when using tactics and resources like sponsored, earned, and owned media (Kietzmann, 2019).
Starbucks has employed programmatic advertising to target particular audiences with pertinent content through paid media. With this strategy, the business may contact customers more effectively and at a lower cost. Starbucks also boosts every single Facebook post that attains 250000 organic communications (Kim, 2019).
Starbucks has concentrated on producing content that is engaging for its audience through earned media through Google alerts. Customers were invited to share their tales and experiences with the brand through the company's "Meet Me at Starbucks" campaign, for instance (Liu, 2020).
Finally, Starbucks has successfully developed consumer engagement and loyalty via owned media, such as its mobile app and reward programme. They have also owned the hashtag #CoffeeCraze, which motivates its patrons to post anything related to Starbucks (Starbucks, 2021).
Figure 3: Strategy and Tools
Integration achieved: Impact and significance
Starbucks attained integration by using a comprehensive approach that linked its marketing communication tools with data analytics, as seen in the picture below. The company's marketing initiatives were created with the goal of ensuring consistency across all platforms and content optimisation. Starbucks developed an integrated marketing communication (IMC) mix that successfully targeted its audience through paid media, owned media, and earned media. This integration was made possible in large part through the use of data analytics. Starbucks was able to customise its marketing message mix to the demands and tastes of its target audience by analysing consumer data. The business was able to determine which channels worked best for connecting with its audience and then adjust how it ran its advertising.
Social media metrics
One of the most interesting brands online is the well-known coffee chain. Take a look at some of the shocking Starbucks social media data:
2 million Facebook likes
9 million Twitter followers
16 million Instagram fans
153K YouTube subscribers (Ravi, Kavya, 2019).
The magnitude of these figures speaks for themselves. Starbucks has successfully transferred its retail branding to its internet presence.
Figure 4: Social media metrics
Facebook
In comparison to the 53,500 fans that the average North American Restaurant & Cafe Page gained, Starbucks gained 710,000 new Facebook followers. It can be seen from the below given figure that. The brand projects a cheerful, colourful, and quirky image throughout its Facebook page through these posts, particularly at the noon time. Over 4.2 million people liked and shared the 84 photo posts, which totalled 547 thousand. The brand promoted 127 posts, or 80% of all posts, which resulted in over 6.1 million likes and 822 thousand shares. The brand received 100% positive feedback from its audience after responding to 95% of the conversations that were started by the 158 Posts that they published.
Figure 5: Total Engagement from Facebook
Twitter
On Twitter, Starbucks has more than 12 million followers. Twitter has evolved into an extremely user-friendly customer service platform. Twitter is primarily used by Starbucks to interact with its audience. 134,000 new followers followed them after they tweeted 57,000 times. They sent 155 tweets per day, with 99 percent of them being replies, demonstrating their appreciation for the platform. Without mentioning their official Twitter accounts for Frappuccino and Starbucks Pumpkin Spice Latté, which each have 202K followers and 112K followers, the genius of Starbucks on Twitter cannot be established. It can be identified from the below figure that the organic followers were immensely increased rom 5 M to about 10M in the year 2019.
Figure 6: Engagement from Twitter
Instagram
Starbucks gained nearly 3.3 million new followers in 2017, representing a 26% increase in followers. More than 77% of their 240 posts contained photos. Starbucks frequently uploads images of its products, typically in eye-catching locations. The #icedcaramelmacchiato, #icedcoconutmilkmacchiato, and #pinkdrink were some of their most engaging themes.
YouTube
Starbucks has 153K supporters on YouTube and transferred a total of 89 recordings. With a growth rate of 24.8 percent, the brand outperformed the average North American Restaurant & Cafe YouTube channel by 21.5 percent. However, comparing Starbucks to its main rival (Ravi 2018),.
What is the analysis telling the reader?
Overall, from the analysis, it can be seen that there is a drop in the content issued in the year 2104 to 2014. Most of the engagement came from Facebook, that is around 18000, which is in the year 2014. After that, they got engagement from Twitter, which is around 17000 and lastly, from Instagram, that is around 14000. The below-given data is given in the picture below.
Figure 7: Issued content
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Conclusion
Key points
It can be concluded from the above study that to engage its consumers and promote its goods and services, Starbucks has been able to successfully integrate a variety of marketing communication tactics, such as advertising, sales promotion, and direct/digital marketing. The business has also used social media metrics and data analytics to assess the success of its marketing initiatives and to inform future campaign choices. Starbucks has been able to maintain its position as a top worldwide brand in the coffee business by combining these tools and techniques into a unified and successful marketing campaign.
Conclude on the impact of marketing environment on the company’s marketing strategy
A company's marketing strategy is greatly influenced by the marketing environment, and Starbucks has shown that it is capable of adapting to changes in the environment and incorporating a variety of marketing communication methods to engage its consumers successfully. The business successfully carried out its marketing campaign decisions by integrating its online and offline media and utilising pertinent data to accomplish so. Starbucks has been able to develop a consistent and successful marketing plan that has assisted it in maintaining its position as a top worldwide brand in the coffee sector. Starbucks has been able to communicate consistently with its consumers because to the integration of marketing communication technologies and the use of data analytics, which has improved brand recognition, boosted customer loyalty, and enhanced overall success.
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