In modern world, well-designed marketing strategy is crucial for the development of companies on the global markets. It is essential that global markets are able to consume the same quality of products worldwide, and it conforms to the company strategy.
Starbucks has been changing its marketing strategy towards expansion. Prior to expansion, the company focused on the local markets and served as elite coffee shop brand. The choice of coffees was slightly different, and the market was clearly defined and rather narrow.
As the image of Starbucks enlarged the strength of brand and encouraged greater customer recognition, the company became popular in other locations. For this reason, expansion was introduced as part of the marketing strategy. Very soon, this strategy was already a part of the activities of the company. By the end of 2006, the company already introduced expansion as its newly formed global marketing strategy.
Expansion strategy did not solely mean the increase of coffee shops worldwide. It also meant changing customer profiles. Market segmentation as well as the distribution channels has changed which influenced the value chain of the company. The focus on quality products has shifted towards differentiation on the market of mass consumption. The newly arriving customers did not want the best quality of coffee; they wanted a variety of coffee drinks which they could drink on hot and cold days, take large and small cups, and drink coffee with a variety of flavors etc.
All this emerged into an important issue for the whole Starbucks brand: a challenge to win other markets with maintaining its quality of coffee and its market position as the leading coffee shop company in the world. Starbucks has to deal with both the coffee enthusiasts market and mass consumers of coffee which is a very difficult customer mix.
The problem for Starbucks was the change of generic strategy from focus to diversification which resulted in changing the company marketing mix and a variety of other value chain elements. Starbucks is not solely a solution for those people who like drinking coffee. The Starbucks experience entails many other elements which are part of well-designed company marketing strategy.
Redefining this strategy without proper rebranding means a lot of challenge for company strategists. This dissertation aims to find how Starbucks global expansion has affected the brand of the company and customer recognition. The basic research question in this case is whether Starbucks is able to meet the growing demand for coffee worldwide together with the changing tastes of its consumers? Other research questions include the extent to which global expansion affected the brand and customer recognition. Finally, the research conducted within this dissertation aims at finding solution to the problem in the form of marketing guidelines for Starbucks.
Due to the fact that there are two key components that need thorough analysis, research is based on subjectivism and interpretivism research philosophies. The combination of these research philosophies is used in order to obtain the information about Starbucks serving as a choice for customers and being part of their lifestyle. As Saunders, Lewis and Thornhill (2007) believe, in subjectivism, “social phenomena are created from the perceptions and consequent actions of social actors”. At the same time, interpretivism allows looking at the roles which Starbucks consumers have in interpreting its customer value and product quality. The analysis which is based on both of these philosophies requires thorough data analysis and examination. For this reason, proposed methods of data collection allow looking at the impact of Starbucks marketing strategy from both sides: exploration of existing image created by customers and the effect that the changing image may have on the customer recognition. The research method chosen in a case study due to the fact that the aim of the paper lies in understanding the case and not providing generalizations.
Discussion and Analysis
Data collection and analysis entail both qualitative and quantitative data collection methods. Based on the case study research strategy, such analysis allows looking at both the questionnaire results (quantitative analysis) and interpreting customer interviews (qualitative analysis). Self-administered questionnaires are distributed to the customers of Starbucks on a weekly basis for a period of two months. Central locations are preferable as they usually gather more people. On-site customer interviews, on the contrary, are conducted during one month in non-central locations of coffee shops where people are more likely to relax and have more time to answer the questions. Social Studies software is proposed as a tool for analyzing quantitative data, and content analysis is proposed as a tool for qualitative analysis. Both tools allow exploring factor correlation among variables and see the cause-and-effect linkage among different factors determining current marketing strategy.
Change of marketing strategy from customer-focused approach towards differentiation and expansion is one of the issues most widely discussed by Michael Porter in his theory on generic strategies. According to Porter (1985), it is not possible to execute two strategies at the same time. For Starbucks, the past strategy is undoubtedly focus which changes the whole scope of marketing action and makes research and design the most important element of the corporate value chain. However, the company did not choose the traditional methods of promotion and advertising. Since the very beginning of its activity, Starbucks focused on creating coffee community with viral word of mouth thoughts and ideas. According to Voteforus, Starbucks ‘employed unconventional word of mouth viral social media strategies that perfectly matched the concept the company wanted to portray’.
At the same time, due to its direct application of brand marketing, Starbucks is less exposed to industry changes and is able to get more competitive advantage by supporting its brand. However, the core essence of brand marketing lies in the fact that the value chain elements are balanced and do not change within a certain time frame.
The research gap in this case lies in the fact that it is impossible to apply value chain changes and incorporate it into the existing brand marketing strategy. Starbucks company image has suffered due to expansion, and the consequences are to be evaluated. According to current company investment portfolio, the effect has been positive. However, the process of change requires investigation.
Practical and Ethical Issues
Research ethics is executed throughout the whole research process. In data collection, ethics means that all questionnaires are correct, and the conditions of all interviews and questionnaires are the same for all candidates. Customers at Starbucks may not be helpful during the data collection process. At the same time, dealing with questionnaires always provides problems in ensuring the validity of data collected. Moreover, content analysis of the qualitative interviews may be challenging due to subjective opinion of the author. The time frame set for research may not be enough to explore the whole Starbucks Company worldwide. That is why the most important limitation for this research is the geographical location: USA, China, and UAE. Only these countries have been selected for comparison. Sensitive issues are avoided, and the permission of Starbucks for questionnaire distribution and interviewing is obtained.