tiistai 21. helmikuuta 2012

The Marketing Mix of Starbucks

What would Starbucks offer in the Finnish market? Usually companies offer similar selection in each market, and Finland is not likely to be an exception. What is the main product beloved by millions and successfully provided by Starbucks since 1971? Right, Coffee. Around 100 different specialty coffee beverages! From Brewed coffee to Frappuccino blended beverages add to these chocolate drinks, tea and juices and you’ll get a head-spinning range of only drinks…  It’s probably too much for customers as they would be too much challenged by choosing. 

On average Finnish coffee shops offer from 15-30 kinds of coffee-beverages, for Starbucks it’s nothing, thus this is a place to overplay the rivals. 50 drink items probably would be enough. Most of cafes offer traditional menu consisting of filtered coffee (a must in Finland), espresso based drinks, such as Espresso, Americano, Cappuccino, Latte, Glasse, Mocha, Machiato, rarely with different dressings and tastes. Here Starbucks comes and bits all of them with its Frappuccino (a line of blended coffee beverages trademarked and sold by Starbucks).(1)
Perfect collection of tea by Tazo Teas would not leave indifferent those who do not consider themselves as coffee lovers. All coffee range is accompanied with wide offer of pastries salads and breakfast options.

Starbucks product line is not limited with conventional beverages one can drink in coffeehouses, it offers also bottled coffee drinks which are sold in supermarkets, souvenirs, drinkware (glasses, mugs, bottles), coffee machines, coffee&tea presses, grinders and other coffee related equipment.

Besides customers can find CDs with the music playing in Starbucks coffeehouses and one more things need to be mentioned Ethos water, 5 cents from each sold bottle in the world go to Ethos Water Fund, which is created to help children from emerging countries to have clean water “So far more than $6 million has been granted to help support water, sanitation and hygiene education programs in water-stressed countries – benefiting more than 420,000 people around the world” (2).

Overall Starbucks follows the multi-brand strategy “by building a portfolio of branded business units beyond the Starbucks retail brand.” (3) Starbucks brands portfolio includes: Starbucks branded coffee, Tazo – tea brand, Etho Water, Frappuccino.

Starbucks pricing strategy is based on quality, differentiation and authority value. (4) Starbucks offers products of high quality and provide excellent service for customers, they are ready to pay more for better quality and better service. Starbucks should maintain the quality of coffee sourcing and the level of services to justify higher prices. Starbucks spends much efforts to differentiate itself from the competitors: new kinds of specialty coffee drinks, interior design to make time spent at Starbucks coffeehouses even more pleasant, new services (Starbucks goes mobile), Starbucks social network community and etc, all this to create additional value for customers for which they are ready to pay more. Overall Starbucks is a strong global brand positioning itself as a coffee expert and its products are priced according to the upscale image related to the brand.

I have been exploring coffee prices in Finland and it seems that local competitors have relatively the same pricing level I even personally visited two coffee chains popular in Finland. So If you go to Robert’s Coffee you will pay around 3.50-3.90 Euro (depends on the type: with or without dressings) for Latte of standard size and 4.10-5.10 Euro for Latte in Wayne’s Coffee. In other local cafes prices are approximately the same, the only exception is McDonalds, where you can buy Latte for 2 Euro, but McDonalds is unlikely to make a real competition to Starbucks, as it has different concept and objectives. Starbucks prices its coffee at the same level in Europe, in Belgium, Germany and Switzerland tall Latte costs 3.75 Euro, which totally fits Finnish local prices and won’t be considered as expensive. Though, it should be taken into account that the biggest target group in Finland is students, a price sensitive segment, therefore special offers and student discounts would make Starbucks alternative to other coffee places more attractive (e.g. 10% KY members).

Currently Starbucks opens one cafe in Vantaa-Airport and soon second Starbucks will be opened there as well, so that not only passengers but also guests could enjoy the taste of specialty coffee. Overall the company plans to open around 15-20 coffeehouses across the Finland. (5)
According to the mission Starbucks can be found in every neighborhood. Settling in Helsinki area could be a next step after the airport. The best location is of course central part, in a close distance to main universities Aalto, Hanken, University of Helsinki. Kamppi seems to be a perfect place, as it’s also a bus terminal that provides an intensive flow of people every day. However, it is unlikely that there are any places available and competitive environment in this shopping mall is very hot, though for such a big flow of people there wouldn’t be a lack of customers, especially considering the fact that there are no cozy and warming places to enjoy specialty coffee. The near-sea area down to Esplanadi park  is very popular among tourists especially in spring-summer season. Linnamaki theme park could be also good option for Starbucks.  Starbucks needs a good research about the location as Helsinki center is quite overloaded with different stores, cafes, and restaurants. One more solution could be Espoo and Vantaa satellite-cities of Helsinki. Competition in specialty coffee segment is not so tough and customers don’t have a big choice of “chill-out places”.  
As for the other “places to be” in Finland I think Starbucks should consider Turku, Tampere and some  northern cities where big skiing centres are located.  Lappeenranta and may be some other cities, close to the boarder with Russia, should be also considered by Starbucks, as these places are very popular among Russian tourists. However in this case company should focus on its “neighbourhood” approach even more to make Starbucks look as much local as possible (new logo will help as well) , because although Russian tourist appreciate high quality coffee, some of them are not fond of everything related to American culture.
There couldn’t be better time for Starbucks to enter Finnish market than the year when Helsinki is named a World Design Capital 2012! Sponsorship of events included in WDC Program could be a good promotion not only for Starbucks coffee but its social responsibility as well. Starbucks with its creativity freshness and trendiness could pretend to be one of the accompanying symbols of design. New services and enhanced customer communication would add more value for the Starbucks coffee lovers. Starbucks has more than 27 million fans on Facebook and around 2 million followers in Twitter. Social networks aid to launch new service eGift – you can treat your friend by buying her favorite Cinamon Dolce Crème Frappuccino or Caramel Macciato or whatever she likes, you just deposit some money on the gift card and send it to your friend by e-mail or regular mail. A perfect way for a company not to spend money for advertising and to attract new customers.

(Source: www.starbucks.com)

Starbucks spends only 1 percent of its revenues (about $30 million) in marketing and advertising. Instead, company highly relies on word-of-mouth as well as on the ability of Starbucks brand to market itself. Well it’s quite reasonable, as Starbucks has reached that level of brand awareness and loyalty when it doesn’t need conventional advertising tools. (6)

To promote Starbucks in student environment it’s crucial to make it a place where students want to go in their free time. To achieve this company can sponsor some student events carried out by student organizations (which are the powerful sector in Finland by the way), to organize student intercultural events and promote foe instance new drinks and pastries inspired by other cultures cuisine. Morning take away Frappuccino with student discount would be a perfect start of the day at school. Facebook promo actions and mobile apps by Starbucks would warm up the interest of Finnish target groups as well.

1 kommentti:

  1. Heyy! Thanks for the post...it helped :)
    I have a blog too, check it out if you're interested