Starbucks Marketing Strategy

bizfluent article image

Love them or loathe them, you definitely know them because Starbucks is the world’s largest coffee brand, with over 30,600 stores in 80 countries. To make that happen, Starbucks created a strong identity and consistent product with powerful messaging.

The company launched in 1971 as a coffee roaster across from Seattle’s Pike Place Market and it wasn’t until 1984 that they opened their next storefront, but they've grown at an incredible pace ever since. A good reason for the company's growth is that Starbucks’ marketing strategy created an iconic brand and identity.

TL;DR (Too Long; Didn't Read)

Starbucks is a global chain because they listen to their customers and keep their identity at the fore of everything they do.

A Short History

Starbucks began as a roaster in 1971 when three students opened shop. Howard Schultz was a customer in 1981 and became a part of the company a year later. In 1983, Schultz went to Italy and fell in love with the coffee culture in the land of espresso. He loved the way Italy’s café scene felt like coffee shops were the third place between work and home — an extension of the home but also of the community.

Schultz left Starbucks that year to start his own company, the Il Giornale coffeehouses. When Starbucks went up for sale with eight locations in Washington and Vancouver in 1987, Schultz secured some financial help from Bill Gates Sr. and Starbucks' "age of Schultz" went full steam ahead.

The Starbucks brand has also bought several companies perceived to be their competitors, such as Teavana, Seattle’s Best Coffee, Torrefazione Italia and La Boulange Bakery. Tazo Tea is another example of the industry dominance Starbucks yields: They bought the brand in 1999 for $8.1 million and sold in 2017 to Unilever for $384 million.

The Starbucks Identity

“The third place” is a distinct focus on Starbucks’ culture — comfortable seating, nice environment, using customers’ names on drinks, free WiFi with any purchase and high personalization with drinks and orders. They've always tried to make customers feel welcomed and befriended by affable baristas with a safe and comfortable environment to relax and work in.

Starbucks prides itself on its social stance, too, and has long been a supporter of hiring veterans, using sustainable coffee, getting involved in Earth Day, advocating for charities and so much more. A winner of “The World’s Most Ethical Company” award for 11 years running, there is arguably no company more aware of its identity than Starbucks.

From the early days, their drink makers have been known as “baristas”, just as they’d be known in Italy. This set the company apart for a long time, but now it's regular cafe jargon.

There’s an exactness that consumers have come to expect from Starbucks, knowing they can visit any location in the world and that tall Americano or grande mocha Frappuccino will be made the same way. That’s all down to their training, which is where Starbucks is even more notable than McDonald’s for how thoroughly they train their team and how precisely they prepare their products.

Identity in Marketing

Starbucks created that community feeling in its stores early on by offering their employees full medical when working over 20 hours a week, plus stock options and other incentives that showed them they were valued as staff. They kept staff longer, too, creating better relationships with their clientele, which further helped cement the company’s brand as that “third place”.

Today, staff are still supported in ways that go far beyond most companies — they’re often encouraged to continue their education or further their training. Starbucks has always focused on hiring people people rather than coffee experts because although they couldn’t make anyone likable, they knew their in-depth training would build coffee knowledge.

The company's “training is the answer” ethos is exemplified by its infrequent-but-bold option of closing every American location for training, as it did in 2018 after a race-based scandal in one of its stores led "SBUX" to admit they failed people of color. They closed 8,000 shops for a day and taught diversity to every barista in America. A decade prior, in 2008, shops closed for a full day of “Espresso Excellence Training”.

CEO Howard Schultz wrote in his autobiography that no matter how big Starbucks grew, “The only number that matters is ‘one’. One cup. One customer. One partner. One experience at a time.” And that’s the ethos that has kept its customers loyal, year after year.

A Strong Online Presence

Starbucks understood the value of social media from the early days. They were early to social and saw it as an opportunity to continue building relationships and hear their customers. That's something Starbucks has done well since the early days — they had always conducted conversations with customers to see what they had enjoyed or been disappointed by in a shop visit. But now, social gives them a way to connect one on one, around the world, all hours of the day.

The company adopted all the channels — Twitter, Facebook, Pinterest, Instagram and on it goes — and they didn’t leave it as the job for some intern to handle; they understood this was a new way forward with connecting and marketing. Starbucks excels at capitalizing on its user-generated content throughout their platforms, sharing their fans’ photos of drinks and Starbucks-related experiences. More importantly, they employ social listening firms to monitor all mentions of Starbucks online, to intercede and engage with consumers online as well as to manage their online communities.

With such online monitoring, they’re not just keeping customers happy, they’re learning about what stores aren't satisfying consumers. They’re also hearing feedback about drinks, food, apps, service and everything else the company does, which means they’re learning about what works, what doesn’t and what might be a profitable new direction to move in. Starbucks was one of the first companies to truly understand that being actively engaged online meant conducting the best focus group ever to monitor what both their customers and detractors believe about their brand.

Focus on Constant Innovation

Starbucks has always been at the fore of innovation in retail, coffee and branding. One look at their social media history makes that clear. Online or off, for as long as the company has existed, they’ve been constant on their branding, logo and "the third place, plus their affinity for continuing a conversation with their customers. They did all that with just a few dozen stores and they’re still doing it with 31,000 stores.

Today, nearly every store or restaurant has a smart gift card available to purchase, but Starbucks was among the earliest adopters of this brilliant tech-enabled gifting. And the marketing team hit a home run, too, urging the public to “Say it with Starbucks”, a slogan that was now the backbone of a massive social gifting strategy the company was rolling out in one of 2019's newest but most critical markets for them — China.

Another area where Starbucks wisely got the jump on the market was in having a proprietary app. The company spent a lot of money for a top-tier team to design an intuitive smart app that gets raves from users, with a rating of 4.6 on the Apple Store from over 27,000 users.

The smartphone app has now evolved to the point where it tracks points, registers and tracks customer cards, customizes orders and even allows customers to pay with the app in-store. Allowing consumers to order ahead so their order is ready means optimizing staff time and reducing frustration with those who are the most loyal of consumers, which ensures they keep coming back. As of 2019, around 20% of purchases were being made through the app.

Loyalty: Membership Pays

Rewarding loyal consumers has always been stock in trade at Starbucks. The Starbucks’ loyalty program is genius because it rewards customers by giving them points for their system, something that has kept clients coming back time and again ever since 2009. But while other companies make rewards programs more austere, Starbucks doubled down on their loyalty program by increasing their reward options, raising points earned from one per visit to two per dollar spent (2016), to now making it easier to use.

In 2019, the company announced it would allow easier redemption on more items with lower thresholds, like being able to get a flavor shot for 25 points or a bakery treat for 50. The company believed making the program easier to use and more robust in rewarding could entice more people to join the program.

The result of that is that people believe they can be paying it forward to a future indulgence by spending money to get points today. This “spend now = save later” mentality is partly why loyalty rewards members comprise 40% of Starbucks’ sales in U.S. stores. That’s why Starbucks is driving the membership train through China, encouraging the world’s biggest market to buy into the Starbucks loyalty rewards program. With 17.2 million active members, they’ve proven that rewarding customers does indeed keep them loyal.

Keep It Interesting

For some, there are just two “times” per year for Starbucks: pumpkin-spice latte time and the sad time where there are no pumpkin-spice lattes. By keeping things rolling with different seasonal launches, a magical week or two a year of “Frappe Hour” and other temporary foods and drinks, there’s often a reason to prioritize a drop-in at Starbucks.

Starbucks does frequent product testing, too. Special drinks can become hot topics in social media, like the “Unicorn Frappuccino” that went viral in 2017 and is still talked about, with articles like “Will the Unicorn Frapp be Back this Year?” despite being in stores for just a few days.

The company also launches special dishes and other retail purchases that might be for a short time only, forever rolling out new designs of mugs or special coffee roasts. By doing this, they make the Starbucks product line and store shelves a great place to browse.

The Art of Marketing

When delving into Starbucks' marketing analysis, it’s an example of how listening to your customers is key to being the best you can be. Their customers complained about long lines and busy stores, and Starbucks heard that and made an industry-leading proprietary app that made life simpler — order ahead, pay quickly, get rewarded — which amounted to 16% of orders and payments in just one $6.8 billion quarter in 2019.

Starbucks is easily one of the best-marketed companies in the world and they're true leaders at showing how to retain existing clientele through service, ethos and messaging. They’ve thought about the kind of company they want to be perceived as, too, by supporting veterans, LGBTQ and other members of society, plus all kinds of social causes. By constantly listening to, engaging, rewarding and enticing their audiences, Starbucks is one of the world’s strongest, and still growing, brands in the world.