Starbucks Marketing Mix and 7Ps (Updated 2024)

The Marketing mix of Starbucks analyses the 7Ps of Starbucks, which includes the Product, Price, Place, Promotion, People, Physical Evidence, and Process of Starbucks. The Starbucks marketing mix 4ps has helped to lay down the groundwork for customer engagement with potential and existing customers through its product, price, place, digital marketing, and promotional mix.

Starbucks’ marketing strategy focuses on both customers and the positive brand image, ensuring top customer experience with the help of high-quality coffee. The premium coffee brand has gained a competitive advantage in the beverages industry, and this is all because of the excellent Starbucks marketing mix framework.

Introduction of Starbucks

# Starbucks Corporation

• Origin Country: United States of America
• Founder: Jerry Baldwin, Gordon Bowker, Zev Siegl
• Founded: 1971
• Headquarters: Seattle, Washington, U.S
• Employees in 2023: 402,000
• Annual Revenue in 2023: 32.914 billion USD
• Net Income in 2023: 3.321 billion USD
• Market Cap in 2023: 124.72 billion USD

The American multinational chain stores Starbucks Corporation is the largest chain of coffee houses and one of the largest roastery reserves in the world. The company, founded as a beans store by three friends studying at the University of San Francisco, initially offered fresh-roasted coffee beans, spices, teas, and fresh fruit juice. This store was later converted by the new owner, Howard Schultz, into a coffee shop that served espresso beverages.

Howard Schultz has been the mastermind behind the company’s marketing strategy, repositioning the brand image around corporate social responsibility, reaching out to potential and existing customers through new Starbucks products, and increasing the beverage industry’s market share. In the Fortune 500 and Forbes Global 2000 list, Starbucks is ranked 114th and 288th, respectively.

Starbucks Product Strategy

The Starbucks marketing mix focuses on strategy related to products in the Starbucks marketing mix, which is very straightforward. The focus is on customer satisfaction, so the coffee chain has introduced new product varieties that are unheard of. Some of its offerings are specific to the locality, whereas others are seasonal.

The product mix of Starbucks, a renowned coffeehouse chain, is multifaceted and caters to a broad customer base with varied preferences.

The new Product Mix of Starbucks in 2024 is as follows (Source).

1. Coffee and Espresso Beverages: This is the core of Starbucks’ offerings, including a wide range of coffee and espresso-based drinks like lattes, cappuccinos, Americanos, and mochas. Seasonal and specialty beverages, such as Pumpkin Spice Latte and Peppermint Mocha, also feature prominently.
2. Teas and Other Beverages: Starbucks offers an assortment of teas (including its Teavana brand) and non-coffee beverages like hot chocolate, iced teas, lemonades, and Frappuccino® blended drinks.
3. Packaged Coffee and Tea Products: For at-home brewing, Starbucks sells packaged whole-bean and ground coffee, tea bags, and loose-leaf teas under the Teavana brand.
4. Food Items: The food selection includes bakery items (like muffins, scones, and pastries), breakfast options (such as sandwiches and oatmeal), and a variety of lunch items, including sandwiches, salads, and snacks.
5. Ready-to-Drink (RTD) Beverages: Starbucks markets a range of bottled and canned beverages in grocery stores and other retail outlets, like Starbucks Frappuccino® and Doubleshot® drinks.
6. Retail Merchandise: Starbucks stores often sell branded merchandise, including mugs, tumblers, travel cups, and other accessories for coffee and tea enthusiasts.
7. Coffee and Tea Brewing Equipment: To enhance the at-home coffee and tea experience, Starbucks offers equipment like French presses, instant coffee makers, espresso machines, and teapots.
8. Digital Offerings and Services: Starbucks has a significant digital presence, a mobile app for ordering and payment, and a loyalty program (Starbucks Rewards) that provides perks and personalized offers.
9. Starbucks Reserve®: This premium line includes rare and exotic coffee beans, often available in select high-end Starbucks Reserve locations.
10. Consumer Packaged Goods (CPG): Besides its stores, Starbucks offers products in grocery and retail stores, including packaged coffee, teas, and various branded items.

Starbucks Pricing Strategy

Starbucks’ pricing strategy is a sophisticated blend of premium positioning sales promotions and psychological pricing, designed to align with its brand identity as a provider of high-quality coffee and a superior customer experience. Here’s a breakdown of their strategy:

1. Premium Pricing Model: Starbucks employs a premium pricing strategy, setting prices higher than those of many competitors. This reflects the high-quality ingredients, unique beverage creations, and overall customer experience that Starbucks is known for. It positions the brand as an aspirational and lifestyle choice rather than just a coffee outlet.
2. Value Perception through Product Differentiation: Despite the premium prices, Starbucks maintains a solid customer base by offering unique product variations and seasonal specialties that competitors don’t easily replicate. This product differentiation enhances the perceived value of their offerings.
3. Dynamic and Geographical Pricing: Starbucks adapts its pricing based on location and market conditions. Prices may vary between cities, countries, and even within different areas of the same town to reflect the cost of operations, local purchasing power, and competitive factors.
4. Psychological Pricing Tactics: Starbucks often uses psychological pricing strategies, such as pricing items slightly below a whole number (e.g., $4.95 instead of $5.00). This makes prices seem lower than they are, a tactic designed to encourage more spending subtly.
5. Loyalty Program and Rewarding Regular Customers: The Starbucks Rewards loyalty program is vital to their pricing strategy. It offers discounts, freebies, and customizable options to frequent customers, which not only encourages repeat business but also helps justify the premium pricing for regular customers.
6. Tiered Pricing for Size Options: Starbucks utilizes tiered pricing for different sizes of drinks, providing customers with options that cater to different needs and price sensitivities. This allows customers to choose based on their budget while encouraging upselling.
7. Seasonal and Limited-Time Offerings: By introducing seasonal and limited-time products at a premium price, Starbucks creates a sense of urgency and exclusivity. This strategy drives sales during the offer period and helps attract new customers and retain regulars’ interest.

Starbucks Place Strategy

The place strategy in the marketing mix of instant coffee at Starbucks is focused on global expansion, supply chain, place, and distribution strategy. The first Starbucks coffee beans store was opened in Seattle, and between 1986 and 2000, the company was on an aggressive global expansion plan through franchising.

The coffee chain Starbucks Corporation has spread its product presence to 80 countries with the help of 35,711 Starbucks stores, out of which nearly 15,444+ are located in the United States. Nearly 8,900 Starbucks stores in the United States are company-operated, and the rest are licensed. Most chain stores offer free Wi-Fi access to lure in more customers.

Here’s the place strategy of Starbucks.

1. Global Store Network: Starbucks operates a vast global network of company-owned and licensed stores in various locations, including urban and suburban areas, shopping malls, office buildings, and university campuses. This extensive presence makes Starbucks highly accessible to a wide range of customers.
2. Strategic Store Locations: Each Starbucks store is strategically located in high-traffic areas and visible locations to attract a steady flow of customers. This includes locations in busy city centers, near public transportation hubs, and prominent shopping districts.
3. Partnerships and Co-Branding: Starbucks forms partnerships with other businesses such as bookstores, grocery stores, and airports to set up coffee stations or mini stores, expanding their reach and convenience for customers on the go.
4. Digital and Mobile Presence: Emphasizing convenience, Starbucks offers a robust mobile app that allows customers to order and pay in advance, pick up their orders at the nearest store, and earn rewards. This digital strategy aligns with evolving consumer behaviors towards mobile use and online ordering.
5. Community-Oriented Store Experience: Starbucks focuses on creating a welcoming and comfortable “third-place” experience in its stores, encouraging customers to linger, work, or socialize. This approach increases foot traffic and fosters community and brand loyalty.

Starbucks Promotion Strategy

The Starbucks promotion strategy in the marketing mix of Starbucks is a blend of search engine optimization, digital marketing, social media platforms, traditional and public relations, etc. The core idea behind the promotional word-of-mouth marketing mix is to boost the brand image and visibility in the consumer market.

Starbucks’ marketing strategy is focused on offering excellent, ambiance-free coffee to its customers where they can chill out with families and friends over a cup of quality or other food and beverage items served by the barista.

Some Recent Video ads and Print ads for Starbucks are:

Starbucks People Strategy

The “People” element of the Service Marketing Mix for Starbucks focuses on employees, customers, and the overall experience created through interactions. This aspect is crucial in service-based industries where customer satisfaction heavily depends on the quality of the service provided. Here are key points regarding the “People” aspect of Starbucks:

1. Employee Training and Development: Starbucks invests heavily in employee training and development programs. Baristas undergo extensive training in coffee knowledge, customer service, and operational skills to ensure a consistent and high-quality customer experience across all outlets.
2. Employee Satisfaction and Retention: Starbucks places a high value on employee satisfaction and retention, offering competitive benefits, including health insurance, stock options, and tuition coverage through the Starbucks College Achievement Plan. Happy employees contribute to a positive atmosphere and better customer service.
3. Customer Service Focus: The company prioritizes exceptional customer service, aiming to create a personalized and engaging experience for every customer. This includes remembering regular customers’ names and orders and creating a welcoming and comfortable store environment.
4. Community and Relationship Building: Starbucks emphasizes building relationships with customers and communities. This is achieved through local events, community service projects, and creating spaces where people can meet and connect.
5. Diverse and Inclusive Environment: Starbucks is committed to creating a diverse and inclusive environment for employees and customers. This includes hiring practices that promote diversity, supporting LGBTQ+ employees and customers, and initiatives to increase racial and gender diversity within the company.
6. Empowerment and Responsibility: Employees at Starbucks are empowered to make decisions to resolve customer complaints and improve the customer experience. This empowerment enhances the quality of service and ensures that customer needs are met promptly and efficiently.
7. Brand Ambassadors: Starbucks employees are considered brand ambassadors. They are encouraged to embody the company’s values and mission, contributing to its image and reputation through customer interactions.
8. Feedback and Improvement: Starbucks values employee and customer feedback to improve the service experience continually. This includes regular surveys, feedback channels, and incorporating suggestions into service and operational improvements.

Starbucks Process Strategy

The “Process” element of the Service Marketing Mix for Starbucks refers to the operational and service delivery methods that ensure customer satisfaction and efficiency. Starbucks has meticulously designed its processes to offer customers a seamless and enjoyable experience, from entering the store to enjoying their coffee. Here are key points regarding the “Process” aspect of Starbucks:

1. Ordering System: Starbucks employs a streamlined ordering process, allowing customers to order in-store, online, or via the Starbucks mobile app. The mobile app, in particular, offers features like ordering ahead and payment, reducing wait times, and enhancing convenience.
2. Customization: A significant part of the Starbucks process is the ability for customers to customize their drinks extensively. This flexibility in product customization caters to individual preferences, enhancing customer satisfaction.
3. Barista Training: Starbucks invests in comprehensive training programs, ensuring employees are skilled in coffee preparation, customer service, and efficiency. This training ensures consistency in product quality and service across all locations.
4. Supply Chain Management: The company has a robust supply chain process ensures the timely delivery of fresh, high-quality coffee beans and other ingredients to stores worldwide. This process includes ethical sourcing practices and partnerships with coffee farmers.
5. Technology Integration: Starbucks integrates technology into its processes to improve efficiency and customer experience. This includes using point-of-sale systems, mobile ordering, digital payments, and the Starbucks Rewards loyalty program.
6. Quality Control: Starbucks maintains strict quality control measures at every stage, from sourcing and roasting beans to preparing and serving beverages. This ensures that customers receive the same high-quality product and experience no matter which Starbucks store they visit.
7. Customer Flow Management: The layout and design of Starbucks stores are carefully planned to manage customer flow efficiently, minimizing queues and wait times. This includes strategic placement of furniture, counters, and signage.
8. Feedback and Improvement Mechanisms: Starbucks has mechanisms to gather and analyze customer feedback, enabling continuous improvement in service delivery and product offerings. This includes input through the mobile app, in-store surveys, and social media channels.
9. Sustainability and Environmental Responsibility: Starbucks’ process emphasizes sustainability, including waste reduction initiatives, recycling, and reusable cups. This commitment to environmental responsibility is part of its operational procedures and brand ethos.
10. Employee Empowerment: Employees can make decisions to enhance customer satisfaction, including resolving complaints and customizing orders. This flexibility is integral to Starbucks’ process, ensuring that customer needs are promptly and effectively addressed.

Starbucks Physical Evidence Strategy

The “Physical Evidence” component of the Service Marketing Mix refers to the environment in which the service is delivered, along with any tangible elements that facilitate the service or help consumers evaluate the service beforehand. For Starbucks, physical evidence is crucial in shaping customer perceptions and experiences. Here are key points regarding the “Physical Evidence” aspect of Starbucks:

1. Store Design and Ambiance: Starbucks stores are designed to offer a comfortable, inviting atmosphere that encourages customers to relax and linger. The use of warm colors, soft lighting, and comfortable seating arrangements contributes to an ambiance that enhances the overall customer experience.
2. Brand Logo and Packaging: The Starbucks logo is highly recognizable and represents the brand’s commitment to quality coffee and customer service. Their packaging, including cups, sleeves, and bags, is designed to be functional and aesthetically pleasing, reinforcing the brand’s premium image.
3. Cleanliness and Hygiene: Starbucks emphasizes maintaining cleanliness and hygiene within its stores. This is critical for creating a pleasant environment and meeting customer expectations, especially in the food and beverage industry.
4. Consistent Visual Identity: Starbucks maintains a consistent visual identity across all touchpoints — from store design and packaging to marketing materials. This consistency helps reinforce brand recognition and ensures a uniform customer experience across different locations.
5. Merchandise: Starbucks offers a range of branded merchandise, including mugs, tumblers, and coffee equipment. This merchandise serves as tangible evidence of the brand and allows customers to take a piece of their Starbucks experience home.
6. Digital Presence: The Starbucks app and website are part of Starbucks’ physical evidence in a digital format. They reflect the brand’s identity and values, offer information on products and services, and provide an additional channel for customer engagement through the Starbucks Rewards program.
7. Signage and Storefront: Starbucks stores’ exterior design and signage are strategically crafted to be welcoming and easily recognizable. This external physical evidence helps attract customers to the store and enhances brand visibility.
8. Informational Materials: In-store displays, menu boards, and brochures inform customers about the products, seasonal offerings, and the company’s sustainability initiatives. This information enhances the customer’s ability to make informed choices and learn more about the brand’s values.
9. Atmospheric Elements: The music, aroma of coffee, and overall sensory experience within a Starbucks store are carefully curated to create a unique atmosphere. These intangible atmospheric elements are critical physical evidence of the brand’s focus on creating a pleasant and distinctive environment.
10. Community Board: Many Starbucks locations feature a community board that displays information about local events, community projects, and store-specific initiatives. This is physical evidence of Starbucks’ commitment to community engagement and helps personalize the store environment for local customers.

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