This paper uses the case study of Starbucks Corporation as a first-class marketer of coffee to evaluate its brand today and its distribution strategy over time. Discover Starbucks distribution channels, strategic priorities, and its success factors.
Background Information
Starbucks Corporation is regarded as a first-class roaster, retailer, and marketer of speciality coffee (MarketLine 2014). The company has operations in more than 62 countries across Europe, North America, Asia Pacific, Latina America, Africa, and the Middle East. Starbucks is reputed to be one of the leading brands dealing with coffee products and snacks in the world.
According to MarketLine (2014), the industry Starbucks operates in is at a mature stage. It experiences a medium level of concentration. Several factors determine demand in the industry. They entail the disposable income and prices of the product on the international market. In this paper, the author uses the case study of Starbucks to evaluate its brand today and its distribution strategy over time.
Analysis of Starbucks Brand
The company has one of the major brands in the world. It possesses several key competencies. One of them is the capability to push its products in the market through differentiation. The company offers a premium product mix made up of high-quality snacks and beverages (MarketLine 2014). According to Garthwaite, Busse, and Brown (2012), Starbucks brand is built and driven by quality and depiction of prestige. Cobb (2008) further postulates that brand equity is founded on the sale of high-quality coffee and related products.
The ‘finest quality’ attribute is achieved by providing every customer with a unique Starbucks experience (Cobb 2008). According to Lingley (2009), the experience is derived from the offering of supreme customer services in clean and well-maintained outlets and stores. The attributes reflect the culture of the various communities the company operates in. It builds a high degree of customer loyalty, bordering on a cult following (Lingley 2009).
Moon and Quelch (2006) argue that the Starbucks experience is best captured in the company’s “live free” mantra. The phrase reflects the coffee culture advanced by the organisation. Also, it highlights the three components of the company’s branding strategy. According to Moon and Quelch (2006), one of the key components of this branding approach is the coffee itself. The company sources coffee from the best growers in the world, including those in Africa and South America. Also, the entity works closely with the coffee producers to ensure the supply of a high-quality product.
The other component of Starbucks branding strategy is based on customer experience. According to Moon and Quelch (2006), Starbuck’s loyal customers visit its outlets as often as eighteen times in a month. The reason is that the company identifies and customises the customers’ requirements, creating an experience that is equal to intimacy. The experience keeps these consumers going back for the brand.
The third aspect of Starbucks’ strategy is the atmosphere associated with the brand. Moon and Quelch (2006) advance that although customers frequent Starbucks for coffee, the reason why they remain is the ambience of the company’s restaurants and outlets. Lingley (2009) agrees that Starbucks outlets have an aura of exclusivity. In addition to having a cup of decent coffee, people also frequent the outlets to network.
The three components of Starbucks branding strategy have turned the brand and the products into highly differentiated phenomena. It lowers the threat of substitution (Cobb, 2008). Starbucks’ major strategy entails building strong customer connections. The initiatives have facilitated the attainment of a high footfall since customers increasingly frequent the company outlets in search of the exclusive experience.
According to Lingley (2009), a key strategy that Starbucks has adhered to from its conception is product differentiation. Differentiators are founded on a premium product mix, supreme customer service, high-quality products, and locations. In essence, these attributes have led to the establishment of a premium value brand, which is very costly for competitors to imitate. As a result, Starbucks has built a formidable brand, which qualifies as one of its major strengths in the industry. The brand boosts the competitiveness of the company in the global market.
Starbucks Distribution Strategy over Time
According to Garthwaite et al. (2012), as early as 1996, the company embarked on the growth process pegged on two initiatives. The initiatives entailed selling products through channels of mass distribution. The other approach was based on the dramatic expansion of the retail footprint (Garthwaite et al., 2012).
Alliances are used by the company to support its marketing approaches. According to Lingley (2009), strategic alliances form the basis of the company’s growth and long-term success. They promote brand recognition in the industry. One of the earliest alliances formed by Starbucks was the joint venture with Pepsi-Cola North America Division. The partnership was aimed at marketing the company’s Frappuccino bottled coffee drink (Garthwaite et al. 2012). By September 1998, the company had engaged in an exclusive long-term licensing agreement with Kraft Foods. However, the partnership was terminated in 2010 (Garthwaite et al., 2012).
According to Cobb (2008), Starbucks occupies the position of industry segment and product quality leader. The company does not engage in aggressive marketing through traditional means. On the contrary, it focuses on word-of-mouth branding, high-level marketing, partnerships, and key alliances (Lingley, 2009).
According to Lingley (2009), the company has formed key alliances with companies and various social groups. Consequently, exposure of the brand has been broadened. Also, the reputation of the brand has improved. The alliances and partnerships have facilitated exposure of Starbucks products and name regularly to new and potential customers.
Starbucks has established distribution channels through shrewd strategic alliances and smart acquisitions (Lingley 2009). Instead of focusing on the franchising model, the firm’s operations focus on company-oriented stores and joint ventures in international markets (Cobb, 2008). For instance, the company has acquired several strategically placed entities. Such alliances aim to enhance product diversification (Lingley, 2009).
Starbucks has experienced numerous successes in its differentiation focus strategy. However, in 2009, the company embarked on other growth initiatives, which increased the diversity of the products offered (Garthwaite et al., 2012). Consequently, some of the distribution approaches have been diversified. Such approaches include online music retailing.
Starbucks has built very strong values about human resource management. Such moves have enhanced the success of the distribution strategy. For instance, the relationships have led to successful employment of the company’s strategy, which entails organic expansion across the international markets (Cobb, 2008). The reason is that the links facilitate the establishment of close unions with both internal and external suppliers. Also, horizontal integration through alliance and smart acquisitions has facilitated the maintenance of the company’s objective of a recognised and respected global brand.
Conclusion
The successes of Starbucks can be attributed to functional corporate governance, a focused distribution strategy, and a strong brand. The industry’s trends are changing. However, the diverse marketing and distribution strategies employed by the company have effectively responded to these changes. However, it is important for Starbucks to brace for increased competition, especially concerning costs and product quality.
References
Cobb, C 2008, ‘Wake up and smell the publicity: a look at Starbucks’ brand revitalisation’, Public Relations Tactics, vol. 15, no. 6, pp. 18-26.
Garthwaite, C, Busse, M & Brown, J 2012, Starbucks: a story of growth, Kellogg School of Management, New York.
Lingley, R 2009, Marketing strategy and alliances analysis of Starbucks Corporation, Web.
MarketLine 2014, Company profile: Starbucks Corporation, Web.
Moon, Y & Quelch, J 2006, Starbucks: delivering customer service, Harvard Business School, New York.