An important aspect of the marketing strategy of a company is promotion. Promotion is one of the four Ps of marketing. “Promotion is communicating information between the seller and potential buyer or others in the channel to influence attitudes and behavior” (Perreault & Cannon, 2015, p.344). Four important aspects of the promotion blend of an organization are sales promotions, advertising, direct marketing and public relations. The employees that are most important in the implementation of promotions are the sales force. It is imperative for marketing managers to allocate a sufficient budget for the promotional efforts of an organization. The promotion strategy of Starbucks will be discussed in this paper.
Starbucks is the largest coffeehouse in the world in terms of establishments and sales. The use of a sound promotion strategy has helped the company achieve market leadership. Starbucks does not promote its products the way other competitors such as McCafé does. It is rare to find an advertisement of Starbucks in billboards, posters, ad space, or newspapers where traditional retail establishment promote their businesses (“Starbucks marketing mix”, 2017). The organization focuses its marketing efforts to differentiate its store to attract an upscale crowd composed of the middle and higher classes. A type of promotional program that can help increase the customer retention of a company is rewards programs. The Starbucks reward program allows customer to accumulate points that can be redeem for free beverages or food items at the stores. Members are eligible for a free food item after they spend $63 (Vasel, 2016). The existence of a rewards program is a great initiative, but in comparison with the rewards program that its competitors offer Starbucks is outperformed by both McCafé and Dunkin Donuts.
A promotional tool that Starbucks created in 2001 was the Starbucks card. This card allows customers to refill the card with money that can be used to purchase beverages and food items at Starbucks locations worldwide. The Starbucks card helps repeat customers manage their weekly or monthly coffee expenses better. It also can be used as a gift card so that friends and family can enjoy a visit to Starbucks. Part of the promotional strategy of Starbucks is to create a great atmosphere at its establishments so that its customers are motivated to stay at the stores. The baristas of Starbucks prepare and serve drinks and provide customer service to the clients. They are considered the primary sales force of the organization. The primary feature that the company emphasizes in its product offering is quality. All coffee served at Starbucks is sourced using fair trade coffee. Starbucks invests resources in public relations. The image and reputation of the company is imperative to maintain its brand value. The organization has a strong corporate social responsibility program. The company is currently working in alliance with the United Nations Refugee Agency to hire 10,000 refugees by the year 2022 (“Starbucks makes global commitment”, 2017). The Starbucks Foundation has donated millions of dollars over the years to strengthen communities by donating grants to non-profit organizations and scholarships to the youth across the United States and abroad.
Starbucks does not enjoy a competitive advantage in terms of promotion. One of the reasons that promotional efforts are inferior to other companies is because Starbucks is not wiling to downgrade its price structure to obtain short term profits. The image of the firm and its organizational culture are two key ingredients of its promotional strategy. Starbucks wants to maintain its reputation, thus continued investments in public relations is a good strategic approach. The firm should increase its marketing budget to further utilize both online and mobile ads since both these marketing channels are cost effective and have gained popularity in the 21st century.
- Perreault, W., Jr., Cannon, J., & McCarthy, J. (2015). Essential of marketing: A marketing strategy planning approach. (14th ed.) New York: McGraw-Hill.
- “Starbucks Makes Global Commitment to Hire 10,000 Refugees by 2022” (2017). Starbucks. Retrieved from https://www.starbucks.com/responsibility/community/refugee-hiring
- “Starbucks Marketing Mix” (2017). Marketingteacher. Retrieved from http://www.marketingteacher.com/starbucks-marketing-mix/
- Vasel, K. (2016). New Starbucks rewards program starts Tuesday. CNN. Retrieved from http://money.cnn.com/2016/04/11/pf/starbucks-rewards-program/index.html