Starbucks Experience and

Social Media
Being a barista on the internet
A. Introduction

In the realm of global economic crisis, Starbucks had started to experience

losing revenue and shifting market segment from High income, well-educated,

white-collar professionals between the ages of 25 and 45 to younger

generation. The newer customers were younger, less well-educated, and in a

lower income bracket- than their more established customers- had less

frequent visits and a different perception of Starbucks. Starbucks had lost the

connection between satisfying customers and growing the business under

threat of global economic crisis. This was the big concern which had been

expressed that Starbucks lost communication between market segments and

their relation with each other. Starbucks experience depends on translation of

their confusion to the customers by using online social media tools to involve in

the community and search out, get advice for new product offers and build

strong relationship over the social media to recover the Starbucks experience

as it was in store environment and it will be always.

In the following chart shows the revenue performance during different periods

from 2008 to 2010.

REVENUE

Periods 2008 2009 2010

December 2767.6 2615.2 2722.7

March 2526.0 2333.3

Starbucks Experience and Social Media

 June 2574.0 2403.9

September 2515.4 2422.2

Totals 10383.0 9774.6

Comparable Store Sales Growth

(Company-Operated Stores Open 13 Months or Longer)
(LLP, 2009)

B. Situation Analysis (SWOT)

Strengths
➢ Starbucks one of the most recognized and respected brands in the world

➢ Innovative and willing to spend on R/D

➢ Premier roaster and retailer of specialty coffee

➢ Good relationships with coffee suppliers

➢ Value employees and supports them with training and education

➢ The product is strongly differentiated from those of rivals

➢ Good supply chain management

➢ Better product quality relative to rivals

➢ Well-developed IT source and management

Weaknesses
➢ Having more expensive price than the competitors

Starbucks Experience and Social Media

 ➢ Excessive focus to keep the growth rate is constant

➢ Bad management of company operated retail store

➢ Becoming own rival at same neighborhood

➢ Revenue loose and Increasing shareholders dilutes their interest

➢ They have expanded too quickly, and have already saturated the US

market

➢ Firm employee policies and applications on Baristas

Opportunities
➢ Expansion into European, Asian and Latin American markets

➢ Distribution agreements, such as hotels, airlines, and office coffee

suppliers

➢ Use supermarkets as a way of expanding into international markets

➢ Improve on perception of instant and decaffeinated coffee to expand that

market share

➢ Expanding the company’s product line to meet a broader range of

customer needs

➢ Joint ventures that can expand the firm’s market coverage or boost its

competitive capability

Threats
➢ The coffee market is oversupplied

➢ Cost of coffee beans is on the rise

Starbucks Experience and Social Media

 ➢ Supermarkets threaten whole bean sales

➢ Immediate competition from food restaurants etc. Dunkin' Donuts and

McDonalds

➢ Consumers trend toward more healthful fare

➢ Loss of sales to substitute products

➢ Restrictions trade policies on the part of foreign government

C. Target Segment Identification

IMAGE GOURMET COFFEE

Young customers Adult focused

Geographic downtown and suburban retail high-traffic, high-visibility

centers, office buildings and Urban, rural and off
university campuses highway locations, shopping
malls

Demographic College grad, young, tech-savvy married couples with

customers, less well-educated, children, well educated, age
lower income, age 18-25 25-45
Male and female from all races professional with high
income

Psychographic diverse and open-minded, Social oriented, know what

outgoing they want, willing to spend
respectful to environmental more
issue, snob and adventurous

Behavioural Coffee drinker, try new products Generous of buying other

Extensive IPod and web user products, spend their time
at coffee shop

Starbucks Experience and Social Media

D. Define the Problems

1. Increase customer satisfaction through improvements to service and offering

better prices/incentive programs

2. To improve customer experience: cost reductions and improving operating

efficiencies should be supported with aggressive differentiation strategy and

innovation on products and services

3. Being behind the technology and not aware of how to revolutionize the way to

communicate with consumers through social and digital media.

E. Target Market Selection and Reason

I prefer to go with IMAGE young customers rather than GOURMET COFFEE adult

focused segment. Main reason for that is because it is more profitable and it is an

open opportunity to reach the called Generation Y. This segment is loyal, ready to by

any new product, computer savvy, the visit ratio is more than the other segment and

they like to be known as Starbucks customer. Despite that fact;

Founder Howard Schultz, returning to handle day-to-day management, even

admitted that Starbucks had lost its soul. As part of Mr. Schultz's multifaceted

turnaround plan, the chain launched MyStarbucksIdea.com. Starbucks has activated

its brand strengths on Facebook, running several ad campaigns to align its fan base,

even to the point of offering free ice cream this past summer. Some say luring fans in

Starbucks Experience and Social Media

with freebies means fleeting success, but Starbucks' fan page is growing, over 3

percent per week, according to all Facebook, putting it on track to overtake Will

Smith in popularity on the site.(Morrisey, 10/12/2009) Chris Bruzzo, Starbucks' VP-

brand content and online, said amassing Starbucks' 5.7 million Facebook fans and

775,000 Twitter followers could be tougher for a dental-floss brand. "Maybe we have

an unfair advantage because in so many ways Starbucks and the store experience is

like the original social network," he said. Consumers "come in, hang out and talk to

our store partners. They sort of got to know us as a brand in a very social

way."(York, 2010)

F. Alternatives

Product

Customers have enjoyed the experience at Starbucks and now for those who seek a

high quality coffee and non-coffee drink can enjoy the same experience. By

introducing these CafeTurco and new summer drinks dark chocolate flavour

FrappaLaTurco, Starbucks will enjoy an entirely new segment to market its products

to existing customers who will begin consuming the new drinks. The new coffee

product could serve in small porcelain cup like espresso at Starbucks restaurants. The

cold drink FrappaLaTurco is a potential bottled summer drink with fancy design on it.

Price

Starbucks summer drinks are priced significantly lower than the specialty summer

drinks. The benefits for consuming a Starbucks drink are quite high for most

Starbucks Experience and Social Media

consumers. The price of the drink is low enough to gain market share, while still

conserving Starbucks’ prestigious image. Starbucks: “The Non-Coffee Treat”. For

CafeTurco is $2.35, FrappaLaTurco $3.45

Place (Distribution)

Starbucks allocates new beverages directly to customers its own retail stores. Also it

will be convenient for customers to buy these new products at the other distribution

channel. These new products will be available year round. Most likely the best place

to sell these products is the retail chains and universities.

Promotion

The internal advertisements within retail stores, such as posters, new product

signage is most convenient way to reach the customers. However, web sites, social

media, cell phone app. magazines, newspaper, in store TV commercials and spot in

the local radio channels would be meaningful to the target group. Starbucks has

determined that targeted customers consider themselves relatively technology

savvy via the computer. I highly recommend a web campaign would be aimed to

increase awareness of the summer drinks. Websites that are highly reputable or that

can be partnered with will be better choice than TV commercials.

G. Recommend the Best Alternatives

Starbucks Experience and Social Media

FrappaLaTurco is the best alternative as a summer drink to IMAGE young customers.

They can purchase either from Starbucks store or retail stores with the reasonable

price. That segment individuals will promote its product by word of mouth campaign

and their rich social media skills such as Facebook, twitter and texting as well as its

promotional strategy over the World Wide Web and the other channels.

Starbucks Experience and Social Media

Bibliography
LLP, DELOITTE & TOUCHE. Starbucks Corporation Fiscal 2009 Annual Report. Annual
Report. Seattle, Washington: Starbucks Corporation, 2009.

Morrisey, Brian. "Hoping to find some new fans for a great brand ..." Brandweek
(10/12/2009): Vol. 50 Issue 36, p13-15, 3p.

York, Emily Bryson. "Starbucks Gets Its Business Brewing Again With Social Media." 3
March 2010. Advertising Age. <http://adage.com/>.

Starbucks Experience and Social Media