Market Research Starbucks 2 10-12 PDF

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Marketing research about StarBucks...

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Part B – Market Segmentation Market Segmentation Variables Market Segmentation refers to dividing a market into smaller segments based on customers‟ different characteristics, needs, or behaviors that might insist separate marketing strategies or mixes (Kotler & Armstrong 2014). Kotler and Armstrong (2014) have also proven that consumers have to be tried by marketers to categorize in segmentation variable(s) because there is no single approach to segment the market to best view the market structure. There are four main ways in segmenting customers. According to West, Ford & Ibrahim (2015), demographic segmentation is the division of consumer market into segment depends on variables such as gender, age, religion, income, and so on. It is the most popular base because it is easier to measure the size of the target market and consumers‟ needs and wants are vary based on demographic variables (Kotler & Armstrong 2014). Besides, Haskova (2015) claimed that the Starbucks‟ customers are normally from Generation-Y, as known as Millennials that born between 1977 and 2000, where the most profit generated from. Fromm (2014) stated that Starbucks has practiced the communicate style to communicate with Generation-Y by creating a digital customer following through social media such as hashtags on Twitter and Instagram because they are technology savvy. Not only that, applications and free music are offered by Starbucks to engage millennials from participating in rewards program (Fromm 2014). Starbucks segmented their customers by using occupation as Dudovskiy (2017) said that they are mostly students or employees so that they can gather in Starbucks to have group discussions or grab Starbucks beverages before going to workplace or colleges. Based on age and income segmentation, about 89% of Starbucks‟ revenues come from consumers ranging in two specific age range groups and the interior design of Starbucks extremely suit them. Thomas (1995) emphasized that the primary target market of Starbucks is men and women aged between 25 and 45 years old. Basically, Thomas (1995) also mentioned that this age range group higher level of income (earn roughly $35,000 per year) or they belong to richer families that have the purchasing power to afford Starbucks‟ foods and beverages since Starbucks‟ foods and beverages are considered as luxury goods in Southeast Asia. Moreover, 40% of sales comes from young adults aged 18 to 24 years old (Brian 2015). In fact, Starbucks outlets 7

mostly located around colleges for college students to hang out, chill, and can even complete their assignments (O‟Farell n.d.). Furthermore, customers can be segmented geographically, which means dividing the market into distinct geographical units including countries, population densities, and paying attention to the needs and wants in the geographical differences (Kotler & Armstrong 2014). Starbucks has more than 24,000 stores in 70 countries (Starbucks Corporation n.d.). Starbucks branches mostly located themselves in urban areas as well as suburban areas. Starbucks stores located themselves in well-known areas in urban areas such as a metropolis or cities while suburban areas such as residential areas (eds Berube, Katz & Lang 2007). Therefore, we can spot Starbucks stores easily in highly visited areas such as in airports, hotels or shopping malls where there are appearances of higher income groups (Convenience Store News 2005). With the result that growing the number of stores in suburban and urban areas, Starbucks is concentrating on drive-through in those areas to bring some conveniences to the consumers (Forbes 2016). Psychographic segmentation uses social classes or personality characteristics to segment market because psychographic characteristics of the people in the same demographic group can be very different (Kotler & Armstrong 2014). As mentioned earlier, Thomas (1995) claimed that the primary target market age ranging from 25 to 45 years old has more income, and they are from upper-middle class. In 2015, Starbucks has emphasized on lower class to support economic and social change (Petersen 2015). Moreover, Starbucks also uses personality characteristics segmentation to segment their consumers. The pattern of living determines how they want to spend their money and time (Solomon et.al 2013). Accordingly, consumers are seeking for good ambiance and status symbol because Starbucks is a western brand (Rannals 2014). Besides that, behavioral segmentation segments market based on consumers‟ behaviors toward a particular product including benefits sought (Goyat 2011). So, what are the benefits sought? Dada (2014) stated that consumers consume their Starbucks beverages due to coffee buying experiences and personal reward. In other words, consumers choose to consume in Starbucks because of the good atmospheres such as good lighting and music. In an addition, they also seek for the quality of the foods and beverages provided in Starbucks as Starbucks put quality over quantity (Mcardle 2010). Moreover, the psychologist suggested that consumers tend to reward themselves with a glass of Starbucks drinks after a long and tough day. 8

Profiling a Target Market Marketing managers must consider the question “What‟s our target market?” in order to design a winning customer-driven marketing strategy and they will select only customers that can be served well and profitably (Kotler & Armstrong 2014). Hence, what is „target market‟? Kotler and Armstrong (2014) defined that a target market is a group of people that has similar needs and wants and can be expected to show some interest in the same products. As mentioned earlier, Dudovskiy (2017) and Haskova (2015) stated that Starbucks‟ targets on students or employees from Generation-Y which belong to the upper-middle class. This target market is mostly from richer families or has a higher level of income (Thomas 1995). Consumers are mostly searching for buying experiences such as the atmosphere of Starbucks stores, the quality of Starbucks drinks, and the products offered by Starbucks. Basically, Starbucks sought to be a comfortable and cozy place for gen-y to spend their time with free WiFi‟s password after purchasing foods and beverages from Starbucks (Miller 2010). As a result of the benefits, they will stay as long as they can and maybe the longer they stay, the more products they will purchase. According to Kotler and Armstrong (2014), Starbucks not only sell coffee but experiences by making itself the „third place‟ between home and workplace or the place we study. The atmosphere in Starbucks stores is friendly and relaxing as customers always welcomed and greeted with a smile by the trained staffs (West n.d.). Furthermore, the quality of the coffee has been controlled all the time to ensure that they always serve a perfect brew (West n.d.). Greenspan (2017) mentioned that Starbucks not only serve foods and drinks but also merchandises such as cups and coffee mugs, coffee press machines, and gift items that are limited editions based on certain occasions or locations. This has attracted gen-y to consume in Starbucks so that they are able to collect them on time. Not only that, this target market is mostly from urban areas like cities or suburban areas like residential areas. In an addition, usually, we can spot Starbucks around college campuses and business offices due to demographic variables (O‟Farell n.d.). In particular, Walsh (2014) said that Starbucks located themselves near to college campuses which brings convenience to consumers and it also boosts up the sales of Starbucks. Thus, Convenience Store News (2005) also mentioned that Starbucks has launched vending machines and drive-thru concept in urban and suburban areas for their target customers since 1994. For instance, consumers can grab a cup of morning coffee before work or attend classes via drive-through or vending machines. In an 9...