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MKT 571 Segmentation and Target Market Paper Starbucks

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MKT 571 Segmentation and Target Market Paper
Starbucks
Target Market
Starbucks’ Target Market
Abstract/Synopsis
Perhaps the most important task for marketing is identifying the
consumer base. This is done through market segmentation or STP
analysis. Being people oriented is essential because developing long
time relationships is what drives successful businesses. Understanding
who it is that a company is trying to reach is essential as not everyone is
interested in every product or service (Grewal, p.245). While there are
many ways to establish a segmenting strategy, as outlined by Grewal
and Levy, depending on the company’s unique product line or service,
there may be a variety of viable strategies to consider. Starbucks has
been successful in part because of their ability to identify who their
majority of consumers is, with relation to demographic and psychograpic
segmentation, and worked to target those types of individuals in an effort
to establish long term relationships.
Primary Target Market
To identify Starbucks’ target audience for their brand-name, high quality
coffee roast, one may look at the demographic distribution of Starbucks
consumption. One important demographic-segmentation characterizing
within a company’s consumer base is customer income. When a
company produces a product, they must market the product price in
accordance with their target audience (Grewal, p250). Porsche for
example would not market their automobiles on billboards in low-income
neighborhoods, because their target audience has to be able to afford
the product. Acting on this principle, Starbucks has focused its efforts on
advertising and opening stores in areas of higher income. This is evident
when looking at the Starbucks store chain’s national geographic
distribution. There are more Starbucks stores in areas of high income,
especially cities where living expenses are high. The trend that emerges

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is that Starbucks’ customers “lean toward households earning over
$60,000” (Tancer, 2008).
Along with income, a common feature of Starbucks customers is that
they are motivated by self-expression, as outlined in the VALS
Framework (Grewal, p253). Understanding that their target audience is
unique, Starbucks has made efforts to show that their company product
is in fact made specifically for the individual with their name-writing
initiative. Howard Schultz recently retrained all his employees to develop
relationships with customers via first name basis, specifically in writing
the customer’s name on their coffee cup (Walters, 2008). Labeling coffee
cups by hand with the customer’s name may seem like a small move,
but it is a powerful tool and by identifying the needs of their customers,
Starbucks has made them feel that they receive a unique service that is
tailor-made for the individual, a value that is highly regarded by
Starbucks customer demographic. Starbucks has tried to reestablish its
original customer base with “It happens millions of times each week a
customer receives a drink from a Starbucks barista but each
interaction is unique”. This primary target market requires constant
monitoring and reevaluation as it is a $17 billion industry, and over 50%
of the U.S. population is coffee consuming, and is of the utmost
importance for Starbucks.
Secondary Target Market
Starbucks has become a global chain of cafes that provide a well
renowned service to their patrons. In addition to their usual in-store
products, Starbucks has looked into other underdeveloped areas where
it can establish new additional customers. A major untapped market for
Starbucks is the grocery shopping consumer. Recently Starbucks has
made great efforts to tap into the grocery sector with readymade
products from “coffee to bottled Frappuccino to Via at the supermarket”
(Horovitz, 2011).
By targeting the shopping consumer, Starbucks is attempting to flex its
brand-power muscle and grab new customers with their evolving product
line. As discussed previously, VIA is their attempt to introduce an
alternative to the billion dollar instant-coffee market. Starbucks is
advertising this new product as a “Ready Brew” and not as instant-
coffee, even though that is what it is in direct competition with (Fujimura,
2011). It is clear that Starbucks is making great efforts to expand its

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Anonymous
Really great stuff, couldn't ask for more. The assignment was done with remarkable detail.

Anonymous
Solid work, thanks.

Anonymous
Goes above and beyond expectations !

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