Gina Iadanza Commack High School 20 October 2009
Business and Management Research Project (Higher Level)
Based on the growing lack of interaction with customers customers due to the drive-thru, what marketing strategies can Starbucks use in order to market VIA Ready Brew?
Word Count Research Proposal: 462 Written Report: 2,376
Table of Contents Research Proposal………………………………………….3
Executive Summery………………………………………..5 Introduction………………………………………………...6 Procedure…………………………………………………..7 Findings…………………………………………………….8 Analysis…………………………………………………….10 Conclusion…………………………………………………12 Bibliography……………………………………………….13
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Research Proposal Based on the growing lack of interaction with customers due to the drive-thru, what marketing strategies can Starbucks use in order to market VIA Ready Brew?
The third place is a term used in community building to refer to a separate identity from the two usual social environments, which are home and the workplace. Starbucks uses the term the third place in it’s marketing in order to establish itself as a place that is its own identity where people can frequent other than their home or workplace. This is where the Starbucks comfy chairs and warm colored decor play into the environment that Howard Schultz created. Starbucks is geared to feel like a “home away from home.” In August 2009, Starbucks stated, "We strive to create a welcoming environment for all of our customers. We do not have any time limits for being in our stores, and continue to focus on making the Third Place experience for every Starbucks customer."1
With the ever-increasing demand for fast, efficient, and accessible food products, many food establishments have created drive-thru’s. Starbucks has also followed this trend by opening smaller stores that are primarily drive-thru based. The drive-thru has had a significant impact on the environment of the overall store, and the company for that matter. The drive-thru has eliminated the “home away from home” feel that Starbucks was known for. Many stores are now dominated by the drive-thru. Although the drive-thru has had many positive effects on Starbucks, it has also significantly affected the way Starbucks can reach out to their consumers. A normal Starbucks customer is no longer entering the store for 4 or 5 minutes anymore. They are now accessing their coffee through the drive-thru, which has proved to be faster. In order to expose the market to the new VIA Ready Brew instant coffee, Starbucks needs to develop marketing strategies that will go outside of the local Starbucks. “Sampling activity, advertising and point-of-sale materials”2 are the fundamental marketing strategies that Starbucks will need to expe dite in order to make the most out of VIA Ready Brew. In order to obtain a direct response from both consumers and Starbucks partners I will survey both parties, asking them their point of view on the atmosphere of the drive-thru. I will evaluate different marketing strategies and decide which ones would be most applicable to Starbucks’ position.
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http://news.cnet.com/8301-19882_3-10310495-250.html http://news.starbucks.com/article_display.cfm?article_id=192
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Action Plan
Oct. 15- Nov. 9
Research Starbucks’ transition to drive-thru/relation to overexpansion Create survey- One for customers, one for Starbucks partners Conduct Research Analyze results from surveys, observe how they are similar to research Construct Rough Draft
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Nov. 9- Dec. 14
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Dec. 14- Jan. 11
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Revise Rough Draft Final Copy
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1. Executive Summery The introduction to this paper introduces Starbuck’s adaption of the drive-thru and the effect that this new feature has on consumer interaction and the overall marketing scheme of Starbucks. Starbucks stores have transformed over the past few years from a “third place” based environment to a fast and efficient drive-thru based store. This change has had a significant impact on the way Starbucks markets its new products, most specifically Starbucks VIA Ready Brew instant coffee. Information was then gathered via survey in which customers were asked their views of the drive-thru. Based in the results, a marketing mix was compiled in order to determine the most effective way to market Starbucks VIA Ready Brew. After a thorough analysis, a conclusion was reached that Starbucks should focus on broad, mass advertising to get this new product out into the public. VIA Ready Brew provides Starbucks with a completely new outlet for consumers, the instant coffee consumers.
2. Introduction 5
Starbucks is an international coffee and coffeehouse chain based in Seattle, Washington. Since its’ founding in 1971, Starbucks has grown rapidly, with over 16,635 stores in 49 countries, it is the largest coffeehouse company in the world. In 1982, Howard Shultz joined Starbucks as director of retail operations and marketing. He brought to the company the idea of the coffeehouse concept after his travels to Italy, where he was inspired by the popularity of espresso bars in Milan.3 Shultz’s idea of turning coffee into an experience has developed into the basis of Starbucks’ marketing plan. “The firm has been able to convince consumers that its stores provide more than just coffee, but rather a rich experience that they should indulge in on a recurring basis.” 4 Over the past 2 decades, Starbucks has grown to be a multi billion-dollar company. With this immense expansion, the over-all environment has changed drastically. Starbucks now thrives off of the drive-thru, which allows customers to a faster and more efficient cup of coffee. Although the drive-thru has expanded Starbucks as a whole, it has also narrowed down the employee-customer interaction. Customers are no longer entering the stores as much and therefore are not exposed to the new products Starbucks has to offer. Starbucks’ VIA Ready Brew is currently Starbucks’ new asset in terms of coffee. It is the first time Starbucks has ventured into the instant coffee market. In order to properly market VIA, Starbucks will need to create a marketing scheme that will reach consumers in new and innovative ways. This has therefore led me to the following research question: Based on the growing lack of interaction with customers due to the drive-thru, what marketing strategies can Starbucks use in order to market VIA Ready Brew?
3. Procedure I will first begin with researching Starbucks’ past marketing strategies and advertising. One of the main strengths of Starbucks over the years has been their tireless effort to 3 4
http://www.starbucks.com/aboutus/Company_Timeline.pdf http://blogs.indews.com/business/starbucks_marketing_strategy.php
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make their product an uplifting part of people's daily lives. Starbucks' strategy for expanding its specialty operations is to reach customers where they work, travel, shop, and dine by establishing relationships with prominent third parties who share their values and commitment to quality. Starbucks has carried out their strategy by moving distribution into grocery stores, convenience stores, department stores, movie theatres, businesses, airports, schools, and homes. Starbucks has shown to use less of traditional advertising; instead relying more on its image advertising in order to promote the success of the business.5 With the research I do on Starbucks’ marketing strategies, I will construct a marketing mix specifically for VIA. This will outline the product, price, place, promotion, people, process, physical evidence, and packaging that is most important to VIA’s success. I then evaluated the effect of the drive-thru on specific consumers by surveying them. The survey was geared to assess how prevalent the drive-thru really is in Starbucks and to analyze the in and out of store traffic that was taking place. Based on both the results of the survey and my study of different marketing strategies, I will be able to determine the proper marketing strategy for the VIA Ready Brew product.
4. Main Results and Findings 4a. Survey Results
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http://www.academicmind.com/unpublishedpapers/business/marketing/2002-04-000aag-catching-thestarbucks-fever.html
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Nearly 57% of the customers I surveyed were more likely to go to the drive-thru than to come into the café.
When asked if they find Starbucks stores with a drive-thru less busy inside, 67% of
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consumers answered yes. This means that there is less traffic within the café.6
When the surveyed customers were asked if they felt the drive-thru had a positive or negative effect, 67% of the customers answered that the drive-thru effected Starbucks in a positive way.
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All graphs derived from surveygizmo.com. This is the same site through which the survey was conducted.
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5. Analysis and Discussion 5a. The Marketing Mix Product - Starbucks VIA Ready Brew is an instant coffee. It is the first and only instant coffee that Starbucks offers. By expanding into the instant coffee market, Starbucks is entering new markets. Price- “He [Shultz] wants to remind people what Starbucks stands for, and that most of its coffee drinks don't cost $4.”7 Although Starbucks is in many cases associated with being highly priced, Shultz and the Starbucks Corporation have gone out of their way to emphasize the savings that can be made with VIA. When first launched, Starbucks issued dollar off coupons just for trying a sample of Starbucks VIA, making a 3-pack $2.95. Baristas were then trained to make the argument to the customer that they could pay under $3 for 3 cups of coffee. Place- Starbucks will not only be selling VIA Ready Brew at Starbucks locations, but it will also be at available in select Barnes & Noble stores, Costco and Target locations. Promotions- The main promotion for VIA is the “Taste Challenge” in which customers are encouraged to try both VIA and the regular Starbucks brewed coffee and then see if they can determine the difference. This not only brings consumers into the store but allows them to see for themselves the comparison of VIA with regular brewed coffee. When interviewing customers who took the taste challenge, a woman stated that she had never been to this particular store and specifically came for the taste challenge. She not only purchased VIA but a drink as well. People- In determining the target market for VIA Ready Brew, Starbucks covered a wide range of people. VIA could potentially be desirable for business people, families on vacation, senior citizens, college students, teachers, or anyone who does not have access to a Starbucks near them. Also, Baristas have been trained specifically on VIA in order to give the consumer a general knowledge of the product. Process- Starbucks is extremely specific in the process in which they use to produce VIA. When asked, Starbucks gave this information on the 7
http://seattletimes.nwsource.com/html/businesstechnology/2009147908_starbucks30.html
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process. “Microgrind is a process of taking fresh roasted coffee and grinding it so fine that we preserve the flavor and the freshness, the oils, everything that makes fresh roasted coffee so exquisite and so rich and we grind it in such a way that we're preserving all of those flavors.”8 Physical Evidence- The interaction between the customer and Starbucks partner. Starbucks partners are well educated and eager to sell VIA. The customer should feel knowledgeable about the product they are buying and it is the Starbucks partners’ job to inform them. Packaging - VIA Ready Brew is packaged for convenience. The packets are small enough to fit in a pocket, a wallet, or any type of bag. The packaging is simple, containing straightforward directions and facts.
If you ask any Starbucks customer how many commercials or ad’s they have seen, the response will be either “one” or “none.” This is because Starbucks advertising strategy is just that, don’t advertise. This strategy had proven efficient in the past, however, based on my findings of how influential the drive-thru is, the experience that consumers once gained at Starbucks in place of advertising is becoming less and less prevalent due to the lack of interaction between Starbucks partners and the consumer. When considering Starbucks VIA Ready Brew, Starbucks must market their new product efficiently in order to make VIA a success. Above is a marketing mix outlining the fundamental basis for marketing VIA Ready Brew. Because VIA is applicable to so many different people, Starbucks should use mass communication in marketing their new product. VIA is for every customer, from the college student to the senior citizen. In since their target market is extremely broad, mass communication, such as TV commercials, large ads in newspapers and magazines, and the Internet are key places where Starbucks should be advertising VIA.
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http://www.starbucks.com/aboutus/pressdesc.asp?id=993
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6. Conclusion and Recommendations In the past, Starbucks has relied on a marketing strategy in which the over-all experience of Starbucks itself has made up for mass advertising via television commercial or newspaper ad. However, Starbucks is a changing company, and with this change the company has broken away from this reliance. The drive-thru has an immense impact o n the way Starbucks stores are run. Consumers are no longer exposed to the personal interaction with Starbucks employees. Starbucks VIA Ready Brew is revolutionizing the way Starbucks can reach its customers. The instant coffee is a completely new market for Starbucks, and that is why it is necessary for Starbucks to create a proper marketing plan. Not only is the company’s relationship with its customers changing, the products being sold are also changing. Based on the growing lack of interaction with customers due to the drive-thru, Starbucks must adapt a marketing strategy that will reach the broad market in which they are trying to sell. Starbucks has numerous outlets for marketing this new product due to the wide range of their target market. As stated in the marketing mix, VIA Ready Brew is applicable to everyone from college students to senior citizens. Therefore Starbucks can focus on broad and varied advertising. They have to get this product out there; they can do this through TV commercials, newspaper/magazine ads, and mass sampling (which is currently in the process). Sampling single VIA packets will allow con sumers to try the instant coffee with no cost to them and is inexpensive. Some limitations to my research are that the survey was only given at one store, and that store was a drive-thru based store. If I went to a store that was primarily café based, the results could have been potentially different. Also, the number of surveys given may have had an effect on the results and therefore my argument.
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Bibliography Brent, Kembell. "Catching the Starbucks Fever." Academic Mind N.p., Apr. 2002. Web. 21 Dec. 2009. . Melissa, Allison. "Starbucks to launch marketing campaign, slow store groth as 2Q profits falls 77%." The Seattle Times N.p., 30 Apr. 2009. Web. 21 Dec. 2009. Rafe, Needleman. "Starbucks: Stay as long as you want." Cnet News N.p., 15 Aug. 2009. Web. 26 Oct. 2009 . "Starbucks Will Restructure and Rise Once Again." Seeking Alpha N.p., 11 Nov. 2008. Web. 26 Oct. 2009 . "VIA Ready Brew: Interview with Andrew Linnemann." Starbucks Coffee Starbucks, 3 Mar. 2009. Web. 21 Dec. 2009. Wartzman, Rick. "A Marketing Spill on Starbucks' Hands." Business Week N.p., Feb. 2009. Web. 21 Dec. 2009. .
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