Starbucks’ Marketing Mix: 4P Analysis - Panmore Institute (2024)

Starbucks Corporation’s marketing mix (4Ps) supports the firm’s industry position as the leading coffeehouse chain in the world. The marketing mix identifies the main components of the coffee company’s marketing plan, namely, product, place, promotion, and price (the four Ps). In this business analysis case, Starbucks uses its 4P to develop its brand image and ensure profitability. With the strongest brand in the coffeehouse industry, the company shows how an effective marketing mix and marketing strategy can support brand development and multinational business growth. Starbucks occasionally changes its 4P to respond to strategic challenges in the market, including competitive forces involving other coffeehouse firms, like Tim Hortons, as well as foodservice companies, like Dunkin’, McDonald’s, Burger King, Wendy’s, and Subway. These competitors challenge the company’s market position, as explained in the Five Forces analysis of Starbucks. The coffee company’s marketing mix functions as a strategic approach to counteract competition.

The marketing mix or 4P is a strategic tool for a unified and systematic approach to bringing Starbucks’ products to food and beverage markets around the world. Based on its 4Ps, the coffeehouse company applies a combination of marketing strategies and tactics to promote the right products at the right places at the right prices. The success of the marketing mix contributes to operational effectiveness and supports Starbucks’ mission statement and vision statement.

Products

This component of the marketing mix focuses on what the coffee business offers to customers. Starbucks Corporation innovates its product mix (and its 4Ps) to capture more of the market. The company modifies food and beverage product lines with the aim of expanding its market reach and growing its market share. The following are the main categories in Starbucks’ product mix:

1. Drinks
2. Food
3. At Home Coffee (instant and home-brew coffee)
4. Merchandise (cups, tumblers, mugs, etc.)

Starbucks’ product mix is a result of years of business innovation and strategic changes in the marketing mix. For example, the company added the Frappuccino line after acquiring The Coffee Connection in 1994. Today, the business continues its product innovation to offer new foods and beverages that attract and keep more customers. The resulting marketing mix, together with Starbucks’ generic strategy for competitive advantage and intensive strategies for growth, ensures that products match consumer preferences in a diverse international market. Thus, this part of the 4Ps involves beverages, foods, and merchandise that are carefully selected or designed to satisfy the needs and preferences of target consumers worldwide.

Place in Starbucks’ Marketing Mix

This marketing mix component determines the venues where customers access the company’s foods, beverages, and merchandise. Starbucks offers most of its products at cafés or coffeehouses. However, other places or channels of distribution are included in this 4P component. This marketing case shows that Starbucks Corporation distributes its products through the following venues or places to reach target consumers:

1. Coffeehouses/Cafés
2. Retailers
3. Website and mobile apps

Coffeehouses or cafés are the most noticeable distribution venues in Starbucks’ marketing mix. These places are strategically located in areas that have high pedestrian traffic, such as malls and commercial centers. Starbucks’ organizational structure (company structure) facilitates the management of franchising and licensing operations for these store locations. Retailers are also included in the coffeehouse company’s 4Ps, as channels for maximizing distribution and market reach. These places enable the company to distribute coffee products, such as VIA instant coffee and other merchandise. In addition, online venues are in Starbucks’ marketing mix. The company’s website and mobile apps provide easy access for customers who want to check available products or place their orders for pickup or for delivery through third-party service providers. The information technology used in this 4P component addresses the sociocultural and technological trends described in the PESTEL/PESTLE analysis of Starbucks. Thus, the company’s marketing mix involves strategies and tactics that use different types of locations to optimize the distribution of food and beverage products. The high visibility and accessibility of these places contribute to a positive brand image, which is one of the strengths assessed in the SWOT analysis of Starbucks.

Starbucks’ Promotion

In the marketing mix, promotions, also known as the marketing communications mix, refer to communication strategies and tactics for the goal of improving Starbucks’ brand, revenues, and market share. For example, the promotional mix can focus on persuading consumers to buy the company’s tea and instant coffee products. Starbucks’ marketing mix includes the following promotional activities:

1. Word-of-mouth marketing
2. Advertising
3. Sales promotions
4. Public relations

Word-of-mouth marketing is the most significant promotional strategy in Starbucks’ marketing mix. The company focuses on high-quality customer experience to encourage people to spread positive reviews that promote the coffeehouse business. Starting with Howard Schultz’s leadership, the emphasis on high quality through Starbucks’ company culture (work culture) helps create such good experiences for customers. In addition, advertising is an integral part of the coffee company’s 4Ps. For example, the company’s coffee and tea ads reach target customers through the Internet and print media. Moreover, the marketing mix involves sales promotions as a communications strategy to persuade consumers to buy more of the company’s foods and beverages. For example, the Starbucks Rewards program provides freebies for customers. In this approach, consumers buy more of the company’s products while expecting freebies, such as free coffee. Furthermore, the company uses public relations to promote its brand and coffee products. In the 4P context, the Starbucks Foundation functions as a part of a public relations strategy. The Foundation assists organizations and communities while promoting the coffeehouse company in the process. Starbucks’ stakeholder management and corporate social responsibility (CSR) and ESG strategy for sustainability and other goals relate to public relations in this marketing mix.

Prices & Pricing Strategy in Starbucks’ 4Ps

Starbucks uses a premium pricing strategy. This strategy involves relatively high price points and price ranges for products that the coffeehouse business presents as superior-quality or high-end (“premium prices” for “premium products”). In the marketing mix context, Starbucks’ pricing strategy takes advantage of the behavioral tendency of consumers to purchase expensive products based on the perception that high prices mean high quality, high value, and high status. This part of the 4P also helps strengthen the premium brand against competitors, like McDonald’s McCafé Premium Roast. Starbucks’ operations management optimizes quality and costs to support the pricing strategy in this marketing mix.

References

• Reddy, T. N., Ghouse, S. M., & JS, R. K. (2023). Marketing Mix – Review of P. Research Journal of Humanities and Social Sciences, 14(1), 55-58.
• Solberg, C. A., & Durrieu, F. (2023). Patterns of international marketing strategy. Journal of Business & Industrial Marketing, 38(7), 1532-1544.
• Starbucks Coffee Company Menu.
• Starbucks Corporation – Form 10-K.
• Starbucks Delivers.
• Starbucks Rewards.
• The Starbucks Foundation.
• U.S. Department of Agriculture – Economic Research Service – Food Service Industry Market Segments.