Starbucks
your not-so-average cup of joe
What's The Buzz About?
Whether you need your morning cup to function throughout the day, a casual meeting space for clients, a study spot, or a renowned PSL (pumpkin spice latte), one famous coffee shop comes to mind—Starbucks. Since its 1971 creation in Seattle, Washington, the brick-and-mortar café has expanded to nearly 30,000 locations among 75 countries. Its presence among city centers and suburban strip-malls is unmistakable. In fact, in 2014, Starbucks was named the fifth-most admired brand worldwide by Forbes. But what’s all the buzz? Why is Starbucks succeeding as a predominantly brick-and-mortar business among digital disruption? How can Starbucks continue to benefit from digitization through marketing campaigns that mutually benefit revenue and customer satisfaction? The contents of this report will delve into two digital marketing initiatives that will boost brand loyalty, customer engagement, co-creation, and revenue through external partnerships.
#MyStarCreation
If you can think it, you can drink it.
Starbucks has gained social media buzz throughout the past few years as customers display their unique drinks online. The Pumpkin Spice Latte and Unicorn Frappuccino have gained notoriety for their social media presence and representation of the Starbucks brand. The #MyStarCreation is a digital marketing contest centered around consumer co-creation through online platforms. The campaign encourages Starbucks consumers and brand advocates to propose new creative beverages, not currently publicly available to customers. The campaign will choose winners based on creativity and number of votes through the Starbucks contest website.
Modeled off of the recent Oreo flavor competition, in which consumers in the U.S. could submit creative cookie combinations through Instagram and Twitter, Starbucks will monitor engagement through the same platforms. Incentive to participate as a consumer is a cash prize (Oreo’s being $500,000), as well as public awareness of the winner’s identity. According to Oreo’s brand manager, Madeline Vincent, “there would be no one better to help us brainstorm than our fans who already have amazing ideas and are already sharing them.” Customers of Starbucks are already encouraged to customize their drink orders in-store, with the ability to add or eliminate flavors, syrups, and toppings. This personalization has fostered an entire off-the-menu list of creative flavors, that display the amount of customer co-creation already occurring. This collaborative creativity, according to Vernuccio’s article on integrated marketing, combines with “interactivity, engagement, co-creation, and hyper-connectivity” to create a climate of creative crowd-sourcing for brand story-telling. The social media contest, then, encourages widespread acknowledgement (both digital and physical) of customer satisfaction created by product customizability.
#MyStarCreation corresponds with the Value Co-Creation (VCC) Framework (INSERT VCC) in its emphasis on customer co-production and value-in-use. VCC encourages knowledge—sharing consumer’s ideas and creativity, equity—sharing control in favor of consumer empowerment, and interaction—engagement that enables exchange between firm and consumer, throughout the creation and consumption cycle. The contest implements all of these aspects by collecting, considering, and finally creating the ideas of the consumers; the entire process revolves around the creativity and opinions of followers through social media. According to Rialti in an analysis on co-created experiences, the relationship between consumer and brand is strengthened by participation within that community. Thus, consumers are more likely to identify with a specific brand community if they are granted access to participation and actual autonomy towards the company’s future. The contest allows participants to feel engaged, excited, and influential within the Starbucks brand.
The VCC framework implies that the effects of co-creation cannot be considered until they are implemented and influence the customer, also known as Value-in-Use (ViU). The foundation Value-in-Use as a fundamental aspect of the consumption cycle revolves around the during and after experiences of a customer—how their opinions changed (or did not) based on their physical, sensory, or digital experience with the brand. ViU emphasizes experience—co-created value through experience in use of products or services, personalization—uniqueness of the use process, and relationship—collaboration resulting in customer empowerment. Because Starbucks is such a renowned brand, participants in the campaign are likely to have experience with their products and services; this implies customer awareness towards the ability to personalize products. The campaign also encourages user-generated-content, brand-to-consumer and consumer-to-consumer engagement, as well as customer empowerment through creative autonomy.
'Be the Barista'
Starbucks has been consistently updating its market for complimentary goods, such as whole bean coffee, signature syrups, and branded merchandise. However, this segment of their sales is significantly smaller than their traditional sold goods. In order to encourage sales of complimentary goods, Starbucks should implement the ‘Be the Barista’ campaign. ‘Be the Barista’ is an integrated marketing campaign that encourages awareness for Starbucks’ complimentary goods, while also widening their target market demographics and encouraging online engagement.
‘Be the Barista’ will implement social media marketing by creating partnerships with well-known lifestyle and food influencers. Advocates will be provided with the necessary products to create content, including un-boxing, reviews, and instructional videos. According to the Spanish Journal of Marketing, “positive content showing the satisfactory experience of a customer may encourage other consumers to buy that brand’s products”. This campaign will encourage beneficial social media engagement by establishing brand awareness among new niches.
The ‘Be the Barista’ campaign is centered around the Starbucks at-home experience, which has been developed through a line of home goods products. The Verismo is an at-home coffee brewing system that is produced and distributed solely by Starbucks. With a price ranging from $80-150, the Verismo system is significantly cheaper than most professional espresso machines. However, awareness of this product is low, and sales have not been exponential.
Instead of focusing mainly on singularity, markets are “witnessing a shift to business as networked partnerships”, according to Dr. Rikke Duus in a 2016 article. Thus, Starbucks should consider creating a partnership with well-established coffee machine manufacturers, such as Keurig, to propel its at-home line of products. These firms, both very well-known, will benefit mutually from a partnership; sales of Starbucks complimentary products will increase, while Keurig will receive exposure and increased sales on the shelves of Starbucks stores.
A main problem caused by digitization, according to Rigby’s theory of “digital-physical mashups” is that too many companies separate their physical and digital operations. By following the 'Zorro' framework, the Starbucks digital innovations team can design and implement this campaign, while continually updating and reproducing it. The nature of social media and abundance of possible influencer outlets allows for the 'Zorro' model to be continually repeated. Instead, companies must fuse digital and physical experiences—especially brick-and-mortars that are especially threatened. ‘Be the Barista’ aims to eliminate the boundaries between Starbucks’ digital and physical platforms, by encouraging online engagement and product-education through influencer partnerships.
Target Audience
Current Market Segments
The international retail coffee shop has a well-established target audience, that remains consistent throughout most of its worldwide markets. Currently, young professional men and women make up the majority of Starbucks sales. According to research on the company’s demographics, high income individuals typically look to Starbucks as a consistent, quick stop for coffee that won’t disrupt their busy lifestyle. Starbucks has, however, made efforts to establish a presence among teenage audiences through social media, lower socioeconomic audiences through discounted rewards programs, and families through kid-friendly products (i.e. juice and flavored milk).
Targets of New Initiatives
The #MyStarCreation and ‘Be the Barista’ campaigns aim to bridge the separation between Starbucks target audiences in regards to brand awareness, customer satisfaction, and sales. The flavor contest is aimed towards young audiences. Older consumers tend to follow norms of stereotypical “adult” choices, such as an Americano or latte; children and teens are more interested in the colorful, sugary creations that Starbucks offers. Young audiences are also especially engaged on digital platforms, likely equating to most of the content’s participants.
The ‘Be the Barista’ campaign widens the Starbucks target market to include families, frugal or environmentally conscious consumers and coffee connoisseurs. By introducing both physical and digital partnerships—with Keurig and social media influencers—the ‘Be the Barista’ campaign encourages a variety of new brand awareness. Starbucks will receive more awareness and sales of at-home products, as well as genuine engagement and user-generated-content through social media platforms.
SMART Objectives
'Be The Barista'
Specific: Contractual partnerships between Starbucks, Keurig and social media influencers (starting with 20) must be put in place. These agreements will ensure the advancement of the Starbucks complimentary line of products, while also securing Keurig’s spot on Starbucks shelves. The influencers are required to bridge the digital-physical partnership and create brand awareness within specific marketing niches.
Measurable- According to the Starbucks 2018 annual report, goods other than beverages in food, including coffee-making equipment, consisted of only 4% of sales. The campaign will be measurable by tracking the potential upward trend in sales after its implementation. The partnership and social media campaign will likely cause an upward spike in these sales. If this is the case, the number of influencers will increase from 20 and correlating trends will continue to be measured.
#MyStarCreation
Realistic- By modeling the #MyStarCreation after Oreo’s flavor competition, the campaign can be considered reliable. Because the social media-based campaign is extremely low-cost (only requires social media upkeep) and does not significantly affect the Starbuck business model and regular menu rotation (new beverages are frequently introduced), there is little risk in exploring consumer co-creation as a means of gaining brand awareness and engagement.
Measurable- The social media campaign is measurable both through engagement tracking and simple analytics of user-input and votes. The amount of attention can be quantified through social media analytics, which point to the success and popularity of the campaign. The projected success of the campaign will be indicated by an increase in engagement on #MyStarCreation branded posts.
Action Plan
Contingency Plan
The #MyStarCreation and ‘Be the Barista’ campaigns are both low-cost, low-risk, with intentions of widening the Starbucks target audience and encouraging consumer engagement. The potential for the #MyStarCreation to fail is low, considering that a winning creation can be chosen from even few entries. The brand itself has a loyal following, but does not currently encourage much online engagement. Thus, should the campaign not receive high rates of attention, Starbucks’ social media and branding teams should consider new initiatives to increase user engagement—especially with the advancement of digitization continuing to reform business-consumer relationships.
Starbucks will experience a greater negative result if the ‘Be the Barista’ campaign fails to produce an increase in the sale of complimentary goods. Should this occur, the marketing teams should focus their attention on a new campaign to facilitate digital-physical engagement.
One possible campaign that could implement consumer engagement through a combination of digital and physical platforms is “Humans of Starbucks”, a social media account dedicated to the life stories of Starbucks in-store employees. Based on the account, “Humans of New York”, this profile would encourage customers to engage in deeper interactions with employees. This also encourages participation via social media platforms that has the potential to instill a brand reputation of respect and appreciation for both customers and employees.
Humans of Starbucks
Value Co-Creation Framework
'Zorro' Model
References
Alam, A. (2017). What Are The Different Target Audiences For Starbucks - Techfee. [online] TECHFEE. Available at: https://techfee.com/different-target-audiences-for-starbucks/ [Accessed 21 Mar. 2019].
Duus, D. and Cooray, M. (2016). Putting new age organizations on ‘ICE’. [online] World Economic Forum. Available at: https://www.weforum.org/agenda/2016/07/putting-new-age-organizations-on-ice/ [Accessed 17 Mar. 2019].
Rialti, R., Caliandro, A., Zollo, L. and Ciappei, C. (2018). Co-creation experiences in social media brand communities. Spanish Journal of Marketing - ESIC, 22(2), pp.122-141.
Richards, K. (2019). Oreo Has an Explosive New Flavor, and Wants You to Create Its Next One. [online] Adweek.com. Available at: https://www.adweek.com/brand-marketing/oreo-has-an-explosive-new-flavor-and-wants-you-to-create-its-next-one/ [Accessed 16 Mar. 2019].
2018 Annual Report. (2019). Starbucks Fiscal 2018 Annual Report. [online] Available at: https://s22.q4cdn.com/869488222/files/doc_financials/annual/2018/2018-Annual-Report.pdf [Accessed 15 Mar. 2019].
Rigby, D. (2014). Digital-Physical Mashups. [online] Harvard Business Review. Available at: https://hbr.org/2014/09/digital-physical-mashups [Accessed 17 Mar. 2019].
Taecharungroj, V. (2016). Starbucks’ marketing communications strategy on Twitter. Journal of Marketing Communications, 23(6), pp.552-571.
Vernuccio, M. and Ceccotti, F. (2015). Strategic and organisational challenges in the integrated marketing communication paradigm shift: A holistic vision. European Management Journal, 33(6), pp.438-449.