Saturday, October 27, 2012

Chapter 18: Sales Promotion and Personal Selling


Starbucks' first card was launched in November 2001.  The first rewards of any kind was launched in April 2008.  The first generation of Starbucks rewards had no “levels.”  You just registered a card and earned free soy milk, free breve milk, free syrups, a free tall beverage with a pound of beans, and free refills.  Then in November 2008, Starbucks launched a gold card where customers pay a $25 annual fee and got 10% off of their purchases.  This meant by the end of 2008 and through most of 2009, Starbucks offered two side by side programs - the free program and the new, paid program.  The 10% off program, which had a $25 annual fee, did not include the free milk changes, free syrups, and all the free perks.   The 10% off card was phased out, one year after its initial launch.  In October 2009, after realizing that having two overlapping programs which didn't relate to one another didn't work, Starbucks announced the current MyStarbucksRewards program, which offers three levels: A “Welcome” level, a “Green” level, and a “Gold” level.  This program launched in January 2010 and the updates to the program occurred on October 16, 2012.


Explanation of MyStarbucksRewards program:
Welcome Level ~
Use your card once, earn your first reward. Sweet!
Something to Drink or Eat On Your Birthday
Get a little extra birthday love with a free drink or food reward on your big day
Green Level ~
Five Stars puts you at Green.  
Besides your free birthday drink or food reward, you also earn Free Refills in the Store.
Paying with your registered Starbucks Card gets you brewed and iced coffee and tea refills at no charge during your visit at a participating store.
Gold Level ~
Collect 30 Stars within 12 months and you’re Gold. 
Once you reach Gold, keep those benefits for another 12 months by earning another 30 Stars. With Gold, you get all the Welcome and Green benefits plus Free Drink or Food Reward Every 12 Stars
Use your Starbucks Card 12 times and the next one’s on us.
Also, you receive a personalized Gold card.  Your barista will know you're somebody special when you place an order.  Be sure to opt in to get special offer and coupons via mail, email, or text message.



This is a form of sales promotion within Starbucks, where marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates consumers or members of the distribution channel to purchase a good or service immediately, either by lowering the price or adding value.  This specific form is a loyalty marketing program, designed to build a long-term, mutually beneficial relationship between the company and its key customers.  It is also a frequent buyer program, a loyalty program in which loyal customers are rewarded for making multiple purchases of a particular good or service.  According to our marketing textbook, at one point, gold level members were notified that they could purchase rare coffee beans grown on one farm in the Galapagos.  The coffee, selling at $12.50 for half a pound, sold out in less that one day, showing that gold-level members are willing to use their benefits.

Lastly, Starbucks also uses sampling within their locations and outside as a form of sales promotion.  This allows the consumer the opportunity to try a product or service for free.  If the consumer likes the certain product, they will most likely purchase it then or at a later moment if the product is still available, since it tends to happen with a limited product or a trial product.
Sampling some Starbucks coffee in Times Square

Starbucks Unofficial Fan Site - Questions answered about the Reward Program

Starbucks Coupons

Thursday, October 18, 2012

Chapter 17: Advertising and Public Relations

According to AdvertisingAge, "Starbucks has long been something of a curiosity in the marketing world because it has spent so much less on traditional advertising than other big chains.  And yet, it's been doing better than what almost anyone expected from it a few years ago."
As shown in this ad campaign video, Starbucks focuses on word-of-mouth promotion.  CEO Howard Schultz makes it important to relay the information and give the customer the experience they expect from Starbucks.  Here and there, consumers encounter advertisements in magazines, train stations, buses, newspapers, or a few commercial ads.  Starbucks also promotes within other companies (as shown in the video below).

Also stated in AdvertisingAge, certain marketing initiatives for Starbucks includes social-media efforts and advertising for certain new or seasonal products (Frappacino and Pumpkin Spice Latte are a  few examples).  Starbucks has had a digital scavenger hunt featuring Lady Gaga and promoted for its 40th anniversary, with one example having MyStarbucksSignature, a website which lets customer create customized drinks.
Starbucks uses product advertising, showing the benefits of a specific good or service, and some pioneering advertising, a form of advertising designed to stimulate primary demand for a new product of product category.  Most of Starbucks advertising is a form of competitive advertising, designed to influence demand for a specific brand or product.  Starbucks doesn't show competition in their ads however, as other companies may in using competitive advertising form.  Even though these ads are out there, the frequency of them are not as vast as other company ads, particularly coffee companies (Dunkin' Donuts, McDonald's McCafe, etc).  Starbucks wants to remind the customer the pleasent experience once walking into a Starbucks and enjoying their product.


     
Explained in an earlier blog post on Chapter 6, Starbucks has a lot of product placement within TV shows and movies, such as Sex and the City, I Am Sam, Devil Wears Prada, and many more (check out Few Starbucks Feature Films for some more).  Product placement is a public relations strategy that involves getting a product, service, or company name to appear in a movie, television show, radio program, magazine, newspaper, video game, etc.  This increases the advertising and promotion of that particular product, service or company.  This has been increasing over time since advertising is easily ignored. 

Now in the case of emergencies, a company always has to be prepared for any repercussions at hand.  Starbucks had an advertising mishap where they had been advertising for their TazoCitrus drinks and the advertising was struck as familiar to the 9/11 attacks (shown to the right), especially since it occurred shortly before the ad would've released.


In a press release shortly after the ad had been seen, it was stated: "We deeply regret if this ad was in any way misinterpreted to be insensitive or offensive, as this was never our intent.  The poster, promoting Tazo Citrus and Tazoberry beverages, was designed to create a magical place using bright colors and whimsical elements such as palm trees and dragonflies."  Starbucks Press Release 6/16/2002
The ad was pulled and replaced with this:

Saturday, October 13, 2012

Chapter 15: Retailing


Retailing is the major part of the sales process of a good or service.  Everyone encounters a retail location at least a few times a week, whether it is a supermarket or department store.  Starbucks falls into the category of a specialty retailer, which is a retail establishment specializing in a given type of merchandise.  Coffee or other morning beverages are Starbucks' main merchandise.  Starbucks is also classified as a chain store, which is a store owned and operated as a group by a single organization.  In North America, most of the Starbucks locations are company operated.   However, the company sometimes has licensing arrangements with companies who provide the right to use particular locations that would otherwise not be accessible.  For example airports, grocery chains, colleges/universities, etc.  Some people see Starbucks as a franchise, which is incorrect.  Starbucks’ subsidiary (a company controlled by a holding company) Seattle’s Best Coffee, does franchise the operation of its cafes and kiosks.  As of the middle of 2008, the subsidiary had over 540 cafés in the U.S. as well as nearly 100 espresso bars.  But since Starbucks' stores are run by the company and not combined with independent ownership, it remains a chain coffee shop.

I have visited several Starbucks locations and now that I attend Borough of Manhattan Community College, I visit a smaller location on Chambers St. right outside of the 1, 2, and 3 trains.  At the beginning of the semester, I was a bit skeptical in going to that location since it is rather small but since it is Fall season, that means Pumpkin season!  I don't go to Starbucks all the time but when it's pumpkin season, I love to have their Pumpkin Spice Latté.  I visited the Starbucks during a high traffic part of the day, around 2:00pm when most people are on lunch break, and there was a huge line.  They had an associate come over to me, take my order, and speak it into a microphone for the baristas to make the order.  When I visited the cashier, I just had to tell them what it is I told the associate taking the order on the line, pay for my order, and since the associate on the line took my name, I just had to wait for my name to be called.  It was a rather quick process and I think it's pretty organized, even though I get worried if they get too many orders at once and mine may be forgotten.  Where I used to work in SoHo, there was a Starbucks on the corner and because of the high congestion and smallness of the location, they also did the same process and it always worked, at least for me.  The people who work at Starbucks care about their customers and makes sure they are assisted as quickly and nicely as possible.

As most people may notice, there are Starbucks locations all over the city, some within a block from each other.  Starbucks looks for densely populated urban communities for its stores.  There are even Starbucks coffeehouses located in Target locations as well.  This is a great marketing strategy and helps them build their company.



Friday, October 5, 2012

Chapter 6: Consumer Decision Making

When an individual buys a product, there is a process which occurs for making their decision.  This is the consumer decision-making process, which includes: recognition, information search, evaluation of alternatives, purchase, and post purchase behavior.  Now not all of the steps are exactly necessary or even taken.  For example, a person may not even purchase the item or some consumers may not need to do the information search. 


Starbucks' consumers rely mainly on the recognition step and even the information search if it is a new consumer.  When a person is thirsty and needs their daily fix of coffee, they are responding to their stimuli.  An individual can be walking by one of Starbucks' coffeehouses and their senses become aroused, which could be enough to indulge in a coffee, or morning beverage/treat in general.  If a consumer needs the information search, they can receive this information from word of mouth.  Many of Starbucks' loyal customers speak very highly of the brand and the quality of the coffee.  Even though the price points are about $2.00 or more than say a Dunkin' Donuts coffee, Starbucks' locations are more convenient to have access to then one of their competitors.

Now within the decision-making process, perception of a specific product is considered by marketing managers.  Perception is a process all people take part in as we move through the course of events in our daily lives.  When we meet people, make business decisions, evaluate performances, or pass judgments, our perception surrounding such events helps us persuade our next course of direction.  Starbucks focuses on their employees and the effects they give on the consumer, as mentioned in previous blog posts.  Starbucks has been successful in modeling guidelines to direct employee behavior and shape corporate perception to help in its success.  Consumers perception must start from the perception employees view about the company.  If the employees decide this is the place to be for them, then the energy will be given to the consumer and they will return.

The consumers' post purchase evaluation process is probably the most important out of the five steps taken because it requires the decision of whether or not to buy that particular item again.  This decision to purchase a product at Starbucks, because of all the research and the variation of products they offer, can be done in one store visit.  Starbucks gives a good motive for customers to return because if you are unsatisfied with your drink, then you will be offered another drink and even given a coupon for a free one.  Again, the customer service in Starbucks is what makes the experience.  The employees make sure that the customer receives what they ask for in a personal way which makes a customer feel like they are the only person Starbucks is attending to and caring for.  As Howard Schultz, CEO, stated to Fortune Magazine, “We aren’t in the coffee business, serving people.  We are in the people business, serving coffee."

An advantage marketing managers take into consideration when selling a product and making sure the consumer continues to buy the particular product is looking into specific primary or secondary membership groups.  Consumers are influenced by people around them, whether from their similar cultures, values, personalities, attitude, etc.  Starbucks focuses a lot in spreading their brand name by word of mouth.  They have some commercial ads but what mostly works for them is to be recommended by someone consumers know.  They also take opinion leaders, which by textbook definition is an individual(s) who influences the opinions of others.  Starbucks does this by being featured in many shows and movies.  This has helped them grow their credibility and gain return customers.