Table of Contents
Introduction
Marketing is an essential factor in competition, and any company that wants to increase sales, expands, and maintains its customer base must use marketing as a tool. An organisation must develop a marketing concept which, when implemented, is called marketing orientation – a concept well mastered by Starbucks as the chosen company of study. Starbucks Corporation is an American coffee company specializing in serving beverages, such as coffee, tea and several organic drinks to its millions of customers. According to Starbucks (2015), since its inception in 1971, Starbucks has continued to expand, and currently, has over 23,768 shops all over the world.
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Over the years, Starbucks has continued to add additional non-alcoholic drinks to its traditional tea and coffee beverages. Due to emerging demands from consumers, it has also added juices and mineral water to its long list of products served in their chain of stores. Starbucks serves a broad market. Its target consumers are men and women aged between 25 and 40, which form 49% of its customers (Starbucks, 2015). This real market has a taste for beverages, and Starbucks uses color and trendy products to appeal to the market. As well, the majority of Starbucks clienteles are on different social media accounts.
Starbucks marketing orientation
The marketing concept forms the core strategies that a company plans to use, to create product awareness and eventually make significant sales. The marketing concept is the formulation of ideas on how to deliver and promote the organisation’s products to the target consumers (Rust, Moorman &Bhalla, 2010). It is critical for any organisation to have clear and workable marketing concepts. The strict follow-up, or implementation of marketing concepts, is referred to as marketing orientation. Starbucks has formulated a marketing concept based on technology, and its marketing direction focuses on social media as a platform for strategic marketing technology tool.
Marketing orientation based on technology is the primary marketing approach that Starbucks has followed in the last 20 years. Technology has performed a crucial role in the commercialisation of its products, further, fostering the successes, which Starbucks continue to enjoy to date. Almost all global companies are increasingly opting for technology and precisely social media as a way of reaching out to the target market. Market orientation demands a clear market concept that a company believes is the strategic approach to its market solution (Rust, Moorman & Bhalla, 2010). The majority of Starbucks clients are on social media. The best way to reach and interact with their customers is through social media, such as Facebook and Twitter (Quesenberry, 2016).
Social media is the new marketing approach for engaging consumers. It has brought numerous benefits that are the success of a well market orientation by Starbucks. Starbucks view marketing as the bedrock of its business and relies heavily on marketing orientation to launch its new products, target new customers, and retain the existing consumers (Rust, Moorman & Bhalla, 2010). To understand how critically Starbucks depends on social media is by monitoring the number of followers it has on social media and how frequently they update their social media accounts. Starbucks has over 11 million followers on Twitter and over 40 million fans on Facebook. The massive market opportunity that waits for Starbuck on social is huge hence the heavy reliance on technology as a form of market orientation.
Starbucks has mastered the use of technology to achieve a market orientation admired by many companies. Constant engagement with consumers on how they enjoy their coffee, what products are on sale, promotions and new products serve Starbucks well as customers feel appreciated and informed about what they consume and sometimes on how it is made (Rust, Moorman & Bhalla, 2010). Since Starbucks has understood that the marketing concept is ideal for its business, social media has increased Starbucks’s sales every year as a result of market orientation approach to business. The use of technology market orientation has also helped market and popularizes Starbucks across the world, hence the rapid expansion to new markets, for example, China and Africa (Starbucks, 2015).
Starbuck’s orientation towards the marketplace over time
Starbucks’s financial portfolio continues to grow hence it does not see the need to change its market orientation strategy. However, new improvements have been made on the market orientation to meet the customer demands and new expectations. Market orientation revolutionized the sales and popularity of Starbucks, and it continues to grow based on its market orientation approach. Therefore, the management of Starbucks has continued to rely on market orientation to achieve its objectives. Businesses that adopt market orientation and succeed tend to keep using the management technique to meet sales targets (Maguire & Hu, 2013). Starbucks reported a sales increase in 2015 and 2016 as a result of product awareness on social media.
Starbucks’s products have competing substitute products. Many of the Starbucks competitors, such as Java Coffee have closely similar products, and customers can buy from its competitors. However, increased marketing creates product knowledge for clients and endear them to Starbucks products (Hooley, Lynch & Shepherd, 1990). Starbucks’s approach to consumer interaction on social media plays to its advantage. Marketing orientation has allowed Starbucks to have better customer service on social media; hence customer focus is achieved by consumer feedback, such as tackling questions and concerns of the clients.
Consequently, profitability has informed the decision by Starbucks to continue using market orientation to run its business. According to Starbucks (2015), fourth quarter revenue was $5.7 billion signifying a 16% increase as compared to same quarter in 2015. The constant increase in net income is evidence that market orientation continues to be the strength rather a weakness (Hooley et al., 1990). Marketing orientation, which largely depends on the marketing concept, is a widely used concept for large companies, such as Starbucks to increase sales, target new markets, and control competition from a new entry into the industry.
Coordinated marketing also informed the decision by Starbucks to continue using market orientation to manage its operations. Marketing is not only for the marketing department. Starbucks’s customers participate in the commercialisation of its products on social media by sharing and “liking” its products. Photos of latest Starbucks’s latte and new pink juices are some of the examples of photos that clients share (Starbucks, 2015). The sharing of photos has proven to create consumer awareness; hence Starbucks not only cut costs on marketing but also benefits from its clients who are involved in its market orientation strategy (Kohli &Jaworski, 1990). Starbucks understands that it has millions of followers and the spread of its product photos can lead to billions of sales from the products, which are seen in its accounts.
The growth that Starbucks enjoys raises a question on the sustainability of the market orientation approach to its business. Competition and sustainability are the critical issues that should be addressed when market orientation is consistently used (Baines & Fill, 2014). Starbucks’s market orientation method works in favor of Starbucks marketing strategy, and hence market direction is still sustainable (Hooley et al., 1990). The sound financial record and growing world popularity for its products and name is an indicator that there is room for marketing growth and overall financial gain, especially, in China where Starbucks has planned an elaborate marketing orientation.
Challenges/barriers that Starbucks strive to overcome
Starbucks has problems/obstacles that threaten its traditional marketing approaches. Mainly, its customers, the old men, and women prefer their old fashioned methods, and thus the new marketing orientation may stand to lose a significant percentage of this target group. These types of clients primarily appreciate product orientation approach to marketing as opposed to market orientation (Hooley et al., 1990). Quality coffee or tea is what they seek, and they barely have time to chat on social media. Consequently, market orientation approach is increasingly being adopted by Starbucks competitors, such as Dunking Donuts and Tim Horton’s. These companies have accepted the same strategy as Starbucks and put a lot of money on marketing to leverage on Starbucks.
However, market orientation demands that a lot of time and resources be put towards advertisement. Social media is about engagement with the consumers of company products (Maguire & Hu, 2013). The challenge with this approach is that Starbucks must answer all the questions, concerns and adverse publicity arising from clients who are dissatisfied. Managing social media accounts require a professional team that can manage negative market orientation by such customers. If not controlled, adverse market orientation by consumers can reduce sales or rebut potential customers.
Market orientation focuses mostly on the marketing concept created by the management; hence employee service delivery may be compromised. Feedbacks from Starbucks clients’ shows that some new shops employ baristas, who lack knowledge on its products and cannot interact well one on one with its customers. The limitation on technology marketing orientation manifests when walk-in customers expect quality services as portrayed in the social media but find the opposite. Market orientation for Starbucks’ chains should be addressed from chains as well.
Finally, another barrier that Starbucks faces in changing orientation in the market place is the resistance from clients, who have invested time and a long standing relationship with Starbucks. The millions of followers and subscribers on different social media platforms are used to market orientation, and any slight shift may mean the loss of some clients, who may not respond well to a different direction in a market place (Maguire & Hu, 2013). Conversely, it ‘s hard to shareholders and investors to have a different marketing orientation approach when they are making profits may not be favorable. Stiff competition, especially, by its closest competitors that have adopted the market orientation approach seems to be working. It means that, if Starbucks does not continue with market orientation, it risks losing customers to its closest industry rivals.
- Baines, P., & Fill, C. (2014).Marketing. (3rd ed.). Oxford, Oxford University Press.
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- Kohli, A.K., &Jaworski, B. J. (1990). Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing, 54(2), pp.1- 18.
- Maguire, J. S., & Hu, D. (2013). Not a simple coffee shop: Local, global and global dimensions of the consumption of Starbucks in China. Social Identities, 19(5), pp. 670–674.
- Quesenberry, K. A. (2016). Fix Your Social Media Strategy by Taking It Back to Basics. Harvard Business Review. Available at: https://hbr.org/2016/07/fix-your-social-media-strategy-by-taking-it-back-to-basics [Accessed 7Aug. 2017].
- Rust, R.T., Moorman, C. &Bhalla, G. (2010).Rethinking marketing.Harvard Business Review. Available at: https://hbr.org/2010/01/rethinking-marketing [Accessed 7Aug. 2017].
- Starbucks (2015).Starbucks: It’s the Experience! Branded!55–75. Available at: https://news.starbucks.com/news/starbucks:it’s the experience/ branded [Accessed 7Aug. 2017].