Marketing strategy concepts and implementation

MARKETING STRATEGY new product development marketing strategy will help grow the market and, at the same time, the company's market share, while winning over both individuals new customers and customers from other competitors in the industry.

In an interview given to an online company blog, Starbucks CEO Jim Donald amused himself and the audience by pointing out that new coffee and other products are regularly introduced by Starbucks out of fear. While this was obviously said on an amusing note, the importance of product development for Starbucks can hardly be evaluated and, further more, it does indeed have a fear component in its motivation.

It's the fear for the competitors, as well as the fear that the company will no longer be regarded as an innovative, market leader, with a proactive approach, but as a company trailing along in a reactive manner. The first one is the fear of competitors, as an essential motivation for Starbuck's product development strategy. If the company didn't have a strategy based on new product development, it would have meant that the competitors would have received a signal that the company has a reactive approach, an approach where its simply replies to market stimuli. It would have supported an image of Starbucks as a second rated company on the market, a company without initiatives, with tremendous consequences for its relationship with its competitors.

Second of all, Starbucks has had a reputation for new product development and creativity over its history and losing this would be equivalent to losing its reputation as an innovator on the market, something on which the Starbucks brand was built. It is difficult, given the size and importance of Starbucks, to commit to an entire rebranding campaign by which to change the basic marketing strategy from product development to something else. The company does not have experience to lead cost leadership marketing strategies, and it would take an extremely long period of time to promote a new marketing strategy such as this and to get the customers and shareholders used to it.

Third of all, a new product development marketing strategy is essential for Starbucks because it is the type of strategy that brings added value to the company. It is one thing to create value based on existing perspectives (obviously limited) and quite another to go to greater length and innovate, produce and promote new product and services and launch them on the market. The probability that the latter strategy will be successful is much higher.

As a last argument of the importance of new product development in Starbuck's overall marketing strategy, we need to point out towards the relationship with the Starbucks customers. Developing new products, coming up with new ideas is important in meeting the Starbucks customers' needs and matching it.

On the other hand, at Starbucks, it is essential to be able to draw as many ideas on new product development as possible, from all sources available. Virtually, we may consider that each idea left in a Starbucks location by a client is a way to expand the market in his direction and to find the solutions by which that respective market share can be approached.

Authors identified three different sources for new product ideas: customers, internal staff and external technical sources. While all three of these may be important, in Starbucks case it is the first two that may make the difference. Indeed, we have already shown why customer feedback is important and Starbucks locations sometimes have people working there and asking customers whether they have enjoyed a certain new product or what it is lacking. It is a way of actively involving the customer into the production and design of new products. It is an important mean to have a feedback from the people you sell to.

On the other hand, the internal, usually technical sources are the key engine to the new product development marketing strategy. This is because their perspective is always based on clear figures, on distinct analysis of customer behavior and possible market evolutions that will indicate what direction it is best to develop into.

For example, the introduction of the Power Frappuccino in the late 1990s, was based on the large popularity of its predecessor, the Frappuccino, and on evaluation from the internal staff that such a move would fit the new customer trend that insisted on health products (the Power Frapuccino had protein, carbohydrates and vitamins additions). The Power Frappuccino was however not introduced directly in all markets, but was first of all tested in different representative markets for a reaction from the customers. We can see from this example that the two main sources for new product ideas worked closely together before this product was introduced.

Another product that was tested during the late 1990s was the Chai Tea Latte, combining black tea, exotic spices, honey and milk. The move in itself could have been considered quite risky, given the fact that Starbucks is recognized as a coffee seller rather than tea shop, but the move did not affect the Starbucks brand. In fact, it showed the customers that there was a lot coming from Starbucks in terms of new product development and that they can virtually expect the company to come up with new ideas not only in the sector where they are market leaders, but also in related segments.

This is the same case as when Starbucks decided to sell food and cakes in its shops as well, for example. The Starbucks brand has always been associated with coffee and this type of horizontal expansion, while beneficial for the company and business, could have been regarded as an unwanted change in management direction. Nevertheless, it was perceived as a new product diversification and as an attempt by the company management to diversify its services and offer its customer even more than they were receiving. This way, one could enjoy a full breakfast at Starbucks, or a full desert.

In my opinion, when referring to Starbucks, we cannot discuss only new product development, but we can expand this concept to include new ways of doing business, new services that the company is proposing etc. These can all be included in a larger category of new product development, in the sense that changing the distribution and the way the services are promoted, for example, will also coincide with the innovatory policies that Starbucks is promoting. The innovative marketing strategy cannot only be resumed to a simple product development.