Starbucks Market Analysis: Psychographic Segmentation Strategy

Introduction to Starbucks and the Specialty Coffee Market

Starbucks is a major, worldwide coffee retailer specializing in a variety of coffee blends and iced beverages, among other related products. Within the market sector where Starbucks operates, several competing companies exist, including The Coffee Bean & Tea Leaf and Caribou Coffee. Each company shares similar strategies, appeals to a similar demographic, and positions itself as the high-end of coffee-based shops and cafés. They also share a similar promise of quality ingredients and service. The difference is that while a company like Starbucks focuses on the behavior of consumers to market its product, a company like Caribou Coffee relies on the taste and quality of its product, and The Coffee Bean & Tea Leaf relies on location and ease of access.

Starbucks was selected as the primary company to analyze due to its immense popularity and success over the last decade. It has become one of the most iconic symbols of coffee, and an entire culture has developed around this famous chain. The first Starbucks opened in the 1970s, and the origins of the name come from Herman Melville's Moby Dick, a novel about the 19th-century whaling industry.

Starbucks' History, Scale, and Industry Position

Starbucks offers more than 6,500 self-operated and licensed stores in over 38 countries outside the U.S., and 10,924 stores within the U.S. (Starbucks Coffee Company, 2011, p. 1). It all began in 1971 when the Starbucks Coffee Company formed a long-standing commitment to ethically sourcing and roasting high-quality arabica beans and brewing top-quality coffee. As of 2013, the company had reached global recognition and become the premier roaster and retailer of specialty coffee in the world. As the company states, "Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup" (Starbucks Coffee Company, 2011, p. 1). The company's stock market value as of 2013 was $51.64 billion, with 2012 revenue of $13.29 billion.

Starbucks is part of the restaurant industry, with specialization in coffee, tea, and baked goods. Starbucks is considered by some to be a fast-food franchise because the drinks and food served there are made or ready-made and available within a short time period. Like other franchises of its kind, it focuses on specialty drinks and fast service. Although it faces stiff competition from other retailers such as Dunkin' Donuts, McDonald's, and Subway, Starbucks has managed to maintain a loyal and consistent customer base.

Its commitment to quality service and the removal of GMO ingredients assures customers that they are getting more for their money. Along with fast service and a broad range of products, Starbucks offers what other fast-food chains lack: free Wi-Fi and an inviting atmosphere. Like Subway and McDonald's, Starbucks has adopted a uniform look throughout all of its stores, and it has also offered franchising opportunities — though it is strict about who becomes a franchisee.

All in all, it is very difficult to remain popular in an ever-expanding market. The coffee-drinking culture has increased and expanded, with special interest in high-end coffee. People do not just want fast and tasty coffee; they also want coffee that is healthy and comes from a sustainable, fair-trade source. Like customers of all fast-food chains, Starbucks customers now demand better ingredients and expect higher standards. Starbucks has maintained and set forth high standards for its food and drinks by eliminating high-fructose corn syrup from most of its products and keeping GMO ingredients out of its baked goods.