Using the full spectrum of segmentation variables, describe how Starbucks initially segmented and targeted the coffee market? Starbucks initially targeted the coffee market using several segmentation variables such as, A. Geographic segmentation: dividing a market into different geographical units such as nations, states, regions, countries, cities or even neighborhoods. By placing their Starbucks locations in areas where the upscale more educated female customer would be able to access it. B.
Demographic segmentation: dividing the market into segments based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality. Starbucks initial customer was a highly educated, wealthy individual, who is predominantly white and more times female. Their target customer was someone who was able to come into the location and shoot the breeze with the barista, who would come into the location on a daily basis, or even twice a day. The locations where set in an upscale neighborhood or in city.
That allowed the person a third place to go other than work or home. A place to sit and read or meet up with friends and hang out. C. Gender segmentation: dividing a market into different segments based on gender. Starbucks target customer was scaled towards females. They wanted people that were set to a certain lifestyle. That liked the personal experience that was being offered, the personalized greeting and the chance to talk with the baristas. D. Psychographic segmentation: dividing a market into different segments based on social class, lifestyles, or personality characteristics.
Again Starbucks was clearly using this segmentation, going after the upper class, the female who had the time to spend and get that experience that they were trying to offer. Question 2 What changed first- the Starbucks customer or the Starbucks experience? Explain your response by discussing the principles of market targeting. A. I believe the Starbucks customer changed first. A year before the economy started to drop is when Starbucks first started to feel the change. The once loyal customer base was starting to dwindle fast. They were losing their target customer.
People were no longer spending their money on the luxury item that Starbucks coffee was. Once Starbucks finally realized what was happening they had no other choice but to change the Starbucks experience. Their new customer was not interested in spending time talking with the barista, they wanted a good cup of coffee and quickly. They also wanted more options offered such as food and other specialty drinks. B. Market targeting: the process in evaluating each market segments attractiveness and selecting one or more segments to enter into.
Starbucks had to make some changes to try and compete with so many other companies that entered into the coffee market that Starbucks had once cornered. Starbucks branched out into selling breakfast parings which really started Starbucks way back onto a road of profits. Starbucks then introduced Via which is its own version of instant coffee that comes in a single serve package. That was offered at $1 each or 12 for $9. 95, this was a great idea that now offered people that didn’t have time to go to a coffee shop or have access to a coffee pot to still be able to have a quality cup of coffee.
This also allowed Starbucks to enter a whole now category and sell this product in grocery stores. After two years of testing Starbucks now offers flavored coffee’s that you can purchase in any grocery stores. In vanilla, caramel, and cinnamon. Question 3 Based on the segmentation variables, how is Starbucks now segmenting and targeting the coffee market. A. Starbucks has changed so much since its first opening, when it offered a quality cup of coffee or espresso. To a company that offers so much more, from the popular Via which is an instant coffee, to the new flavored coffee that can be bought in stores.
Sine four out of five cups of coffee are drunk at home Starbucks new it had to branch into this segment and get its products into people’s homes. Then Starbucks purchased Seattle’s Best, which would allow it to branch into such markets like vending machines, coffee carts, fast food restaurants like Subway and Burger King, movies theaters and convenience stores. Branching out to customers that normally would not purchase their coffee from Starbucks. Question 4 Will Starbucks ever return to the revenue and profit growth that it once enjoyed?
Why or why not? A. I don’t think Starbucks will ever return to a place where it was growing at such a fast pace. I believe that Starbucks has seen its peak when it was in the best of the best. I do however believe that even though Starbucks is mot growing at such a fast pace as before that it will still stay very profitable. If Starbucks continues to create new inventive ways to branch out into new markets like it has been doing I believe that it might make more money that way. Appealing to the masses is better than appealing to a small group.