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Revealing Starbucks Marketing Strategy and What You Can Learn From It?

June 28, 2022 5 Mins Read

June 28, 2022
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Can you give thought to a week without coffee breaks at cafes?

It might not be possible, but earlier, having coffee outside the house was never a thing.

So how the tables have changed the corners?

Table of content

Table of Contents

A Tale of 30,000 Cafes: The Story of Starbucks

Starbucks is not just a name but a well-established brand itself.

It holds the history of unfamiliar times, struggles, and the high gap between demands, but all of the above, they cope with it and succeed in this industry.

Give it a thought to how coffee can dominate the brand.

Yes, it can if it has the visionary heroes to protect and innovate to be relevant and revolutionary in the market.

Starbucks has always been way ahead with its marketing strategies to be out-of-the-box and gain trust, which leads consumers to replace the existing coffee mugs with Starbucks paper cups.

You can just get an idea of the craze of Starbucks coffee at that time.

There is more to this story. To compete in 2025 and remain relevant to all their consumers, they have adopted all the practices that can make a difference and reach the consumer's physiology.

The current CEO of Starbucks, Mr. Niccol, commented, “We’re going to, once again, be loved for our coffee, loved for the warm, loved for kind of the welcoming coffeehouse…that we have,” he said.

Do you know? Starbucks holds 57% of the total cafe market. Yes, it's 57%.

We’ll catch more intriguing things throughout the blog and make it justify what stories led Starbucks to have 30,000 cafes, generating pretty good employment across the world.

The Idea of Starbucks–The beginning point

Starbucks originated with three friends called Gordon Bowker, Zev Siegl, and Jerry Baldwin.

Yes, Zev knows how the coffee industry went in and out and has the best knowledge about coffee in the country.

The fun fact is that Starbucks didn’t sell coffee at that time. Shocking? It sells only coffee bees.

Back then, there was no concept of having coffee outside the home. People are intended to enjoy it at home.

So, how did the idea come into shape? It’s intriguing! Starbucks was established in 1971 in Seattle, USA, where they used to sell coffee bees.

For the first decades, they opened Starbucks at five different locations.

Till then, there were no separate bars for coffee, and no one could even imagine getting the beverages at the Starbucks coffee shop before 1980.

Things changed in their direction with the addition of one man. He was the wave of change that got Starbucks to new heights and made it a household name in the USA.

The company hired its first Director of Marketing and Sales, a well-reputed name known as Howard Schultz. This was a time for a significant shift.

As a company person, he went to Italy in 1983 and was amazed by Italian coffee bars and the romance of coffee in each sip.

This was when he thought about selling coffee instead of coffee beans.

He kept this idea before the founders, but they were rigid as they didn’t have the vision with coffee and were not interested in going ahead with other verticals.

They just aimed to sell high-quality coffee beans.

It was hard, but Howard Schultz made them agree to an experiment.

The following year, they turned bean stores into cafes and served their first latte. Believe this, it was a successful experiment.

But wait....

It was not easy, as the founders were quite hesitant to change the business model and shift to a coffee shop where there was no concept of people having coffee drinks outside of the house, which made Howard Schultz leave the company to pursue his vision.

Four years later, when he looked at Starbucks, it was in a worse condition,

So, he collaborated with investors and bought Starbucks for $3.8 million to implement his ideas there.

The Sales & Marketing Strategies of Howard Schultz: A Hero Of Starbucks

It was not easy, as he got rejected 100 times, but he didn’t make these things his bottleneck and continued to go with others to establish a coffee business that became his zeal and passion.

He adopted Aggressive Expansion, where he was focused on expanding the stores.

It is mentioned that in 1992, he opened 165 stores, and after six years, in 1996, he opened more than thousands of locations, including the first international cafes in Japan and Singapore.

The growth was massive, and right in front of eyes, in 1999, Starbucks opened its stores in 2,000 more locations.

Once they aggressively expanded, their next focus was on premium coffee.

As the years passed away, the vision of Mr. Schultz was to sell premium coffee.

As the foundation of the new Starbucks was taking the growth, they released their first statement:

“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.”

It shows their uncompromised principles as they grew.

The first was when Starbucks served the first Coffee Latte, which got positive reviews and became known as the Classic Coffeehouse.

That coffee late was the simple combination of bold, tasty espresso with fresh, sweaty steamed milk on top.

It serves as a delicious base, and you can choose flavors to add to the coffee.

Recently, Starbucks has done some experiments and provides premium instant coffee.

Rather than whole bears or pre-ground coffee that used to be bought in paper bags, instant coffee is micro-ground coffee made with 100% arabica beans from Latin America.

Opening coffee stores and selling premium coffees build the need for the Third Place, a well-structured marketing strategy for Starbucks.

The concept of Third Place was new to the practice…

No, it was not a home, office, or school, but it was the place between them where people could come and catch up with their friends and colleagues and meet anonymously.

It was the perfect place for the first date.

It was the vision of Mr. Scheltz to make a welcome place for the consumers.

It is a place where the comfy chair, the traditional taste of cups, a personal touch through writing their names over-cups, and the fantastic jazz much with the fresh aroma inside the cafe.

Starbucks Sales: A Trip From Beans to Billions

Psychologically, Starbucks has become an ideal place for premium members across the globe to be there and enjoy traditional coffee tastes.

In 2000, Schultz switched from CEO to Executive Chairman when it was operating 3,500 stores worldwide.

Believe me, but between 2000 and 2007, Starbucks cafes increased from 3,500 to over 15,000.

The sales went up from $2 billion to $ 9.4 billion. Consumers were ready to ditch their kitchen just for a cup of coffee at Starbucks for its paper-to-go cups.

But then the Bottleneck year came, and things shifted in 2007 due to the financial crisis.

Yes, it was a hard time because the competition was tough, and Starbucks was losing its identity as it adopted the mobile phone and booked online coffee to save time, but this proved the right approach.

The loop here was the contradiction to their ideology, as in the beginning, they generated the need for the “Third Place” so the consumers can enjoy their time, get relaxed, and get involved entirely in the chill vibes, but as the introduced mobile booking to save the time of consumers from the long queue, where personalized touch went down.

They are making a convenience about saving time, but at Starbucks, time is all about spending well.

It was a hard time for Starbucks, but the real players were still in the game, and Schultz quoted:

Ask any public company CEO, and they will tell you that “a miss” is virtually inevitable, even at the best-managed, fastest-growing firms.

It’s not the miss that matters. It’s what comes next.

How Starbucks Reinvented Its Marketing Strategy After 2007?

Schultz forced 600 shops to shut down as they were not making the expected profit. Yes, they bear a significant loss then, followed by 28% compared to the previous years.

Later, in 2009, they agreed to close more than 300 shops and lay off the 6,700 employees. After eight years, he returned to the CEO position after replacing Jim Donald.

The competition was going strong as McDonald's came in front of Starbucks selling the espresso, and the US economic situation added insult to injury.

After observing the situation, Mr.Schultz shot the latter to the employees, where he stated:

"The company must shift its focus away from bureaucracy and back to customers."

They adopted a technology-oriented strategy, heavily investing in mobile ordering and payment capabilities through their app.

They immersively focused on the Loyalty programs (Starbucks Rewards) and optimized social media channels to connect with the new generations, giving them a personal experience.

They also encourage their employees to think freely about the organization's contribution in terms of ideas and innovative strategies.

Following this, in March 2008, the creative idea rolled out, which was “My Starbucks Idea,” where customers are open to exchanging opinions, reviews, and ideas directly with the company.

As a result, customers attach themselves to Starbucks and can give opinions on products, services, coffee taste, and so on.

It is estimated that more than 93,000 ideas were shared by about 1.3 million users on social media, and their pageviews rose to 5.5 million.

It was a time when Starbucks reconnected with its consumers, making everything as consumers want to be there.

They implemented over 100 ideas. They built a robust fan base and implemented ideas like ‘free Wi-Fi, ‘soy groups,’ and those comfy chair groups.

The next thing Starbucks implemented was 'MyStarbucksSignature’ on hot and cold coffee, giving consumers a personalized touch.

It was a long-term savior for Starbucks. The best part of this is that they have explored the technological paths way before.

Now the sudden emergence has occurred, they know and well-practiced what they mainly require in their apps and websites.

Then recently, There were selected countries with the largest number of Starbucks stores worldwide as of September 2024.

To Conclusion

Starbucks is itself a beautiful journey filled with challenges, passion, determination, and the will to face all hurdles that come along the way.

They are heavily active on social media and respectful toward their consumers, bridging the gap between the company and the customers in 2025.

Starbucks is still “third-place” in spending quality time, having business meetings, and hanging out with friends.

There are more others, but Starbucks is the premium and worth-for-money brand itself.

It has a lot to explore and excel in, and it is graciously moving towards innovating and nurturing the bond between the young generations according to their needs.

Frequently Asked Questions

What are the key elements of Starbucks' marketing strategy?

Starbucks focuses on premium branding, customer experience, digital engagement, and loyalty programs. Their marketing revolves around personalized promotions, social media storytelling, and strong brand positioning.

How does Starbucks use digital marketing to enhance customer engagement?

Starbucks uses mobile apps, social media campaigns, and AI-driven personalization. The Starbucks Rewards program and mobile ordering system keep customers engaged and encourage repeat purchases.

What lessons can businesses learn from Starbucks' marketing approach?

Businesses can learn the importance of brand consistency, experiential marketing, and customer loyalty. Creating an emotional connection with consumers and leveraging technology for personalized engagement are key takeaways.

About Author

Mansi Garg

Chief Operating Officer

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An extensive background working in Tech, Travel, and Education Industries. Currently involved in entire business operations process: Benefits strategy and implementation, systems integration, Human Resource handling, Outsourcing engagement & strategizing the company architecture. Learning different stages of the business cycle. Coached leaders in various areas, including - employee relations, complaints, and response management.