Integrated Marketing Communications - Starbucks.
Integrated Marketing Communications - Starbucks.
Starbucks key of success is the ability to change the concept consumers had about drinking coffee. With more than 6000 outlets across the world (2003 numbers) and the intention of increasing them in the near future, the company has transformed coffee into a lifestyle accessory with as much elegance as the latest fashion. However, their way to success was not so easy and if we go back in 1971, we will find that coffee didn't look like it was a great business. There were no signs of getting better, either. Coffee consumption in the United States had peaked in the 1960s, but by 1971 it was on the decline. Most Americans drank something called "coffee" that came ground up very finely in vacuum-sealed tins. Nevertheless, there was appeared tiny Seattle based chain with innovative idea of how to do business that in a few years changed the vision about the process of drinking coffee not only in USA but worldwide. Starbucks has evolved into a great success due to their outstanding implementation of Integrated Brand and Marketing Communications.
But, what is integrated marketing communication? For many, IMC is concerned with the harmonization of customer oriented promotional messages. Duncan and Everett (1993) suggest IMC has been referred variously as orchestration, whole egg and seamless communication. It is regarded by some as a means of combining the tools of the promotional mix in a more efficient and synergistic manner. Increasingly IMC is seen to include all consistent interactions a stakeholder has with an organization (Shultz and Schults 1998) and therefore any definition needs to include or refer to concepts such added value, relationship marketing, corporate blending and with it, the blending of internal and external communications.
One of the primary motivations why Starbucks moved towards IMC was the reduction in costs that it was possible to realize through this approach. The rise in some media costs, most notably television through 1990s, the proliferation of media opportunities and the splintering of audiences has led to a reappraisal of the communications strategies used by the company and a reformulation of their promotional and media mixes. By reducing their reliance on above-the-line media and by attempting to move towards the use of media-neutral mixes to deliver consistent messages that cut through the increasing clutter, Starbucks has moved, if unintentionally, towards some form of integrated marketing communication activity.
Agreeing a definition of IMC is proving elusive but one of the more popular, simple and intrinsically satisfying views of IMC is that the messages conveyed by each of the promotional tools should be harmonised in order that audiences perceive a consistent image of a product or organisation. One interpretation of this perspective is that the key visual triggers (design, colours, form and tag line) used in advertising should be replicated across the range of promotional tools used, including Point-of-Purchase (POP) and the sales force. At another level IMC is about the integration of some of the promotional tools. One such combination is the closer alliance of advertising with public relations. Increasing audience fragmentation means that it is more difficult to locate target audiences and communicate with them in a meaningful way. By utilising the power of public relations to stimulate word-of-mouth communication about brands and advertisements.
Basically, we see that Starbucks' success was built on two things: the store experience (Starbucks' image) and the quality of its product - it really is a better cup of coffee The first one is so sacred that on Starbucks employees initiative the chain even prohibited smoking in its stores in Vienna, where cigarettes and coffee are inseparable, because Starbucks doesn't want anything to interfere with the seductive scent of fresh-brewed espresso. That's why top-management of Starbucks deeply believed that employees make the store that they work in. A Starbucks employee needed to be very knowledgeable, communicative, and helpful to the customers. Customers need to know the difference in the new roasted coffee Starbucks will offer. Well-educated employees will surely handle this requirement. Starbucks need to use strong cultural incentives to drive the identification of opportunities.
In Starbucks all employees are called "partners," signaling a level of responsibility maintained by few companies with sales in the billions of dollars. Anyone who has an idea uses a one-page form to pass it to the senior executive team-and gets a response. When the company pursues an idea, its author, regardless of tenure or title, is typically invited to join the launch team as a full-time member. New-style marketing organizations, by contrast, hire marketers not for jobs but for two broad kinds of roles: those of integrators and specialists. Integrators are marketers with broad skills who coordinate ...
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In Starbucks all employees are called "partners," signaling a level of responsibility maintained by few companies with sales in the billions of dollars. Anyone who has an idea uses a one-page form to pass it to the senior executive team-and gets a response. When the company pursues an idea, its author, regardless of tenure or title, is typically invited to join the launch team as a full-time member. New-style marketing organizations, by contrast, hire marketers not for jobs but for two broad kinds of roles: those of integrators and specialists. Integrators are marketers with broad skills who coordinate the delivery of products and services to the market from beginning to end. Specialists-more narrowly focused marketers with specialized skills-can be mobilized quickly to provide the particular expertise a given opportunity team requires. Starbucks is one of them and finding its way of capturing the market it will surely pay high attention to the recruitment process.
If communications are to be used effectively then there is a need to communicate aspects of the direction in which the organisation intends moving and how it intends to achieve this. In other words, the business philosophy and its aims and objectives, often expressed formally through mission and vision statements, need to be communicated to particular audiences in a way that is synchronised and co-ordinated with the organisation's other communication activities. At a strategic level IMC has at its roots the overall business strategy of the organisation. Using Porter's (1980) Generic Strategies, if a low cost strategy is being pursued then it makes sense to complement the strategy by using messages that either stress any price advantage that customers might benefit from or at least do not suggest extravagance or luxury. If using a differentiation focus strategy then price should not figure in any of the messages and greater emphasis should be placed on particular attributes that enable clear positioning.
In case of Starbucks mission sounds in such a way: "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow". The development of the mission statement was the start of the company's marketing management initiative. Starbucks overall objective in the eye's of the leaders was defined. This mission does not want to jeopardize the quality, ambiance, or service due to expansion into a global marketplace.
Besides writing a mission, Starbucks has outlined their guiding principles, which they follow in the business:
. Provide a great work environment and treat each other with respect and dignity;
2. Embrace diversity as an essential component in the way we do business;
3. Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee;
4. Develop enthusiastically satisfied customers all of the time;
5. Contribute positively to our communities and our environment;
6. Recognize that profitability is essential to our future success.
There can be little doubt that the elements of the marketing mix, however configured, also communicate (Smith 1996). The price and associated values; the product, in terms of the quality, design and tangible attributes; the manner and efficiency of the service delivery people, and where and how it is made available, for example the location, retailer/dealer reputation and overall service quality, are brand identity cues with which recipients develop associations and images, which in turn through time may shape brand reputations. It is suggested, therefore, that IMC cannot be achieved just by saying the same message through a variety of promotional tools. Effective communication underpins the stability and quality of relationships. While the origins of IMC might be found in the inadequacies of the prevailing structural conditions, an understanding of what IMC is or should be, is far from being resolved and is evolving as the industry matures.
The elements involved in IMC are many and numerous. Depending upon the perspective an individual might adopt, those elements might range from a simple configuration of the promotional mix through to a fully integrated and culturally driven mission and corporate strategy.
Starbucks understands brand building. According to the survey held by Choice in Chains 69% of respondents are familiar with its coffee shops. Now, with 2,346 in North America, Starbucks also understands market penetration. And it knows the importance customers give to service and atmosphere, two areas for which it received the highest grades, in building a brand. That knowledge helped put it a top the doughnuts/cookies/coffee category again this year. The key aspects of Starbucks promotional strategy are:
* Only $30 million on advertising annually;
* Relies on ubiquity and word of mouth;
* In comparison, McDonald's spends $300-400 million annually;
* No commercials on TV
The price as regards building contracting is largely determined by the amount of margin to be added to the build up of the estimate for the project. Price is almost always considered as being the single most important factor for the client as 99% of contracts are let to the lowest bidder. "The setting of the correct price is of enormous importance in marketing - both in getting the product accepted by the target market, and in generating sufficient revenue for the organisation." Starbucks pricing policy is unique. It's expensive. In USA you'll pay about $2 for a regular coffee and $3-4 for a specialty one. But it did not bother to have a good dynamics.
As for place, there is one good phrase about it: "Starbucks is caffinateing the world" (5,689 stores in 28 countries. And the product itself is always been paid high attention by Starbucks. "The aroma of our coffee is one of our competitive advantages; it is one of our products, " says Mr. Hong, manager of Chineese Starbucks division. "You cannot have a complete Starbucks experience if you have smoky air. We need to win people over on the importance of aroma.
To accomplish the goal of being a household name brand coffee worldwide, Starbucks should choose to implement an expansionary strategy. They deliver consistent messages through the co-ordination of the tools of the promotional mix and make it plausible and perfectly understandable in the light of the in which their marketing communication services have been provided.
This marketing strategy will allow Starbucks to enter any market and win consumer loyalty before anyone else can. After visiting a Starbucks, switching costs for the consumer will be extremely high due to the great service and quality that Starbucks can assure. With Starbucks expanding globally, the only adjustment they might want to consider is a plant overseas to help distribution there.
Two thirds of the world's coffee is sold in stores for home consumption. Not only will they be able to reach millions of coffee consumers, but also this will ensure with IMC a great distribution channel that will help lock out some potential competitors. Consumers can now enjoy great quality coffee at home or by stopping in a local store. This is a key step in ensuring that Starbucks becomes a household brand name. The only adjustment Starbucks must consider is that they are in a new industry with huge competitors such as Maxwell House, Folgers, and many others. Starbucks must make sure that the organization stays with its mission statement.
The way of how to follow the mission statement is IMC. For there to be consistency of message content and delivery there needs to be an agreed direction and a focus for shared values. In Starbucks, as well as in other companies this can be achieved by a move towards a strong(er) customer orientation. This requires a cultural shift of values and beliefs, whereby customer, organisational and brand identity issues become paramount. To make this feasible, the internal systems and procedures may need to be reviewed and the communication infrastructure adjusted to the needs of key audiences. One of the most widespread methods of how to do this is SWOT-analysis (see below):
Strengths:
- Wide Variety of Products
• coffee, baked goods, cds, and etc.
- Logo, Developed brand, copyrights, trademarks, domain names, and patents
- Company Operated Retail Stores, International Stores
- High Visibility Locations
- Value Employees: low employee turnover
- Good Relationship with coffee suppliers
- Not a Franchise
Weaknesses:
- Lawsuits: Olivia Shields, et al. v. Starbucks Corp.
- Excessive focus: marketing myopia
- Clustering: self cannibalization
- Cross Functional Management
- Price: expensive
Opportunities:
- Expansion into retail operations
- Grow its specialty operations
- Finding new distribution channels, i.e. delivery
- Launch new products
- International Market Expansion
- Distribution Agreements
- Brand Extension
Threats:
- Competition
• restaurants, street carts, (non) specialty coffee shops, other caffeine products
- Coffee Saturated Market
- Coffee price volatile
- Consumer trends toward more healthy ways
In order for Starbucks to remain a brand name, they must not stray from the strategy they set forth in the past. Their commitment to the mission statement, their employees, and expansion is what got them where they are. To stray from these ideals would prove tragic in their goal of world recognition. Should Starbucks stay loyal to their own beliefs they can only grow bigger. With stores opening all the time in new markets, Starbucks' greatest challenge is managing its phenomenal growth. Their market is affluent, conscientious and discriminating. They want to know what Starbucks is giving back to the communities they infiltrate and markets they dominate.
Integrated marketing communications needs to involve the whole organisation, because it requires internal and external communications to be blended so that it is strongly identified with the strategy and direction of Starbucks. The importance of internal marketing communications and the need to involve employees consistently in positive communication activity, appears to be recognised increasingly, by many organisations, as an integral part of their overall communication programme. IMC cannot be sustained unless it is supported by all Starbucks employees adopting a customer focus and who 'live' the brand.
Starbucks is not a perfect company. But it is a company who has a very good management and outstanding understanding of IMC. Starbucksshould make the voyage to success without compromising key principles of the guiding vision. The voyage ahead is more treacherous. Will Starbucks be able to maintain the integrity of its vision. I hope so.
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