Starbucks Digital Marketing

Answer

Assignment 2:

Case study: Starbuck’s Digital Marketing Tools

            This paper analyses the Starbuck’s digital marketing as depicted in the “Starbucks’ Loyalty Reigns” case study. This case illustrates how Starbucks incorporated technology in its marketing efforts between 2002 and 2016 to improve its customer loyalty and grow its sales volume. The company started incorporating technology in its operations in 2002 when it began providing Wi-Fi in its stores (Murray, 2016). In 2007, Starbucks initiated a partnership with Apple to provide free iTunes music access to its customers. These efforts led to a significant increase in sales making the company to increase its technology focus to include more contents and offerings. As a result, Starbucks digitalized its customer reward program (My Starbucks Rewards) to a mobile app in 2011which enabled it to improve its customer loyalty and order frequency.  

            According to the case study, the opportunity that Starbucks faces is the shift in consumer behavior which is attributable to technological advancement and access to information. To address this opportunity, Starbucks Corporation considered various marketing actions and platforms. Firstly, Starbucks invested $25 million on Squire, a payment start-up (Murray, 2016). The investment improved the store experience and allowed for the development of order and pay features. Secondly, Starbucks launched a customer loyalty app that had Pay and Order Features and linked to different incentives. This actions enabled customers with the loyalty app to conduct their transactions through the app and receive a constant flow of gifts and marketing communication. By mid-2015, 20 percent of the company’s payments in the US happened through the app. Again, to address the change in customer behavior, the company started serving mobile adds via Mobile Rich Media Ad Interface Definitions (MRAID). This effort incentivized customers and helped them find the nearest shops. Starbucks also integrated Twitter in its efforts to address the opportunity by enabling customers to buy coffee for their friends using the app.

Case Analysis

            Based on the case study, Starbucks uses several marketing tools, techniques and social media platform technologies to acquire new customer while retaining the current consumer base. These tools and technologies enable Starbucks to retain long-term customer attachment to its products leading to the growth of sales and profitability. The marketing tools, techniques and social media platform technologies used by Starbucks according to the case are discussed below.

Current Digital Marketing Tools and how they lead to Customer Loyalty and Growth

Twitter

This is one of the social media platforms that customers all over the world are so passionate to use daily. With over 11million twitter users, Starbucks uses a complex twitter strategy to channel experiential marketing by taking advantage of this passion demonstrated by its customers (Murray, 2016). This social media platform contributes to customer loyalty and growth by enabling customers and potential customers to conveniently receive marketing communication directly through their phones and on their favorite platform. It also allows them to receive information on new products before the products are available in the stores.         

My Starbucks Idea Website

This tool enables Starbucks customers to suggest their product preference ideas and offer recommendations on their store experience. The company follows and implement these suggestions and recommendations to improve customer satisfaction and business expansion. The proposals range from new desired programs to recipe changes. The website features allow customers to vote for recommendations as well as classify suggestions that are under implementation and those under review. This tool improves customer loyalty and growth offering a sense of belonging.  According to Goodman et al. (2005), Customers feel valued and appreciated when the company addressed their concerns and implemented their suggestions.

Starbuck Mobile Application

Starbucks also uses a customer loyalty mobile application with arrange of features including payment management and store locator. The app through the Order and Pay feature allows customers to link their PayPal or credit card account to the app and load money to it so that it functions like a debit card (Murray, 2016). This mobile application leads to customer loyalty and growth because it offers a convenient way to purchase and pay for Starbucks products and services. Customers with the app can buy and pay for items without communicating with company employees directly. The app also provides a platform for the company to offer user communication to the customers including new menu offerings.

Special offers and incentives

 The company uses this marketing tool to encourage customers to use the loyalty app. Customers that use the app to purchase products and services attract constant stream gifts and special offers. Starbucks also offers incentives to social media users. For example, in its marketing efforts in 2009, the company provided $20 gifts cards to Twitter followers that twitted a picture of its adverts (Murray, 2016). Such incentives improve customer attachment to the company leading to loyalty and growth.

Facebook.

Starbucks has over 35 million followers on Facebook, and 94% of the platform users are aware of Starbucks’ market offerings (Murray, 2016). The company uses this social media to engage current and potential customers through marketing communication thus developing a relationship with them. Through Facebook, Starbucks communicates its reward programs that incentivized customers to try its products and services. It offers free drinks and food for transactions done through the app.

Starbucks Reward Program

This is one of the essential tools used by Starbucks to market its products. The company takes advantage of the large customer following by offering rewards to increase the sale conversion rate. Under the reward program, it rewards free drinks and food for transactions done through the app. For instance, during the holiday season Starbucks rewarded free bakery items to members who paid for their purchases with the Starbucks app. This tool increases reward program enrollment, app usage, and sales.

Starbucks Digital Passport

This is a digital learning tool used by the company employees that tracks the coffee journey from farm to cup. It shows the types of coffee, brewing techniques, the origin of the bean and records photos and notes on in the mobile application. This tool leads to loyalty and growth by increasing consumer engagements.

            Starbucks has used the correct digital marketing tools and social media platforms. This is because 9 out of its 45 million customers pay using the digital platforms and its digital users have grown by 32% in one year. Again 21% of its transactions are paid through the digital tools. As a result, the company recorded an 11% increase in net profit during the 2015 financial year with a $652.50 million net profit up from $587.80. However, the company can use another social media platform to increase its customer involvement further. Instagram has 1 billion monthly users with over 100 million pictures posted per day making it an effective marketing platform (Aslam, 2019). Besides, over 25 million businesses are on Instagram.

Recommendations

            Securities and Exchange Commission (SEC) filings outlines tampering, mislabeling and contamination as a risk factor to the Starbucks operations (Starbucks Corporation, 2016). Opinions about health concerns can adversely affect the consumption of the company’s products. Therefore, I would use digital marketing tools and social media platforms to encourage customers to immediately report any cases of mislabeling of products and contamination concerns and offer incentives to compensate such customers. This enhances customer loyalty and increases the customer base.

            Secondly, Starbucks heavily rely on information technology in its operations (Starbucks Corporation, 2016). This imposes risks to the company because any interruptions or security failure may significantly affect its performance. To address this risk, I would use Instagram influencers to diversify the sources of customer traffic. Instagram popular with pictures; thus a post by an influencer can create significant traffic for the company. In this case, the increases its customer base and failure of other tools will not affect as much.      

            Again, as indicated in form 10-K, one of the risk factors that face Starbucks operations is the failure to preserve the value of its brands (Starbucks Corporation, 2016). The company’s success heavily depends on the value of its brands and any action that affects the brand perception affects its performance. Starbucks can use its digital marketing tools and social media platforms differently to improve its brand value. For example, digital tools should be used to enhance product delivery to consumers who live in less populated areas. Delivery services such as Postmates only operate in densely populated areas like the city centers making it difficult for customers leaving in the outskirts to purchase products more frequently. Such customers can be encouraged to buy through the app and deliveries made by uber eats, especially where distances are longer.