Chapter 18: Sales Promotion and Personal Selling

Starbucks' first card was launched in November 2001.  The first rewards of any kind was launched in April 2008.  The first generation of Starbucks rewards had no “levels.”  You just registered a card and earned free soy milk, free breve milk, free syrups, a free tall beverage with a pound of beans, and free refills.  Then in November 2008, Starbucks launched a gold card where customers pay a $25 annual fee and got 10% off of their purchases.  This meant by the end of 2008 and through most of 2009, Starbucks offered two side by side programs - the free program and the new, paid program.  The 10% off program, which had a $25 annual fee, did not include the free milk changes, free syrups, and all the free perks.   The 10% off card was phased out, one year after its initial launch.  In October 2009, after realizing that having two overlapping programs which didn't relate to one another didn't work, Starbucks announced the current MyStarbucksRewards program, which offers three levels: A “Welcome” level, a “Green” level, and a “Gold” level.  This program launched in January 2010 and the updates to the program occurred on October 16, 2012.

Explanation of MyStarbucksRewards program:

Welcome Level ~

Use your card once, earn your first reward. Sweet!
Something to Drink or Eat On Your Birthday
Get a little extra birthday love with a free drink or food reward on your big day
Green Level ~
Five Stars puts you at Green.  
Besides your free birthday drink or food reward, you also earn Free Refills in the Store.
Paying with your registered Starbucks Card gets you brewed and iced coffee and tea refills at no charge during your visit at a participating store.
Gold Level ~
Collect 30 Stars within 12 months and you’re Gold. 
Once you reach Gold, keep those benefits for another 12 months by earning another 30 Stars. With Gold, you get all the Welcome and Green benefits plus Free Drink or Food Reward Every 12 Stars
Use your Starbucks Card 12 times and the next one’s on us.
Also, you receive a personalized Gold card.  Your barista will know you're somebody special when you place an order.  Be sure to opt in to get special offer and coupons via mail, email, or text message.

Use your free reward to redeem any handcrafted beverage or any food item of your choice. All food items in participating stores are eligible for the free reward, with the exception of multipacks, trays, whole bakery loaves and food items specific to the Starbucks Evenings menu.

This is a form of sales promotion within Starbucks, where marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates consumers or members of the distribution channel to purchase a good or service immediately, either by lowering the price or adding value.  This specific form is a loyalty marketing program, designed to build a long-term, mutually beneficial relationship between the company and its key customers.  It is also a frequent buyer program, a loyalty program in which loyal customers are rewarded for making multiple purchases of a particular good or service.  According to our marketing textbook, at one point, gold level members were notified that they could purchase rare coffee beans grown on one farm in the Galapagos.  The coffee, selling at $12.50 for half a pound, sold out in less that one day, showing that gold-level members are willing to use their benefits.

Lastly, Starbucks also uses sampling within their locations and outside as a form of sales promotion.  This allows the consumer the opportunity to try a product or service for free.  If the consumer likes the certain product, they will most likely purchase it then or at a later moment if the product is still available, since it tends to happen with a limited product or a trial product.

Sampling some Starbucks coffee in Times Square

Starbucks Unofficial Fan Site - Questions answered about the Reward Program

Starbucks Coupons