Chapter 11: Developing and Managing Products

Over the last four decades, Starbucks has developed new products and continues to do so.  A new product is new to the world, the market, the producer, the seller, or some combination of these.  This can include new-to-the-world products, new product lines, additions to existing product lines, improvements or revisions of existing products, repositioned products, or lower-priced products.  Starbucks is very innovative when it comes to their products, whether it's their seasonal coffees, their iced beverages, or their coffee/espresso makers.

An innovative, new Starbucks product are the Starbucks Refreshers, which is a product that uses green coffee extract (a natural source of energy), resulting in thirst-quenching, low-calorie, refreshment with a boost of natural energy from caffeine and fruit juices.  This makes Starbucks the first to bring green coffee extract innovations to customers, on a global scale nonetheless.  According to Starbucks' newsroom, this gives the company an opportunity to introduce a new offering globally and continue to expand through innovation.  This also extends their product line of coffees, making more variety for customers to purchase.

Another example of an innovative product, which recently was released, is the Starbucks Verismo System.  This is a machine that makes both coffee and espresso.   The machine features three different pod types -- espresso pods, coffee pods and milk pods that can be combined in a number of ways to make custom drinks.  If a consumer invests in this system, price range is from $199-$399, then they may save on buying coffee everyday from Starbucks in the long run.

Because these items have just recently been introduced into the Starbucks product mix, they are just in the introductory stage of the product life cycle.  As reactions start to increase amongst the Starbucks customer and people start to buy or reject the products, then the product will be in the growth stage.  If they last the growth stage, then they may just complete the cycle into the maturity stage and all the way to the decline.  For the Starbucks Refreshers, people seem to have mainly positive reviews on the taste.  According to a blog called YumSugar, their tasters thought the drink had a "crisp, fresh taste" adding it was "ideal for pop lovers who want a healthier alternative."  While some praised the "nice fizziness level," others still pulled down the voting average, claiming the beverage was "too reminiscent of Red Bull" and the "pungent, syrupy sweet smell" was overwhelming.  It is still rather early to tell seeing it just came out this year. 

 

As for the Verismo System, someone from the Huffington Post stated, "Somehow Starbucks has learned the art of coffee making through this machine. It made a latte better than I've ever had in a Starbucks coffee shop" and for espresso making, someone said from the same news source "I tried the espresso and the house blend.  I'm not someone who's that familiar with Starbucks espresso, but I would say the espresso from the machine tasted as genuine and close to the real thing as I could ask for.  At no point did I feel the slightest inkling of being duped into drinking fake or knock-off espresso. It was tasty, and I already feel slightly more productive at work."  From these reviews, it seems Starbucks is using innovation as a key strategy to continue to gain profit and make their customers happy with the products they offer.  Huffington Post couldn't have said it better, "The verdict: We were a little surprised at how much we liked this machine. If you like Starbucks coffee and you want to drink it at home, this is the ticket."  This view would be ideal if all of their innovative products had the same reaction.

2011 Annual Report

Chapter 16: Intergrated Marketing Communication

When Starbucks redesigned their logo, they reached out to several of the Starbucks rewards members regarding the change.  The email provided a link and was available for mobile viewing.  The timing was an important element because in order for the message to be unique, it had to be received before the official announcement.  They also used a video with Howard Schultz explaining the reason for the redesign (video found in previous blog post).  Lastly, there are sharing icons so the reward members can spread the word to other prospective members and there can be a flow of communication about this news.  These are some elements of integrated marketing communication.  The rewards members were viewed as special customers worthy of a pre-announcement.   As one observer pointed out, "the timing also helps deflect attention from a price increase announcement."

Starbucks does a good job with integrated marketing communication because not only do they reach out to their customers through email, they also use many of the social networking sites as a form of advertising and letting people know what is going on within the company.  Although they have a large Twitter and Facebook audience,  they have found their voice in these channels and it's appropriate and consistent with who they are as a brand.  Lastly, direct mail is the delivery mechanism for rewards.   Despite all their online communication, the old fashioned postcard is still the "gift basket" for delivering reward benefits.  Customers look forward to the solid black postcard because they know it's treat time.

 As previously discussed in the first week of September, Starbucks has a sustainable competitive advantage because even though they sell a product, which many companies offer as well as street carts, they are very consistent with how the coffee is made and the service they give their customers.  Many people continue to purchase their products at higher prices which proves their advantage is sustainable to keep loyal customers, gain prospective customers and keep them all happy.

Starbucks is using a QR program which allows consumers to learn more about various coffee products.  QR codes are newer to the marketing world and haven't quite taking off as some other marketing endeavors have.   Unfortunately these codes have an unappealing look to them, but it can be quite effective if used properly.  With the new program, Starbucks uses QR codes in their ads and stores to promote information in an interactive way.  Since the consumer has to physically scan the QR code with their device, the motivation to actually read and take in the information about the coffee they are learning about is there.

The promotional mix -- the combination of promotional tools including advertising, public relations, personal selling, and sales promotion to reach the target market and fulfill the organization's overall goals -- is used rather effectively within Starbucks.  Again, Starbucks doesn't overload their consumers with advertisements but when used, they try to have quite an impact on their customers.  









They also use a bit of sales promotion through online sources and as reward loyalty members.  As for personal selling, whenever I walk into a Starbucks location, they make sure to get your name when ordering and that builds a sense of personal selling.  Their vibe is emitted to the customer and makes each individual feel special in some way.

ENJOY SOME STARBUCKS ADVERTISEMENTS, since they're not heavily saturated through our everyday lives.

Chapter 10: Product Concepts

A product is everything, whether it is favored or not by the consumer, that a person recieves in an exchange.  Even though Starbucks coffee is not quite as inexpensive as let's say the corner cart, since Starbucks merits little shopping effort and it has wide distribution areas in order to sell large quantities of it to achieve profit goals, I would say it fits the mold of a convenience product.  Also, Starbucks coffee, among other products sold at Starbucks, are specialty products because many loyal Starbucks customers are very reluctant to accept alternatives.

Starbucks has a vast product mix (all the products a company sells) such as coffee, tea, breakfast and lunch products, as well as espresso and coffee machines.  As time progresses, more innovative ideas come about.  Some of the product mix is shown in the image below:

Source - Janice Ho's Blog: http://sites.cdnis.edu.hk/students/001771/2012/02/21/classifying-starbucks-products/

As a brand, Starbucks has built their company to differentiate from the competitors.  According to the Starbucks website, I've provided a bit of history on their brand mark (logo), which is the elements of the brand that cannot be spoken.  "Back to 1971, when Starbucks was first coming to be, in a search for a way to capture the seafaring history of coffee and Seattle’s strong seaport roots, there was a lot of poring over old marine books going on.  Suddenly, there she was: a 16th century Norse woodcut of a twin-tailed mermaid, or Siren.  There was something about her – a seductive mystery mixed with a nautical theme that was exactly what the founders were looking for.  A logo was designed around her and their long relationship with the Siren began." Their logo, which has been renovated to commemorate their 40th anniversary (video to the left; picture at beginning of post shows evolution of the logo), maintains their heritage and now Starbucks has dropped the "Starbucks Coffee" from the logo and has let the woman come out of the circle.
History and Information on the Starbucks brand mark

Also, Starbucks has made it a point to take its successful offline branding strategies and begin them online.  Their online image and messages have stayed consistent with their brand values, which are honesty, sincerity, and connecting with its consumers on a level unlike any other brand. The offline, more personal Starbucks culture has taken to the airwaves of the internet and social media.

Lastly, Starbucks is a global brand since it does obtain at least a third of its earnings from outside the U.S. and it is recognizable outside of the U.S. to other consumers.  It was number 88 in the top 100 best global brands of 2012, according to Interbrand.