Markham

Media
Solutions
Starbucks Media Plan

By: Brian Markham

M.M.S. 1
Situational Analysis

Company

Starbucks was founded in 1971, in Pike Place Market, nestled in Seattle. The company

was originally named Starbucks Coffee, Tea and Spices, but this later changed to what we know

it as today, Starbucks Coffee Company. A little known fact about the name was rather

interesting; it was named after the first mate in Herman Melville’s Moby Dick. The name sets

the stage for the company. Coffee is not the only thing they offer. They pride themselves on

offering a great experience. This is accomplished through many factors. Among them is the

convenience. It has grown exponentially since its beginning. Now stores are located all over the

U.S. They sprung up in urban areas, suburbs, as well as rural areas. They expanded further to

drive thru locations as well as products to be placed in grocery stores and other locations. This

expansion developed the brand as we know it today. It has become a well known name for

quality coffee. The very perception they were looking for.

This did not just happen for any reason. They changed the normal experience of

going to a coffee shop. The music selection, furnishings, wide selection of coffee, and great

customer service set them apart. Concerning customer service, it was interesting to learn that

they refer to their employees not as employees but at partners. This was only the building blocks

of success. As they expanded their advertising became more and more prominent, and launched

their name into the minds of many. This can only take credit for part of it; word of mouth was

also a great tool that helped them to succeed on such a grand level. To coin this experience,

Howard Schulz, CEO of Starbucks, once stated, “You get more than the finest coffee when you

visit a Starbucks—you get great people, first-rate music and a comfortable and upbeat meeting

place”.

M.M.S. 2
 The company also took on a larger responsibility, what they refer to as their social

responsibility. In their own words, Starbucks describes this as, “champions business practices

that help produce social, environmental and economics benefits of communities in which we

operate”. Some of the programs they do are a Foundation for Literacy, Sustainable Coffee

Production, limiting the impact on our environment, and Urban Coffee Opportunities. The

Foundation for Literacy’s main focus is improving the literacy of the youth. Sustainable Coffee

Production has many aspects to it, paying premium prices for premium coffee, supplying loans to

improve the coffee farms, and investing in social development programs. The limiting of impact

on the environment comes in many forms, from materials they use to the way the coffee in

produced. The Urban Coffee Opportunity is to help get Starbucks Coffee Company stores into

ethnically diverse communities. This is one way that the company sets themselves apart from

the competition.

Mission

To establish Starbucks as the premium purveyor of the finest coffee in the world while

maintaining our uncompromising principles as we grow.

Principles

 Provide a great work environment and treat each other with respect and dignity.

 Embrace diversity as an essential component in the way we do business.

 Apply highest standards of excellence to the purchasing, roasting and fresh delivery of

our coffee.

 Develop enthusiastically satisfied customers all of the time.

 Contribute positively to our communities and our environment.

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  Recognize that profitability is essential to our future success.

The mission and principles are listed among many other aspects of the company on their web

site, starbucks.com.

Product

Their product has grown with them. Coffee may be their main product, but there is so

much more offered by the company. Coffee being their staple product, they offer over 30 blends,

which come from all over the world. They package these as well as produce a premium

handcrafted beverage in their stores. Starbucks also offers its customers a wide assortment of

home coffee machines. This is in combination with a plethora of coffee accessories to meet the

style and needs of their customers. Also at their stores, they give their patrons a delectable

choice of fresh foods to accompany their coffee. They also make many products to sell at other

locations such as whole bean and ground coffees, and pre-bottled beverages. With all of these

they have so much to offer their customers.

Stores

As of February 2008, the expansion of the Starbucks Coffee Company was very

extensive. They had stores in all fifty states including the District of Columbia. That means in

the United States they had 11,168 stores, 7,087 company operated stores and 4,081 licensed

stores make up this staggering number. This is not the true extent of Starbucks, they have also

expanded internationally. They now have 4,588 stores in over 43 countries. This does not take

into account the thousands of grocery and specialty stores that their products are sold in.

M.M.S. 4
Sales and Market Share

According to figures published by the SCAA, Specialty Coffee Association of America,

in 2006, Starbucks was the top company in the coffee market. They owned 70% of the market

share in terms of revenue and 52% of the market share in terms of location. This is not true

today. According to estimates from Marketing Advisor this market share could have dropped as

much as 20% in the last two years. This decrease has been felt due to the unexpected economic

recession taking its toll on the business world. Another reason for such decreases is the rise of

major competitors of McDonald’s, Burger King and Dunkin Donuts. This competitive rise can

be seen by observation of new campaigns targeting coffee drinkers, as well as information from

Pew Research Center. This not only affected market share, it has also forces locations to be

closed and a devastating drop in revenue due to less nonessential items being purchased by the

consumers. The following graph shows the high and low points of revenue earned by Starbucks

in the last five years.

businessweek.com, Starbucks profile

M.M.S. 5
Awareness

Considering they have been ever growing since 1971, up until the last couple years, the

awareness of Starbucks is far reaching. This is not just true in the United States; their name is

known throughout the world. With the locations being so vast and neighborhoods embracing

Starbucks, awareness is very high. Their brand is top notch in the coffee world, but this

awareness is mainly in respect to their handcrafted beverages and other items located at their

store. One of the more overlooked products is their ground coffee sold in your local supermarket.

This product has much room in the awareness category to grow. This information was found by

conducting an awareness survey among target audience as well as information obtained on

starbucks.com.

Demand

During the 90’s and early 2000’s, Starbucks’ coffee was in very high demand. Yet again,

the recession being felt by so many has changed the demand for their product. The cause of such

decrease is mainly due to the perception of products, such as Starbucks, being considered a

luxury, extravagance, and unnecessary indulgence. The fact isn’t that coffee drinking has

decreased; it is more because people are watching their spending habits more closely and

choosing to buy slightly lower quality coffee in order to save money.

Pricing

When doing such a comparison between what to buy, their pricing is one of the main

things that come into question in the consumers mind. Compared to many rival brands, they are

more expensive. For example, a one pound bag of their ground coffee sold in a grocery store

M.M.S. 6
costs around $10. Although the quality of coffee is better compared to brands such as Folgers

and Maxwell House, which cost around five to seven dollars for the same amount, the

competition pricing is what is distracting the consumer.

Competitive Analysis

Although the numbers for this year are not yet out, the competition is thriving, in

comparison, in a declining market. There are a few main competitors that stand out among the

rest in the fresh made beverage group. These consist of McDonald’s, Burger King and Dunkin

Donuts. McDonald’s is a direct competitor due to their new release of the McCafe. This took

such a toll on Starbucks, because as a cheaper substitute the economy helped push people to

make this choice. The coffee is not the only reason; consumers are able to get a combination of

breakfast and coffee at a very reasonable price. Burger King also produced a breakfast menu and

what they call their BK Joe. Dunkin Donuts is another direct competition that through a very

well targeted campaign is targeting coffee drinkers and using the taste test preference tactic to

draw customers from Starbucks.

As for the ground coffee market, the main competitors are Maxwell House, Folgers, Hills

Brothers and Taster’s Choice. They are well established and have been the choice of home

brewers for a long time. Along with this history, they are also more affordable. They also offer a

variety of choices. These range from style of bean to flavors. In the ground prepackaged area of

the coffee market, Starbucks is lagging in comparison to the competition.

The indirect competition is very far reaching. Healthy living being a huge part of many

peoples lives, water or juices are taking the place of coffee. Another major coffee substitute is

M.M.S. 7
soda. Such companies as Pepsi and Coca-Cola are the leaders in the soda market and are huge

competitors for Starbucks.

Problems

The main problem for Starbucks is the economic recession. This is followed by the rise

of the competition and their pricing. Given that during this kind of economic pressure, people

tend to be more conservative, therefore luxury items are less likely to be purchased. More

specific problems for the ground prepackaged coffee are the fact that it is less advertised. The

next is that it is not as marketable or unique as the handcrafted version offered in the stores.

Another problem is that there is a large variety of established competition on the shelves at the

grocery stores.

Opportunities

One of the biggest opportunities is to promote the fact of them offering such a high

quality product. This makes them unique among competitors. Given that less people are willing

to go out, the fact that they can purchase this during their normal grocery shopping is an

advantage. This is combined with the fact that they can get that same great quality taste at home.

We should point out the advantage of saving money by making it yourself and enjoy that great

taste in the comfort of your own home. There are many varieties offered for the Starbucks

ground coffee that the consumer can get the flavor they want without spending the extra to travel

to a store and have it made for him or her. With the hectic lifestyles of today, the point that you

can make it on your own time will be very beneficial to the consumer.

M.M.S. 8
Creative Strategy Outline

Creative Problem

After analyzing the information in the situational analysis, a main problem stood out.

They need to find a new aspect of their company to produce revenue. The product that best fits

would be their prepackaged ground coffee. In order for this to increase revenue, it must first have

a higher awareness among the target audience. This would be the creative problem that the

advertising must solve. Advertising has to appeal to the target audience and make this product

stand out from the rest. The objective of increasing awareness is the most important part of the

advertising. By increasing awareness, consumers will make the connection between the quality

Starbucks coffee they get in the store and the quality coffee they can brew at home.

Positioning Statement

Starbucks provides coffee that is unlike the normal coffee drinking experience. Drinking

Starbucks coffee is more about an attitude and feeling, than drinking coffee. We want to put in

the minds of the consumer that you can bring the Starbucks Coffee Shop experience into your

home for a fraction of the cost, and for much less effort.

Major Theme

The major theme to be carried throughout the advertising is that Starbucks coffee can be

in your home as well. The overall feel will be warm and persuasive. The tone will be friendly

and inviting. The object will be to get the target audience to become aware of this particular

product. This will be accomplished by showing that the quality of Starbucks can be experienced

by you on your own time, and in the comfort of your own home.

M.M.S. 9
Target Market

The primary target audience was found by evaluating information from MRI+, focusing

in on those that drink ground prepackaged coffee in the home. The primary target audience is

women 25 to 54. A secondary target audience is men aged 25 to 54. Among these two audiences

there are some similar characteristics. One of them is an average household income or $75,000+.

They have attended some college or beyond. They are more likely to have an occupation in a

professional or related occupation. They will be engaged or are already married. Family is

another aspect of this target audience; they will have at least one child. Along with this, they

have a higher tendency to have lived at their same address for more than a year. The West region

is the most lived in, yet the Midwest has a large opportunity for growth. Caucasian is the most

predominant race among this target audience. Media most preferred are Internet, outdoor,

magazines and newspapers.

Women

Men Series1

Total

0 1000 2000 3000 4000 5000 6000 7000 8000

M.M.S. 10
 Educ: no college

Educ: post graduate

Educ: did not graduate HS

Series3
Educ: graduated high school
Series2
Educ: attended college Series1

Educ: graduated college plus

Total

0 1000 2000 3000 4000 5000 6000 7000 8000

HHI: <$20,000

HHI: $20,000 - $29,999

HHI: $30,000 - $39,999

HHI: $40,000 - $49,999

Series3
HHI: $50,000 - $59,999
Series2
HHI: $60,000 - $74,999 Series1
HHI: $75000 - $149, 999

HHI: 150,000+

Total

0 1000 2000 3000 4000 5000 6000 7000 8000

M.M.S. 11
 Women 25-54

Women 18-49

Women 18-34

Men 25-54

Men 18-49

Men 18-34

Series2
Age 65+ Series1
Age 55-64

Age 45-54

Age 35-44

Age 25-34

Age 18-24

Total

0 1000 2000 3000 4000 5000 6000 7000 8000

All graphs were taken from spreadsheet produced from MRI+

Our target market is first and foremost the coffee drinker of the home. The primary

audience is women 25 to 54 who are coffee drinkers. This primary audience takes into account

this person being the primary shopper for the family. The secondary would include men 25 to 54

that play a similar role within the family structure. The individuals whom we are targeting are

people who enjoy the rich flavor of Starbucks coffee, but don’t have the time, or the money to go

to Starbucks as often as they like. They are a person who has developed an emotional connection

M.M.S. 12
with Starbucks coffee. They understand that Starbucks is more than just a brand of coffee, but

instead, it’s an experience that a person is savoring in the morning during their coffee time.

Purchasing Rate and Buying Habits

Credit cards and debit cards are the more likely means of currency for purchase. In 2006,

the purchasing rate for Starbucks products was very high. The rate has decreased along with

demand due to economic issues. The buying habit of consumers has decreased in several ways

included coffee. This is because in the 90’s and early 2000’s, the consumer had more expendable

income available to make such purchases as quality coffee. To outline the habits of those that do

buy coffee, the time period between 6 and 10 in the morning have the highest rate of purchase;

this is increased further during the winter season. The second highest rate is found during the

time period between 4 and 7 in the evening.

Rationale

Looking through all of the information that MRI+ offers, we chose our target audience

wisely. We wanted to target the groups of individuals very specifically. Since we are trying to

make them more aware of the Starbucks product, we chose our primary audience by choosing

those who buy ground coffee for the household. Based on the numbers, we furthered that by

selecting certain aspects that ranked highest among the group. Since the target group is the

primary shopper and already partakes in ground coffee, they fit perfectly into meeting our

objective. Given that the product is made for home consumption, we targeted those that had

families and a home, who live comfortable and can enjoy our high quality beverage.

M.M.S. 13
Target Media Mix Strategy

After analyzing the information about what media the target audience prefers, we came

up with the following: newspapers, internet, outdoor, magazines and radio. Two certain types of

magazines were the most used. Those were women’s interest and news and entertainment

weeklies. Some of the specific vehicles for magazines will be Better Homes and Garden, People

and National Geographic. As for newspapers, it was locally distributed carriers that ran the

Parade supplement. The internet usage varied across a wide variety of content. Therefore, a key

word association will be the most local choice to select their certain interests as well as the name

Starbucks itself. Radio is also another that will have to change as far as format is concerned. This

will vary depending on the market the radio is in. They do share common listening times. These

times are from 10am to 3pm, Monday through Friday, and 3pm to 7pm on the weekends.

Outdoor being another selection of media to reach our target audience it is a way of being in the

community as they transit from one place to another. The location of this will be selected based

upon spot market rating for the most showings in the specific areas.

Reach/Frequency Objective

Our goal is to achieve an 80% reach with a 4+ frequency during the first two months of

our campaign. For the next 5 months, we want to lower that slightly to 75% reach with a 3+

frequency. For the remaining five months of the campaign, we will decrease it slightly again to

70% reach with a 3+ frequency.

M.M.S. 14
Rationale

The reason for the reach and frequency is all based on our goal of awareness. We want to

make the target audience more aware of the Starbucks ground coffee products. In doing so, a

higher reach will be needed in order to obtain such a goal. The reason for choosing 80% for the

first two months is to get the message out to lots of people; therefore, the reach is highest during

the first two months. The frequency is slightly higher as well. This is for two reasons. The first is

because we want the product to be on the top of the mind. The second reason is to make sales.

With a well balanced reach and frequency, our advertisements will be extremely effective. For an

advertisement to be effective, a rule of thumb is the 3+ reach, by increasing that slightly more of

the target audience is likely to take action. As the campaign continues, we decrease the reach

and the frequency slightly. We chose to this because by this point the awareness should be taking

place and the campaign acts as more of a re-enforcer. The 75% reach and then the 70% reach

will still be more than adequate to make the target audience aware without making them feel

overwhelmed or harassed, therefore keeping our warm, friendly persona.

Strategy

Using the media mix we have chosen, our reach and frequency goals will be easy to

obtain. We will be using radio, magazine and internet on a national level. By doing so, we allow

ourselves a nice balance of reach and frequency. The magazine is very niche marketed, allowing

us to get the most for our money. We will be mailed, or picked up, landing directly into their

hands. As for internet, this gives us a modern presence on the fastest growing medium. The

internets main strength is the reach it is capable of. We will also use radio, which gives a good

way to dial in on the target market and accomplish our frequency goals. Frequency will be used

M.M.S. 15
in combination with reach; we want to keep them well balanced. Knowing that as reach

increases, frequency therefore goes down. By keeping frequency relatively consistent, we will

only slightly change our reach goal, therefore, maintaining a level correlation between the two.

With these three media combined, we will have a well balanced reach and frequency among our

target audience.

Media Budget Objective

The media budget will be spent on both a national and spot market campaign. The spot

markets were chosen to develop the brand in a potential growth area. Given that the coastal areas

are very familiar with our products, the Midwest is not as aware of what Starbucks can offer

them. By selecting key cities in this region, we can capitalize on a new market area. These areas

fit very well into our target market as well. They are family oriented, have lived in the same

place a long time and are heavy coffee drinkers.

Rationale

With a total budget of $50 million, we propose to spend 40% of the budget on spot

markets. This is a high growth area; therefore, a large portion of the budget will be spent to reach

these consumers. This money will allow awareness to grow in areas that Starbucks is not as well

known. We are using it as a heavy up in combination with our national campaign. The national

campaign will be allocated 50% of the budget. With the national campaign reaching such a large

portion of our audience, it will receive a larger portion of the budget. Along with these I have

also allocated 10% of the budget for special community functions. Starbucks will hold

community activities such as supporting fundraiser in local areas, donating coffee to firehouses

M.M.S. 16
and soldiers, not only in the United States, both those serving abroad as well. They will also hold

promotions in supermarkets across America, giving away samples of their fresh brewed ground

coffee sold in the aisle near them.

Strategy

The budget is being divided between both spot and national markets. As described above,

the heavy up portion of the pulsing schedule will be done using strategic spot markets. The first

two months, August and September, will be heavy in both national and spot. These months will

have a much larger GRP requirement. This will continue for the next five months, October,

November, December, January and February, in both the spot and national campaign, yet slightly

lowered. These months will have a slightly lower GRP requirement, yet still very effective. After

these five months have passed, the last five months, March, April, May, June and July will

mainly be a national campaign with a slightly lower reach, yet the same 3+ frequency. These last

months will have the lowest GRP requirements. Along with these last five months, we chose to

keep the outdoor going. This will better boost our brand and product in the community by

establishing a continual recognition.

The frequency distribution throughout my campaign is very strong. From month to

month it meets the 3+ rule as well as far exceeds it in the first few months. We wanted to keep

the frequency running well with the reach. By doing so, we make each advertisement that much

more effective. The rule of 3+ is that if the target audience sees the advertisement three or more

times, they are more likely to act on what is being portrayed. Maintaining a 3+ frequency will

allow for more sales and better recognition.

M.M.S. 17
Geography Objective

The geography of the campaign will mainly be national. There are ten spot markets

chosen based off information from both MRI+ as well as SCAA. MRI+ gives a breakdown of

regions that the coffee drinkers are more likely to be based on a census report. As we looked

through these, we found that the Midwest was high for coffee drinking, based on an SCAA

report, but low for Starbucks coffee according to MRI+. Taking into account that the target

market is family oriented, well established coffee drinkers, there is a large amount of these

people located in this area.

Rationale

We selected a national level with spot buys based on a growth potential found in the

Midwest region of the United States. As stated above, the situational analysis along with the

target market finding led us to this conclusion. The ten markets that were chosen are:

Billings, MT, Cleveland, OH, Denver, CO, Green Bay, WI, Lincoln, NE, Minneapolis – St. Paul,

MN, Oklahoma City, OK, St. Louis, MO, Topeka, KS.

Strategy

These cities were selected because of their location in the Midwest. They cover a large

area and are a main hub for the surrounding areas. These combined with the national campaign

will not only increase awareness in the spot areas, it will also been far reaching into areas that the

national campaign would be unable to reach. This strategy fits very well into our media

objectives. We wanted to reach into a new market and exploit a possible growth potential, but at

the same time make the nation aware of the prepackaged ground coffee that Starbucks produces.

M.M.S. 18
This makes geography very important to the media plan. With a possible growth area identified,

it will be essential to heavy up in those areas to reach them more than the rest of our campaign

across the nation.

Scheduling Objective

We chose to keep the same media going throughout the campaign. In the first two months

of August and September, we added more during that time to get the campaign launched with a

more efficient reach and frequency than the rest of the campaign. The next five months, we kept

the same usage just slightly decreased them to a lower GRP goal, as well as a lower reach and

frequency goal. In August, we chose to use Network radio, along with spot radio, magazines,

both general interest and women’s. We also implemented internet keyword and targeted sites.

The other media used in August was spot newspaper and outdoor. All of these were continued at

various levels for September, October, November, December, January and February. The only

change for the months of March, April, May, June and July was that we did not use spot radio or

newspaper. We did keep the outdoor component throughout.

Rationale

We chose to schedule the media buys in this fashion to better target our audience. We

only bought the media that was most used by our target audience. This includes buying only

daytime and evening drive radio spots. We also focused directly in on our target market using

magazines. The general interest magazine would be one such as National Geographic, were as

the women’s magazine would be more like Better Home & Gardens and People. When deciding

on what months to pick to heavy up, we looked back on the analysis of Starbuck’s sales from

M.M.S. 19
Business Week, along with the consumption habits of coffee drinkers found in SCAA 2009

report on coffee consumption statistics. We found that more coffee is being consumed during

the colder months of the year. Starting the campaign in August allows us to get a jump start and

making the target audience aware of our product and our quality, and also allows them time to

buy it in addition to the coffee they may already have.

Strategy

The media buys are scheduled in a way to bring the message into the normal media

consumption times of the target audience. By placing them on billboards in the local areas, they

will have the opportunities to view them on any of their trips, during their day to day routine.

The radio was chosen for the times the target audience will be listening, so that they will have

the product on mind while doing the shopping or other such activities. Magazine advertising lets

the information land directly in their hands, without them going out of their way to find it.

Newspaper follows with this same concept, putting the information into media that they already

take time to view. The purchase will then occur on a shopping trip in the near future.

M.M.S. 20