Dynamic Marketing Communiqué

Tall, Grande, Venti: How this brand adapted to market changes without changing its brand identity and original approach [Monday Marketing Marvels]

August 24, 2020

“One venti pumpkin spice latte for Justine!”

When we hear this phrase, one particular brand often comes to mind.

A brand that specifically provides its customers with Italian-labeled sizes for its drinks.

The STARBUCKS CORPORATION is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington.

It is considered the largest coffeehouse chain in the world, starting out in Seattle, a haven for coffee aficionados.

First opened in 1971, this company started off as a roaster and retailer of whole bean and ground coffee, tea, and spices.

Today, with over 30,000 retail stores worldwide, Starbucks is known for capturing the hearts of its customers by providing them with a huge variety of drinks and pastries.

The company’s secret?

It puts its consumers first and heavily incorporates its brand identity in its marketing strategies amid the changes in the market.

Starbucks makes it a point to have a consistent brand identity in its products, services, and experience.

From promotions on social media and TV ads, to the experience of waiting in line at a store or talking to baristas, Starbucks pays great attention to a consistent modern-clean feel.

Nonetheless, like other brands, Starbucks also continues to keep up with changing times and the trends that come with it.

The company markets its products to cater to the wants of its customers, much so without compromising the brand’s original approach.

Starbucks Consumers and Word-of-Mouth

Generally, word-of-mouth is the passing of information from person to person using oral communication. Just like storytelling.

When a company chooses to use word-of-mouth for its promotions, it knows one of its priorities should be providing people with the best customer experience.

Doing so encourages customers to spread positive reviews about the business because of the excellent service they received. When people are excited about something, it’s natural that they share this with others.

No wonder Starbucks, taking advantage of its unique shop decor and coffee flavors, gave word-of-mouth marketing a shot.

And guess what? It worked!

Coffee breaks were no longer simply an experience of drinking coffee.

The company prioritized improving customers’ overall coffee experience through offering a place to relax or get together with others.

The company let the quality of its products and customer service speak for itself.

These days, word-of-mouth is not limited to oral communication. With the immense popularity of social media apps, actions such as retweeting or resharing posts can be considered as the digital form of word-of-mouth marketing.

Starbucks started widening its reach, engaging with its customers through other means such as…

Active Social Media Accounts

According to statistics, Starbucks has:

  • 37.2 million Facebook likes
  • 11.9 million Twitter followers
  • 16 million Instagram followers
  • 153 thousand YouTube subscribers

The company is famous for being one of the most engaging brands online, quickly replying to customer queries and even responding to tags or mentions.

It also uses these apps as a means to promote its products and give customers updates on newly released products and promos.

By the amount of activity Starbucks has online, it’s clear it has greatly used these platforms to its advantage.

The Starbucks App

Besides maximizing the use of social media platforms, Starbucks also created an app for its customers to keep up with the digital age.

It includes everything you need to know from orders to updates and essentially provides the services one can avail of when visiting the physical store.

In most countries, customers can purchase Starbucks products through the app. In other countries, customers have the option to just enjoy the convenience of cashless transactions.

Starbucks Rewards

To make things even better for its consumers, Starbucks paired its app with a reward loyalty program.

Consumers can register for the program through the app or website and once that’s been done, Starbucks will issue them a card so they can avail of the following rewards:

  • Earn free add-ons, drinks, and food items
  • Free refills on brewed coffee and tea
  • A free birthday treat every year
  • Bonus reward days

Have a visa credit card accredited by Starbucks? You can also earn rewards when you purchase using the said card.

Through these strategies, Starbucks Corporation was able to maintain a consistent brand identity—the clean, modern design philosophy Starbucks extends to everything it creates.

In its continuous execution and improvement on branding and customer experience, Starbucks has recorded a revenue of:

  • $22.4 billion in 2017
  • $24.7 billion in 2018
  • $26.5 billion in 2019

Starbucks’ total revenue increases at least 5% each year and even an increase of 10% at most.

Starbucks Corporation’s Earning Power: Valens Research vs. As-reported numbers

Starbucks Corporation makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a better earning power generator on average than investors might think.

So, how well has Starbucks Corporation been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.

The blue bars in the chart above represent Starbucks Corporation’s earning power (Uniform Return On Assets). Recent Uniform ROA shows massive improvement and strong outperformance of its historical profitability. The company generated 28% Uniform ROA in 2019.

The global ROA average is just 6%.

The orange bars are the company’s as-reported financial information. If you relied on these numbers, SBUX’s profitability is massively understated, recording only 11% as reported ROA (return on assets, a measure of earning power) for 2019, which is significantly lesser than 28% Uniform ROA.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.

The numbers show that it has been doing well and making a profit vs S&P 500.

Starbucks Corporation continues to maintain and improve the quality of its products, taking the coffee experience to another level for everyone, most especially for long-time customers.

The company gives way for people to avail of its services and get to know them better through all sorts of platforms.

What a smart way to keep its customers loyal and encourage new consumers to avail of Starbucks services too!

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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www.valens-research.com