The primary customer segments for Starbucks coffee shops in the United State have been identified as the Students, the Leisures, and the Rush Crowd. A detailed segment analysis has been performed and is highlighted in the segmentation grid shown on the next page, along with our analysis summary.
Customer Segment Summary The Students: This segment primarily represents the clientele of university and college towns: college and post-college students. This segment, typically within the 18 to 22 age range, has lower income and therefore is very price sensitive to disposable goods such as coffee. Their interest in going out to a coffee shop is driven by social interaction and a focus towards concentrated study during school semesters. The Students segment can be persuaded to go to a coffee shop if doing so is the popular or trendy thing to do.This segment purchases coffee at coffee shops primarily to create energy for study or to drink for pleasure with friends. The Students may go to a coffee shop 1 to 3 times per week, depending on the time of the school year and the Students’ study load.
During the non-school season, coffee shops that are targeted towards the Students segment generally have a temporary dip in revenue and profitability due to lower student inflow. However, on an ongoing basis the Students segment offers good, recurring profitability.The Leisures: This segment represents family/friend focused coffee drinkers that enjoy a good conversation over a cup of coffee/snack. This segment, ranging from 16 to 65 years old, represents individuals with various education and income levels.
Sensitivity to the price of disposable goods is also variable. Leisures can be found going to coffee shops in couples or groups to enjoy the overall leisure experience. Similar to the Students segment, the Leisures segment is likely to spend some time relaxing in a coffee shop, rather than behaving in an “in-and-out” manner. However, unlike Students, Leisures can be found in coffee shops more frequently throughout the year, primarily on weekends.The Leisures may go to a coffee shop 1 to 2 times per week, bringing friends, family, and their kids along, which can translate into greater food and merchandise purchases. This is because in addition to coffee, this segment also purchases complementary items that further enhance the coffee drinking experience.
Placing coffee shops in major rural and city intersections has been Starbucks’ primary way to attract the Leisures customer segment. The Rush Crowd: This segment primarily represents busy working professionals, typically aged between 22 and 55, with mid to high income and education levels that seek to drink coffee to start the workday off right. Unlike the Leisures and Students customer segments, the Rush Crowd does not have time to enjoy an extended coffee-going experience away from the office. As a result, this segment typically exhibits an in-and-out behavior when purchasing coffee at coffee shops and does not really care about the ambiance of a coffee shop.
The Rush Crowd is primarily drawn to purchasing coffee from a coffee shop because it is fast, nearby work, and good quality. This segment also my bring co-workers along to the coffee shop when buying coffee in order to have a quick co-worker “bonding” experience or business discussion. The Rush Crowd is more sensitive to time and effort in the purchase experience versus the cost of the coffee. The Rush Crowd can be found in small and large cities, and the segment is very condensed in high occupancy business buildings. Individuals in this segment may go to a coffee shop more or less every workday morning.Understanding What Customers Value Each customer segment receives value through Starbucks’ coffee shops in distinct ways via the customer’s experience.
A detailed analysis of the customer purchase and usage experience for each segment is provided in Exhibits A-1.1 through A-1.3. As shown in the Exhibits, some similarities and differences exist among the purchase and usage experiences of each segment. A summary of the key findings in the customer purchase and usage experience is provided below.Understanding the Customer Experience - Summary In summary of the findings from the customer purchase and usage experience of each segment shown in Exhibits A-1.
1 through A-1.3, the Students and the Leisures segments received value by having a place to gather and have a pleasurable experience. Conversely, the Rush Crowd receives value by having the coffee shop very quick and efficient and in a location where they can get in and out as fast as possible. Of course, in regards to actually drinking coffee at Starbucks, all three segments receive value in consistent and high quality taste and a variety of drink and complementary food items.
Naturally, each segment will have a specific preference regarding the “personality” of the coffee shop that the segment goes to in order to get this high quality coffee. The following grid translates the identified customer purchase and usage experiences of each customer segment into preferred coffee shop “personality”, thus providing further understanding into what customers value.Awareness: Exposure and Attention Unlike many businesses in the United States, Starbucks does not channel its resources in delivering awareness to customers through typical active marketing channels such as media advertisement. Starbucks’ primary strategy for generating awareness is through extensive passive exposure through its stores and drink/food packaging. Visual repetition of its logo and products are found everywhere; whether it is in the workday morning when there is a coffee drinker going to work, or on the weekend when there is a coffee drinking student studying in a library.
Consistent visual repetition of its packaging has become an exceptional awareness generator for the masses.Comprehension By having over 4,000 Starbucks locations throughout the United States, Americans are exposed to the Starbucks brand on a daily basis. In addition to the product packaging creating customer awareness, the consistently designed and displayed storefronts, just the right size to have a curious number of customers filling inside the stores, communicates that Starbucks is alive and people are going to the stores for some reason. Further, customers carrying uniformly logoed cups communicate a strong and crisp image of consistent quality to customers. This combination, along with very positive word-of-mouth from happy coffee drinkers drinking from Starbucks cups establishes comprehension that Starbucks offers consistently high quality and tasty coffee that is available to anyone.
Starbucks method to developing comprehension is very effective because it delivers messages through multiple senses (sight, sound, smell, etc), thus maximizing memory recall. Because potential first-time customers are exposed to many people drinking out of the steaming logo cups that smell great, when these potential customers need coffee, sensory memory kicks in and Starbucks will be in the forefront of their minds as an option to try for the first time. This creates a clear signal for potential customers and develops a unique product category of coffee shops in their minds, as well as a unique difference based on quality and service.
