As has been discussed in a number of WebHeads blog posts, it is important to have a grasp of your target audience in order to have an effective website and the get the best return-on-investment (ROI) for your marketing efforts. In order to understand more about target audiences, this series is an effort to help you understand what target audiences are through real-world examples. This week we will look be looking at Starbucks, a global retailer of coffee that you likely know and are familiar with.
Overview of the Company
Starbucks is a global coffee chain that specializes in coffee and other related beverages. In October 2023, it had 19,592 company stores and 18,446 licensed stores (MarketLine Company Profile 2024) and employed around 400,000 people in 80 countries (Harvard Law Review 2024). Other brands under its company umbrella include Seattle’s Best Coffee, Teavana, Evolution Fresh, Ethos, and Princi. In FY2023, the company had a reported revenue of US$35,975.6 million (MarketLine SWOT 2024).
Starbucks is ubiquitous in the coffee industry and appeals to a broad customer base. However, in spite of this appeal, they still have a primary target audience that they aim for. The characteristics of their target audience is the subject of this post.
Age Groups
While Starbucks has a primary audience, which can be thought of as a middle sweet spot, it does exclude others. By understanding the preferences and behaviors of the various age groups, they are able to tailor their marketing efforts and have a varied assortment of offerings to maximize their reach and appeal.
Primary Age Groups
Starbucks focuses on Gen Z (ages 9-24) (Shanker, et al 2024) and Millennials (ages 25-40). These generations are significant consumers of coffee and are drawn to the image of the brand and the company. In fact, currently Gen Z has the highest “brand love” for Starbucks (Shanker, et al 2024). Some reasons for the focus on these age groups include:
- They are often Early Adopters: Gen Z and Millennials are more likely to embrace new coffee trends, like cold brews, nitro coffee, and plant-based milk alternatives, which have been a promotion focus for the company.
- They are Tech Savvy: These age groups are comfortable using mobile apps for ordering, payment, and rewards programs. As such they are ideal users of the Starbucks app, a major component of the company.
- They are Influenced by Social Media: Millennials and Gen Z are intensely active on social media, where Starbucks places itself. They tend to share their experiences online, which provides organic marketing for the company.
- They have an Affinity to the Brand: Both Millennials and Gen Z view Starbucks as more than a coffee shop. To them, it is a third-place between home and work, where they can socialize, study or relax. All of which aligns with their desire for experiences and community.
- Focus on Sustainability: These age groups are generally concerned about ethical sourcing and evironmental issues. Starbucks emphasizes its commitment to sustainability in order to resonate with them.
Secondary Age Groups
- Gen X and Baby Boomers: Even to older generations, Starbucks was often one of the first coffee shops they went to. The people in these generations appreciate the familiar, comfortable environment, and consistent quality of the coffee.
- The Younger Side of Gen Z: This represents an emerging market for the company. Lured by Frappuccinos and other sweet drinks, it is hoped that these consumers become loyal customers as they get older.
How they Cater to Secondary Age Groups (Not Millennials or Gen Z)
- Product Diversification: The reason you see a lot of drink selections at a Starbucks location, is because of an effort to appeal to people of different ages. However, their main aim and target is their main audience of Millennials and Gen Z.
- Atmosphere: The environment that resembles a cafe is designed to be welcoming to all ages, with a variety of seating, Wi-Fi, and a relaxed ambiance.
- Marketing: To appeal to different groups, Starbucks uses differing marketing channels and messages. For instance, they use social media for younger audiences and traditional advertising (print. mail, and broadcast) for older demographics.
Locations of Stores
Starbucks locates their stores generally where their primary audiences reside, pass by, or shop at. The locations are often in city centers and suburbs. For a shopping example, you will often find stores located in Target, but not Walmart. This is related to the shared target audience, which is more likely to shop at and live near a Target. This helps in furthering their market penetration. Their focus areas include:
An Urban and Suburban Focus
- High Density Areas: Stores are generally located in areas of high population density and foot traffic. This includes city centers, busy shopping districts, and commercial areas within suburbs. The high density ensures maximum visibility and accessibility for their target audience.
- On-the-Go Lifestyle: People, such as young professionals, who live in urban and suburban environments often have busy lifestyles and rely on convenient options. To cater to them, Starbucks offers quick service, grab-and-go options, and mobile ordering for those who are constantly on the move. This focus has been a subject of a push-pull within the company. At one point it more towards on-the-go concepts (Rainey 2022), but it has recently pledged to go back to it roots of being a third place once again (Sirtori 2024).
- “Third Place” Concept: Starbucks aims to be a “third-place” – social gathering spot outside of home and work. Having a comfortable place to go is appreciated in urban and suburban areas where people seek connection and community. Some have said it needs to focus more on this concept to reclaim some of the brand identity it has lost (Pine and Dubois 2024).
- Accessibility: Most of the locations are near public transit stations and/or have good parking, making it easy for customers to access the stores.
Efforts Outside City Areas
- Expanding their Reach in Small Towns and Rural Areas: In an effort to expand its customer base and enter new markets, Starbucks has been trying to build in select small towns and rural areas that have a high concentration of their primary audience.
- HIghway Rest Stops and Travel Hubs: Recognizing that its target audience travels frequently, it sells its coffees in airports, train stations, and highway rest stops. In this way, they can provide the same experience to those who are traveling outside of their home areas.
- Drive-Thrus: In the exurbs and less densely populated areas, drive-thrus can be a key feature of stores. This allows customers who are commuting to and from work to order and get their drinks without leaving the car.
Adaptation to Local Areas
Where possible, Starbucks tries to adapt to the needs and requirements of local areas. Some of the things they accomodate are:
- The Store Format: Store formats are adjusted based on location, zoning, and other local ordinances. For instance, a smaller footprint store might be located in a dense urban area where space is tight, while larger stores, having more seating are located in suburban areas. Some locations offer family-friendly drinks and snacks or play areas making them more suitable for families. In some cases, stores are themed according the local areas, such as a store in a colonial tavern in historic Alexandria, VA.
- Regional Preferences: Starbucks takes into account regional preferences when designing menus and store aesthetics. These preferences may include localized food and beverage options or incorporating design elements that reflect the local culture.
Income of the Target Audience
Starbucks provides a wide range of products at different price levels in order to cater to all incomes. However, most prices are suited to its primary audience with a few outliers to appeal to other demographics.
Its Primary Focus is on Middle and High-Income Consumers
- Premium Pricing: Starbucks is a provider of premium coffee as opposed to McDonald’s and its prices reflect this. Their target audience is able to spend more for higher-quality coffee, specialty drinks, and a more comfortable atmosphere. Those who want this coffee are individuals with a middle to high income and as such have the income to spend on non-essential items.
- “Affordable Luxury”: The coffee here is priced higher than many other coffee options, but it is still in reach of most people. This makes the coffee an “affordable luxury” that most people can justify every once and awhile.
- Brand Perception: Having a higher price point gives Starbucks’ a brand image of quality and exclusivity. Customers generally associate higher cost with better ingredients, skilled baristas, and a more sophisticated experience.
Spending Habits of its Audience
- Discretionary Income: This coffee chain relies on markets where customers have discretionary income, which is money left over after paying for essential needs. With this extra income, they can spend on premium coffee and occasional treats.
- Frequency of Visits: Those having higher incomes or who commute in the city may visit more frequently, either daily or for regular treats, especially in public transit hubs. These frequent visits by regulars, is a significant source of revenue for the company.
- Larger Order Values: Customers who have higher income generally spend more per visit, get larger order sizes, or order food. Some order for other co-workers or for the office.
How They Reach and Wider Range of Incomes
- Value Offerings: While their main audience is higher income customers, they also cater to lower incomes by offering more value-oriented options. These include brewed coffee, discounts, and value-priced combos.
- Rewards Program: Starbucks offers a rewards program to allow customers to acquire points and redeem them for free drinks and food. This provides cost savings that are attractive to those with a lower income and encourages customer loyalty for all incomes.
- Global Pricing Strategy: Prices are often adjusted for local markets and economic conditions in other countries. This allows Starbucks to cater to different income levels.
Lifestyle of its Audience
Starbucks caters to a number of lifestyles, all of which are appealing to its primary target audience. These include:
- Convenience is King: Starbucks sells to people who are busy and want a coffee drink with speed and effeciency. As such it provides features like mobile ordering, grab-and-go options, and quick service to align with their fast paced lives.
- Urban Mobility: In following with the main demographic, most customers live in urban areas and rely on walking, biking, or public transportation. Stores are located strategically in those places where these customers find themselves during commutes, errands, and shopping.
- Time-Pressed Professionals: Many professionals who need a quick caffeine fix or a quick lunch break go to Starbucks for its convenience and efficient service.
Tech-Savvy Consumers
- Digital Integration: Technology is seamlessly integrated into the customer experience. Since their target audience is comfortable using mobile apps for ordering, payment, and managing rewards, this pays off handsomely for the stores.
- Free Wi-Fi: Providing free Wi-Fi caters to those who want to work, study, or connect with others online while enjoying a coffee in a “third-place.” With free Wi-Fi, Starbucks is able to draw in students and remote workers representing their target market.
- Social Media Management: Social media is used to connect with its tech-savvy audience and is used to promote new products, sharing user-generated content, and fostering a sense of community.
People Seeking a Third Place
- Beyond Home and Work: Starbucks tries to be a comfortable and welcoming place where people can relax, socialize, or work outside of thier usual places.
- A Community Hub: Many customers use Starbucks as a meeting spot for friends, colleagues, or study groups. The comfortable atmosphere encourages social interaction and a sense of belonging.
- Personalized Experience: Baristas often attempt to learn customers’ names and their regular orders. This creates a sense of familiarity and personality that enhances the personal experience.
Other Lifestyles
- Health-Conscious Consumers: A number of healthy options are offered in stores, such as sugar-free syrups, plant-based milk alternatives, and lighter food choices.
- Sustainability-Minded: Starbucks’ commitment to ethical sourcing and environmental sustainability draws in those consumers who prioritize sustainability in their choices.
- Image-Conscious: For some, this brand is a status symbol. Carrying the cup with the recognizable logo or even being in the store can project a certain image. The coffee even carries a price premium over other coffee brands on Amazon (Etumnu and Volpe 2024).
Values of the Company
Starbucks tries to incorporate its values in its brand identity to resonate more with its target audience. This helps it be more than just a coffee shop, but a company that stands for someting meaningful. It does this by promoting:
- Ethical Sourcing and Sustainability Efforts:
- Coffee Sourcing: This company is committed to ethical sourcing and works directly with coffee farmers and cooperatives to ensure fair prices and sustainable farming practices. These efforts draw in consumers who are concerned about the environmental and social impact of their coffee.
- Environmental Responsibility: Starbucks makes efforts to reduce its environmental footprint by using recycled materials, conserving water and energy, and promoting resusable cups. This is appealing to customers who prioritize sustainability and environmental protection.
- Community Engagement: Being actively involved in community development programs and supporting inititiatives of local organizations is a core feature of this company. This brings in customers who value social responsibility and giving it back to the community.
- Diversity and Inclusion Efforts:
- A Welcoming Environment for Everybody: Starbucks makes every effort to create a welcoming and inclusive environment for all customers and employees, regardless of background, race, gender, or sexual orientation. Customers who value diversity and social equity value this aspect of the company.
- Employee Benefits: A comprehensive benefits package is offered to employees, including healthcare, tuition assistance, and parental leave. This shows their commitment to employee well-being and social responsibility. However, there have been some allegations of unfair labor practices at the company, especially during COVID-19 (King 2023), resulting in some stores unionizing (Harvard Law Review 2024).
- Social Justice Advocacy: This company has taken positive public stances on social justice issues, such as racial equality, and LGBTQ+ rights. As such, they align with customers who like brands that advocate for positive change.
The Customer Experience
- Fostering a Welcoming Place: Customers who value community and a sense of belonging appreciate the experience at stores where everybody is respected.
- Connection and Conversation: Starbucks encourages connection and conversation among its customers, fostering a sense of community and shared experience.
- Personalized Service: Part of the training of baristas is to provide friendly and personalized service, making customers feel valued.
Conclusion
The success of Starbucks comes not just from expertly crafted coffee, but from a deep understanding of its target audience. By focusing in Millennials and Gen Z, urban and suburban locations, middle to high income consumers and individuals with on-the-go, tech-savvy lifestyles, it has cultivated a sustainable and loyal customer base. In addition, it has drawn in others who prioritize values, such as ethical sourcing, sustainability, and community engagement.
Using all of these approaches, product quality, convenience, brand image, and social responsibility has put this company in a solid position as a dominant player in the coffee industry. In the future, it will be interesting to see how this company adapts and innovates to maintain its connection with its target audience.
References
- Etumnu, Chinonso and Richard J. Volpe. 2024. Measuring Brand Equity on Amazon.com: The Case of Starbucks. Journal of Food Distribution Research 55 (1): 15-31.
- Harvard Law Review. 2024. Labor Law – National Labor Relations Board – Deference – Starbucks Corp. v. McKinney ex rel. NLRB. 138 (1): 416-425.
- King, Adam. 2023. The battle to bargain with Starbucks. Briarpatch 52 (6): 17-21.
- MarketLine. 2024. MarketLine Company Profile; Starbucks Corporation. 9/18/2024 1-78.
- MarketLine SWOT. 2024. Starbucks Corporation SWOT Analysis. 7/11/2024 p. 1-7.
- Pine, B. Joseph II and Louis-Etienne Dubois. 2024. How Starbucks Devalued its own Brand. Harvard Business Review Digital Archives 6/26/204 p. 1-6.
- Rainey, Clint. 2022. A Burnt Taste. Fast Company Summer2022, (250): 98-112.
- Shanker, Deena, Daniela Sirtori, Jo Constantz, Josh Eidelson, and Kevin Merigala. 2024. kids in a candy store. Bloomberg Businessweek Nov2024 Issue 4825.
- Sirtori, Daniela. 2024. Starbuck’ Niccol Maps out Vision, Including Four-Minute Coffee. Bloomberg.com 10/31/2024.
