The Role of Market Research in Starbucks

It is important to note that the competition in the beverage industry has increased over the years. In particular, the competitors in the industry have enhanced the quality of products they offer to their customers in a move to establish customer loyalty ((Malhotra et al. 2003, p.1211). For this reason, market research has continuously become important when it comes to the growth of companies that offer beverage products. Moreover, the companies that operate in the beverage industry have found it significant to establish trust with its clients. However, all this cannot be possible without market research as it is difficult to determine customer needs. The top ranking companies such as Uber, McDonald’s, and KFC are some of the few entities that attribute their success to market research. Starbucks has managed to successfully enter new markets and gain a significant market share owing to the market research method they have adopted. Besides, the high-quality coffee products offered by Starbucks and its brand differentiation have attracted customers to the company. The purpose of this paper is to highlight how Starbucks has utilized market research over the years to gain a competitive advantage.

Literature Review

Market Research

According to Burns, Bush, and Sinha (2014), market research refers to the function that creates a bridge between the public, the consumer, and the customer with the market owing to the fact that information is availed and thereby assisting in the identification of marketing opportunities and threats (p.54). It is important to note that marketing research assists in providing information that is vital in addressing the underlying issues in the market. For this reason, marketing research entails a systematic design, reporting, collection, and analysis of data for a company. On the other hand, marketing research enables companies to adjust to market research and therefore enabling it to be competitive. Besides, the profitability of a company heavily relies on market research it has conducted.

In a move to get an in-depth understanding of marketing research, there is the need to evaluate its effectiveness. It is important to note that market research entails four stages. They include problem definition and exploring tasks, coming up with the research plan to guide information gathering, a collection of primary and secondary data, and presenting the findings (Malhotra et al. 2003, p.1210). Therefore, getting it wrong in the first step has an adverse effect on the other stages and will subsequently lead to wrong outcomes.

Problem Definition and Exploring Tasks

The individuals at the helm of the marketing department in an organization need close coordination in a move to identify a problem that hinders the company from attaining its objective. Besides, managers are conversant with the decision-making that takes places in different levels of the company. Therefore, they are aware of where specific information can be obtained. Moreover, there is the need to consider the exploratory, casual and descriptive objectives of the company when identifying the problem faced by the company. Concerning exploratory research, it entails hypothesizing the market condition whereby the hypothesis is a well-thought assumption. For this reason, exploratory research does not intend on acquiring a specific answer but to guide future studies. Exploratory research involves gathering information from newspapers, trade literature, and other academic literature. On the other hand, descriptive research focuses on the marketing situations and this could be assessing a product using a survey, through observation, or a case study. Lastly, the causal research establishes the cause-and-effect relationships in the market.

Coming up with a Research Plan

The next stage entails taking an in-depth look at the research problem. For this reason, it is prudent that managers initiate data collection. It is important to note that the data collected is from both primary and secondary data sources. Regarding the primary research, the company can decide to outsource the services or assign the role to its employees. On the other hand, secondary research requires gathering information from documented sources.

Gathering Secondary Data

Online databases are a significant source when it comes to collecting secondary data. Moreover, an organization may opt to use online search engines when carrying out their market research. It is important to note that collection of secondary costs means that a company will incur relatively lower costs while at the same time gaining access to a wide range of information (Malhotra et al. 2003, p.1212). However, the challenge experienced when using secondary data is that the information may be irrelevant.

Gathering Primary Data

Collection of primary data takes place after companies have carried out secondary research. The approaches a company can adopt during the primary research include conducting experiments, observations, and administering surveys (Rosenberger, King and Yiu 2014, p.49). Similarly, the company may use online sampling and interviews. Hence, there is the use of mechanical instruments in the primary research.

Implementing the Research Plan

Upon developing the plan, there is a need for the company to implement it. For this reason, there is the collection, decomposing, and processing of the information. Before compiling the results in a report, the company conducts a verification and validation approach to ascertain the accuracy of the data obtained.

Interpreting the Findings

The presentation of the results is conducted by the market researchers and entails shading light on what it means if the company undertook a given marketing strategy. It is important to note that the cooperation of the researchers and managers come a long way to ensuring the results will lead to desired organizational outcomes.

Analyzing and Using Marketing Information

Prior to making the market research information available to the consumers, there is a need for the managers of the company to carry out an analysis. The approaches adopted during analysis revolve around customer relationship management, use, and distribution of the information, and big data and market analytics. It is important to note that the customer lies at the center of these approaches (Rosenberger, King and Yiu 2014, p.44). The primary aim for this is to ensure that the company is better placed to understand consumer behaviors and preferences. Therefore, the customers will offer a feedback that the company expected. Concerning big data, the company need to consider the ever-increasing needs of consumers hence has to collect both structured and unstructured data. Lastly, market analytics aims at evaluating the performance of the different segments within the market. Hence, it enables company managers to get more information on consumer insights.

Market Research in Starbucks

Problem Definition and Exploring Tasks

Before venturing into new markets across different parts of the world, Starbucks is known to conduct adequate market research. In particular, the beverage company explores the means through which it can meet the needs of the consumer. It is important to note that Starbucks employs an exploratory research in a move to develop a dimension of addressing the market opportunities. When setting up the Starbucks outlet in 1971, the company wanted to offer high-quality coffee products to its customer (Jackson 2018, p.64). However, its customers wanted a home-like experience and for this reason, the exploratory research by the company revealed that there was the need to prioritize customer needs as they were paying premium prices for the products and services. However, Starbucks experienced challenges as there were many competitors in the market offering the same product and this necessitated the company to differentiate its products and services (Voigt, Buliga and Michl 2017, p.42). Its outlets in different places around the world entail local architectural designs and the quality of their coffee is comparable to none. Hence, the company also conducted casual market research to gain a competitive advantage.

Coming up with the Research Plan

The market expansion plan developed by Starbucks entailed obtaining secondary data from various online databases. In particular, the entry of Starbucks into China required the company to research about the population of Chinese people that had interest in the coffee products it offered (Qian and Xing 2016, p.30). However, most of the individuals in China consumed tea and Starbucks had to come up with a plan that would attract potential customers to their products. The company decided to adopt the cultural values of the Chinese that included their store designs and hiring locals to promote diversity. The outcome revealed that Starbuck had succeeded in its pursuit to attract consumers to purchase their coffee products. Subsequently, Starbucks started creating the coffee culture in China and other parts around the world which contributed to their successful expansion. It is important to note that the company relied heavily on primary data when planning their expansion.

Implementing the Research Plan

Starbucks is known for its mission statement of nurturing the human spirit which has played a significant role in ensuring the company prioritizes the needs and satisfaction of the consumer. It is important to note that the company chief executive officer of Starbucks is responsible for the implementation of the research plan adopted by the beverage company. For example, the company proposed a rationalized plan that would see the company adopt new changes in its corporate culture as it had its operations in different countries (Qian and Xing 2016, p.29). Therefore, the company would in a position to enhance its relations with partners, introduce local products in its offerings, and integrate local technologies in its operations. Hence, the company will be in a position to meet the consumer needs and thereby gaining a substantial market share in the market it expands.

Interpreting and Reporting the Findings

Regarding the findings, the executives of Starbucks closely coordinate with the market researchers in a move to ensure the results are desirable. In particular, the company has a strong belief that the close relationships among employees will foster improved customer service and further enhance the core values of the business that entail meeting the consumer needs.

Analyzing and Use of Marketing Information in Starbucks

The information obtained by Starbucks after completion of market research is subjected to analysis and plays a significant role in consumer relationship management. In particular, the company adopted the Starbucks Loyalty Program that helped popularize its new payment option using mobile devices (Jackson 2018, p.75). It is important to note that the competing companies have experienced challenges when promoting mobile applications given that their approach to distribution of information to customers is inappropriate Moreover, Starbucks plans on expanding the mobile payment program despite its huge success as the consumer needs are ever-changing on a daily basis. Therefore, the company has succeeded in customer relationship management while still implementing big data and market analytics. On the other hand, the customers who buy Starbucks’ products have other needs apart from beverage products. For this reason, the introduction of the Loyalty Program will see the company gathering information that would be useful in the future. Hence, the customer growth and increasing profit margins reported by Starbucks is attributable to their market research analysis.

Conclusion

In conclusion, it is recommended that Starbucks should observe ethics when it comes to the information they obtain from the consumers of their products. In particular, the Starbucks Loyalty Program entails collecting personal information of customers that would enable the company to gain competitive advantage whenever it plans to expand to new markets. It is important to note that offering convenient services to customers has numerous benefits but infringing on the privacy of customers will lead to adverse outcomes. The expansion of Starbucks to various countries around the world is an indication of how significant market research is important when it comes to linking customers and consumers to the information available in the market. For this reason, there is the need for companies to embrace market research as its benefits outweigh the costs. Besides, companies such as Starbucks have managed to maintain a significant market share given the information they have gathered regarding consumer preferences and tastes. Thus, the success of Starbucks is attributable to market research.   

References

Burns, A.C., Bush, R.F. and Sinha, N., 2014. Marketing research (Vol. 7). Harlow: Pearson.

Jackson, M., 2018. Starbucks Market Plan. GRIN Verlag.

Malhotra, N.K., Birks, D.F., Palmer, A. and Koenig-Lewis, N., 2003. Market research: an applied approach. Journal of marketing management, 27, pp.1208-1213.

Rosenberger, J.L., King, J.B. and Yiu, D.T., Lightspeed Online Research Inc, 2014. Analyzing market research survey results using social networking activity information. U.S. Patent Appl

Qian, Y.A.N.G. and Xing, T.U., 2016. Starbucks VS Chinese Tea—Starbucks Brand Management Strategy Analysis in China. International Business and Management, 12(1), pp.29-32.

Voigt, K.I., Buliga, O. and Michl, K., 2017. Globalizing Coffee Culture: The Case of Starbucks. In Business Model Pioneers(pp. 41-53). Springer, Cham.ication 13/646,630.