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The growth of the food and beverage industry has been rapidly increasing in the last few decades. The desire to eat out has become a habit and a norm of modern life. More and more cafes and restaurants have become brands, and there are even more to appear on the market. The overall tendency is the saturation of the market which is marked by the fact that consumers nowadays want choice and convenience, and they are ready to pay more for the satisfaction of these needs.

Historical development of the industry pushes the existing companies to look carefully at their products and services. For this reason, this research paper features one of the most prominent examples of food and beverage industry products in the global consumer market – Starbucks Coffee Caramel Macchiato.

The choice of the product is explained in terms of the popularity of Caramel Macchiato out of all the hot espresso drinks offered in Starbucks Coffee Houses worldwide (Starbucks Report 2012). The drink is no more associated solely with the brand but has become a lifestyle mark itself. For this reason Caramel Macchiato is the subject of this research.

Rockwell Automation (2008) also suggests that financial performance, sustainability in the form of quality retention, and brand equity are the key factors that the food and beverage market players should be focusing on nowadays. It is essential to mention that Starbucks Coffee is a well-known brand which has developed its presence on the world markets through effective market positioning and franchising policies. Caramel Macchiato is present in all Starbucks Coffee Houses around the world and in some way this product represents the brand for its consumers.

Product Analysis

Description of the product

Starbucks Coffee has developed a number of popular brands throughout the history of the company. At the beginning, the company only made brewed coffees. Nowadays, the portfolio of Starbucks Coffees entails more than forty types of coffee; some of them like Frappuccino already became registered trademarks.

Caramel Macchiato has deserved its popularity due to its taste and nutrition characteristics which combine the drink content (coffee) with the food content (syrup, milk) (Starbucks Menu 2013). At the same time, the name of the drink is Italian, which is also giving a hint of the lifestyle connection to the European coffee culture. The product looks rather fancy; therefore, Starbucks Coffee actively uses the pictures of Caramel Macchiato for advertising. The following image displays the typical Caramel Macchiato by Starbucks:

Marketing Mix

Due to the fact that Caramel Macchiato is a product, there are four basic elements that should be explored in terms of the marketing mix in this case: product, place, promotion, and price. The four key characteristics are linked to the overall Starbucks strategy (Starbucks Report 2012). However, it is essential to demonstrate the particular characteristics of Caramel Macchiato and the features which differentiate this drink from the rest of the Starbucks Coffees.

Product

The core product is the Caramel Macchiato itself. With its specific taste and quality which has been sustainable for the last few decades, the drink has special characteristics besides its nutrition facts that should be mentioned. First of all, the taste of coffee is rather soft so it does not prevail in a cup. This provides the opportunity of combining the coffee with various syrups, not only the caramel syrup which is part of the drink. Caramel Macchiato is made in such a way that it also goes well with pastry products offered at Starbucks Coffees, and it is a good replacement of food due to its drink and food contents (coffee and the sweetness of milk and syrup combination).

However, beside the core product, there is also the augmented product. In the case with Starbucks Coffee, the augmented product is always the coffee house itself. Being a lifestyle brand, Starbucks offers a very distinctive atmosphere of big city and cosmopolitan surrounding. This is the augmented product that always goes together with the Starbucks Caramel Macchiato. If the Caramel Macchiato is for takeaway only, then the augmented product is limited by the USP (unique selling point) which is a Starbucks cup.

Place

The place for Starbucks Coffee is a combination of the external and internal environments. It is a known fact that the company has its restrictions for building coffee houses, i.e. they windows have to fact the sunniest part of the location and the location should be the best place to sit and rest. That is why most Starbucks Coffee houses are located in the center of the city, at railway stations, airports. The strategy is to invite the customers during rushing moments to take some time to rest, work in quite areas, and enjoy coffee. Caramel Macchiato is located in all stores of Starbucks, which is why in this case the location of the coffee house links directly to the location of the product.

Promotion

Starbucks is one of the worldwide brands that are promoted everywhere. In recent years, the campaign for web promotion has been the most active out of all Starbucks promotion activities. The company uses application forms to connect with its customers to obtain feedback and ideas. Starbucks encourages its customers to be part of the brand with the active usage of various loyalty programs. Caramel Macchiato has become an image of many adverts used by the company, and that is why the product (compared to other Starbucks Coffee products) has earned its popular position and customer recognition.

Price

The price for Caramel Macchiato is considered high in terms of coffee (over 3 US Dollar for a small cup). However, the pricing strategy is linked with the corporate value chain which is marked by quality coffee selection practices and strong brand sustainability. These are the reasons why the price of coffee is positioned a little bit higher on the market than other types of coffee drinks from various coffee houses. Caramel Macchiato is a recognized drink, and this allows higher pricing. At the same time, the concept of ‘value for money’ is retained in this case. Caramel Macchiato is relatively an easy solution for a person who is a little bit hungry but is not ready for a standard meal at the restaurant. That is why the price of the drink is usually not perceived as high.

Consumer Behavior Analysis

Demographic Consumer Behavior Analysis

The key demographic consumer behavior factors that are analyzed in this research paper are the life-cycle factors, ethnicity, occupation, and economic factors. All these factors help create the demographic profile of the person who enjoys Caramel Macchiato and who might remain the loyal Caramel Macchiato drinker in the future.

Life-cycle of the target market is important in estimation of the buying behavior of a person, as it changes due to the changes in the life of a person. As Starbucks Coffee House, everything entails various lifestyle elements that confront the people of various life-cycles. The people who enjoy Caramel Macchiato in particular are those who usually have either young families without children or are not married at all. The majority of those consumers who buy Caramel Macchiato are in the process of finding and being in a relationship. These people are usually young (between 18 and 30 years old). The consumer behavior of this market is less saving and more spending, that is why they are usually not concerned about the price of the Caramel Macchiato being a little bit higher than in the rest of the coffee houses. They also make a lot of impulse decisions about the product that a consumer might not really need. However, what is also important, the life-cycle of these people is rapidly changing, so do their buying decisions and preferences.

Ethnicity is an important factor of consumer behavior in the case with Caramel Macchiato, as Starbucks is present globally and there are usually many nationalities consuming the same types of drinks worldwide. However, when looking at the characteristics of Caramel Macchiato, it is possible to conclude that the drink is selected by the Europeans and North Americans more often than by the people from Asia, Latin America, Africa, and Middle East.

Caramel Macchiato is a long hot drink which is sweeter than other types of coffee offered by Starbucks, and for this reason the occupation is also a distinctive characteristic of the product. The people who have creative professions like artists, bloggers, and writers are likely to enjoy Caramel Macchiato, so as the students and the social workers. Businessmen and people working in the offices usually have less time, so they prefer ‘quicker’ drinks like espresso or cappuccino.

Finally, there are various economic factors which are the result of those perceptions that Caramel Macchiato produces. These factors entail the price of the product which is positioned a little bit higher than the rest of the similar products, and this shows that Starbucks Coffee products are seldom recognized by the people with low income.

Psychological Consumer Behavior Analysis

Psychological consumer behavior factors are intertwined and are generating a whole picture of the individual who is the unit of the target market. The role of psychological factors in marketing consumer behavior analysis is very important. All psychological factors can be observed as the following pyramid:

Brown (1996) defines a personality as the combination of the internal traits and behaviors that make an individual unique, and therefore this uniqueness is derived from both the personal experience and heredity of an individual. Each customer of Starbucks Coffee has his/her own fantasy about him/her, and tries to bring this imaginative image to others. For this reason, the choice of Caramel Macchiato can be a part of this process of delivering to others self-image and vision of self.

The difficulty in this aspect arises from the fact, that each consumer may see himself/herself in a different way, and having many consumers, it is necessary to understand, what common features they have in seeing themselves that causes the choice of the hotel. For Starbucks, the popularity of Caramel Macchiato and the customer recognition may be the result of the fact that the product is so good that consumers wish to identify themselves with it.

According to Perner (1998), learning involves a change in behavior due to consumers experience and knowledge. However, learning can sometimes have reasons, which a consumer cannot explain, i.e. learning can also be an unconscious factor of change in behavior.

Learning has three main forms: reinforcement, punishment, and negative reinforcement. Reinforcement occurs “when consumption or utilization of the goal-object leads to gratification of the initiating needs” habit, reinforcement is the aspect of consumer learning behavior, when an individual, after getting good quality Caramel Macchiato in one of the Starbucks Coffee Shops will learn from self-experience and choose Caramel Macchiato in the future.

What is ever more important, the more times product is chosen and meets customers’ expectations, the more he/she will be likely to come again (Pride & Ferrell 2012). Punishment occurs when the expectations of an individual have not been met, i.e. the drink tastes terrible or simply does not meet the expectations of the customer. Negative reinforcement should not be associated with punishment, as this form occurs when an aggressive sales person forces a consumer to change his/her consumer behavior.

In general, Starbucks Coffee environment is a great instrument for shaping the buying behavior of an individual via sensitive channels. The majority of these channels involve color and smell. “The ability of colors to “color” our expectations is frequently used by marketers”.

The color combination of dark green and brown in the coffee shops as well as the color of the cups and coffee itself provides room for relaxation, proximity to nature, and awaking the appetite. Also, as “odors can sir the emotions or have a calming effect”, the constant smell of coffee in the Starbucks Coffee Shops is already a positive reinforcement element for the consumers of Caramel Macchiato.

Finally, the backbone of the psychological customer behavior analysis is the evaluation of the values of Caramel Macchiato consumers. Since “values are affective in the sense that people can feel emotional about them”, it can be concluded that defining the values of a consumer is a very important process of understanding the motives which drive him/her in his/her behavior about the product. De Mooij (2003) divides values into terminal and instrumental.

Social and Cultural Factors of Consumer Behavior

Social and cultural factors, contrary to the psychological factors, usually relate to the personal experience of a person which is a result of the environment. Culture is one of the most important dimensions in consumer behavior, being the most general characteristic feature of a consumer:

According to The Psychology of Consumers (1998), cultural factors are influences of other individuals on consumer behavior. Thus these factors can be estimated as external ones. Social class is an important tool for categorizing consumers and thus getting a clear picture of a target market and its values and tastes. Social class can be categorized by income, education and occupation of a customer, as these features define social classes in the majority of societies. Therefore, the consumers of Caramel Macchiato can be defined as high income, high education and creative profession class.

However, as stated by Solomon et al, social class involves not only income, but also lifestyle, priorities and interests, as well as attitude to money depending on the way how these people earned them. In this aspect, consumers of Caramel Macchiato can be not high-spenders in comparison to other high social class consumers, such as artists, actors etc.

An important issue for all Starbucks Coffee consumers is the reference group influence. Shibutani defines a reference group as “that group whose outlook is used by the actor as the frame of reference in the organization of his perceptual field”. Reference groups for Caramel Macchiato consumers entail all past consumers and friends who are loyal to Starbucks brand in general.

Decision-making Process

Brown (1996) name four types of decision-making: impulse, occasional, extensive, limited, routine decision-making. A choice of coffee drink at Starbucks is both impulse and routine decision-making. For those consumers who already know the products, decision-making is low product involvement decision. For those consumers who haven’t tried Starbucks before, the choice of Caramel Macchiato would be an impulse and most likely high product involvement decision. According to Hsu & Powers, more than one person is responsible in the organization buying; in this aspect, it is important to know the possible roles of each person involved in decision-making process, both from family and organization side.

Market Segmentation

Segmentation criteria

The basic criteria for the market segmentation that was chosen for Caramel Macchiato entail all the above listed factors: demographic, social and cultural, and psychological. The main factor in the competitive success is to focus on little differences that are of vital importance to the customers. Therefore, segmentation criteria for the consumers of Caramel Macchiato by Starbucks is built in such a way that is explores those little differences. Such criteria as identity, adequate size, accessibility, unique needs, and duration were identified as significant for market segmentation of Caramel Macchiato consumers.

Customer Profile

The consumers of Caramel Macchiato come from mostly European countries and North America. They are young couples or people seeking a relationship. They are usually no more than 30 years old. They pick up Starbucks due to their brand loyalty and habits of lifestyle. Drinking coffee for these people is part of their daily life, and they are picky when it turns to choosing what type of coffee they prefer. Almost all Caramel Macchiato consumers live in mild climate zone and enjoy celebrating Christmas. They are usually very active to travel and are very computer-friendly (especially in terms of Internet and social networks). They have received or at the stage of receiving a college or university degree. Religion for this segment is Christianity. The range of interests includes travel, fitness, culture event, jazz music, books, and eating out. Also, they might be environmentally concerned people.

Perceptual map

In order to construct an effective perceptual map, it is essential to provide the most important consumer criteria for choosing the product. For this reason, to build perceptual map for Starbucks consumers, it was proposed to choose location and drink quality as the key characteristics. Also, these characteristics represent the brand values of the Starbucks Coffee Company.

Starbucks as a brand positions itself as the one choosing the best location for its coffee houses and providing the highest quality of coffee. However, this also may not be the case when compared to other companies and other international coffee chains, such as Gloria Jean’s Coffees, Dunkin Donuts. It was also proposed to take McDonalds for perceptual mapping, as McCafe entails the similar concept to the Starbucks Coffee. The perceptual map based on these two main criteria is presented below, and the customer profile is applied for positioning:

Conclusions and Recommendations

As seen from the analysis, both in terms of location and the quality of coffee, Starbucks brand including Caramel Macchiato stand out of the competition (Pride & Ferrell 2012). It is also important to focus on the fact that Starbucks customers are in general loyal to the brand and are very stable in terms of their decision-making. Caramel Macchiato as a product attracts relatively large and growing audience. It can be predicted that the number of Caramel Macchiato consumers will be increasing due to the effects of reference groups and other powerful social and cultural factors connected to lifestyle. Caramel Macchiato is more than just a branded coffee; it is a part of Starbucks experience and a very stable lifestyle habit for many young people all over the world. For this reason, the only recommendation that can be made for Starbucks Coffee Company it to sustain the value of the product and to always guarantee the Starbucks experience to its customers as part of augmented product value.

Code: Sample20

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