Marketing Research- Starbucks vs. Coffee Beans

Essay by dnazarUniversity, Bachelor's March 2002

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Market segmentation is defined as the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix (Schiffman, Bednall, Cowley, O'Cass, Watson and Kanuk, 2001). Different companies have different abilities that enable them to serve their target market better, which is why some companies choose to focus much of their attention to specific segments. Starbucks primarily chooses to focus on the demographics, psychographics and lifestyle of their customers. It is with the information gathered regarding these segments that Starbucks can better serve its customers.

Demographics are things such as age, sex, marital status, education, occupation and income. Starbucks targets both males and females, mainly 18-30 year olds, but really does cater for everybody's needs. And because young children don't usually drink coffee, Starbucks offers a range of non-coffee beverages to cater for the whole family.

Hanging out in Starbucks gives the impression of being very with it and most of the people you see sitting in the stores exude a certain coolness and give off the image of having some sort of social status, with lots of money to spare. Starbucks customers are mainly in their final years of high school, in university or just starting to work. But whatever it is, they all have had a good education, and if they do have a job, it almost certainly includes a big income as well.

Demographics help to locate a target market and this information is often the most accessible and cost effective way to identify a target market (Schiffman et al, 2001). Even though factors such as personality and behaviour are often first used to define a market segment, the consumer's demographic characteristics must be known in order to assess the size...