Understanding Consumer Behavior And Targeting Strategies: A Case Study Of Starbucks, Essay.

Factors Affecting Consumer Behavior

Discuss About The Perception On Starbucks Experience Economy?

Currently, every individual is involved in the purchasing and utilization procedure of the products and services in the market. The term ‘consumer behavior’ can be defined as the actions taken by consumers who are engaged in the product purchasing or consuming in the market. It basically includes mental as well as physical procedures. In other words, consumer behavior can be described as the decisions of the customers like buying, utilization and dispose of the products or services offered by various companies. It is essential for the companies to recognize the behavior of the customers which is helpful in implementing various strategies to penetrate the market (Mooradian, Matzler & Ring, 2012). Understanding consumer behavior is also helpful in solving the queries of the customers while purchasing the products. There are some factors affecting the buying behavior of the customers. Those factors are attitude, motivation, perception, lifestyle, learning and roles. These factors have significant impact on the buying decisions of the customers (Schiffman, Kanuk & Hansen, 2012). The objective of this report is to identify two factors of consumer behavior which impact the decision of the customers while purchasing the products or services. Along with this, objective of the report is to implement those individual factors in the selected company in order to enhance the marketing tactics.

The objective of this report is to observe and examine the impact of various inner aspects of customers on the purchasing and utilization actions for the particular products and services. For the discussion in the report, well-known coffee manufacturing company Starbucks is selected. The report focuses how Starbucks uses internal factors of the customers in order to target them in the market. Starbucks identifies the consumer behavior factors for achieving high customer base in the operating market (Krikorian, 2014). In order to understand the thinking and perception of the customers, it is important to understand their buying behavior. Customers always have a choice while consuming coffee as they have option of selecting regular, large or extra large cup of coffee. Starbucks is famous coffee provider company in all over the world. This is largest coffee producing company in Australia also. The customers always enjoy high quality coffee products along with smoothing atmosphere of the company (Hajarrahmah, 2011).

In the product range of Starbucks, company has quality coffee along with pastries and other confectionary products. Company has also introduced Trenta cup of coffee in order to provide more value and quality to the customers. Starbucks basically provides two types of products i.e. Coffee and Tea and Ready-to-drink. Along with this, company also provides fresh food including baked pastries, salads, sandwiches, fruit cups and yoghurt parfaits etc (Starbucks Corporation, 2017).

Starbucks: The Selected Company

This report analyzes the buying and consumption behavior of Australians towards coffee products provided by Starbucks. There are various psychological products which impact on the consumer decision making process i.e. understanding the needs of the customers, selecting various alternatives, making final decision for the products and services etc.

The products of Starbucks in Australia will specifically target at young people. The target market is chosen according to current market situation in Australia including all the business experts in all over the region including youth. In terms of demographics, the target consumers for coffee related products would include young business people in the age group from 21 years to 40 years. In the whole working day, coffee is the basic need and by targeting young professionals, company will be able to achieve higher level of sales and growth. In the psychographic targeting, the target market will include those customers who prefer expresso coffee.

Motivation and customers’ need of the customers are related to each other. It is observed that individual has some needs in daily life. Customers have diverse and unique wants and requirements so, it is crucial for the companies to recognize the requirements of the consumers and satisfy them by the unique products and services. The motivation factor of consumer behavior can be described as the driving factor to satisfy the desires and requirements of the consumers by providing quality products. In simple words, motivation is the driven force that pushes the individuals to action. Motivation is the objective oriented behavior according to various theories. Various literatures have provided different theories and models of motivational process of individuals (D'Souza, 2010).

It is well known that buying behavior of the customers push them towards the specific products and services in the market. Their inner motivational factors impact their behavior for the particular product or service. Motivation is the internal striving condition of the consumers including wishes, desires, needs and drives. Customers buy the products based on some economic or mental forces that can satisfy their wants and desires. There are many theories and models related to motivation that shows the role and importance of motivation in the consumer buying process. Most famous theory of motivation is Maslow Hierarchy of needs that is based on different motivation training exercises.

There are different types of needs of each individual. Those needs of the customers are described below:

Psychological and Biological needs- These are the basic needs of individuals including hunger, thirst, sleep etc. These are the essential needs of individuals and no other need has importance until these needs are not fulfilled. Under this need, clothes, foods and shelter are most important.

Buying and Consumption Behavior of Australians

Safety needs- Individuals needs protection for various hazards and this need comes under safety needs. People want safety from various accidents in terms of family stability and financial security. These needs are for financial and social rather than physical safety (Michael, 2013).

Need for belongingness- This is the need to establish various relations in the society. This includes religious organizations, family associations and clubs. These needs are based on group acceptance, affiliation and identification.

Esteem needs- self and esteem needs are the other needs of the society. Individual gets self-confidence while fulfilling these needs. Esteem needs are related to the feelings of accomplishment and usefulness.

Self-actualization needs- This is the highest level of need of individual. The self-actualization need is related to identifying the potentials and attaining them. In other words, this need is related to achieving maximum needs by people in the society.

There are more theories of motivation provided by more researchers that explains the relevance of motivation in the purchasing procedure of the customers. Those theories are Gestalt theory, cognitive theory and psychoanalytic theory. Based on the mentioned theories, customers with the motivation factor are capable to take proper decision about purchasing the products and services. Motivation is the kind of need which is crucial to satisfy the consumers by the desired product or service. The intensity of motivation impacts on the purchasing actions of the consumers. Motivation is directly linked with the various needs of the consumers. The buying motivation of the consumers is effective in enhancing the transactions and inspiring the consumers to buy the products and services.

Motivation is the important factor in order to decide the market tactic for the particular product i.e. coffee at Starbucks. There are many consumers who are obviously inspired for drinking coffee and evaluating the charges of coffee with other companies. Each individual is affected or inspired by different perceptions. Consumers are inspired and motivated for drinking coffee because their relatives and friends are consuming coffee also. For the product of Starbucks i.e. Trenta Cup of coffee, effective marketing tactics have crucial role in the buying process of consumer based on attitude and motivation of the consumers (Ferrell & Hartline, 2011). There is need of sense of urgency in the promotional actions with innovative coupons and discounts. Further, by providing offers and discounts to the customers, these types of programs allow the customers to use credit card of Starbucks so that they can avail cash back and redeem their reward points while purchasing coffee. By this tactic, customers are motivated by Starbucks for drinking coffee by adding value and establishing strong relationship with the customers. Starbucks is aware about the impact of various external factors of Australia i.e. culture, demography and society. So, company is focusing on the inner factors of consumers i.e. motivation, perception and attitude. By the effective tactics and customer base expansion, Starbucks is trying to meet the expectations and requirements of the customers in the Australian market. In the customer purchasing or buying procedure, motivation is a helpful aspect in order to formulate a better strategy so that the actions of the customers can be understood in the market. Motivation is useful factor for Starbucks in introducing new products and new range of coffee for Australian consumers (Lindgreen, 2010).

Motivation and Consumer Needs

Based on the theories of motivation, there are various reasons by which customer decide to purchase the specific product or service. Those motivations include branding, guest motivation, and common impact which force the consumers towards purchasing the products. There are several societal factors including family social classes, culture and reference group which decide the actions of Australian consumers for coffee products. Further, customers have perception that Starbucks is using green marketing (Dahlstron, 2010). Starbucks is operating at the international level having effective supply chain system in order to purchase fresh coffee. Along with this, Starbucks has adopted quality management by which it is able to enhance its quality performance, brand equity and effectiveness in the market (Burge, 2013). Customers buy coffee of Starbucks rather than its competitors as Starbucks is always successful in satisfying the customers by identifying their emotional needs. Customers always select to pay as premium because they are seeking for prestige product from the company. Starbucks always satisfy the customers by identifying their belongingness and self-esteem needs. Further, the stores of Starbucks always create a pleasant atmosphere that motivates the customers to buy the coffee.

Next and important internal factor is consumer perception which impact on decision making process of the consumers while purchasing the products. The factor ‘perception’ can be defined as the process by which consumers can evaluate the gathered information related to product or service. Perception is based on the point how the consumers perceive a particular product or service in the market. It is crucial for the companies to analyzing the perception of the customers while buying the products. Once, customers are aware about the needs and requirements then they start collecting relevant information related to product or service (Haenfler, Johnson & Jones, 2012).

Currently, customers are now conscious about the companies, information of stores and product by newspapers, publications and various new media. Based on the information of the products, they analyze the information and make the decision which is called perception. This is generally a procedure by which customer choose, collect and analyze the information and make a image of product based on their understandings. Buyers have different behaviors in the market for the products and services. Based on various definitions, it is observed that perception includes three important steps. Although, consumers collect various information related to desired products and services but few of them are helpful for the consumers to enhance the awareness about the products and services (Hornik & Giulia, 2009). Many researchers have provided theories related to perception by which the role and importance of perception in the buying behavior is analyzed. Among the theories, cognitive theories of perception, and Gestalt theory of perception are helpful in analyzing the perception factor effectively. According to these theories, perception is the first impression of the products or services made by the consumers based on the information they have gathered for the products. That is the reason, perception impact on the satisfaction level of the consumers based on their buying decisions. There are three basic factors in the perception of the customers i.e. quality, prices and value (Tam, 2008).

Target Market of Starbucks

Customers can have both positive as well as negative perception for the quality of the products or services. Quality of the products can be defined as the analysis of the supremacy and excellence of the particular product. Quality of the product can be analyzed by the physical characteristics of the product by the customers. National companies always produce the products with the help of sophisticated procedures and high level of technology and on the other hand, private companies use less technology while producing the products. So, differentiations in the products create different perception in the minds of the consumers. Marketers should understand the consumer perceptions and target them by product align and promotional tactics.

In terms of pricing factor of the products, customers also have various perceptions. Low income consumers are price conscious and they always switch towards the low cost products rather than selecting national brands. Further, some customers in the market are price seekers and they seek for low pricing products. For these types of consumers, buying exclusive product means getting high value in the society. Apart from this, there are some consumers who are connected with the low quality and low priced products. For such type of customers, high prices are the symbol of quality products. So, in the perceived prices, there is the price-quality relationship (Solano & Arquiza, 2009).

Risk can be described as the doubt of the consumers while purchasing the products and services. The risk perception of the customers is a crucial factor that impact on the choices of the consumers in the market. Risk in the purchasing procedures can have bad perception in the mind of the customers. In order to minimize the impact of the risk, customers choose more expensive products. There are some risks perceived by the customer i.e. financial risk, social risk, functional risk and physical risk (Yusuf, Fatih & Hayrettin, 2013).

This figure shows the connection among the perceived price, perceived value, perceived quality and perceived risk. It is observed that price, excellence and worth are connected in the positive manner and risk is connected in the negative manner. Higher perception for the price level is the symbol of low perceived risk with high perceived value. Further, high perceived risk is created due to low perception of price and quality. On the other hand, high perception of worth and price has good influences on the value of the product perceived by the customers. Lower perception of quality and price are the symbol of higher perceived risk. Customers who are perceiving the prices high, then product will get enhanced worth in the market (Kazmi, 2012).

The Role of Motivation in Starbucks' Marketing Tactics

Perception is the important part that impact on the buying behavior of the consumers. People experience different sensations like taste, sound, texture and sight and based on those experiences, customers select their products. In case of Starbucks, the promotion tactics are associated to ecological aspects which are the cause of the success of Starbucks in the international market. There are various allocation mediums of Starbucks in order to serve the customers. Company has very flexible marketing plan including effective tactics in order to meet the expectations of the consumers. The stores of the company have the combination of culture and pleasant atmosphere for the customers. Starbucks provides consistent quality in the products. The perception of the customers is influenced by the demography, financial systems and exclusive civilization under the environmental features (Schultz & Gordon, 2012).

In the decision making process of the consumers, there are some steps i.e. data exploring, recognition, recognition of substitutes, and buying and after buying activities. The consumers of Starbucks focus on the information search about the products. For Australians, coffee of Starbucks is like a daybreak pleasure. There are various loyal customers of Starbucks who select the brand and quality of coffee. Starbucks is known as the best coffee source because of most convenient location for the customers (Stávková, Prudilová, Toufarová & Nagyová, 2007).

Need recognition- In Starbucks, need recognition of coffee includes as the famous coffee manufacturing company. When satisfying the needs of the consumers, coffee is the effective product of customers think about the coffee when it comes to satisfy the needs of the consumers. For the company, the need of the customers is the coffee in order to stay energetic while working so they buy coffee in middle of the day.

Information search- Customers always search for information regarding products while buying the products. So, they always try to collect the information from the external sources i.e. searching from the internet, blogs, news and asking to family or friends. These all are way of non-controlled information. Further, customers are targeted by various advertisements so; Starbucks has done advertisements on various media tools i.e. TV, internet and newspaper. Its green logo on the cup of coffee is one of the effective tactics to target the customers.

Evaluation of alternative of substitute- Various customers analyze and evaluate the purchases based on various attributes of the products i.e. taste of coffee, customer services, varieties, brand rating, environment and suitable. Sometimes, they analyze the products with the taste as taste of the coffee is the important characteristics which are chosen by the consumers (Semejin, Van & Ambrosini, 2004).

Conclusion

Purchase decision- In the product selection procedure, observation and opinion is the crucial feature for the customers. In such manner, the behavior of the employees impact on the customers and their decision making process. Starbucks has modeling strategy in order outline the perception in order to achieve growth in the international market.

Post purchase decision- The post purchasing behavior is also most crucial procedure in order to make the consumer devoted and trustworthy and then they purchase the products continuously. Starbucks is providing reason to the consumers buy the coffee. If they are not pleased with the offered coffee then they are able to offer another drink with the coupon for free one. Starbucks has best customer services in order to provide unique experience to the customers.

From the above discussion, it is observed that internal factors have strong impact on the buying or purchasing process of the customers in the market. Consumer behavior includes selection procedure of the consumers including buying, utilization and disposition of the products and services. The internal factors i.e. motivation and perception are important in order to drive the customers to satisfy their needs and wants by purchasing the desired products. Motivation is the inner driving condition of the customers that can be defined as the desires. Currently, consumers are becoming more aware about the products by using newspapers, magazines and various media tools. There are various theories or motivations i.e. Maslow hierarchy theory, and cognitive theory that describe role of motivation in the decision making process of the customers. Based on the gathered information about the company and product, the interpreted data is called perception. In Starbucks, customers are motivated by providing various offers and discounts (Michael, 2013).

Further, Starbucks has adopted various strategies in order to create positive perception among the customers as the company knows that consumers are conscious about each product due to available information on various media platforms. Company understands the desires and requirements of the customers in order to gratify them. There are various important theories related to perception i.e. Gestalt theory of perception that is useful in consideration the role of perception in the buying behavior of the consumers. Quality coffee products are the strong point of Starbucks and customers perceive coffee of Starbucks as best over the competitors.

Although Starbucks is perceived as the topmost company providing good taste of coffee but it is crucial to enhance the consumer base by the company in the market. In order to ensure the satisfaction level of the customers, company must be engaged in gathering the opinions of the customers. While considering the marketing mix, Starbucks should focus on three key marketing mix factors i.e. product, price and promotion.

The strategy of product should be in such manner that should satisfy the targeted customers. In respect to the coffee business in Australia, company should introduce various seasonal offerings by identifying the needs of the customers. Going beyond, the company can also offer coffee as well as cappuccino makers intended for the users. For the quality management and brand richness, the employees of the company must be involved in the aims and objectives of the business.

Apart from the product strategy, pricing strategy is also crucial for the company. Starbucks generally keeps the prices of the products high. The products are highly expensive and the price charged per coffee is $30. But, in order to target more customers, company should charge premium prices to the customers. The strategy of charging premium prices will create felling among the customers that coffee products offered by the company have higher quality levels (Cadogan, 2009).

Promotion of the products or services is important as it allows the company to create enough awareness among the potential customers related to product offering. In the promotional strategies, Starbucks can issue some coupons to the visitors for the first time and discount can be provided in their next visit by 10 to 20%. Celebrity endorsement can also be performed related to new product catagories. The online mode of promotion of promoting the products should also be performed.

Conclusion

Based on overall discussion, it is analyzed that consumer behavior is important concept for the companies in order to operate the business in various markets. It is observed that consumer behavior is an important part of marketing. It is influenced by various aspects like personality, perception, attitude, motivation, lifestyle and behavior of the customers. They always select those products that match their values and lifestyles. So, individuals can make choice for specific brand based on their lifestyles. The report identifies two factors i.e. perception and motivation of consumers affecting their buying behavior.  It is analyzed that Motivation is the kind of need which is crucial to satisfy the consumers by the desired product or service. The level of motivation impacts on the buying behavior of the consumers. Further, perception is the first impression of the products or services made by the consumers based on the information they have gathered for the products.

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