Digital Media and Society: A Case Study of Starbucks

Question

Instructions

The use of digital media within organizations has transformed how organizations communicate with prospective and current customers. Digital media such as: web videos, e-books, and social media have each shaped the communication strategies organizations employ to engage customers.

In this assignment, you will locate examples of how the use of digital media was used to communicate information to achieve a specific goal of an organization or individual.

Students are required to create a case study and provide an analysis, which integrates what you have learned in the course, in addition to performing additional outside research.

  1. Formatting Requirements ◦Project must follow APA style

◦Double-spaced 1 inch margins

◦12 point professional font

◦Headers including project name, class, and page numbers

◦File name first initial, last name and project (ex. BWright_casestudy)

◦Use of tables, graphs, images, etc. of appropriate size that are relevant to the information being conveyed is highly encouraged.

  • Content Requirements ◦Minimum of 1650 words, maximum 1750 words (excluding cover and bibliographical pages)

◦Title Page including your name, instructor name, course name and number, and paper title

◦Case Study Requirements

1.Introduction and Synopsis of Article / Case

2.Goal of Organization or Individual

3.Strategy Employed to Accomplish Goal

4.Measurable Success Factors

5.Conclusion and Analysis of End Results of Initiative

◦Bibliographical Page with minimum of 2 professional / scholarly sources. Wikipedia is not acceptable.

Answer

Digital Media and Society: A Case Study of Starbucks

Name:

Institution:

Contents

An Introduction and Synopsis of Case. 2

Goals and Objectives of Starbucks. 3

Strategies Employed to Achieve the Goals. 4

Measurable Success Factors. 8

Conclusion and Analysis. 9

References. 11

Digital Media and Society: A Case Study of Starbucks

An Introduction and Synopsis of Case

The use of digital media in facilitating communication between organizations and consumers has taken over the contemporary world. Most organizations and institutions are adopting the use of digital media to reach their respective target market groups and consequently, to market their products and services using these state-of-the-art digital technologies and innovations that have flooded the market. The majority of the digital media is driven by the progressive development of high-speed internet, influencing to a great extent how various organizations utilize these readily available technologies and digital marketing platforms for their marketing strategies.

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Additionally, digital platforms more so social media sites such as Facebook and Twitter have been inculcated into numerous marketing plans and strategies employed by various and businesses (Dahlen, 2010).  It is quite evident that these new digital media have led to a transformation from unidirectional to bidirectional communication between consumers and service providers (Nielsen, 2016). As Dahlen (2010) suggests, communication with prospective and existing customers is now being undertaken in a more open, free-flowing and non-linear manner. This case study examines the use of digital media by Starbucks. It will examine the company’s goals, strategies employed in achieving the stated goals, and measurable success factors. The objective will be to determine the effectiveness of Starbucks’ digital media campaign.

Starbucks Company has been a market leader in the coffee industry and has achieved massive success in its use of digital media to communicate, entice and engage consumers effectively. It has inculcated the use of social media campaigns extensively to boost its sales and profit margins while simultaneously trying to make a brand for itself. Furthermore, being one of the most reputable and recognizable brands, Starbucks has a huge customer base and a wide following on social media. As such, the company has several social media accounts including Google+, Facebook, Twitter, and Pinterest. It has been aggressively utilizing these platforms and other digital technologies including the web to market its products and services. The company demonstrates a high level of perceptibility and acuity in its use of each type of media primarily b customizing the content shared depending on the target group and the environment.

Goals and Objectives of Starbucks

Since the launching of the company, the major objective remains that of aspiring to remain the most dominant coffee shop chain in the world while prioritizing quality of the services provided to consumers. Additionally, through several strategies and plans employed, Starbucks aims to attract new consumers and retain existing ones through consistent awareness creation in regards to the products being offered. In line with these objectives, Starbucks has launched several social media campaigns over the years. Recently, the company has decided to take things a notch higher by aspiring to improve on its brand recognition and consequently earn the respect of consumers and competitors due to the high-quality coffee and other special drinks that it prides in. Its mission brings into perspective cultural development, innovations, high level of performance and accountability. These are the key elements that drive the company in all its digital media campaigns. The digital media campaign was launched in order to improve the company’s unimpressive financial performance recorded in 2011 particularly in terms of profitability.

Strategies Employed to Achieve the Goals

Following a net loss of almost $6.7 million for the third quarter of 2007 and a further decline of up to 97% in profits for its fourth quarter of the same year, the company’s earnings went down significantly (Schultz and Gordon, 2012). For this reason, the company was forced to close down 900 underperforming stores and to terminate the employment of hundreds of its workers in an attempt to cut down on costs (Adamy, 2008). This prompted Starbucks to go back to the drawing board and come up with a strategy to ensure that a repeat of history does not occur. Consequently, the company launched a website known as www.mytarbucksidea.com whose sole aim was to create a platform for sharing key ideas, suggestions, and the posting of queries and even complaints to try and revive the company. The strategy was quite successful in that the changes that were implemented based on customers’ overall feedback yielded new innovations for the company, prompting an increase in sales. Moreover, customer participation has increased tremendously following the launching of this site. Some of the ideas proposed are captured in the figure below.

Fig. 1: The main ideas proposed under the www.mytarbucksidea.com campaign (Source: Harvard Business School, 2015).

Moreover, the company has embarked on quite a number of strategies that have seen an overall increase in sales and profit margins without compromising the organization-guiding principles. The strategies used to meet the desired goals of the company include the use of the World Wide Web and social media sites for brand-building, as well as the introduction of online campaigns on Twitter and Pinterest that primarily target the use of mobile applications. A close look at these strategies can provide insights into of how the digital media has catapulted Starbucks to its current position of dominance in the beverage industry.

Firstly, the company launched an online campaign on twitter called “Tweet a coffee” to increase awareness and boost sales. The campaign was designed to allow customers to purchase coffee and a $5 gift card for a friend on Twitter using the slogan “@tweetacoffee” followed by the friend through his/her Twitter handle.  This campaign led to an overall increase in sales with purchases amounting to almost $180,000 being recorded since its launch in late October 2013. During the initial stages of the campaign, over 27000 participants made purchases, thus contributing to 33% increase in purchases (Ajani, 2013).

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Additionally, the company launched a website, www.frappuccino.comto address changes in customer preferences while simultaneously seeking to achieve exceptionality in line with Starbucks’ stated goals. This initiative was launched to enhance consumer engagement and rigorous involvement in creating awareness in an attempt to improve the Starbucks brand. This digital media platform allowed customers to participate directly and unopposed in helping the company to identify its strengths and weaknesses. For instance, consumes were accorded a chance to come up with their own drinks and name them as they deemed fit. Such drink would then have a high probability of being incorporated as actual Starbucks products to be sold worldwide across all the company’s stores. This involvement of consumers has proven to be quite beneficial for the company in the sense that there has been an upward growth in sales following the introduction of several customer-oriented drinks. The fact that consumers are able to upload photos of them enjoying a Frappuccino further helps to create consumer awareness on a global scale.

Moreover, the company has integrated the use of mobile applications in achieving its laid-down goals. For instance, it recently launched a mobile platform known as “myStarbucks app” that enables users to conveniently locate the company’s coffee stores in addition to gaining more knowledge on the brands of coffee and other beverages being sold at various stores. It has been one of the drivers of the huge sales that Starbucks is making as well as the profits being realized. In addition to this, Starbucks has gone an extra mile to come up with a “Mobile Card App” that allows customers to pay for their drinks using their mobile devices. Currently, over 20% of its transactions are conducted through mobile phones (Blumenthal, 2008).

The company has also been able to tap into social media sites to communicate with its customers on the products and services offered at their stores.  The advantage this accords to the company is that it is able to generate new revenue streams by observing how customers interact with their products and responding to their feedback. Social sites such as Twitter, Facebook and Pinterest have been at the core of Starbucks digital media use strategy. Through these sites, the company aims at achieving and improving their brand recognition through various advertisements and competitions. For instance, the company has recently come up with new advertising posters targeting major cities in the USA. Consumers are required to take a photo of themselves and using the Starbucks Twitter handle and to upload it in order to stand a chance of winning a gift card worth $20. The accumulated revenue by far outweighs the cost of the promotion. Moreover, the operators of the Pinterest account at Starbucks upload captivating images that have been obtained from customers. The company has a maximum of 700 boards with more than 900 pins between them, making this quite an advantageous strategy for promoting brand recognition.

Measurable Success Factors

Following the above campaigns, there several notable factors that can be used as a basis for measuring the success of the company. Firstly, tracking of purchases and net sales growth through compiled reports reveals that indeed the company has been quite successful in achieving its goals. For instance, the company realized $146 milion on accrued interests only in 2015 which is equivalent to about 8% of aggregate profits realized. These significant capital gains have been greatly contributed by the “card mobile app” reducing the corresponding transaction costs that would otherwise have gone to credit card firms.

Secondly, the traffic generated across the company’s social media platforms shows a positive correlation with the growth of the company. In June 2010, the company was hailed as the world’s most popular consumer brand in terms of social media following a huge increase in its fans and followers on its Facebook page and Twitter handle respectively. This is primarily due to the fact that the company places emphasis on quality of content shared to these sites as opposed to quantity and frequency of posts. This approach explains why the company does not post stuff regularly but still manage to maintain a huge following. The graph below depicts how Starbucks has increased its profit margins from 13% in the first quarter of 2014 to 20% in the first quarter of 2015 as a result of incorporating the use of digital media to target more customers.

Fig. 2: Starbucks’ profitability analysis for the period between the first quarter of 2014 and the first quarter of 2015 (Source: Marketrealist.com, 2015).

Conclusion and Analysis

In conclusion, it is quite evident that Starbuck is leading the pack when it comes to the use of digital media. For instance, the mytarbucksidea.com concept has led the identification of numerous ideas on how to revive the company while the “Tweet a Coffee” campaign has contributed to a rapid increase in the company’s purchases. Other platforms such as the Frappuccino.com and the myStarbucks app have enhanced customer engagement and customers’ ability to locate stores respectively. Similarly, the use of Twitter, Facebook, and Pinterest has led to greater brand recognition for the company. Thus, digital media use has proven to be imperative for the success of the company since it reported massive losses the third quarter of 2007. It has ensured that the company stays ahead of its competitors as demonstrated in the notable successes achieved in terms of sales and profit margins.

References

Adamy, J. (2008). Starbucks to shut 500 More Stores, Cut Jobs. The Wall Street Journal.

Ajani, S. (2013). Starbucks’ @ Tweetacoffee Campaign Generated $180000 in Sales, Huge Long-term Benefits. Keyhole.

Blumenthal, K. (2008). Grande Expectations: A Year in the Life of Starbucks’ Stocks. Crown Business.

Dahlen, M. (2010). Marketing Communications:A Bradnd Narrative Approach. Chichester,West Sussex UK: John Wiley & Sons Ltd.

Harvard Business School. (2015). My Starbucks Idea: Crowdsourcing for Customer Satisfaction and Innovation. Harvard Business School, Web.

Marketrealist.com. (2015). Profitability Analysis for Starbucks. 23 January 2015. Web.

Nielsen. (2016). What Are connnected ShoppersDoing and Not Doing Online. Nielsen Global.

Schultz, H. & Gordon, J. (2012). Onward: How Starbucks Fought for its Life without Losing Its Soul. Rodale Books.

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