Instagram Marketing Case Study: Starbucks
Introduction
The internet has entered people’s lives in tremendous numbers. More people use the internet today than even a decade ago. It has become the way to engage with friends, family, community and even businesses. As internet has become ubiquitous, so have its applications. Business to business e-commerce and business to customer e-commerce have steadily grown and is expected to become $20 trillion industry by 2020 . Increasingly social media has become the new avenue for marketing efforts by both traditional companies and e-commerce companies . From the biggest brands to the smallest companies are all onboard social media to create a one-on-one relationship with their customers. Traditional media like TV, radio, newspapers and magazines are a form of one-way marketing . Social media allows clients and customers to interact with businesses, providing feedback, sharing experiences, telling their stories which the companies can use for sharing globally. In turn, companies have tapped into the immediate response power of social media. They know that engaging customers on social media will result in creation of a buzz even before the product is launched in the market. Companies can also learn from customers by encouraging them to provide insights from their experience with products and services. Companies can also create targeted promotions for their social media followers and let word-of-mouth bring in more and more customers to their outlets. The biggest contributor to the rise of social media in marketing is the proliferation of mobile phones, smartphones and portable internet connections , .
Instagram is one of the fastest growing social media applications in the world. Within two months of its launch in October 2010, 1 million users had joined the forum . By 2012, it had 80 million users, by 2013 it had 100 million active users monthly and by 2015 the Instagram community had 500 million users. Businesses can no longer ignore the potential of this consumer base. One of the biggest marketing success stories on Instagram is Starbucks. Starbucks had close to 9.2 million Instagram followers by beginning of June 2016 with an average of 15,000 followers active every day .
Starbucks was started in 1971 in the Pike Place Market area of Seattle in the state of Washignton by three men who had no background in business. Gordon Bowker was a writer, Jerry Baldwin was an English teacher and Zev Siegl was a history teacher . The success of the first store led to expansions starting in 1980. In 1987, the company was purchased by Howard Schultz who led a rapid expansion of the company in the 1990s and 2000s to grow into a 15,000 store global behemoth by 2008.
But by 2008, several things had changed. The rapid growth had reduced the person-to-person interactions following the installation of new espresso machines across stores. The recession that occurred in 2008 further led to poor sales; people were unwilling to spend premium rates for coffee. Popularity of the brand was on the decline and sales continued to slow down. A major marketing makeover was required.
Schultz who was the returning CEO in 2008 made sweeping changes in the company. He closed underperforming stores and declared a new marketing strategy – interacting directly with the customer to understand what they like and what they don’t like. The vehicle for this strategy would be social media, by then an increasingly global phenomenon. Starbucks had just felt the tremendous impact of social media when in 2008 it was reviled across social media following a report of the millions of liters of water the company wasted at its outlets. The company which had always been tech-savvy, was caught off-guard, but immediately updated its operational model and expanded its marketing plans to include social media. Starbucks created its own website called MyStarbucksIdea.com and also became active on Facebook, Twitter and YouTube. Shortly thereafter Starbucks became the most liked brand on Facebook and the most followed on Twitter. After Facebook purchased Instagram in 2012 , the company tapped into the tremendous potential of the photos-based social media site to expand its marketing reach worldwide with the lowest costs in marketing compared to many other brands. In fact, Instagram has single-handedly turned around the brand value of Starbucks in a short span of time.
Social Media Marketing
Business-to-consumer markets are changing rapidly as more people and companies tap into the global nature of internet and go online for buying and selling goods . Buyers are continuously researching online to read reviews about the products and services of companies. They also tend to believe peer reviews as opposed to reviews and recommendations published by the companies or even online newspapers. With over 800 million buyers online every year, sellers have the opportunity to engage with customers and market their products in unique ways.
Social media marketing is a relatively lost cost option for marketing. Marketing costs are reduced to a fraction of traditional media outlets because companies don’t need to buy advertisement space as in the case of newspapers or TV. The costs involved are related only to the setting up and maintenance of social media platforms, typically run by a few employees of the company. At Starbucks, in 2009, there were 13 personnel engaged for social media marketing and customer engagement . In 2010, the company had spent only 1% of its US sales in advertising. It spent only $94.4 million on advertising, compared to McDonalds which spent $887 million and Burger King which spent $301 million on US advertising . Its net revenues at company operated stores as on October 2010 were close to $9 billion. However, the most successful social media marketing strategies are the most well planned ones.
The content of social media marketing is critical to its success. Companies can have a content release calendar planned much ahead . They can plan what they will post during the coming days and weeks, when they will schedule seasonal promotions and they should have enough room in the calendar to accommodate unforeseeable events as well which will elicit customer response. Another critical aspect of content is the distribution of the types of content. A ratio of 10:30:60 for promotional, Owned and Curated content has been found to be the most engaging with customers. By its very nature (it is dependent on people posting pictures), Instagram helps Starbucks achieve this ratio very easily. Starbucks posts less photos than its customers, in order to keep the engagement primarily between brand and customer community.
Instagram Marketing
Instagram has become a worldwide phenomenon in a span of 6 years. The growth has been faster than any other social media website ever launched and its appeal lies in its visual nature. Nowhere else has the truism “A picture is worth a thousand words” held up so strongly. Pictures are taken on a camera phone and uploaded almost instantly to the user’s Instagram account. Captions and hashtags are added for developing a wider reach. The skilful combination of pictures and words create stories that connect with people emotionally. The pictures need not be technically brilliant but relatable to people’s own experiences . These pictures drive the buying decisions of consumers. Therefore, a brand must create an interactive relationship with customers in order to be able to influence them into making purchases.
A brand is critical to sales performance and reputation of a company . Brand value is defined as the sum total of the perceptions and feelings that consumers have towards a particular item that is identified by a brand name; the feeling and perceptions relate to the identity, quality, performance, of the product and the trust and familiarity that a consumer associates with the products, the values that the consumer thinks the product and its brand name stand for. This shows that building a brand value has to address the customer’s perceptions about the brand itself. Instagram provides a platform for creating content about a brand and also connecting with other people who admire the brand. This creates an online brand community which allows users to actively participate in brand value creation rather than be just passive receivers of the brand value created by a company. Starbucks asked its followers to upload their photos of having a Frappucino under the hashtage frappucino. Within weeks, 61,180 such photos had been uploaded for that hashtag . By allowing customers to co-create material, Starbucks ensures that they reach not just their own followers, but the followers of the people who post these photos. It provides an easy and efficient method to expanding brand awareness and customer base.
Starbucks Instagram Strategy
Starbucks keeps it strategy on Instagram quite simple. It allows the images to speak for themselves. Most of the images feature their takeaway coffee orders – people walking with them on the way to work, holding them against nature backdrops, or even drinking them . Photos also feature other offerings from Starbucks like their cookies, waffles and sandwiches, and merchandise like coffee mugs and bottles. These are instantly relatable to its customers who may have experienced something similar or have something to say about the coffee or the merchandise.
Starbucks also uses the hashtag feature of Instagram to create memorable pictures. A hashtag like #RipVanWaffle is likely to attract customers by the word play and encourage sharing and comments. The company also monitors the responses and posts its own responses from time to time to keep the customers engaged and to lead them to a purchase point or participation opportunity. Customers can use the hashtag #starbucks to post pictures of their purchases of Starbucks products or any photo they can relate to coffee. The photos can also showcase funny experiences at Starbucks outlets. An Instagram account in the UK showed how baristas struggled with writing down Irish names on the takeaway mugs writing in one instance Shibon for Siobhan and many others .
Another strategy that Starbucks successfully employed was eschewing celebrity endorsements. It has relied on real feedback from its customers to rebuild its brand rather than use celebrities to promote its products. Starbucks customers post their own photographs with Starbucks coffee, photographs from Starbucks outlets, photos of themselves as they go to work coffee in hand, reflective photos as they take time out with Starbucks coffees, or photos of family and friends having a good time together. Allowing people to share their real experiences helps customers bond with the brand at a deeper level.
The ability of Starbucks to successfully use social media, especially Instagram, to turn around its sales values highlights the successful creation of brand value through marketing efforts. This is achieved because Starbucks successfully met the four criteria of creating brand value in online communities: social networking practices, impression management practices, community engagement practices, and brand use practices . It successfully social networks by creating close ties with its customers and regularly reinforcing those ties through offers and promotions and acknowledgment of customer contribution, it creates positive images of the brand and evangelizes the brand through customer photos to create lasting impressions. The company keeps its Instagram community engaged through pictures and regular posting of stories and milestones which keeps users connected with the company and each other. The company’s own photos promote brand use practices by showing best eatable combinations with a particular type of coffee, providing gift ideas for events like Mother’s Day . All these create a dialog between company and customer that brings the brand closer to the customer.
Conclusion
Starbucks is a prominent success story of social media marketing turning around a company’s fortunes. Always a tech-savvy company, it adopted social media aggressively in its revamped marketing strategy and became the top brand on Facebook and Twitter. With the rise of Instagram, Starbucks found a marketing partner most suited to its product. Food and beverages are as much about sight as they are about taste. The photo-based social networking site helped boost sales for the company by simply allowing customers to post photos of their products as customers interacted with them. The engaging real-life visuals devoid of any celebrity faces, created deeply personal connection with the brand which was largely the reason for the marketing success.
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