How Starbucks Uses Big Data

How Starbucks uses Big Data

By Josie Sittig

 

Now that Fall is upon us, pumpkin-flavored-this- and-that season is in full swing. And speaking of pumpkin flavored things, Starbucks is way ahead of the game. They started selling their classic 'PSL' on September 1st, 82 days before Halloween(!). Pumpkin Spice Lattes have been around since September 2003, but their popularity has endured tremendous growth in the more recent years.  But in this post we are going to talk about the data behind the famous PSL.  

 In 2014, Starbucks had sold more than 200 million Pumpkin Spice Lattes, generating at least $80 million a year in revenue alone. How has the PSL become such an iconic media feature? Well, Starbucks has done a great job of pinpointing their target market. Chron writes that Starbucks targets 25-40 year old as they account for 49% of the business. Another 40% of business consumers consists of individuals ranging from 18 to 24 years old. Starbucks smartly has created a social media account that boasts nearly 115,000 twitter followers. They are also involved on instagram and Facebook.

 When typing in Pumpkin Spice Latte into Google Trends, you will see that search interest started to pick up in late July, but spiked in the second to last week in August, and then again in the last week of August. Another interesting fact comes from the market research firm NPD. They found that Starbucks has valid reason to put so much money into advertising the PSL, because the PSL buyer spends more on their drink.

 A study conducted in Fall and Winter of 2014 shows that the average check for pumpkin latte buyers was $7.81, compared with $6.67 for non-buyers. Starbucks may need to work on getting consumers to purchase the PSL more than once though. Another study, again conducted by NPD, found that the PSLs are likely considered to be an "indulgent" purchase, and the majority of the customers, 72 percent, purchased the drink just once.  About 20 percent of pumpkin spice latte customers purchased the item twice, and about 8 percent made three or more purchases during the offer period.

 The Pumpkin spice flavor is on an upswing in trends, and each year it seems the flavor has only gained in popularity. It isn't surprising to see Pumpkin flavored muffin mixes or recipes to pop up during the fall season.

 Data from Mintel Menu Insights shows that the popularity of pumpkin flavored items on restaurant menus is up 21% since 2012. While just over half of this growth is in baked goods, statistics show the overall satisfaction in pumpkin flavored items is up. Starbucks has been paying attention to customer demand and has added Pumpkin flavored baked goods such as the pumpkin cream cheese muffin and the pumpkin scone. Starbucks has finally rolled out a pumpkin flavored grocery line to better accommodate their customers.

 Starbucks has also used it's Starbucks Rewards app to appeal to customers  while also getting important data such as what drinks consumers are buying, in what quantity, as well as their average order price. With this information gained, Starbucks can better help their customers and also create drinks they can predict their customers will like.

 Starbucks has done a great job of learning what their customers like, and has capitalized on big data to help gain brand popularity.