Tea is the second most consumed beverage in the world after water, but Starbucks Corporation, the coffee company and coffeehouse chain founded in Seattle, has had difficulties getting consumers to pay the same premium price for tea that it gets for coffee. When Starbucks bought Teavana Holdings, an Atlanta-based tea company for $620 million in 2012, Starbucks Executive Chairman Howard Schultz promised, “we will do for tea what we did for coffee.”²⁵ That goal has yet to be achieved.

Starbucks first started taking tea seriously in 1999, when the corporation purchased the Tazo tea brand in 1999 for $8.1 million. In 2017, Starbucks sold the Tazo brand to Unilever for $384 million to concentrate on the Teavana brand.26 However, Starbucks announced plans in 2017 to close most of its Teavana stores due to low sales. Starbucks still hopes to create a “tea culture” within its cafés.

Several reasons are cited for the willingness of people to pay more for coffee than tea in the U.S.27 First, coffee lends itself to complicated premium drinks that use combinations of flavors, dairy or dairy substitutes, and sweetener.

Second, tea often comes in a tea bag, which may not be associated with premium prices. Finally, the coffee industry may simply have been better at marketing coffee as a premium beverage.

The tea industry has developed some tactics that it hopes will increase the prestige of tea. These include creating tea drinks that cannot easily be replicated at home; developing new flavors, particularly those that are perceived 

to have health benefits; spending more on training staff to brew tea properly; and highlighting tea’s long and rich history. Perhaps these strategies can help increase the sales of premium tea drinks at Starbucks.
1. Based on the definition of marketing research, do you think that marketing research can help Starbucks increase its sales of tea? Explain.
2. Which of the three uses for marketing research identified in the AMA definition might help Starbucks improve tea sales? Why?
3. Marketing research is used in all areas of the marketing mix, including determining target markets and conducting research of products, pricing, promotion, and distribution. Which of these areas do you think would be most useful for Starbucks to use to increase tea sales? Explain.
4. In thinking about the components of a marketing information system, which components would you suggest that Starbucks use? Why?

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Starbucks hopes to create a "tea culture" within its cafes. FAUP/Shutterstock