Starbucks coffee house uses modern technology in attracting customers and gaining competitive advantage. Due to increase in demand for the modern technology, Starbucks coffee house are more focused on producing high quality coffee. The survival of this business is threatened by fierce competition from seven businesses. The competitors capitalize on financial resources, market expansion, prices, quality, and brand to strengthen their position. Starbucks utilizes marketing strategy as a survival technique amidst its competitors, especially association with consumer’s lifestyle.
The financial performance of Starbuck is determined by economic trends but amidst all the prevailing conditions, it has remained sound and steady, which enables to widen its consumer base and leverage its business activities. In relation to this, it has managed to provide its shareholders with great returns on investment and significant value. A well-established blossoming relationship with customers has been the foundational basis of profound capabilities characterized by offering high quality coffee, necessary education, and friendly employees. By establishing a list of loyal customers, Starbuck has succeeded in fostering its mission that is to inspire and nurture human spirit as well as its vision and rich heritage.
Starbuck derives its strength from product diversification, strong worldwide brand, customer loyalty, significance annual generation and strong financial foundation. Despite being a market leader, Starbuck experiences weaknesses in terms of lack of internal focus, product pricing and international problems. Emergence of new markets, expansion of coffee culture and co-branding with other manufacturers are some the opportunity coming along its way. Operation of Starback is greatly threatened by increased competition, volatility of coffee market with change and increased cost of coffee.
In the market analysis, the author illustrates a tremendous growth in coffee and tea market more so among women and coffee homes. The current size of operation and increase is exemplified by generation of $34 billion and a 50% growth. The major driving force for this has been industrialization. Profitability analysis pictures stiff competition in the industry, bringing on substitute products, low bargaining power of consumers, stronger bargaining power of coffee and equipment suppliers, high fixed and entry cost but low variable cost, high visibility and traffic located distribution systems, economic trends, consumer government and technology (wireless internet) being the prevailing market trends while assets and competencies (of staff) are the basis for successful competition.
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Touching on marketing objectives, Starbuck aims at increasing; product and brand awareness within 8 months, sales of new products with first 10 months and market share within the 1st 10 months. In conjunction with these objectives, Starbucks strategizes to achieve immense competitive advantage with limited resources. Market awareness would be achieved through sales promotion techniques and methods while the pricing strategy would entail pricing of commodity on the basis of prices of similar products in the market but ensuring that prices are not too low to extent of incurring loses. The author also illustrates the fact that Starbuck wishes to employ Niche marketing, in which the target group will be women, through appealing packaging and in later reach out to all young people. Coupon marketing is also a choice for this business considering packaging of coffee in small quantities and giving freely and cause marketing, whereby they would chose breast cancer, an issue among women due to its antioxidant properties in order to draw women customers.
The action plan is also brought up in the article following the set objectives. The first being; a new offering whereby Starbuck in alignment with growing health movement will introduce healthy cocktail as a way of product development in existing market and product diversification in the new market. The target market would be well educated young males and females in relation to demographics and healthy cautious people in connection to psychographics. Considering pricing strategy, the price of the healthy Cocktail will be 2.500KD. Marketing activities for the product would be limited to social networking through Facebook and use of posters. Additionally, the author illustrates that the best metric for Starbucks coffee would be the customer buying frequency and comparing business growth with that of the competitor
In conclusion, the author notes that effective marketing strategies are important in gaining competitive advantage. However, it is also unveiled that it is imperative for analysis of strategies to be in order to enable the marketing teams to effectively asses their marketing strategies and initiate necessary adjustments to the strategies.
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