The Industry demand has changed due to a shift in consumers’ attitudes towards healthier products. This placed Starbucks’ coffee culture at risk and threatened the company’s future. Starbucks has tailored their menu to include more organic and healthy product mixes, venturing into tea, bread and fresh juice products (Geereddy, n.d). Starbucks’ cornerstone product differentiation strategies and Human Resource Management are the main impacts to strategy formulation. Starbucks’ is a premium valued brand; costly to imitate.
To show their support for the farming communities, Starbucks invests in programs that are meant to improve the economy of the communities. Moreover, these programs help improve the farmers’ lives and ensure a long-term supply of high-quality coffee for the industry. (Starbucks,
They are focused on their suppliers such as coffee beans farmers and customers. Starbucks through the fair transition to keeping coffee beans market position and provide high-quality coffee as well as a comfortable place to customers enjoy Starbucks’ coffee and food. Also, Starbucks has involved a lot of community activities, so they are created a long-term relationship with the community. Moreover, Starbucks also focus on environment development. Such as cycling activities and water Conservation.
The current value curve for Starbucks and its most relevant competitors Peets, and the McCafe Line shows somehow a threat to Starbucks becoming part of a red ocean. For which Four Action framework should create more customization by allowing users to create new flavors and drinks online not only this, but also user can order online and can find the nearest Starbucks. To enhance the Starbucks brand in the new digital era and to create a blue ocean for the coffee experience an online system or may be mobile app is necessary. Starbucks has maintained its position in the market and has a competitive advantage for creating its original blue ocean of bringing high quality coffee choices to the masses. To avoid competitors such as McDonalds and other coffee chains they will need to bring innovation by enhancing the customer experience by investing in online customized content and interactivity rather than creating more new products.
It company’s mission statement is “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” Starbucks brand message is that they value each customer specially. For a long time, the company has been committed to providing the highest quality coffee and service to customers, creating a unique “Starbucks experience”. Customer experience is the core demands of its brand equity. They want the brand to bring friends together, set up the conversation and foster the relationship. Starbucks goal is to become the ‘Third Place’ in the customer’s daily lives, a place away from work or home (Starbucks, 2016).
Starbucks differentiate itself from other coffee shops by providing unique customer experience. It has very high standards of customer service, due to which it enjoys customer loyalty. Starbucks has been facing stagnant coffee sales and to overcome this, the company has decided to continue its global expansion. Starbucks has been looking to expand its product mix. To achieve this Starbucks has come up with a new concept called Starbucks evenings.
However, such short-term financial growth is in sacrifice of brand positioning and equity in the long term. When confronting the financial crisis and intense competition, Starbucks becomes inevitably vulnerable. As a result, it needs both internal and external brand revitalization to regain its competitive
Starbucks fully understands the impact of sustainability and have taken a proactive stance to improve the overall health of the eco-system to ensure fruitfulness in the future. - Creating employment opportunities for more than a million people. Starbucks College Achievement Plan illustrates that they have seen that investing in the youth will bring about a positive future. Their initiative to hire refugees demonstrates that they see the need to welcome everyone into society and help those seeking refuge to make a new life for
Customers appreciate its ethical sourcing of raw materials and are happy to pay more for Starbucks products. Even though the company does not hold the first place in the UK market, which is held by Costa Coffee, they have acquired a strong customer base of students, as well as their normal target group of working class. Based on the findings from the Marketing Mix, Starbucks has successfully created value for their customers. (Shubber, 2015) They have succeeded in growing their cafes into experience and a place for people to meet to spend their time. In the recent years Starbucks has expanded their sales channels from cafes to smaller pop-up units inside shopping areas, bookstores, college campus and airports.
However, the company must work to address the identified threats, especially the threat of substitution linked to the increased availability of home-use specialty coffee machines. On the other hand, Starbucks cannot do much but to avoid the threat of bureaucratic red tape. Overall, the PESTEL/PESTLE analysis framework indicates that Starbucks Coffee has plenty of room for further global growth. The preceding analysis proves the point that Starbucks is operating in a relatively stable external environment. The main reason for this is the fact that it operates in the Food and Beverages space which means that despite the recession, consumers cut down on the consumption to a certain extent and not completely.