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.
The aggressive growth rate of stores across the world had a ripple effect which led to Starbucks undergoing multiple changes: a. Globalization – The number of retail stores were 5000 and counting. It also started experimenting with new retail formats such as ‘drive-throughs’. Around 15% of its revenue came from non-company operated retails channels, known as ‘Specialty Operations’ which included international licensed stores, grocery stores, warehouse clubs and online mail-order sales. The goal was simple – reach customers where they work, travel, shop and
• In 1987 the original owners of Starbucks sold the company to Howard Schultz who rebranded his own coffee stores to Starbucks and as a result Starbucks began to expand. • In 1987 Starbucks opened stores in Vancouver, British Colombia and Chicago. By 1989 there were 46 outlets and nearly 1 million kilograms of coffee were being brewed per year. • By 1992, they were listed on the stock market and had grown to 140 outlets with an income of $74 million. • Today Starbucks sells Coffee, Smoothies, Tea, Baked goods and Sandwiches.
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.
Starbucks implements loyalty programs to help maintain customer satisfaction. It is also known as a corporation that adopts product differentiation. They have seen growth during the years. Weaknesses Weaknesses are always present, even in the top companies. Starbucks has a number of competitors in the market, and have high cost products when comparing them to other competitors.
Originally, Starbucks was a trendsetter with its unique brand positioning and differential values. It offers not only food and services, but most importantly, experiences. Starbucks can gain high customer motivation to pay with relatively low cost and earn reasonable profits. Its "non-brand" decisions, such as licensing arrangements, store locations and drive-through service, may financially make sense over a short period of time (Ferrell and Hartline, 2014, p. 527- 528). However, such short-term financial growth is in sacrifice of brand positioning and equity in the long term.
People are driven by a variety of factors and there are many different internal motivations and external influences that affect a consumer’s decision to visit an establishment or make a purchase. By creating a detailed consumer profile Starbucks can better understand their customers and guide them through the purchase process. Target Market Starbucks has done an extremely effective job at defining their target audience and appealing to them through hip, contemporary design and consistent messaging. Their typical customers are men and women between the ages of 18 and 45. They are urbanites, meaning they live and/or work in a metropolitan city or a suburban neighborhood.
“The total number of coffee shops in the US is forecast to grow by just 2.17 percent this year, the slowest growth rate seen in the last six years” (Mintel study). The Company has been fast expanding in sales of its own bottled drinks and other coffee assortment at supermarkets and other locations. the company continues to find growing through other beverages, such as tea, beer and wine. Starbucks has as well continued to emphasis on its café presence through a widespread variety of food options, stylish restaurant remodeling, a revamped rewards program partnership with Chase and Visa, launching its first co-branded reward credit card to allow consumers to earn Starbucks reward points when they shop elsewhere. “Americans” increasingly on-the-go lifestyle is leading to a surge in demand for ready-to-drink beverages.
EVALUATION OF STARBUCKS PRODUCT Starbucks has a product range of more than 30 blends and single origin coffees, handcrafted beverages, bottles and etc. Contrary to the apparently broad product range, beverages represent 77% of retail sales whereas food items and other products account for 15% and 8%, respectively, which means that the company strongly depends on beverages and also that the variety of products developed has not worked as it should have, which may be risky if market and competition conditions change. There are several cases of distinctive product range failures; For instance in 1999, the introduction of an internet venture to sell kitchen products resulting in a stock fall of 28%, just one day after the announcement. Starbucks
Starbucks Coffee Company, founded in 1971, has grown to an international brand. As the world’s biggest coffeehouse company, Starbucks continues to lead the industry in sustainable business and innovation. Such success is attributed to the firm’s ability to address the external PESTEL/PESTLE factors. The PESTEL/PESTLE analysis framework indicates the most significant influences on Starbucks based on characteristics of the remote or macro-environment. Despite its current industry leadership, Starbucks must continue monitoring its remote or macro-environment.