Unlike before, not all baristas were hand-picked who had mastered ‘both’ the hard-skill and soft-skill required for the job. Moreover, the diversification of customer base and increased product portfolio meant that they had to deliver ‘customer-made’ beverages as quickly as possible and maintain the ‘customer intimacy’ quotient at the same time. The above table clearly states that the most profitable / valuable customer for Starbucks is a ‘Highly Satisfied Customer’ with an average lifetime revenue of
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.
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.
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.
Strong brand identification or high capital requirements can minimize the threat for competitors. As a brand Starbucks holds very strong reputation in the market. For people Starbucks is like second home as when they get tired of being home or workplace they can sip a coffee there and feel relaxed, which can relate in a bad manner for the new entrants. For Starbucks the threat of new entrants is modest as they have their own standards that are very high to compete with by the other firm. Locally there are many other coffee shops that are developing.
The increase in average temperatures and the turning of rainy seasons destroy large parts of farmers' yields and impede the overall yield of coffee. • Competitors The main potential challenges facing Starbucks are increasing competition from other retailers with similar concept of products. These competitors are able to stand out in the markets to generate customers. The main competitors are Dunkin Donuts, McDonald’s and Costa. It is essential for Starbucks to know their rivals and what they are currently doing to gain completive edge over them.
As previously mentioned, Starbucks has various strategic issues including the overreliance on the US market for its revenues, lack of control over its brand image in foreign markets, and competition from other players including fast food retailers, specialty coffee providers, grocery stores, specialty retailers, and convenience stores. Therefore, Starbucks has to respond to these strategic issues by amending its strategy to improve its performance in the highly competitive market. First, Starbucks needs to amend its transnational strategy to increase the performance of its international markets to reduce vulnerabilities associated with overdependence on the US market. The firm needs to recognize that tastes differ by region and the products
OVERVIEW Starbucks is organizations which deals with retailing of coffee all throughout the world and has now-a-days become a global brand. Starbucks has a reputation for the world’s finest coffee and its legendary customer service. In order to determine the rate of growth of Starbucks it is necessary to look in to how they treat their fellow partners, customers, communities, suppliers and shareholders. Starbucks is consistent with the Global Human Rights Standards and it supports equal opportunity in its hiring practices. In case of hiring people under the age of 18 Starbucks takes a special note in relation to the legal requirements that need to be followed such as the working hours and tasks performed.
Its products are expensive compare to other competitors in the market. Because of the economic situation of these days, consumers are finding them self-switching to a lower price coffee service providers, especially in lower developed countries. Starbucks is dealing with this issue by offering products promotions and lowering prices by recycling paper cups or using customers’ provided mugs as a mean for promoting environmental friendly operations. Increased competition is another threat facing Starbucks which the company has to deal with. Due to globalization the organization should focus on developing a good reputation not only in the US, but also around the world.
• 24h service • kids oriented menu Threats • The availability of Arabian coffee that is much cheaper • A tax increase • • 5) Competitive Advantage of Starbucks Starbucks has a unique marketing strategy, the way they advertise is word to mouth. What they do is they purposely misspell people’s names on coffee cups, so people can take photos of them a post them online (this would be free advertisement). It relies more on giving a unique experience to the customers and less on bragging about itself. Starbucks focuses on product quality; they offer rich coffee beans and a delicious taste. They offer great customer satisfaction; employees do their best to please the customer.