McCafe breaching coffee market

With coffee consumption being transformed into a habit, with active market growth, with Starbucks being a North America market leader the distance between company and its competitors was reduced.

Customers However, data from the market research team has shown that there is a shift on Starbucks’ brand recognition in customers’

McDonalds Business Proposal Paper ECO/561 February 3, 2012 McDonalds Business Proposal McDonalds has always been a company that shares in the happiness of a child. Recently after taking my own children to McDonalds, I have found that there is not a breakfast option for children. McDonalds should add a happy meal option to the breakfast menu. Current demands by consumers are to add a happy meal option allowing parents to purchase child sized portions of breakfast items. This option could help McDonalds to increase profits by attracting more consumers. Shareholder reports show a quarterly cash dividend per share increase of 15% and annual dividend of $2.80 per share. Comparable sales grew 5.6%. Cash by operations increased $808

Customers yearn for top notch coffee and pay willing high prices compared to others. Coffee drinkers, are not only paying for convenience, but know it is good coffee. Restaurants favor one of two business models: the standard retail business model or the franchise model. Starbucks is a standard model chain, which means it does not franchise out. The bulk of its profit come from locations the company owns. Sometimes this business model can hinder expanding. Starbucks beat the odds of this by going to high populated areas with lots of traffic. Meanwhile globalization is playing a role in how companies can

Ratio Comparisons Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks

Substitute Products – The threat of substitute products poses a potential threat to Starbucks as competitors with like products offer similar products to capture the market.

Starbucks has created a competitive advantage with their product quality by setting themselves apart from their competitors. “The Company has stayed with the upper-scale of the coffee market, competing on comfort rather than convenience, which is the case with its closest competitors, McDonald’s and Dunkin Donuts” (Mourdoukoutas, Panos). Consumers believe they are receiving a better product and experience when they purchase from a Starbucks as opposed to another large food service company that may sell coffee.

McDonald’s has been in business since 1955. It has positioned itself in the market as a low-priced, fast food restaurant focusing on hamburgers and other convenience foods. The company is currently faced with competition from Chipotle, a restaurant which offers fast and healthy Mexican food in the fast-casual dining segment. Both restaurants are competing for customer dollars and while they both offer fast convenience there are differences in their food offerings. McDonald’s has always offered a fast, basic meal at a low price. In comparison, Chipotle offers fresh, quality Mexican food fast at a low price. Analyst have suggested that Chipotle would bring an end to the fast food burger chains that have long dominated the industry. McDonald’s must determine if Chipotle is a competitive threat and if so how to address the threat in the market.

Dependent upon equity & debt financing (p20). 5.     Effectively leveraging its brand-name and size (p20). Opportunities 1.     Reinforcing its brand-image (p8). 2.     Global expansion. a.     Higher coffee consumption in foreign markets than in the U.S. b.     Already has contact with foreign exporters. 3.     Marketing in higher echelon restaurants and day-part chains (p16). 4.     “Concretely defining its brand-image” (p20). Threats – 1.     Adequate number of “A” sites in “A” markets nationally (p13). 2.     Individual and small chain competitors overshadowing Starbucks’ brand in local markets. Issue Analysis Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?

Company Situation Starbucks roasts high-quality coffee beans to make espresso drinks and sells coffee products through multiple retail channels. The company has over 24,000 stores in 70 countries. Starbucks target market is affluent adults ages 18-40. This market segment makes up 49% of the company’s sales. In addition to targeting a specific market, the company employs a differentiation strategy. Along with the high-quality coffee, the company offers an experience within their stores which justifies higher products. Some aspects of this “coffee experience” include free Wi-Fi, friendly baristas, fast service, and comfortable seating. Also, the company relies on new product development as a strategic choice. This includes adding alcoholic beverages and food to its coffee shop. All of this is done with the idea of making the higher priced product worth it for the consumer.

Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”

Summary The “Coffee Wars – The Big Three: Starbucks, McDonald’s and Dunkin’ Donuts” article focuses on the company analysis of the Starbucks brand and how its main competitors, McDonald’s and Dunkin Donuts, has affected their brand and driven competition higher. Even though there are many companies trying to enter the specialty coffee market, these three companies own the majority of the market share. With Starbucks’ top quality and above average prices they hold a different market than the fast coffee/food market of Dunkin’ Donuts and Starbucks; yet the competitive moves Dunkin’ Donuts has made over the years in order to compete with Starbucks and surpass McDonald’s has driven competition up between all three companies. The competition has stiffened ever more in the past ten years due to the changing economy. This led to “the big three” to come up with different techniques to gain competitive advantage over the other. Although the competition between these companies is to gain most of the market share, consumers are still loyal to a certain brand; this makes it difficult to gain each other’s clientele. McDonald’s continues to appeal to customers who want value and speed, Dunkin’ Donuts focuses on the middle-class, while Starbucks a customer who desires a higher quality product along with being recognized for using the brand.

Strengths Branding: The Starbucks brand is one of the most recognizable brands in the United States. Whenever you see that a company sells Starbucks’ products, you know that you will be able to receive the same product that you are used to in a Starbucks’ store. Through Starbucks’ market research, they have noticed that their consumer wants consistencies with all of their products. Starbucks’ had listened to this from their consumers and it is reflected in their brand. Their brand has created a customer following that allows the consumers to completely trust the brand. When this happens, no matter what Starbucks puts their brand on, they are able to show that the product is able to be trusted with the same trust you give Starbucks.

In terms of competition and the forces, which could limit the success of Starbucks it is important they stay ahead or even with other companies concerning innovative products. Many more micro companies are coming up with new products with a similar quality and a lower price/cost. It is important that Starbucks continues to search for innovative products to continually satisfy their customers. At the same time “rivalry” amongst Starbucks and smaller providers of coffee will continue to increase as the demand for coffee continues. The buyers bargaining power is significant as they can determine the cost, type of product, quantity and ultimately

McDonald’s Corporation Analysis 1) Summary of the Company: McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants. There are over 31,000 McDonald’s locations worldwide primarily selling hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, and desserts.