Starbucks

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.

Additionally with its growth strategy Starbucks seemed to have lost the ability to communicate its values to its customers. Note that Starbucks research team discovered that between 2000 and 2001 there was an increase in customers who felt that Starbucks primarily cared about making money and building more stores. This is an indication that the company lost sight of the components making up its value proposition. Customer service was a major component of Starbucks value proposition but according to the research team by 2002 it discovered that Starbucks was not meeting expectations in terms of customer satisfaction. In fact the data collected by the research team indicated that 10% of customers would like to see improvements in service especially speed of service and 19% would like to have friendlier more attentive staff.

Starbucks customers are diverse, well educated, young business people looking for a quick and easy way to grab coffee on their way to work. Starbucks values a strong relationship with their customers so they are

Similarly, companies such as Starbucks was affected by changes in leadership and competing with other companies that also saturated the market. Starbuck was a very successful company because they was able to provide a relaxed atmosphere that allowed people to converse with family and friends, have meeting, read, and use internet access all while drinking a cup of coffee. Starbucks customer flow was beginning to decline because the customer were growing tired of spending $4 for a cup of coffee when they can get similar coffee at the competitor i.e. McDonalds, Dunkin Donuts, or Seattle’s Best. In 2008, Starbucks listened to the customer and began revitalizing and going back to the basics. They removed distracting items from countertops such as books, CDs, breakfast sandwiches and began to focus on the product itself which was coffee. In making these changes, Starbucks was able to slowly start growing again and was able to continue to make strive to internationalize.

As a well-established coffee retailer and over 35 years of success, Starbucks is at the maturity stage in the product life cycle. It is in this stage that Starbucks needs to shift gears and focus on marketing program modifications by increasing the number of customers and customer visits (Kotler, 2009, pg. 185). While improving service will attract first-time customers and retain current ones, further marketing modifications will need to be made if it wants to continue to grow. More advertising, distribution, sales promotions, and personal selling are a few of the ways to modify the marketing program.

The market research team has also discovered that Starbucks’ customer base is evolving. The customers tend to be younger and less well educated. Regardless of this insight, customer behavior remains the same. According to Figure A in the case study, the typical customer visits just five times a month. I believe this is in part due to Starbucks’ inability to meet customer expectations and increase satisfaction. In order for the company to increase the frequency of customer visits, customer satisfaction must improve. Thus, the ideal, most profitable consumer for Starbucks is one who is a

companies market their brands in the United States as well as internationally and are very successful at it. In order to be successful in other countries both Caribou Coffee and Starbucks have learned that they need to change their menus, advertisement and sometimes layout of their stores to appeal to locals abroad. For example, Starbucks had success in India by partnering with a local business called TATA Global Beverages. Starbucks used them to gain knowledge sharing networks about Indian real estate as well as specifics on culture and local preferences. Starbucks strives to have the same in store format throughout India, this helps to maintain the unique selling point of the customer experience (Starbucks). They also have slow and

Starbucks would then open up stores in trendier areas of a country, most likely geared toward a youthful image. In addition to these strategies Starbucks decided not to compromise on its basic principles of offering quality coffee of similar origins, and offering a non-smoking environment across the globe (Starbucks International Operations 5).

As the number one specialty coffee retailer, Starbucks offers hot and iced drinks, breakfast and pastry items, as well as boxed meals and sandwiches to customers in over 18,000 coffee shops in 60 countries. Also known as the premier roaster, Starbucks has created a high level of brand reputation because of its top quality services they prove to their customers. Starbucks wants to create top quality for their customers as well as create unique customer experience for each individual customer. They use premium coffee beans that they roast with great care to ensure a great, bold taste in their coffee. Starbucks also makes sure that each store is more of a community feeling, rather than a store establishment, and

Marketing and Sales: Starbucks aspires to build customer trustworthiness through word of the mouth as a cost effective means of marketing [8]. Though the stiff competition have made senior management to re-evaluate the marketing strategy and marketing budgets [8]

Starbucks control the supply chain so that they can make sure the coffee is the highest quality. And the starbucks locations are always in downtown area or high-population area which brings customers more convenience. The decoration style is trying to make customers feel as comfortable as they can. Although starbucks is not unique enough as other private coffee shop, starbucks is the highest coverage coffee shop with high quality coffee and comfortable areas. It is a coffee shop brand that people can easily find and walk in.

Starbucks is and will continue to be one of the largest distributers of a cup of coffee today and into the future.  The Starbucks mission to “inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” directly correlates with the experience a customer has in each store. They have many ways to differentiate in comparison to competitors because they provide an experience while shopping for a coffee allowing them to charge a premium price.

India, like many other Asian countries, has a tea drinking culture, but the coffee market is catching up and growing fast. This case talked about the stories of Café Coffee Day (CCD), the Indian coffee industry market leader, along with its competitor Starbucks from USA. CCD was founded in 1996 and by April 2013 it had around 3,000 stores within the Indian market. CCD had not faced any severe threat up till 2012 when Starbucks made its entry into the Indian market through a joint venture with Tata. As the world’s largest coffee chain company, Starbucks wanted to get a slice of the cake. In 2013, it opened 11 stores in Delhi and Mumbai.

Starbucks’ product is a casual experience in a comfortable atmosphere where the customer can enjoy a premium cup of coffee and a newspaper or relaxing conversation with friends.

The entrance of Starbucks in Indian coffee market offering global services standards, higher income to employees, strong partner and supplier and premium food, caught the curiosity of a lot of customers and, even though the price was aggressive, the movement around Starbucks was huge. Not only the international appeal and the Indian desire to try new brands contributed to that, but also the strong image of an innovative and strong brand image helped Starbucks to grasp the interest of a new affluent segment - people above 25 years old with enough money to afford high quality service and premium products - that CCD was not managing to get. CCD was lacking innovative actions to catch the affluent segment and aim to grow. Also, with low salary and recruiting staff from small villages, services was starting to drop the level and not even meet the customers’ expectations. In general, with the changes of the external environment, CCD was not competitive enough to sustain market leadership position in India.