Executive Summary
Starbucks is the leading retailer and roaster for brand specialty coffee in the world. It has over 7,500 stores located worldwide. As Starbucks continues to expand, it will encounter all sorts of new product markets, with new and demanding customers for unique and appealing products. Starbucks has begun by introducing an extension of the Frappuccino line targeted to the non-coffee drinker. Entering this new market, Starbucks faces many challenges from having to compete to retain brand recognition of its primary products, yet increase awareness of its new product line. Our analysis and research of the market have resulted in keys findings as follows:
• The new Frappuccino blended beverages, also known as the
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This success is due to the combination of high quality drinks and friendly environment with good music, comfortable chairs, and good services. This creates the “Starbucks experience” which customers can relate to that lead to brand loyalty. In addition, Starbucks needs to deal with customers’ cultural preferences in all its worldwide locations to maintain customers’ loyalty. (See Figure 2) Also see Figure 3 for influences on the consumer purchase decision process.
Competitor
To ensure further market growth and be competitive, Starbucks is developing new products for non-coffee drinkers. Starbucks provides its current customers and attracts new customers not only with quality products but also with varieties flavors that customers’ desire (See Figure 3). Starbucks’ two largest competitors are Dunkin’ Donuts and Krispy Kreme, both are national chains. These companies use aggressive price-cutting, up to 20%, for their drinks.5 Other competitors are small local coffeehouses, and other coffee brands like Tully’s and Pete’s Coffee. Their direct competitors for the new product line are Orange Julius, Jamba Juice, fast food chains such as McDonald’s and Burger King, and other small coffee alternative providers.
Complementors
Starbucks recently teamed up with Bank One to offer the Starbucks Card Duetto Visa.7 This is a stored-value card and traditional credit card. Starbucks has also introduced a T-Mobile Hotspot service which allows the
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.
Starbucks has developed a brand image that has revolutionized coffee drinking experience. It has created an ambiance that is designed to attract customers and keep them coming back to Starbucks stores. It offers wide varieties of services such as comfortable seating areas with unique music and free wireless Internet for their customers while sipping their favorite coffee. This distinctiveness sets Starbucks apart from most of its competitors and has allowed the company to successfully grow and profit while charging premium prices for their products.
Starbucks main competitors are quick-service restaurant and specialty coffee shops. They are serving the same or similar core product as what Starbucks providing to their customer.
starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One
It’s a known fact that Starbucks is one of the leading brand in the market.When we analyse the market we find that Mcdonald 's and Dunkin are the competitors in the same product segment. So comparing Starbucks with these competitors will throw light on its grey areas, process and competitive edge in the market.
Starbucks will be the first come in your mind when you want to have a cup of coffee. Don’t you feel curious about why is Starbucks so successful? This report explains how Starbucks take advantage in consumer purchase decision making process, how does Starbucks attract customer, how does Starbucks segment its market and new trends in society affect purchasing process.
Starbucks advertises two essential mission statements. First and foremost, it strives to “establish [ourselves] as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while [we] grow(s).” (Starbucks) Reflective of its mission, Starbucks bases its strategic campaign and communications on six indispensable philosophies; structuring a pleasant work environment in which employees are treated with “respect and dignity,” incorporating diversity in all business aspects, purchasing, roasting and delivering fresh coffee, retaining satisfied customers, giving back to the community and environment, and developing
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?
Starbucks has put heavy concentration on product innovation, new product launches and branding strategies and as a result, the company has lost sight of the customer’s wants and needs. Ultimately, Starbucks is not properly or correctly measuring customer satisfaction. They are basing these scores on characteristics affecting the product, and not precisely measuring the quality of their services. As Exhibit 10 from the case study shows, Starbucks’ customers ranked a clean and convenient store as the most important attributes of creating customer satisfaction. As marketing research is beginning to reveal, this should not be the only focus. Starbucks needs to shift their priorities and rank fast service, customer experience, and atmosphere as most important, as new studies suggest.
Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty
Starbucks has always taken exceptional care in keeping its brand value. In fact, Starbucks prides itself in its brand, particularly the power it has to keep its customer base strong. Before analyzing this loyal customer base it is best to consider the particular characteristics of the brand that has led to Starbucks having such devoted patrons.
Starbucks faces competition from variety of small-scale specialty coffee chains, such as Caribou Coffee, Peet’s Coffee and Tea, Dunkin Donuts, and thousands of independent specialty coffee shops. Each of them applies different strategies to differentiate itself from Starbucks; some of them deliver highly personalized service.
In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.
By applying the industry rivalry concept, although Starbucks has other competitors, they are comparatively smaller and they often focus their business in certain areas or regions. Some of Starbucks’ competitors are Coffee People, Gloria Jean’s, Second Cup, which are currently expanding or planning to expand their businesses nationally or internationally.
Starbucks first opened its doors in Seattle’s Pike Place Market with the name being coined from that of Moby Dick’s first mate (Schultz & Yang 1999). It has spread its shops across North America, all over Europe, the Middle East, Latin America as well as the Pacific Rim with an estimated 35 million customer weekly (Michelli, 2008). With tremendous growth from a small time coffee shop, the company has matured to an international icon that today it is one of the world’s leading retailer, roaster and brand specialty coffee (Story, 1971). The company offers whole bean coffees, espresso beverages, and confectionery and bakery items.