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Starbucks Analysis

Starbucks Analysis – Competitive Analysis, SWOT Analysis, and Marketing Mix

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Starbucks analysis |Starbucks SWOT Analysis | SWOT Analysis of Starbucks |Starbucks Competitive Analysis |Starbucks marketing mix | Starbucks competitors

 

Starbucks Background and Starbucks History

Starbucks Company is one of the leading American multinational Coffee Company which was founded in 1971 in Seattle, Washington as a single coffee shop. The key people behind the formation of Starbucks were Zev Siegel, Jerry Baldwin, and Gordon Bowker. Around the globe, the company was turned into a huge success with the effort of Howard Schultz. The main product of the Starbucks Company is the Coffee which can be found in the form of ground coffee and the whole bean along with this there is the availability of more than thirty blends as well as single-origin roasted handcrafted high premium coffees.

 

Starbucks Mission Statement

The mission statement of Starbucks Company is to “inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time”.

 

Starbucks Competitive Analysis

Competitive Analysis is defined as one of the critical parts which deal with identifying the key competitors of the company’s product and services along with evaluating strategies adopted by competitors to determine their strengths and weaknesses as compared to the product and service of your company (Li, 2017).

 

Starbucks Competitors

Starbucks Main Competitors
  • Costa Coffee
  • Dunkin’ Donuts
  • McDonald’s McCafe
  • Café Coffee Day

Direct Competitors

Starbucks Indirect Competitors 
  • Tazo
  • Dilmah
  • Maxwell House and Folgers
  • Tetley
  • Twinings

Indirect Competitors

 

SWOT Analysis of Starbucks / Starbucks SWOT Analysis

 

SWOT analysis is a powerful tool that is used by the company to assess its external and internal factors for evaluating strengths, weaknesses, opportunities, and threats of the company.

 Starbucks Strengths

 Starbucks Weaknesses
  • Market positioning is strong with global brand recognition.
  • High Quality of Products
  • Product Diversification
  • Corporate Social Responsibility
  • Customer-based Loyalty
  • Human Resource Management
  • Significant investment in Technology supported growth through the introduction of “Starbucks App” both in Apple and Android (Geereddy).
  • Location of its stores
  • Products are costly/Expensive
  • Auto-Cannibalization caused by the aggressive expansion of its stores.
  • Too much dependent on the US market with 8078 stores only in the USA.
  • Cultural Clash of American/European Coffee with other countries. [ For example, Starbucks had to shut down its stores in Australia because of not understanding the Australian concept of Coffee (Essays, 2018).]

 

Starbucks Opportunities

 Starbucks Threats
  • Expansion into emerging international markets.
  • Advancement in Technology
  • Brand Extension
  • Expansion of its retail operations
  • Expansion of Distribution Channels
  • Product mix Expansion
  • Huge Increase in Competition
  • Violation of Intellectual Property Rights
  • Market Saturation and Economy of Developed Countries
  • Changing customers’ taste and preferences

 

 

Starbucks Business Strategies

 

Product Differentiation Strategy

The Company offers a wide variety of products like baked goods, Frappuccino, Smoothies, beverages, etc. along with its main products roasted handcrafted high premium coffees.

Starbucks Company followed product diversification strategy by the acquisition of Evolution Fresh, Teavana, and Bay Bread as it didn’t follow the franchising model.

 

Globalization Strategy

The Company has expanded its market around the globe with the opening of the outlets in different countries for reaching a large group of customers and gaining a competitive advantage.

 

Market Segmentation Strategy

The Company is using both demographic and geographic segmentation strategy in order to position its offerings as per their preferences of the customers accordingly.

 

Backward Supply Chain Integration Strategy

The Company uses a backward integration strategy which is helping it to bring down the costs as wells as controlling the roasting, purchasing, packaging, and distribution of the coffee worldwide which helps in maintaining the taste and quality of the coffees around the globe(Bhasin, 2019).

 

Value-Based Positioning Strategy

The Company is using value-based positioning to create brand loyalty and some kind of imaginary stimulus in the minds of its customers by offering some kind of intangible benefits along with the main product(Loob, 2013).

 

BCG Matrix Strategy

The Company is using BCG (Boston Consulting Group) Matrix Strategy in order to review the portfolio of its products for finding out the product to invest in, product to discontinue or develop.

The above strategies adopted by the company helped it to gain competitive advantages over its competitors. The Company along with these strategies has been adopted according to the technological pace by introducing “Starbucks App” both for Apple and Android. The Company is not only focused on profit but also is carrying out social and ethical responsibility. With the integration of all strategies it has been possible for Starbucks to compete with its direct competitors in the market like Costa Coffee, Dunkin Donuts, McDonald’s McCafe, etc. and create its own space in the market.

 

Starbucks Marketing Mix

 

Starbucks is the biggest coffee chain in the world has been constantly focused on providing premium coffee to its customers by bringing innovation in its products that bring a unique and wonderful experience for the customers. Marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. Starbucks 4P’s of Marketing Mix is described as follows:

Starbucks Product Mix

Some of the Major Products offered by Starbucks are:

Coffee
  • Roasted Cocoa Coffee Beans
  • More than thirty blends of coffee

Handcrafted Beverages
  • Coffee with Fresh brewed
  • Hot and iced Espresso beverages
  • Frappuccino coffee
  • Non-coffee blended beverages
  • Starbucks Refreshers beverages

Merchandise
  • Equipment that brews Coffee and tea
  • Mugs and Accessories
  • Packed Goods

Fresh Food
  • Sandwiches
  • Baked pastries, etc.

 

Among all the above products the main product of Starbucks is its high premium coffee that offers a unique experience to its customers which is different compared to the coffee of its competitors. The company is constantly focusing on the product innovation process that helps in offering new products to retain the existing customers and to attract a diverse group of new customers in the international market as the business is operating widely in the global market.

 

Starbucks Price Mix

Starbucks has adopted a “Premium Pricing Strategy” for its products and has been able to create a premium brand image in the customer’s mind (Friesner, 2014). Because of the increase in the price of the roasted coffee beans and other raw materials, the company has to keep   price of the coffee high than other competitors Costa Coffee, Café Coffee Day, etc.The company offers expensive products but has a great product quality that allowed the company to sustain its premium image among its customers because of the high quality and amazing experience offered by the company. 

Starbucks Place Mix

Place Mix determines the different locations and venues from which people can access the products. Starbucks uses various distribution channels for making its products available to its customers around the globe in order to maintain a direct and personal relationship.Following are the place mix of Starbucks Company:

  • Operating in more than 70 countries around the world.
  • Starbucks Cafes around the globe.
  • Online Store
  • Starbucks Mobile Application

Previously the company used to sell its product through the Cafes. But due to growing advancement in technology company has allowed its customers to place their orders through the use of the Starbucks App.

Starbucks Promotion Mix

The promotion mix is mainly related to how the company uses different communication strategies to flow information about the company’s products and services to its customers. Starbucks is using both traditional and digital media to advertise its product and position its brand image. The company is spending a huge amount of money on marketing and advertising (GREENSPAN, 2019). The company has spent around $350 million in marketing and advertising in 2015.

The different promotion mix of Starbucks is:

a.      Advertising

Both traditionally and through digital medias using television, print media, and the internet (company’s website).

b.      Public Relations

Public Relations Campaign was done by a company like “Race Together”.

c.       Sales Promotions

The company used Starbucks Card as a sales promotions technique that allows the customers to get freebies.

 

Conclusion

Starbucks Company is not only focused on making profit but also is carrying out social and ethical responsibility equally. With the integration of all strategies it has been possible for Starbucks to compete with its direct competitors in the market like Costa Coffee, Dunkin Donuts, McDonald’s McCafe, etc. and create its own space in the market.

Among all the products offered by the Company, the main product of Starbucks is its high premium coffee that offers a unique experience to its customers which is different as compared to the coffee of its competitors. Starbucks has adopted a “Premium Pricing Strategy” for its products and has been able to create a premium brand image in the customer’s mind. Starbucks uses various distribution channels for making its products available to its customers around the globe in order to maintain direct and personal relationships. The strategic use of different marketing channels affects the profitability of the business. Starbucks is using both traditional and digital media to advertise its product and position its brand image.

 

 

Smirti
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