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. Enteringthis 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 themarket have resulted in keys findings as follows:
The new Frappuccino ...view middle of the document...
Faced with the challenge of entering a new competitivemarket Starbucks must compete to retain brand recognition of its primary products, yet increaseawareness of its new product line.
Starbucks is the leading retailer for roaster and brand specialty coffee in the world (See Figure 1).It has over 7,500 stores, which are located in the United States, Canada, Europe, Asia and the MiddleEast
. Besides high quality coffee drinks, Starbucks sells bottled coffee drinks, such as Frappuccino® andStarbucks DoubleShot™.Starbucks revenue is growing by 20% a year and is opening approximately three stores every day.Starbucks is capable of managing its successful operations by having steady market growth. It achievedthis by financing through their cash flow instead of franchising, selling stock or increasing their financialleverage
. Its strategy to success is “blanket an area completely.” This approach is to “cuts down ondelivery and management costs, shortens customer lines at individual stores, and increases foot traffic for all the stores in an area,” that gives Starbucks a competitive advantage.
At first only yuppies went to Starbucks, but now it attracts a much wider demographic of customersincluding people of different ethnic backgrounds and ages. Today, Starbucks has the striking number of 25million people visitors in its stores each week
This success is due to the combination of high quality drinksand 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.
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 withquality 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.
Other competitors are smalllocal coffeehouses, and other coffee brands like Tully’s and Pete’s Coffee. Their direct competitors for thenew product line are Orange Julius, Jamba Juice, fast food chains such as McDonald’s and Burger King,and other small coffee alternative providers.
Starbucks recently teamed up with Bank One to offer the Starbucks Card Duetto Visa.
This is astored-value card and traditional credit card. Starbucks has also introduced a T-Mobile Hotspot servicewhich allows the Starbucks customer to have access to wireless internet for a fee.
Offering more serviceslike the Visa card, wireless internet...