Fig 1. The Modern Coffee Shop Marketplace
A relatively mature market with fierce competition. The focus is on increasing Marketshare, mainly through outlet expansion, Premiumisation of products to Differentiate and increase prices to influence the average spend per visit; along with NPD and creating new channels to new markets, i.e. PRC. Specialists add value through their expertise and dramatic show of Barista skills. Brand Loyalty is low, with consumers under pressure due to static wages/rising prices. To offset, retailers offer miniatures/vending, improved convenience and create new occasions to visit stores.
Fig 2. Porter’s Generic Strategies (1980) – Strategies to increase ...view middle of the document...
e. location, cost effective options * Flexible working location – moving into home offices * Value drives choice in lower end of market e.g. meal deals appeal * Miniaturisation presents a better solution for premium products * Knowledgeable staff, good service, comfort surroundings are important | Threat of New Entrants Rising costs & Product commoditisation * Rising costs & commodity prices have put pressure on small independents – large companies have benefits of economy of scale * Global Brands, McDonalds & Tesco threaten large company dominance * Sandwich shops, Department stores, Service stations, Hotels, Vending * Starbucks has the greatest international coverage – threat will come as similar size companies venture into international markets * New ‘local’ entrants meet the needs of the customers in new & growing international markets, i.e. China & American company resistance |
Threat of Substitutions * Rise of supermarket-sold instant coffees * Non specialist operators - McDonalds, Tesco (copying format) * Greggs UK low cost options * New, convenient outlets – service stations, hotels |
Fig 4. SWOT Analysis p.8
Strengths extensively trained barista – determines the quality of your coffee * Global player – Best international coverage – 50 countries (sustainable) * Global success – Strong partners, committed, capable & strategic fit is critical. Starbuck leader international but need to expand, i.e. Indonesia * Brand values – High quality products & service, ‘serious’ coffee heritage * Brand awareness – Starbucks: perceived as a premium global company * Economies of Scale – efficient supply chains reduce effect of rising costs & have the power in relationships with suppliers, i.e. long-term loans to farmers in developing countries to retain supply chain power/control * Strong relationships with Farmers – loans & Farmer support centres * ‘Local Community Connection’ – different menu for each country | Weaknesses – Emerging markets, PRC, India are dominated by independents * Slow into growing markets – Indonesia where there are no global chains * Consumer loyalty – ‘Loyalty Ladder’ need more food options, more drink options – hot and cold, more cost effective products, mini & vending and in more accessible/convenient places, i.e. Drive thru’s, Kiosks, Airports.... * Integrated Marketing Strategies – A coffee shop/brand for the young? * Exploring new, innovative & cost effective channels - Late to Verismo (Nespresso) and Evolution Fresh (e.g. Naked) market * Large number of franchises (U.S) = Trust, Control, Power, Commitment * Global regional resistance to US corporation |
Opportunities – ‘Expansion beyond Coffee’ – Outlet Expansion * ‘The ageing population’ - Increase appeal to 55-64 & 65+ year olds who visit 36% & 27%, but sit-in 89% & 91%!...