Starbucks is a leading international coffeehouse that was founded in the year 1971 and acquired by Howard Schultz, the CEO of the company, in 1987. It has shaped the American culture by altering what we pay for coffee, what we eat, where we meet and how people spend their time socially. It rose from a single location in Seattle to a multibillion-dollar enterprise that operated in more than 17,000 retail stores in fifty countries. Originally Starbucks only sold coffee beans and ground coffee and later on came up with prepared coffee, Italian-style expresso beverages, cold blended drinks, food items, premium-teas, and beverage-related accessories and equipment. ...view middle of the document...
Back in the year 1998, the competitors of Starbucks included Maxwell House and Folgers. Starbucks has also competed with smaller chains such as Peet’s Coffee and Tea, the Coffee Bean & Tea Leaf, and Caribou Café. According to Exhibit 3, the major competitors of Starbucks today, include McDonald’s and Dunkin’ Donuts. Other competitors include Peet’s, Caribou Coffee, Dollop, Unicorn Café, Metropolis, and Barista.
Starbucks is considered a style statement for a lot of individuals these days. Young adults use Starbucks for internet access, studying, socializing and dating. Business professionals visit Starbucks before, during, or after work. And teenagers go to Starbucks after school hours. Increasing the perceived image & value of the product in the minds of the customers has provided a great impetus to Starbucks during the past years. Over the years, Starbucks has improved on the technology front and has become a Wi-Fi hotspot.
The strength of the Starbucks brand to leverage its product differentiation strategies by offering a premium coffee and snacks is where the core competence lies. The strong market position and brand recognition of Starbucks is because of its presence all over the globe now. The growing number of retail stores was a good move, but the aggressive approach used by Schultz by replacing the La Marzocco expresso machines with push-button Verismo models blocked the customer’s view of the barista, thereby eradicating the whole idea of theater and romance with the customer. It definitely did simplify the process of training baristas, but the emotional connect with the customer was lost. Secondly, the transformational agenda of strategic initiatives to revitalize the company involved the abrupt closing of 1000 stores. This resulted in loss of business and the brand image went down. The rotation of coffee also resulted in operational inconsistencies. Also, the lack of internet connectivity during that time had worsened things in terms of the company’s reputation. On the other hand, the introduction of the Clover machine was a great option since it offered customers with the necessary romance and theater. The...