Introduction
: Starbucks
started working in Seattle’s Pike Place Markets in 1971 by the inspiration of
three coffee lovers. Its aim was to provide coffee to many of restaurants and
bars around it. For this purpose, Howard Schultz was drafted with an ever
growing expectation of marketing and retail efforts of Starbucks. Schultz gave
a new direction to the company through his innovating ideas. In 1983, he
visited Italy and took decisions to introduce some of the Italian principles to
develop a strong bar culture. Schultz started a new store in order to serve
quality coffee beans by utilizing the abilities and specialties of Starbucks,
and started brewing of coffee from these beans. In 1993, Schultz had generated
an idea to go in public. The idea was brilliant and Starbucks did extremely
well in turning an everyday beverage into a premium product.
Starbucks have a
mission statement containing: good working environment, uncompromising
principles, and highest standard of coffee purchasing, profitability, ethical
standards and diversification.
Starbucks and their Coffee, It has always been, and will always be, about quality. They are passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. They care deeply about all of this; their work is never done. It roasts more than 30 varieties of the world’s finest Arabica coffee beans. Buying green coffee beans has added a new dimension of the Starbucks coffee world and its blends coffee with a many different ways.
It's Not Just Coffee, It's Starbucks
Brand Positioning
In order to create a distinctive place in the market, a niche market has
to be carefully chosen and a differential advantage must be created in their
mind. Brand positioning is a medium through which an organization can portray
its customers what it wants to achieve for them and what it wants to mean to
them. Brand positioning forms customer’s views and opinions. Brand Positioning
can be defined as an activity of creating a brand offer in such a manner that
it occupies a distinctive place and value in the target customer’s mind. Starbucks has a
significant geographical presence across the globe and maintain a 36.7% market
share in the United States and has operations in over 60 countries. Starbucks
is also the most recognized brand in the coffeehouse segment and is ranked 91st
in the best global brands of 2013.8 Starbucks effectively leverages its rich
brand equity by merchandizing products, licensing its brand logo out. Such
strong market position and brand recognition allows the company to gain
significant competitive advantage in further expanding into international
markets and also help register higher growth in both domestic and international
markets. Over the years, they have achieved significant economies of scale with
superior distribution channels and supplier relationships. They give the
highest importance to the quality of their products and avoid standardization
of their quality even for higher production output. Starbucks has stores in some of the most prime
and strategic location across the globe. They target premium,
high-traffic, high-visibility locations near a variety of settings, including
downtown and suburban retail centers, office buildings, university campuses,
and in select rural and off-highway locations across the world. This has earned
them a significant competence and advantage to be able to penetrate prime
markets and tap into customers convince factor. Their stores are visually
appealing and have a ‘cool’ factor attached to it with being designed to
reflect the unique character of the neighborhood they serve in and
environmentally friendly. They provide free wifi, great music, great service,
warm atmosphere and provide an environment of community meeting spot, which
forms a wider part of the ‘Starbucks Experience’. The main aim for the firm is
to make their stores a ‘third place’ besides home and work. Their stores are
community friendly, focused on recycling and reducing waste. They build
goodwill among communities where they operate.
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Recommendations :
Starbucks
has great growth opportunities in Tea and Fresh Juice products mix. They should
build up these products along the same line of their core coffee products.
Also as consumer tastes and lifestyle shift
towards more snacks and beverages options, Starbucks should tailor its menu and
expand to give more healthy product offerings in its mix.
Coffee beans are a significant input into
Starbucks value chain and there have been wide fluctuations in the market
prices of high quality coffee beans. Starbucks could mitigate this price
volatility risky by implementing an effective hedging strategy like future
contracts to lock in their estimated quantity inputs at a low swing price so
that the future costs can be managed to a greater extent.
Starbucks growth strategy in the saturated
U.S. market should focus on getting additional penetration into untapped rural
markets.
Another
growth sector is its packaged coffee packets and iced beverage products.
Starbucks should build better relationships with big box retailers to get
premium shelf space and increase the efficiency of this distribution channel.
References:
1
Starbucks 2013 10-K Form for FY ended on September 29th, 2013
2
Starbucks 2013 10-K Form for FY ended on September 29th, 2013
3
IBIS World: The Coffee & Snack Shop Industry in the US Report, October 2013
4
IBIS World: The Coffee & Snack Shop Industry in the US Report, October 2013
5
IBIS World: The Coffee & Snack Shop Industry in the US Report, October 2013
8
http://interbrand.com/en/best-global-brands/2013/Starbucks