It is a well-known fact that Starbucks is expensive, and it is not only coffee the company sell but status. In today 's developing countries Starbucks represents a status symbol that separates the rich consumers from the masses especially in the continent of Asia. A cup of Starbucks cappuccino coffee costs more than 6 dollars in China and is even more expensive in other developing countries in Asia, but the same cup of coffee may only cost half that price in the US. The American coffee and chain company of Starbucks Corporation sets an example and explanation of how global hospitality companies can implement price discrimination. Before any hospitality company expands globally there are key indicator that the company will generate profits.
For instance, their instant coffee line VIA was a part of their differentiation and low cost leadership strategy. VIA is a low cost alternative to regular coffee and a... ... middle of paper ... ... market in US also can be a problem for the stores based in US. However this can be counterbalanced by adopting a diversification strategy and innovative product offerings to retain their customers in the US market. Opening stores in growing markets can give a big boost to Starbucks to regain its market leadership position. In spite of these challenges Starbucks still maintains a strong financial status which indicates that company still has many prospects for future growth especially with unexplored coffee markets in certain countries.
A new entrant would be hard pressed to meet these economies of scale. New entrants into this market will face higher costs initially than industry incumbents which makes this barrier to entry high. STRONG BRAND PREFERENCE – HIGH (RW) There is a strong presence of brand preference when it comes to consumer taste in the coffee industry. Most consumers drink the same brand to which they were first introduced. This might be the brand of coffee their parents drank or even the brand that their work provides in the office.
Most coffee shops are operated at locations where population is dense and income is high. However, as a result, the rental prices are very high. Costa Coffee could consider opening new shops at bus stations / other busy intersections where rents are lower but traffic is big. The marketing strategy that will be followed to China is very significant since it also influence neighboring countries like South Korea which is also a new coffee consuming country. If Costa Coffee fails to change the public opinion of the highly expensive coffee , it will be a matter of time before the consequences will be similar to Taiwan and Hong Kong where there is a negative trend in coffee business growth.
Starbucks is generally more expensive than the alternative, which gives the buyer the power to decide whether to spend the extra money and shop at Starbucks. Although buyer power is high, Starbucks holds the largest share of coffee sales worldwide. Starbucks also holds many coffee related partnerships and subsidiaries making it the largest purchaser of coffee beans from c...
Starbucks attempts to get a leg up on these competitors by differentiating their products and offering higher quality drinks and snacks than do many of their competitors. While the high quality of these items drives up the price of the goods, it is apparent that the customer base is willing to pay the additional price for Starbucks’ offerings. Though Starbucks has, thus far, been quite successful, it is important to note that every company has strengths and weaknesses, opportunities and threats. The trick is to properly identify, analyze and acknowledge these aspects to help companies identify where they stand and how best to take advantage of their position. A SWOT analysis of Starbucks may include the following: • Strengths • Differentiates by offering high quality food and drink to consumers.
This could prove to be very successful if they can capture a significant amount of the production they could become a price setter in the coffee commodities. Also because small coffee retail outlets are so trendy it is possible for them to set ... ... middle of paper ... ...nal locations in the heaviest coffee drinking countries. This has to be done quickly as to get the jump on other that may also be considering this type of a move. At the same time they should be selling franchise right for the coffee carts. This will provide an increased cash flow as well.
The opening of a new coffee shop is the keystone of Starbucks success. For Starbucks to continue to grow in the business is to enhance equity of the business and Starbucks brand name. By opening new coffee shops within the communities will attract new consumers. In addition, the latest shop locations will also permit existing customers to increase visits. Starbucks is adding drive thru for the on the go consumers and professionals.
(Business Wire, 2005) Starbucks serves is an excellent specimen of a company that follows continual patterns of expansion directly correlating to increased access to foreign markets, and also the ability to nurture growth within these markets as well as gain access to new markets through the Market merging. In my research of this company and its path to globalization, I found that information about certain aspects of the company were more readily available than others. For example, I found that I had more difficulty finding scholarly articles that dealt with the distinct business strategies that Starbuck’s employed in order to globalize, in that it became apparent that much of the information about the terms of their mergers and acquisitions were not released or that the companies and business groups that they did so with had websites that contained no information in English. Interestingly enough, I found more of an abundance of scholarly material on the homogeneous cultural impacts that Starbucks has had and how the spread of the company’s locations worldwide has been received by some cultures as the spread of American values. A bulk of my research findings came from business reports and releases about the company, which were useful in keeping accounts of how the company was able to infiltrate global markets and expand.
The customers of the coffee industry are very brand loyal which makes it hard to gain new customer clientele. With Dunkin Donuts being a franchisee business there is a trend of riffs between owners. There should be a set of guidelines that each owner has to follow because they are representing the Dunkin brand. Dunkin has a wide variety of coffee, beverages, and breakfast food items but most of these items are high in saturated fat. There has been a trend of healthy and organic eating; Dunkin has yet to offer such a menu to accommodate this clientele.