The Marketing Strategy Of Starbucks

Customer desire and preference significantly influence the amount of competition each coffee company has with one another, so each company, including Starbucks, is trying to expand menu options and store locations to better serve a greater customer base. Starbucks opened up approximately 30 years ago and has experienced extraordinary growth and success. It is considered the go to coffee shop to work and socialize, corresponding with the company 's marketing approach. Starbucks has aimed to create a place for consumers to stop between work and home, and created concepts for locations that provide customers with a relaxed experience and atmosphere. This tactic has been extremely successful, as evident by Starbucks’ revenue of approximately 18.5

However, there are high entry barriers for the specialty level or big league/chain players. Overall, there is no significant barrier of entry for coffee industry due to low entry and exit cost. Everyone who is interested in the coffee industry may start selling any kind of coffee at anytime and anywhere, thus entry and exit cost for the coffee industry is relatively low compared to other industries, such as agriculture, manufacturing, and real

Starbucks coffee has price elasticity, but not to the point in which the demand will be significantly affected by small changes in the price. Since Starbucks is a dominant player in the competitive coffee market, it has significant pricing power as it has acquired a relatively loyal crowd of customers over the past years. Starbucks was designed as a place where people could meet that was between home and work, which is a social strategy secured with the sale of an addictive product, giving it pricing power. Therefore, Starbucks does have control over the prices they are able to charge for their product, which is relatively higher than most other coffee sellers such as Tim Horton 's and McDonald 's. The reason that Starbucks is able to charge higher prices for coffee is that they have differentiated their product from all others by not only offering premium coffee, but also providing a complete coffee experience. If Starbucks were to lower their prices, profitability would decrease as costs would remain the same, but revenue would