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Case Study Starbucks Philippines Branches

Starbucks Coffee Company stands as the biggest coffeehouse business in the world. The firm’s competitive advantage is based on its strengths, as shown in this SWOT analysis. In SWOT analysis, business strengths are evaluated to determine the ability to address weaknesses, opportunities and threats. This SWOT analysis of Starbucks Coffee presents the internal factors and external factors significant to the firm. Even though Starbucks is already a strong global brand, various factors threaten the business. As such, the firm must innovate its approaches to overcome these threats. The result of this SWOT analysis shows that Starbucks is strong, but it constantly faces major threats in various markets around the world.

Starbucks Coffee’s SWOT analysis shows that the company’s strengths far outweigh its weaknesses. However, this SWOT analysis also points to major threats that could prevent the success of new Starbucks cafés in markets outside the United States.

Starbucks Coffee’s Strengths (Internal Strategic Factors)

This component of the SWOT analysis model deals with the internal factor of business or organizational strengths. Starbucks Coffee’s main strengths are:

  1. Strong brand image
  2. Extensive global supply chain
  3. Diversified business through subsidiaries

Starbucks has one of the world’s strongest and most popular brands. The company also has a growing population of loyal customers who prefer Starbucks based on quality and the brand. In addition, the company has a global network of suppliers. The firm has also acquired businesses as subsidiaries, such as Ethos Water, Seattle’s Best Coffee, and Teavana. This part of the SWOT analysis shows that Starbucks is resilient through diversification and a global supply chain.

Starbucks Coffee’s Weaknesses (Internal Strategic Factors)

This dimension of the SWOT analysis model indicates internal factors like inadequacies that present challenges to business development. Starbucks Coffee’s main weaknesses are:

  1. Higher price points
  2. Generalized standards for most products
  3. Imitable products

The relatively higher prices of Starbucks products make them less accessible to the large population of lower-middle class and lower class consumers. Most Starbucks products are also based on generalized corporate standards that make the products less aligned with cultural demands in some markets. Also, Starbucks Coffee’s business is imitable in terms of products and café ambiance. This part of the SWOT analysis shows that Starbucks must innovate to overcome its weaknesses, especially the imitability of products.

Opportunities for Starbucks (External Strategic Factors)

This component of the SWOT analysis model focuses on external factors that a firm can use to grow its business. Starbucks Coffee’s main opportunities are:

  1. Expansion in Asia, the Middle East, and Africa
  2. Diversification of product mix
  3. Partnerships or alliances with other firms

Starbucks has the opportunity to expand in the Middle East and Africa, where the firm currently has minimal presence. The company also has the opportunity to expand in Asia, where economic growth rates are high. In addition, even though Starbucks already has a considerably diverse product mix, further diversification can help improve its competitive advantage. Partnerships and alliances can also strengthen Starbucks Coffee’s competitive position. This part of the SWOT analysis shows that Starbucks has major opportunities for global growth.

Threats Facing Starbucks (External Strategic Factors)

In this aspect of the SWOT analysis model, the focus is on external factors that could reduce business performance. The main threats to Starbucks Coffee’s business are:

  1. Competition from low-cost coffee sellers
  2. Imitation
  3. Independent coffeehouse movements

Low-cost coffee from firms like McDonald’s and Dunkin’ Donuts effectively compete against the more pricey Starbucks products. Also, other companies can imitate the business. Many competitors have already imitated Starbucks and succeeded, such as Stars and Bucks, a coffeehouse in the Palestinian Territories. There is also a growing social movement supporting independent coffeehouses and opposing large coffeehouse chains like Starbucks. This part of the SWOT analysis shows that Starbucks must ensure competitive advantage amid potential negative effects of the identified threats, especially imitation and competition.

Recommendations based on Starbucks Coffee’s SWOT Analysis

Starbucks Coffee’s SWOT analysis shows that the firm has the business strength to maintain competitiveness. However, the company must exploit opportunities for global expansion as soon as possible, to gain advantage over other firms also attempting to globally expand. To address the issue of competition with low-cost coffee products, Starbucks can emphasize quality and uniqueness in innovation of products to differentiate them. Starbucks can also increase efforts for trademark and intellectual property protection to reduce the threat of imitation.

References
  • Helms, M. M., & Nixon, J. (2010). Exploring SWOT analysis-where are we now? A review of academic research from the last decade. Journal of Strategy and Management3(3), 215-251.
  • Hill, T., & Westbrook, R. (1997). SWOT analysis: it’s time for a product recall. Long Range Planning30(1), 46-52.
  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management29(6), 801-830.
  • Koehn, N. F. (2002). Howard Schultz and Starbucks Coffee Company. Harvard Business School.
  • Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing Intelligence & Planning7(5/6), 5-7.
  • Smith, M. D. (1996). The empire filters back: consumption, production, and the politics of Starbucks Coffee. Urban Geography17(6), 502-525.
  • Starbucks Coffee Company (2015). Company Information – Starbucks Coffee Company.

Case Study & Case Analysis, Starbucks Coffee, SWOT Analysis

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This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Copyright by Panmore Institute - All rights reserved. Small parts of this article may be quoted or paraphrased for research purposes, as long as the article is properly cited and referenced together with its URL/link.

Starbucks Coffee Company’s marketing mix (4Ps) supports the company’s industry position as the leading coffeehouse chain in the world. The marketing mix identifies the main components of the firm’s marketing plan. Starbucks uses its marketing mix as a way of developing its brand image and popularity. With the strongest brand in the industry, the company shows how an effective marketing mix supports brand development and business growth. Starbucks also changes its marketing mix over time, thereby emphasizing the need for the business to evolve its various aspects to maintain competitiveness.

Starbucks Coffee’s marketing mix (4Ps) indicates the importance of this marketing tool as a way of ensuring that the firm promotes the right products at the right prices and places.

Starbucks Coffee’s Products

Starbucks continues to innovate its product mix to capture more of the market. This component of the marketing mix focuses on what the business offers to customers. At present, the following are the main categories of Starbucks products:

  1. Coffee
  2. Tea
  3. Pastries
  4. Frappuccino beverages
  5. Smoothies
  6. Merchandise (mugs, instant coffee, etc.)

This product mix is a result of years of business innovation. For instance, Starbucks added the Frappuccino line after it acquired The Coffee Connection in 1994. The company also has an ongoing product innovation process that aims to offer new products to attract and keep more customers. Thus, this part of Starbucks’ marketing mix involves beverages, food, and merchandise.

Place in Starbucks Coffee’s Marketing Mix

The company offers most of its products through Starbucks cafés. This component of the marketing mix determines the venues at which customers can access the products. In Starbucks Coffee’s case, the following are the main places used for the distribution of products:

  1. Cafés
  2. Online Store
  3. Starbucks App
  4. Retailers

Originally, the firm sold its products through Starbucks cafés. Through the Internet, the company now offers some of its products through the online Starbucks Store. Also, the firm now sells some merchandise through retailers. In addition, the company uses the Starbucks App to allow customers to place their orders. This part of Starbucks’ marketing mix shows how the firm adapts to changing times, technologies, and market conditions.

Starbucks Coffee’s Promotions

Starbucks promotes its products mainly through advertising. This component of the marketing mix refers to the communication strategies used to disseminate information about the firm and its products. Starbucks’ promotional mix is as follows:

  1. Advertising
  2. Public relations
  3. Sales promotions

The company advertises its products through television, print media and the Internet. The company infrequently uses public relations, which has not always been successful for the business. For example, Starbucks’ Race Together public relations campaign was widely criticized. In addition, the firm uses sales promotions, such as the Starbucks Card that customers can use to get freebies. This part of Starbucks’ marketing mix shows the core significance of advertising, and the supporting roles of public relations and sales promotions for the company.

Starbucks Coffee’s Prices and Pricing Strategy

Starbucks uses a premium pricing strategy. This pricing strategy takes advantage of the behavioral tendency of people to purchase more expensive products on the basis of the perceived correlation between high price and high value. The company’s coffee products are more expensive than most competing products, such as McDonald’s Premium Roast. Through this pricing strategy, the company maintains its high-end specialty image. This part of Starbucks Coffee’s marketing mix directly relates with the firm’s generic strategy, thereby helping the business maintain its premium brand image.

References
  • A Letter from Howard Schultz to Starbucks Partners Regarding Race Together.
  • Hanssens, D. M., Pauwels, K. H., Srinivasan, S., Vanhuele, M., & Yildirim, G. (2014). Consumer attitude metrics for guiding marketing mix decisions. Marketing Science33(4), 534-550.
  • My Starbucks Rewards.
  • Rahmani, K., Emamisaleh, K., & Yadegari, R. (2015). Quality Function Deployment and New Product Development with a focus on Marketing Mix 4P model. Asian Journal of Research in Marketing4(2), 98-108.
  • Starbucks Store.
  • Van Waterschoot, W., & Van den Bulte, C. (1992). The 4P classification of the marketing mix revisited. The Journal of Marketing, 83-93.
  • Yun-sheng, W. (2001). Perfection and innovation of 4P Marketing Mix – How to evaluate 4P Marketing Mix. Commercial Research5, 6.

Case Study & Case Analysis, Marketing, Marketing Mix (4Ps), Starbucks Coffee, Strategy

COPYRIGHT NOTICE:
This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Copyright by Panmore Institute - All rights reserved. Small parts of this article may be quoted or paraphrased for research purposes, as long as the article is properly cited and referenced together with its URL/link.

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