Institutions
Starbucks is an American coffee chain that is based in Seattle in Washington. As at 2016, the company had over 23,000 locations across the globe. The company has positioned itself as a premier coffee shop that distinguishes its products by taste, quality and customer service. The company target quality conscious customers serving premium priced coffee based on light roasts and espresso machines (Starbucks News Release, 2016). This paper will evaluate the micro and macro environment of Starbucks and specifically the competition.
The main Starbucks competitors include Dunkin and McDonald’s. The two main competitors are striving to edge each other by expanding their menu and opening strategic coffee shops in areas where they are likely to siphon customers from the others. In addition to the large coffee shops, the company faces competition from other smaller coffee shops that offer high quality and unique blended and roasted coffee. Other competitors include Folgers and Maxwell House. In spite of these intense competitions, the company still dominates the coffee market with over 55% of the market share. In addition to the products, the company competes on price, place and run year wide promotions that ensure that the sales are consistent. They have a unique loyalty program that keeps the customers coming back (Haskova, 2015).
The competition is from the major players and as well from the small ones. The company has a strategy to tackle all the competition by introducing high quality and expensive brands that are geared towards tackling competition from small specialized coffee houses. In competing against the substitutes, the company has expanded its menu to include fresh juice, tea and snacks thus allowing it to compete against stores with larger menu such as McDonald’s.
There are few barriers to entrants as the larger established brands have unique loyalty programs and unmatched menu that allow them to retain their loyal customers. Starbucks has a large portion of the coffee market (Dorn, Messner, & Wänke, 2016).
References
Dorn, M., Messner, C., & Wänke, M. (2016). Partitioning the Choice Task Makes Starbucks Coffee Taste Better. Journal of Marketing Behavior, 1(3-4), 363-384. doi:10.1561/107.00000023
Haskova, K. (2015). Starbucks Marketing Analysis. CRIS - Bulletin of the Centre for Research and Interdisciplinary Study, 2015(1). doi:10.1515/cris-2015-0002
Starbucks News Release. (2016). Starbucks Details Five-Year Plan to Accelerate Profitable Growth | Starbucks Newsroom. Retrieved from https://news.starbucks.com/news/starbucks-details-five-year-plan-to-accelerate-profitable-growth
