Case Study:
Starbucks is a company that was founded in 1970s in Seattle’s where it was initiated to sell coffee beans to restaurants and coffee bars. In the spirit of development the same year it opened branches in Canada and Chicago. Further in 1991 it opened humanitarian organization distributing coffee graders thus marking the expansion of the company globally though it still retained its initial services developing and expanding its stores and scope of distribution. Currently Starbucks serves hot and cold beverages, complimentary foods and other coffee accessories and has as many as 37 retail shops internationally and 7,500 stores in the US though its headquarters is in Seattle, Washington. It has also been known to offer about 200,000 people jobs and records a heavy income of about 8,000 billion every financial year. The main objective of the company is to create awareness for its brands making the organization’s retail centers as interaction areas where people accompany one another, chart and listen to music while sharing coffee and other beverages together. With time it has grown and is expected to expand to many countries creating an opportunity for people to exchange cultures and ideas. With these two aspects of both cultural and social exchange Starbucks has come in to offer refreshments and offer hospitable services to people and at the same time make profits in order increase the gross profit for the economy of United States and subsidiary countries that have similar branches.
In order to retain its customers Starbuck has created a unique experience for them establishing a customer driven strategy to market its goods and services. It has also introduced the strategy of segmentation to reach out many customers and capture other new markets. It also has an exclusive merge of refreshing ambient and original coffee drinks making it a favorite for a wide range of customers. It does not only offer a cup of tea but accompanies it with quality and excellence making it extraordinary. It also has products of high distinction branded with its trademark causing enhanced credibility among the customers resulting to increased customers as stated by Clark (2007). It has also continually increased the quality taste and graded blends with the highest level of quality assurance. With its convenient locations globally it has encouraged faithful customers. Strong brand impartiality has been created with high quality and at reasonable prices thus maintaining many customers more to their hygiene and cleanliness ensuring. It has also promoted it customers by the creating strong bonds and loyalty programs making their culture to ensure customer satisfaction. As stated by Clark (2007) it will not fail to have a numerous increment of customers if these attractions are going to be maintained and enhanced. It has also mastered its own language on how to relate with its customers. It has further been accredited for its affordable experience with customers, its relationship with them and also it relation with employees enhancing employee engagement in all its decisions (Clark 2007).
These improvements on Starbucks just started recently but previously it was just a coffee business like any other but with time it has drawn closer to its potential customers serving them and doing eminent business. They had a managerial problem previously that had hindered them from growth but currently it is repositioning its products and extending the scope of services it offers to retain its status and also inform its customers on the new line of products it has invented. Currently Starbucks has started selling bottled drinks apart from coffee and has expanded the number of stores it has to 7500 around the United States. It has further financed its cash flow through the leverage system cutting to a great extent its delivery cost thus according to studies done it has been found to accommodate about 25 million people in every 3 weeks. Starbucks has also learnt on strategic planning hence maintaining on its product quality and consistent delivering ensuring quality assurance, this was not previously there but has been incorporated and has become an integral part of its operations. Previously they only targeted people only interested in their main brand coffee but this has changed since they can now accommodate the young due to their wider variety of products.
To achieve this competitive advantage Starbucks has applied two strategies to ensure it fits in the dynamic market, according to Porter’s five forces model (2010) that stipulates the reasons why a given market would be dynamic is due to the supplier power thus ability to reach out many customers without any substitute inputs of the same service thus maintaining monopoly, the threat of substitutes to ones business and the barriers to access of a products. The degree of competition and the purchasing power of the customers to buy the products should also be carefully monitored to accommodate their continued attraction to a business. Putting these aspects in consideration Starbucks has applied the strategy of segmentation to cope up with changes in market while earning both profit and attracting an increased numbers of customers all at once. This has been done based on age and household status. In terms of age Starbucks targets that their primary customers be aged from 25-54 years. These are persons who often visit their stores to chat, socialize and have fun and in the process may come accompanied by their families thus they set aside some desserts and pastries for the children which include ice creams and chocolates. They also incorporate music and internet sources to accommodate more fun. Based on socioeconomic status they have introduced what is known as fair trade coffee and offer the same quality products and at fair prices targeting even those in rural areas who are not well up financially. This means the company has expanded to the grassroots levels ensuring quality processing and packaging of its unique brand that is similar in all retail shops.
According to Porters Five forces (2010) these five forces can also be countered using generic strategy that has been leveled at 3 stages: the corporate, business and functional level. At the corporate level enhancement of good management and supply of the required products should be proficient while at the business unit level should be hospitality and good customer relations so as to attract and retain them. Further at the functional level all the services and products sold should be done in an integrated manner with transparency and honesty to ensure that the customers do not loose their loyalty in an organization. These levels have been shown to cause cost effective quality management of Starbucks, its differentiated amalgamation of focus and vision to expand its horizons and also ability to fight many related competitive businesses still retaining and increasing customers. With the application of these two strategies Starbuck has become a successful organization and is anticipated to be very successful. With these findings many organizations embracing these new strategies of customer relations, customer integration and competitive advantage in their business can be sure they are going to thrive and expand.
References
Clark, T. (2007). Starbucks Cooperation. A Double Tall Tale of Caffeine, Commerce, and Culture. Little, Brown and Company pp.201- 243.
Porter’s Five Forces. (2010) Strategic Management: A Model for Industry Analysis, International Center for Management and Business Administration, Inc.
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