Starbucks Coffee is a global market leader in the provision of specialty coffee with over 13,000 outlets in more than 37 countries worldwide (Starbucks.com). It is a highly successful and profitable company with a turnover of over USD 10 billion and over 110,000 employees (Starbucks.com). It is renowned for its high level of service and standards across the world. Starbuck Company has well-designed outlets which are usually conveniently located near commercial areas, airports, and high-end retail centers such as tourist malls where people would usually tend to relax.
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The company’s main product is coffee which is served in all sorts of varieties and styles. The Company’s favorites are tea and frappuccino which is a mix of ice, frappe, and cappuccino; it also sells assorted snacks and pastries, muffins, and cookies (Starbucks.com). Currently, Starbucks has introduced ice cream as a new product to be sold alongside its other products in all its outlets. This ice cream is designed similar to small size Haagen-Dazs and the price is set to be $2.50 (Starbucks.com). The new product is designed to close an existing product gap and will also complement the existing products to the line more comprehensively by giving the customer a range of products to choose from.
The unique selling features of the new product
- Taste: The ice cream has been produced to have superior taste and richness with a smooth texture; it is made from rich natural ingredients such as milk, honey, and fruits and will thus be very nutritious and popular among the health-conscious consumers.
- Price: The product is fairly priced at $2.50 which means it is affordable; more importantly it also means that the Company will maintain standards and quality when it is sold at that price.
- Packaging: The product is packaged in small units to allow for initial test-buying by customers and is designed to resemble Haagen-Dazs. It is also available in medium size packs and deluxe packs for families.
- Service philosophy: The philosophy of Starbucks is that it provides comfort besides just selling its products to consumers since people want to consume these products when relaxed. This is part of the brand image that the Company has created which they refer to as the “Starbucks Experience” (Starbucks.com). This new ice cream is expected to enhance the Starbuck experience by offering a tantalizing tasting experience to its customers.
- Delivery: Product will be produced and delivered using the existing Starbucks network which means no additional retail infrastructure is necessary. On the other end, the company has a very well-developed and sophisticated supply chain that will source the required raw materials. It also has highly trained staff to prepare and deliver the product; these three factors will facilitate steady production and supply of this new product
- Corporate-social Responsibility: The Company is renowned for its contribution to environmental conservation efforts as well as advocating for the social rights of farmers, workers, and its suppliers. The new product features promote the same ideologies and will thus serve to further this vision.
- New innovative product: The new product adds and complements the existing products and is generally superior compared to other products existing in the market. The product is made with high-quality products such as milk, fruits, and honey which are good for human health. The product also meets an existing need that has previously been neglected. The product will also serve Starbuck’s clientele who would previously go elsewhere when they needed ice cream. Loyal customers are likely to test it and if they like the taste will engage in repeat buying.
- Good Value for Money: Customers will benefit from the high quality of the product that is sold at a fair price. The product is well prepared using the highest quality of inputs, it is well packaged and presented. The convenience of the Starbucks’ shops and the availability of many other products and services such as comfort means it is a good bargain.
- Positioning: The product is positioned like all other Starbucks products and targets the high-end market. The way it is positioned targets just the right market segment; it will be popular with users who are well educated, who are engaged in high skilled professions, and who earn fairly good incomes. It is also a product that other members of the society, those in the middle level and low end of the market will aspire to buy and would like to be associated with.
- Brand Extension. The Starbuck brand is well known and respected for its quality and high level of service. Because of Starbucks ‘ brand equity, the new product is bound to be successful.
Starbucks faces competition from other established chains that offer almost the same product at a lower price. These include MacDonald’s, Dunkin Donuts, Peet’s Coffee and Tea. The company must develop strategies that will differentiate its product from others in the market (Hartline and Ferrell 143) to be successful in their marketing strategies.
SWOT of Starbucks
Starbucks has unique advantages that it can utilize in the launch of the new product these include; strong brand name that is well known and highly respected. The brand occupies a very high position in the market; also, all its outlets are of high class. The other factor is that the qualities of services in all its outlets are standardized such that customers know what to expect in any of their shops. The company has a strong and sophisticated supply chain which will aid in the sourcing of raw materials for the preparation of ice cream. The company already has a loyal customer base who will support the new product when it is launched. Finally, the company has a dedicated, trained, and motivated workforce which is committed to delivering the highest level of services (Lovelock and Wirtz 78).
The Ice cream industry is highly saturated; from highly specialized ice cream makers to small shops in an out of the city. Also, all major competitors of Starbucks such as MacDonald’s, Dunkin Donuts, Peet’s Coffee, and Tea amongst others have ice creams that are sold at lower prices than what Starbucks is offering. Some of the competitors have better tasting ice-cream that can be attributed to their years of experience in preparing the product.
Another weakness is that the high number of customers that come to Starbucks stream in during peak hours thereby limiting the ability of the company to effectively provide them with personalized service
Ice-cream is an everyday commodity; as such, once it has been successfully launched is likely to be an everyday item on the Starbucks menu. The opportunity for a brand extension where Starbuck will capitalize on its brand name to make popular the new product should not be wasted. Finally, the promise of new frontiers in international markets like China, Japan, and Europe presents an opportunity for growth and profitability, since Starbucks has over 4000 shops in these markets alone.
Other chains such as McDonald’s, Dunkin Donuts, and Peet’s Coffee and Tea have a lower-priced product, the global financial crisis has not completely ended and its’ effect on employment and spending power has placed a severe strain on businesses. Also, diversification of Starbucks into a new area might affect negatively its core business of coffee. Finally, raw materials supply may suffer from instability and price hikes.
Ferrell, O C. and Hartline, D M. “Marketing Strategy.” Ohio: South-Western. 2011. Print.
Lovelock, C H., and Wirtz, J. “Services Marketing: People, Technology, Strategy.” New Jersey: Pearson Prentice Hall. 2007. Print.
Starbucks.com. “Starbuck Coffee Company, 2011.” Web.