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Operating in the realm of the global economy is a challenging task, especially for a company working in the food industry. To evaluate the efficacy of Starbucks compared to two of its primary rivals, Costa Coffee, and Caribou Coffee, it was decided to choose the following areas of assessment:
- Product quality (10);
- Services (9);
- Convenience (8);
- Low price (7);
- Store personnel (6).
After visiting Starbucks, Costa Coffee, and Caribou Coffee, the degree to which the identified aspects were developed in the specified organizations was located. The table below (see Table 1) provides a summary of the three experiences:
Table 1. Multiattribute Model: Starbucks, Caribou Coffee, and Costa Coffee
|Starbucks||Caribou Coffee||Costa Coffee|
As the table above shows, Starbucks has the right to be called the leader of the industry. Indeed, given the results of the assessment, the organization provides the services of a rather decent quality level compared to its competitors. Granted that the rivals also offer the services of impressive quality, the fact that Starbucks manages to retain its top position is worth appreciation.
It should be noted, though, that the assessment points to certain shortcomings of the current approach used by Starbucks as far as its services are concerned. For instance, the fact that the orders are delivered at a very moderate speed deserves to be mentioned among the primary reasons for concern. While the current speed of order processing and service is not low, Starbucks’ competitors show the results of nearly the same quality, which points quite clearly to an obvious problem.
However, by far the greatest issue that needs to be looked into is the price policy of the organization. Granted that the product quality levels are very high, the company cannot afford to be so rigid about its pricing standards given the competitive rates in the global market. Quite on the contrary, an array of discounts and other money-saving opportunities must be offered to the target population.
One must admit, though, that Starbucks has already introduced the strategy that has been used as the means of managing the pricing issue. Particularly, the firm has been hedging against investment risks for quite a while (Sommer, 2015). However, even with the identified approach, there is a threat that people may choose the organizations that offer the services of only slightly lower quality yet with an impressively lower [price.
Retail Consumer Profile
By their design, Starbucks products are supposed to be aimed at a very general audience, i.e., the customers of no discernable characteristics. However, for a number of reasons, including the factors such as the relatively high price of the product, the fact that the company positions itself as an innovative and diverse organization that keeps in pace with time, its current retail customers can be defined as senior-age and high-income people, usually of Asian descent. Despite the fact that the percentage of male and female customers is roughly the same, there is a slight propensity for the male population to be more interested in the Starbucks products than the female one (Infoscout, 2017).
The current customer profile suggests that two steps should be taken to improve the company’s position in the target market. First, it is necessary to embrace a wider range of customers, striving to appeal to the people of other ethnicities, ages, gender, and income levels. Simultaneously, the firm will have to maintain its popularity among the current retail customers.
The goals mentioned above might seem incompatible. However, a closer look at them will show that they are attainable once the principles of customer segmentation are introduced to the current marketing framework. By making the brand image more general and, therefore, more pliable, Starbucks will be able to attract a wider range of people.
The concept of lifestyle merchandising can be defined as the marketing strategy aimed at attracting new customers by appealing to their habits and way of life (Kinley & Bradon, 2015). Given the increasingly high diversity levels in the context of the global market, the identified approach is admittedly complicated, especially for a company that produces products as common as coffee Nevertheless, once the unique characteristics of the target customers are identified and used as the foundation for the further design of the marketing approach, a stunning success can be expected.
As far as the use of lifestyle merchandising at Starbucks is concerned, one must mention that international stores constitute most of its retailers. Therefore, it will be legitimate to assume that Starbucks’ retailers do not consider lifestyle merchandising as their primary strategy of appealing to the clients. The use of general strategies is quite understandable given the fact that international stores need to cater to the needs of a variety of customers and, therefore, have to conduct massive research to determine their lifestyles. However, the identification of the primary lifestyle tendencies among the customers is preferable as the means of increasing sales and the levels of customer satisfaction. Thus, the competitive advantage of Starbucks can increase compared to the ones of its rivals.
The picture in Fig. 1 above can be deemed as a means of using lifestyle merchandising to cater to the needs of the target population. The use of space as the means of creating a sense of tranquility and leisure will appeal to all target groups alike. Furthermore, the lack of obtrusive elements of interior will help customers feel at home and, therefore, develop trust toward the brand.
Layout and Fixtures
The layout of the store seems to be in line with the exterior and the area in which it is located. As stressed above, people with high-income rates are currently viewed as the primary audience to which the firm markets its products. Therefore, there is no surprise that the visited store is placed in what can be defined as a premium location, with several high-priced shops representing famous brands located in the vicinity. Furthermore, the Starbucks shop in question was next to the downtown area, which meant that the firm was aiming at attracting business people.
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Furthermore, the interior of the shop was in line with the setting in which Starbucks was located. With exquisite and tasteful décor elements, as well as a well, thought out color palette as the background, the coffee shop owners managed to create a sense of coziness and refinement. It could be argued that the identified environment did not seem affordable for the representatives of the middle class; however, a stressed above, the identified population is not currently viewed as profitable by the leaders of the organization. Therefore, every element of the interior was fully justified by the marketing choices that the company has made so far.
It should be noted, though, that the atmosphere of chic which Starbucks creates in its shops may put a certain strain on the customers. The lack of casual elements in the environment of the shop may become the reason why some people will refuse from buying Starbucks coffee. Put differently, other options for shop interior will have to be considered to take the needs of a diverse audience into account.
Table 2. Starbucks: Financial Evaluation
|Starbucks||Caribou Coffee||Costa Coffee|
|Markup in dollars||$2.3||$1.4||$2.1|
|Markup percentage on cost||85%||40%||72%|
|Markup percentage of selling price||46%||38%||47%|
As Table 2 shows, the current pricing strategy seems rather sensible in light of the fact that Starbucks takes significant expenses in order to meet the quality standards that it has set. However, as stated above, it is imperative that the firm should consider a change in its pricing policy, including the introduction of discounts, customer benefits, and other saving options for its clients. Herein lies the significance of adopting the principles of sustainability and cost-efficiency as the basis for the management of resources within the company. Once the pricing strategy changes, it will be necessary to balance out the expenditures by cutting the cost and reducing the waste levels. Therefore, it is crucial that Starbucks should reconsider its current marketing strategy to increase its markup and remain sustainable in the context of the competitive global market.
Infoscout. (2017). Starbucks consumer insights. Web.
Kinley, T. R., & Bradon, L. (2015). Branding strategies for home furnishings products: Consumer perceptions. Journal of Marketing Development and Competitiveness, 9(1), 93-105.
Sommer, J. (2015). Why Starbucks prices went up as coffee beans got cheaper. New York Times. Web.
Tchibo – Visual merchandising. (n.d.). Web.