I. MARKET RESEARCH
1. Market Size/Growth
The Starbucks Corporation is a famous franchise that has built a good reputation of operating coffee houses all over the world. In recent times, the Starbucks Corporation has grown to become the largest coffee house company in the world. The notion that the Starbucks Corporation is the largest coffee house company in the world is evidenced by its many stores all over the world which are spread out in over 60 sixty countries.
There are a number of reasons that could explain the massive growth of Starbucks’ coffee houses. The rapid growth of the coffee house industry is a major reason that explains why the Starbucks Corporation has been able to establish such a big franchise all over the world. A good example that shows the increasing market share of the Starbucks Corporation is the fact that 40% of people with an average age of 18-24 years drink coffee every day according to a research that was done by the National Coffee Association in the year 2010. The 40% marked a 9% increase in coffee drinkers when compared to the year 2009. An increase from 44% to 54% of coffee drinkers who had ages ranging 25-39 years also shows the increase of the potential market that has motivated the business in the coffee industry to grow.
2. Market Trends
The existing market trends could also be used to explain the rapid growth of the coffee house industry. In recent times, coffee entrepreneurs have put a lot of their attention into studying the market trends of the coffee house industry in order to improve their ability of increasing their market share. Some of the trends that have been identified and adopted by most coffee houses are:
There has been increased consumption of espresso beverages in coffee houses in recent times as compared to old times where there was massive consumption of gourmet coffee. Most coffee house corporations are now looking into ways of improving their quality and method of serving espresso.
Coffee houses are putting up other facilities in coffee houses to attract customers: It is interesting to note that most coffee house corporations are now looking into ways of enticing customers to visit their stores for other purposes as a strategy of increasing their coffee sales. An example of a strategy that is currently being used by coffee houses is evidenced by the increasing practice of setting up of wireless communication technology in coffee houses. This strategy is being used with the aim of attracting potential coffee customers into coffee houses by providing them with a place to surf the internet and communicate with their friends and family.
Diversification of products: The coffee house industry also depicts changing trends in the form of diversification of products sold at their branches. Most coffee houses are now selling other forms of food such as salads, snacks, sandwiches, pastries etc with the hope that attracting more customers to come to their business outlets. The coffee house industry also shows a trend of increasing coffee prices as a result of the increase in operational costs.
The above change of trends in will have several effects on the coffee industry. For example, the increasing trend of selling coffee products according to consumer taste and preferences will have the effect of maintaining the increased number of customers visiting coffee houses. An increase in the number of different food stuffs sold in coffee houses will also make a big contribution of increasing the number of customers who visit coffee houses. However, the increasing level of coffee price will result in a decline, in the demand of beverages and food stuffs, demanded from coffee houses.
3. Key Competitors
The Starbucks Corporation faces competition from a number of rival corporations. For example, the Corporation that produces the Caribou coffee is perhaps Starbucks biggest competitor in the coffee house industry. The Caribou Coffee Corporation boasts of having 415 stores established in the United States currently. Caribou Coffee Corporation mainly deals with the sale of coffee and other related beverages. However, McDonalds which is a company that deals with the sale of fast foods, has emerged as a potentially dangerous threat to Starbucks’ market share. The company that produces and sells Dunkin Donuts has also emerged as a serious competitor in the coffee house industry. The company deals with the sale of take-away coffee as opposed to Starbucks set up which allows customers to seat relax and enjoy their coffee at their stores.
1. Market Mix
In a bid to discuss the marketing mix of Starbucks Corporation, it will be important to analyze what stage of the life cycle that Starbucks products qualify to be categorized. Starbucks Corporation’s products are in the maturity stage of the product life cycle. This is because the company has grown to become a reputable coffee house company all over the world. Therefore, the company’s products are used all over the world thus proving their maturity. Starbucks Corporation’s products are specialty products. This is because the company makes its products according to the requirements specified by customers.
The second aspect of Starbucks market mix is its pricing strategy. An analysis of the pricing strategy used by Starbucks reveals that the company uses a strategy of creating some form of prestige and scheming. This can be proven by the fact that the company sells the smallest values of their products at very high prices. Through this strategy, the Starbucks Corporation hopes to convince its customers to buy bigger quantities of their products at since customers will realize that it is a loss to buy a small quantity product while they can add some little cash and buy an even bigger quantity.
3. Placement and Distribution
Starbucks Corporation uses the strategy of opening a lot of coffee house outlets in order to sustain and increase its market share in the market. The company hopes that it will use its many coffee outlets to enhance their coverage and ability to distribute its products all over the world. The company also tries to make sure that it has opened outlets at strategic areas that have a lot of human traffic e.g. malls
It is also important to evaluate Starbuck’s promotion strategy. Generally, the company uses a promotion mix that entails a number of actions. For example, the company maintained a culture of strengthening its brand name. The company also relies heavily on the provision of good quality products and services. Customer satisfaction and constant innovation are other aspects used by the Starbucks Corporation to promote their products.
III. INTERNATIONAL MARKET ENTRY STRATEGY
1. Host Country Analysis
In my opinion, I think it would be prudent for Starbucks to open stores in an African country such as South Africa. There are a number of factors that support my opinion. For example, most coffee house companies have ignored the market potential that is available in South America. Secondly, South Africa is has a huge amount of population. The business environment in South Africa is accommodating for new businesses. This, therefore, means that the South Africa would offer a very viable market for coffee drinkers.
2. Mode of Entry
The Starbuck Corporation should enter the South African market as a wholly owned subsidiary. This is because the company has already made a good name for itself all over the world. Therefore, in a bid to inform customers that has opened a branch in South Africa, it will be prudent for the company to use its own brand name in order. Thus, Starbucks Corporations’ will be able to make a good sale in South Africa if it uses its own brand name
Vote for Us. Starbucks Marketing Strategy. 30 November 2012.
ABI/INFORM Complete. Web. Coffee Shops. 23 Feb 2012.
The Africa Report. Hub Pages. 1 November 2012.