Starbucks’ Business Strategy
Starbucks is an American-based coffee retailer that was founded in 1971. Over the last few decades, Starbucks has grown into a dominant player in the retail coffee industry (Starbucks, 2017). The company’s success largely depends on the kind of strategy adopted by its management. The type of business strategy that a company adopts is dependent on the challenges that the company in question faces, along with the kind of competitors in the market. The main types of business strategies are product differentiation, growth, acquisition, and price skimming strategy (Suttle, 2017). Starbuck has adopted a product differentiation strategy, and this is the focus of the current essay.
In product differentiation strategy, the business endeavors to ensure that its services or products are distinguishable from those of its competitors (Suttle, 2017). This essentially affords the company a competitive advantage in the target market. Faced with competition from such firms as Dunkin Donuts and McDonald’s, Starbucks had to identify ways of maintaining its operational costs down so that it could increase its revenue sales and profit margin, and hence remain as competitive as its other two main rivals (Brizek, 2014). Starbucks has also embraced product differentiation to improve the quality of its products for which they charge a premium (Brizek, 2014) Customers are willing to pay a higher price for the product owing to the experience such as excellent customer service (Thompson, 2017). This enhances the attractiveness of its retail stores, thus giving the retailer a competitive advantage. To realize their product differentiation objective, Starbucks have branded their image as providers of the highest quality coffee in the market. Additionally, Starbucks have invested heavily in store design in order to enhance the coffee house atmosphere, thus enabling customers to enjoy their products in a relaxed environment.
In conclusion, Starbucks banks on its unique social impact program, product differentiation and investment in redesigning of coffee houses to realize a sustainable advantage in the market.
References
Brizek, M.G. (2014). Coffee Wars – The Big Three: Starbucks, McDonald’s and Dunkin’ Donuts. Journal of Case Research in Business and Economics, 5, 1-12. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.649.1307&rep=rep1&type=pdf
Starbucks (2017). Company Information. Retrieved from https://www.starbucks.com/about
us/company-information
Suttle, R. (2017). Different Types of Business Strategies. Retrieved from
http://smallbusiness.chron.com/different-types-business-strategies-4634.html
Thompson, A. (2017). Starbucks Coffee’s Generic and Intensive Growth Strategies. Retrieved
from http://panmore.com/starbucks-coffee-generic-strategy-intensive-growth-strategies