Starbucks Case Study

Case 7: Starbucks

1. What is Starbucks’ product?

The main product of Starbucks is gourmet coffee. The product line includes multiple blends and single-origin coffees, handcrafted espresso and other blended beverages, Tazo teas, bottled Frappuccino coffee drinks and Starbucks DoubleShot. They also offer a line of Starbucks Barista home espresso machines, coffee brewers and grinders as well as their premium quality coffee beans. At present, Starbucks has a line of freshly baked pastries, a line of super premium ice cream and chocolate along with a small selection of sandwiches and salads. Starbucks also offers coffee mugs, assorted gifts and other coffee accessories. Recently, Starbucks has introduced a tip notch coffee system called Verismo for its patrons to enjoy exceptional home brewing experience. Starbucks is known to provide its customers with an exceptional ‘coffee break’ experience where people can relax away from the day’s busy work schedule for short while.

1. What advantages does McDonald’s have in competing with Starbucks for coffee sales? 

McDonald’s enjoys all the privileges of being the largest fast food store in the world. Their brand has been well known among customers for years. Because of their well-established supply chain network, they can afford to maintain a low-cost system, thus offering good quality coffee at a considerably lower price. Also, McDonald’s has a lot more stores worldwide when compared to that of Starbucks; this in turn helps with the coffee sale numbers. Since, Starbucks has a more upscale ‘fast-casual’ style model, it typically has a longer wait time for the products to be out to the customer. McDonald’s on the other hand is known for its speedy service which can be an important deciding factor specially for professionals heading out to work every morning.

1. What changes in society have helped Starbucks be successful?

The changed economic and political backdrop in society has paved way for a dynamic culture. People are always busy getting things done and in a society as such, speed and convenience is of essence. A recent shift in the taste of the people has indicated that they are willing to pay a little extra money for better quality and service but cannot afford to waste much time waiting in a conventional restaurant type setup. The founders of Starbucks back in the 1970s realized that the people of America are lacking an opportunity to savor a good cup of coffee while engaging in a conversation in a laid-back atmosphere. Since its inception, the customer base for Starbuck’s has kept increasing in number. The company has designed its retail strategy, to serve this upscale coffee drinkers as its target market. The company has made their presence more prominent by partnering with stores like Nordstrom and Barnes & Noble, United Airlines, Sheraton and Westin hotels, and Holland America Cruise Lines. The society demands more drive-thru options where people can get their desired products fast without having to sit in the restaurant waiting. Starbucks has taken care of that for most parts. Most the Starbucks’s store has fully operational drive-thru windows. Starbucks follows a strict protocol while training their employees and provides them with benefits (stocks/shares) and growth opportunities. The company enjoys a healthy turnover ratio when compared with that of its competitors in the food service business.