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Strategic Marketing Management
MMGP 5 Group 1
Starbucks
BUSI 520
School of Business, Liberty University
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Strategic Marketing Management
One of the fundamental elements of Starbucks' business strategy is its
marketing mix approach, which emphasizes retaining market dominance while setting
itself different from its competitors. The company's success can be attributed to its
unique marketing approaches and techniques to produce quality, which have assisted
in making it a phenomenal American brand. Two of the major rivals are McDonald's
Mcafe and Dunkin' Donuts, and each has a unique approach to competing with the
multinational food and coffee industry.
5.2.1 Theory section on competitor/competition, who is the competitor and what
do they do differently from Starbucks.
Theory
Scholars have demonstrated the theoretical significance of organizational
identity and how it influences competitive rivalry, organizational learning, strategic
issue interpretation, sense-making, and organizational change. Even though a
corporation may compete in numerous markets, managers determine the
distinctiveness of their organization based on the markets that are the most important
to the business. Managers fabricate a story to convince customers that their
organization is more reliable than its competitors in the identification industry. How
managers interpret the identity of their organization is influenced by competition. A
firm needs to be able to produce products that offer value for customers in its identity
domain if it hopes to acquire a competitive advantage (Few and Few, 2018).
According to marketing notions, outperforming rivals in terms of generating,
delivering, and conveying superior customer value to your target markets is the key to
accomplishing organizational goals. Competitors can be identified by desired products
or services, products or service similarities, substitute items, and brand attributes.
Companies can compete for the consumer's money in the markets for luxury and long-
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Strategic Marketing Management
lasting goods, but they are not exclusive to social goods and requirements. The clever
competitor must create and supply offerings for clearly defined target markets in
economies with a wide variety of people, each with their demands, perceptions,
preferences, and purchase criteria. Competitors by market share, participation in a
retail network, geographical characteristics, and price level are relevant. Promotion is
the ability to influence consumer behavior and market dynamics (Kolter and Keller,
2016).
Research
Starbucks is up against competition from a range of reputable businesses as
the coffee market expands. Starbucks wants to firmly establish itself as the market
leader to make it more difficult for its rivals. However, there is strong competition,
with big businesses constantly coming up with novel ideas and innovative strategies
to take on the market leader in coffee (Cheddar Flow, 2023). As Pereira (2023) points
out, Jerry Baldwin, Zev Siegl, and Gordon Bowker started Starbucks in 1971 as a
modest coffee roasting business in Seattle's Pike Place Market. Today, Starbucks has
more than 32,000 locations worldwide. According to Bhasin, H. (2023), Starbucks
rival McCafe, a division of McDonald's, focuses on espresso-based beverages. This is
a result of the massive operation of 3700 outlets in over 100 countries around the
world supporting it. Along with coffee, this coffee shop also sells snacks and other
beverages. It was founded in 1993 in Australia and is a reliable representation of
espresso coffees. However, this is anticipated to increase now that McCafe has
upgraded its equipment to ensure consistency in the quality of its coffee. In Australia
and New Zealand McCafe is the leading coffee brand. According to Pereira (2023),
offering tasty, premium espresso drinks like cappuccinos and lattes is McCafe's core
focus. The availability of cold beer and other take-out foods like croissants and
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Strategic Marketing Management
muffins is also widespread. They offer loyalty programs that reward frequent
customers with free drinks or discounts, which promotes customer loyalty to their
already well-liked cafes. To raise attention to its products, McCafe frequently offers
limited edition flavors or items in all its locations across the world. McDonald's
competitive edge over Starbucks is derived from its franchising strategy and its low-
cost menu which includes a variety of breakfast options, chicken products,
cheeseburgers, wraps, milkshakes, desserts, salads, fish, soft drinks, and smoothies to
cater to the tastes and preferences of its customers. Its marketing methods include
changing the logo and franchising. Royalties, rent, and franchisee fees are additional
sources of income for McDonald's. Although it began as a hamburger shop, its
marketing strategies have helped it become a household name (Cheddar Flow, 2023).
According to Pereira (2023), McDonald's can spend more on marketing campaigns,
increase investments in product development and research, and provide better prices
than even its fiercest competitors because it has substantially more financial resources
than Starbucks. To diversify its coffee line into the Chinese market and counter
Starbucks' hegemony, McCafe committed $381 million in 2020 and expects to open
4,000 coffee shops across China by 2023. They have been actively pushing this brand
throughout the past years (Cheddar Flow, 2023).
Dunkin Donut is a coffee shop and donut maker with its headquarters in
Massachusetts, USA. Since its founding in 1950, it has expanded to become one of
the largest bakeries and coffee franchises in the world. It operates in more than 35
countries and has more than 11,500 restaurants. Drinks and donuts are just two of the
many items that Dunkin' makes. When it comes to the performance of the company,
its presence in 35 countries speaks for itself. For those who enjoy coffee, Dunkin'
Donuts provides a less expensive option compared to Starbucks. The breadth of its
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Strategic Marketing Management
menu, which includes breakfast sandwiches and frozen drinks in addition to its typical
assortment of doughnuts and coffee, aids Dunkin' doughnuts in maintaining a
dominant market position. Dunkin' Donuts' price approach strongly emphasizes the
middle class, which gives it a competitive advantage over Starbucks' premium pricing
(Cheddar Flow, 2023).What distinguishes Dunkin' Donuts and Starbucks is their
product selection. Starbucks is renowned for its specialty coffees, which are
increasingly well-liked all around the world. They provide a selection of drinks,
including frappuccinos, cold brews, and unexpectedly delicious pumpkin spice lattes
(Pereira, 2023).
Analysis
In addition to the differences in the products they offer, pricing is another
crucial area where the two companies are very different from one another. Starbucks
typically charges more than other coffee shops like Dunkin'. Although the price may
be a major factor for customers seeking reasonably priced daily coffee products, many
customers find it convenient enough to pay more for the premium ingredients or
distinctive recipes provided by Starbucks while forgoing the price reductions offered
by competitors like Dunkin' Donuts. Dunkin' Donuts has established a reputation as a
formidable competitor of Starbucks. Even while Dunkin's yearly revenue is
significantly less than that of the huge coffee firm based in Seattle, it nevertheless
faces fierce regional and national competition. After acquiring Dunkin' Brands,
Inspire Brands now owns Dunkin' Donuts. The company also collaborates
strategically with other brands, such as Coca-Cola.
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Strategic Marketing Management
5.2.3 Theory section on brand elements. What brand elements would be most
useful for differentiating Starbuck's brand from the competition.
Theory
According to Bishop (2014), the core elements of a brand are physically
present or nearly tangible, such as the product itself, its packaging, and other traits
that a services marketer could recognize as obvious indications of an entity's physical
presence. Businesses need to maximize brand equity producers. The creation of
distinctive, unified brand names, logos, and packaging that boosts both brand
awareness and brand image should be their priority. Aspects of a brand should have
the greatest creative potential and be memorable and important. Creative packaging
can replace advertising by drawing attention at the time of purchase. A brand is any
name, word, sign, symbol, design, or mix of these things that is used to identify and
set one seller's or group of sellers' products apart from those of competitors.
A strong brand identity needs to have distinguishing features that set it apart
from competitors and make it simpler for customers to recognize and purchase it.
These elements include colors and characters as examples. Therefore, a key marketing
job is deciding which elements to invest in to protect and grow this identity.
Consumers use brand identification signals as shortcuts to quickly recognize brands
and distinguish them from competitors when making purchases and in the
commercials they produce. The core of brand identity is identification components,
which help consumers recognize brands and distinguish them from competitors.
These elements provide the brand with a distinctive look and/or feel that aids in brand
recognition. Additionally, they aid customers in remembering the brand (Ward et al.,
2020). Because customers are frequently unfamiliar with the target brand at the
beginning of the engagement, brand relationships, or connections of this type,
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typically start at zero. If a consumer does not use or consume the brand, they will not
first encounter it and its key components, learning more about the brand's unique
selling points. As a consumer frequently encounters brand characteristics, they
become more knowledgeable about the characteristics and benefits (SchmidDand
Huber, 2019).
Research
The Starbucks logo is a medium-sized green circle with a siren. Sirens are
dreadful legendary creatures that, according to Greek and Roman folklore, preyed on
sailors by tempting them with their alluring music and gorgeous singing voices and
steering their ships onto the rocky beaches. People can easily relate to the Starbucks
logo since it is a unique design that plays with cultural aspects. The artwork was
changed to keep up with the times. It did, however, retain the essential parts. One of
the most well-known changes made to the Starbucks logo since the company was
created is the switch from the original rich coffee brown to the present deep green.
Minor tweaks have also been made to the typeface and shape (Raghav, 2023). One of
the things that keeps Starbucks a well-known brewed coffee brand is its logo.
Starbucks' logo evokes reliability and tradition. The public has always been able to
see this distinctive company emblem. The unusual design of the Starbucks logo has
contributed to the company's tremendous success. The striking design of the
Starbucks logo and packaging never fails to catch people's attention (Mar 2023).
According to Kyamko (2023), the Starbucks logo has always been written in a
straightforward, bold style. For ease of reading, the brand name is written in a legible
sans-serif font. The colors green and white make up its present logo. Green serves as a
metaphor for the economy, good health, and the environment. White, which is the
predominant siren sign, represents clarity and cleanliness. One of the most common
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Strategic Marketing Management
shapes in graphic design is the Starbucks logo, which is circular. A circle-shaped logo
appears neat, uncomplicated and recognized. The twin-tailed siren is a symbol of the
sea and Seattle, the place where Starbucks was first established. Unproven, the siren's
use in the Starbucks logo is thought by many to represent mystery, obsession, and
addiction. One of the main competitors McDonald, logo is predominantly red and
yellow in terms of color. There is a reason why these two hues have been selected.
Red stands for vitality and enthusiasm, whereas yellow is all about coziness and joy.
Every time you see the logo, the combination of them strikes the ideal balance that
makes you feel happy. Simplicity is crucial when it comes to the font used in the
McDonald's logo. The typography is legible and readily recognized thanks to its bold
uppercase font. The font is written in Helvetica (Bagdon, 2023). Like the Starbucks
logo, the McDonald's logo has been tweaked and changed over time to support
various media and platforms. Therefore, the Starbucks brand has characteristics that
set it apart from similar competitors like McDonald's in some ways.
Another feature of the business is its mission, which is to "inspire and nurture
the human spirit - one person, one cup, and one neighborhood at a time" (Starbucks,
2023). While McDonald's concise and distinctive mission statement reads, "To make
delicious, feel-good moments easy for everyone." The mission statement of
McDonald's reflects its dedication to providing enjoyable eating experiences and
easily accessible meal options for all customers. The company seeks to provide
customers with delectable, enjoyable menu alternatives that also match their interests.
To ensure that its menu offerings continue to exceed customers' expectations and
please their palates, McDonald's invests in research and development. McDonald's
aspires to make its food and dining experiences easily accessible to everyone,
regardless of origin or geography (McDonald's, 2023).
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Strategic Marketing Management
Analysis
Starbucks is more focused on the experience and providing the highest quality
product, whereas McDonald's is more concerned with providing the best experience
for the money. McDonald's aims to be the most affordable option while providing the
highest quality. In addition to implementing Starbucks cup fees and offering own-
brand reusable tumblers, Starbucks has recently upped its packaging sustainability
initiatives. To use less plastic in its cold cups, Starbucks is working on a project.
When that project is finished, recyclable materials will be included in the new cold
cups. Starbucks is continuing its research and design efforts to find replacement
options for plastics that are challenging to recover for items like customer stoppers
and the plastic lining of hot coffee cups with the Starbucks Logo printed on each cup.
Whereas McDonald's products are promptly and easily recognizable by both
customers and those who package the meal it is not reusable. The reduced packaging
includes the item's name and the McDonald's M logo.
Conclusion
McCafe is an excellent brand of McDonald's as it relates to coffee considering
the price, flavor, and Rainforest Alliance accreditation. McDonald's supremacy in
terms of location across the globe and availability are factors Starbucks should
consider. In comparison to Starbucks, Dunkin' Donuts outlets are more conventionally
styled fast-food restaurants with lower costs. If competition keeps setting prices low,
it might get Starbucks in trouble with its high prices. Starbucks could try persuading
more people to open new restaurants by providing alluring incentives to franchisees,
thereby boosting the number of franchises and the brand's recognition.
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References
Bhasin, H. (2023). 11 Starbucks competitors – competitions analysis of Starbucks.
Marketing 91. Retrieved from https://www.marketing91.com/starbucks-
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Cheddar Flow. (2023). A comprehensive analysis of Starbucks competitors in 2023.
Cheddar Flow. Retrieved from https://www.cheddarflow.com/blog/a-
comprehensive-analysis-of-Starbucks-competitors-in-2023/
Chang, W. J.D(2021). Experiential marketing, brand image and brand loyalty: a case
study of Starbucks,DBritish Food Journal, Vol. 123 No. 1, pp. 209-
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Bagdon, S. (2023). The McDonald’s logo history, colors, font, and meaning. Design
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Bishop, D.D(2014). Brand revolution: Rethinking brand identity,DJournal of Product &
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Few, W. T., and Few, M. E. (2018). Identity, competitors & distinctiveness: Who are
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Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson
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Kyamko, M. (2023). Starbucks logo: History, meaning, evolution, hidden details, and
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Mar, (2023). Starbucks Logo – History, Meaning, and Evolution. The Branding
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logo-evolution-meaning/
McDonald's, (2023). About us. McDonald's. Retrieved from
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Pereira, D. (2023). Top 10 Starbucks competitors & alternatives. The Business Model
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Raghav, S. (2023). Starbucks Logo – An Overview of Design, History And Evolution.
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