Module 7 Assignment 2: LASA 2—Capstone Strategic Audit

Market Position Analysis

Kenawa E. Jigba

Module 2: Assignment 2

Solutions to Organizational Challenges: A Capstone Experience | B6028 BLO | SU213 |

Argosy University

Instructor:  Dr. Andrea Banto

(Summer II 201 )

Introduction

The following paper presents a market position analysis of Starbucks Company, the analysis of the target customers, the wants/ needs of the customers, and why customers chooses Starbucks as a company. The competitive advantage and sustainability of the company as well as the Five P’s of Marketing will be addressed.

Starbucks Company is a global firm that has come to woo customers of every kind from each corner of the globe. In the year 1971, this company was officially launched in Washington, DC to start operations as a drinks-producing firm. It should be further noted that Starbucks’ name came into existence as a result of retail chains of coffee, tea, and spices. Majorly, this firm put more emphasis on the quality of coffee that the consumers were served. In recent times, the company has greatly expanded since it has stalls in not less than forty countries worldwide. Consequently, Starbucks deals with beverages and pastries as it continues to make it big in the global industry amidst the stiff competition in play. Examples of pastry that Starbucks deals in include: fudge, cakes, cupcakes, cookies, and bread among others.

Description of the target market

Starbucks has got three market targets: teens and young kids, adults, and young adults. With respect to adults, Starbucks’ main audience includes women and men that are older and whose age frame range between 26-41 years. In addition, 49% of the company’s total supply goes to adult consumers. The company on the other hand tries its best to appeal to this class of customers through adverts and a kind of contemporary design that best works at attracting the older customers.

The second class of audience is the young kids and teens. This group ranges 12-17 years of age and the same accounts to almost 2% of the total supply made. In addition, the company supplies kids with milk that is caffeinated and sugary not forgetting coffee drinks. On the other hand, there are the young adults whose maximum age goes up to 24 years. Furthermore, this class of audience constitutes close to 5% of the total sales made by Starbucks Company. Moreover, this firm has a strategic way of locating the youths because normally it is positioned in colleges where students meet to socialize with each other or write term papers.

Identifying Competitive advantage and Sustainability

With regards to the competitive advantage of this company, they came with 3 strategic components. The first component was the coffee itself whereby the company provided coffee drink that was of high quality compared to any other competing firm. This attracted most consumers owing to the fact that Starbucks hade many retail outlets in operation. Secondly, the company used another component that involved extraordinary and good services that kept customers glued to this company. Some of these services involved remembering the names of customers not forgetting the orders they had made. This in a great way influenced the customer’s perception for the better. Thirdly, a very ideal component was the atmosphere whereby, the company provided a wonderful and attractive atmosphere that kept consumers around even after they had finished their drinks.

The company has proven to be sustainable in that, the position of this company was originally started in Washington but later spread to many countries in the globe. On the other hand, the source of competitive differentiation in Starbucks was from interactive segments such as the social platforms like twitter and Facebook.

Application of the five P in marketing the product

As a manager, I will put effort to satisfy the customer’s by using the five variables normally referred to as 5 P’s of marketing or marketing mix. These variables are controlled by the management in order for the managers to meet the needs and wants of the target market group (Kalb, 1993).

Product – Starbucks is the leading retailer, roaster and brand of specialty coffee in the world operating about 40 countries in the world. The Starbucks key success is innovating, modernizing, aggressive store openings and strong product differentiation in the coffee industry that limits the new entrant’s entrance in the coffee industry.

Price- Starbucks set the price according to the purchasing power of its customer and the prices at their competitors coffee houses. At Starbucks the prices are not negotiable due to its high product differentiation, enormous selection of coffees, uniqueness and high quality perception perceived power. This is the reason the opportunity for the Starbucks may sell at higher prices (Starbucks, 2008).

Promotion- Starbucks key success in promotion is through the company’s innovating, modernizing, aggressive store openings and strong product differentiation in the coffee industry. For instance, they offer free Wi-Fi access to enable customers to surf internet. Prepaid Starbucks card, card rewards and Starbucks gold card , improving its coffee line to offer smaller, cheaper cups, using new technology that create one cup at a time individually so that the taste remains the fresh. The use of social media such as Facebook has been a great tool for promotion.

Place this is the place where the business will be located and where the business will manage to sell it products. The placement decision will consider the channels of distribution that ensures the product reaches the customers. Therefore, the distribution channel will involve market coverage, logistic, service level and channel member selection. Starbucks has 13, 168 locations worldwide. Their management team sees long term potential for over 40, 000 locations worldwide.

People- Starbucks recognizes the loyalty that their consumers give them. Therefore, the environmental principle reflects that the company is more conscious and interested in utilizing their resources in regards to the friendly environment operations. The company will ensure that the workers are honest and helpful to the customers and have a positive attitude and a pleasant appearance. Since customers also have the ability to make their own coffee and Starbucks is trying to remove this threat by offering directions on how to make the perfect brewed cup of Starbucks Coffee at home, known as the “Four Fundamentals of Coffee” ( www.Starbucks.com ).

Conclusion

In all three interviewed that were conducted, it seem that all the senior managers agreed that innovation is necessary to advance in competition. When Senior Vice President Craig Russell and CFO Troy Alstead were asked if they were threaten by Dunkin Donuts, they jokily laughed with a statement, “We have no reason to be threaten, if for any reason Dunkin should be the one to be threaten not us.” All interviewed seemed to have the same common response (See Appendix)

Reference

Lunny, D. (1994). Checklist for going into business. Toronto: Productive Publications.

Kalb, I. S. (1993). Marketing your legal services. Los Angeles: K&A Press.

Starbucks, (2008), www.studymode.com/subjects/starbucks-2008-page3.html

Schultz H. & Yang J. (2011). Put your heart into it: how starbucks built a company one cup at a time. New Jersey: Prentice Hall.

http://www.starbucks.com/