Name: Nicole Smith

Name of Firm (if applicable, provide industry focus): Starbucks (retail coffee)

1. Perform a SWOT analysis. Paste the results below. What are some important
takeaways of the SWOT analysis?
SWOT Analysis for Starbucks
Strengths Weaknesses
Effective use of marketplace data A high-cost logistics system
High service levels High staff turnover
Strong profitability levels Limited number of new customers
Strong service levels Imitative product design
Clear segments targeted effectively Limited product range
Great customer experience delivered Many product gaps
Targeting price inelastic markets No distinct product features
Customer-centric strategy Product-centric strategy
Strong value proposition Reliant on one main channel
Consumer "love" for the brand Reliance on a single brand
Strong staff skills and expertise Broad competitive set
Good understanding of the customer journey Many substitute competitive products
Access to a customer database Significant price-based competition
High quality staff Strong existing competitors
Valuable customer database information
Good understanding of the market
Highly convenient locations
High level of customer loyalty
Strong customer relationships

Opportunities
Become a first-mover in an emerging markets
Data mining of our customer database
Use cross-functional teams to develop new products
Attract new customers through special offers
Grow customer loyalty/retention
Improve offering to increase customer satisfaction scores
Add more product line extensions
Broaden our product range to target new segments
Broaden our product range to eliminate product gaps
Expand our product mix
Identify and pursue relevant market gaps
More clearly differentiate our product offering
Broaden our geographic reach
Build relationships with influencers
Position our brand as the market leader
Pursue co-branding opportunities
Work closer with key channel partners
Demand for home delivery services
Develop environmentally-friendly products
Expand our number of channels
Threats
Changes in consumer spending patterns
Consumers becoming more price sensitive
Geographic shifts by consumer markets
Losing key/valuable customers
Lost of unique product features
Products becoming outdated
Poor publicity in the media
Adverse media attention
Brand damage due to "viral" videos
Brand damage due to media stories
Product recalls and brand damage
Increase in supplier costs
Loss of a key supplier
Competitors targeting our key customers/segments
More efficient competitors, competing on price
Economic downturn
Foreign exchange risk
High levels of unemployment
Home delivery series

2. What is your firm’s most important competitive advantage? Why is what you identified
so important? Does your team anticipate the importance of this competitive advantage
to increase, decrease, or remain stable over time and why?
Starbucks’ most competitive advantage is their strong focus around providing their guests
with excellent customer service. Starbucks refers to the ‘Starbucks Experience’, as making
guests welcomed and cared for, by developing a relationship with each guest. Providing the
 ‘Starbucks Experience’ is an important competitive advantage because it forms an emotional
connection between Starbucks Partners and their guests. I anticipate the importance of this
competitive advantage to increase over time due to the fact that many of us have been
negatively affected by COVID19 lockdown. With many people losing loved ones and
spending less time with family and friends, I believe people are looking now for a connected
experience and from that experience, customers value the relationships they form with
Starbucks Partners. Without Covid19 circumstances, I believe this competitive advantage
will increase because creating positive customer experiences builds long term relationships
and customer loyalty.

3. Please describe your firm’s target market(s). How attractive is the target market(s)?
Can you offer data to support your attractiveness claims.
Starbucks’ main target market is high-income men and women aged 25 to 40, accounting for
49% of their total sales. Starbucks’ next largest target market is middle to upper-class men
and women aged 18 to 24, accounting for approximately 40% of their total sales. Starbucks’
target market is upper to middle class men and women who are willing to pay a higher price
for quality and the ‘Starbucks Experience’.
4. Market Segmentation: What specific criteria pertaining to the bases of segmentation
(geography, demographics, psychographics, benefits sought, usage rate) should your
firm use? Why? Be as specific as possible, listing specific criteria (e.g., family income
over $100k), and briefly explain why you chose the criteria you did.
Starbucks should use demographic, psychographic, and geographic market segmentation.
Starbucks’ main target market is those who are considered upper-middle class or “rich”
meaning their annual family income falls between $106,000 and $373,000. By looking at
demographic and psychographic segmentation, Starbucks can increase profits by opening a
new establishment targeting upscale areas with family income that is greater than $106,000.
Those aged 18 to 24 account for 40% of Starbucks’ total sales, so by using both demographic
and geographic segmentation, Starbucks can target areas populated by young adults like near
college campuses and office buildings.
5. Describe your firm’s marketing mix. In your response, be sure to discuss how this
marketing mix compares and contrasts to its closest competitors. What is
(a) Products/services: Starbucks has created their brand around providing premium beverages
and the ‘Starbucks experience’. Unlike their competitor Dunkin’, Starbucks uses premium
fair trade coffee beans and quality ingredients. Dunkin’ also does not pride themselves on
creating customer connections and providing an experience, quite like Starbucks. For those
who aren’t coffee lovers, Starbucks even offers teas, juices, and sparkling waters. Starbucks
also carries low-fat milk as a heathier alternative to whole milk or cream. Starbucks also
carries milk substitutes, like almond, soy and coconut to accommodate those who are health
conscious, have food allergies or food aversions. Although their competitor Dunkin’ provides
many of these same options and even some locations provide options Starbucks doesn’t carry
like, oat milk. Unlike Dunkin’, Starbucks provides many quick grab snack options ranging
from paninis to salads. Starbucks also provides vegetarian and vegan food options as well.
cold brew was an exclusive item at Starbucks, but in the recent months Dunkin’ has
introduced their own cold brew as well.
(b) Places: Starbucks has a strong global brand and as of 2019 has 31,256 stores worldwide.
Starbucks can be found in basically every city, making them easy to find even when
traveling. Not only can you find Starbucks in basically every city, but they the store are
placed in easily accessible and convent locations. Customers don’t have to drive to a location
to get a drink, because Starbucks sells products through other channels like grocery stores.
The Starbucks app has increased sales and customer loyalty. While store lobbies were closed
for the pandemic, it was crucial for Starbucks to adapt a technological, no contact way for
customers to order a beverage. In 2020, 24% of Starbucks sales were placed on the mobile
app. Customers may also order and have your order delivered to you from Starbucks using
the Starbucks mobile app and its partnership with Uber Eats. Dunkin, Starbucks’ largest
competitors also has a global presence with 11,300 stores worldwide. Dunkin also has
partnered with Uber Eats, Grubhub, and DoorDash to provide online ordering and delivery to
its customers. Dunkin also sells product through other channels like grocery stores.
(c) Promotions: Starbucks is in a well-established position in the market but still spend
hundreds of millions of U.S. dollars a year on their marketing campaign. Starbucks uses their
reward program to keep existing customers and their brand loyalty. For each purchase made
at any Starbucks location, customer receive reward points. Starbucks also has ‘double star
Thursday’ where customers receive doble the rewards when they purchase any item on
 Thursdays. These reward points can be redeemed for basically any item Starbucks offers
from custom beverages to food items. Starbucks also releases seasonal offers and menu items
for the seasons and some holidays. Starbuck does most of its promotional strategies through
social media. Starbucks is active on social media by posting content regularly on all
platforms, hosting contests, interacting with influencers, using hashtags, and staying trendy
online. Starbucks has also partnered with celebrities like Ariana Grande, making their own
signature beverage, found exclusively at Starbucks. Although Starbucks’ largest competitors
offer many of the same promotions such as, DD Perks (a reward program), an active social
media presence, as well as celebrity partnerships and beverages.
(d) Pricing: Starbucks provides quality beverages and food items that are sustainably sourced,
all while creating the ‘Starbucks experience’ to their customers. Because Starbucks crafts and
sells premium products and excellent customer service, their significantly higher prices are
justified. The Starbucks brand targets those who are willing to pay higher prices for quality
and service. Because Dunkin doesn’t claim premium products and service, its prices are
cheaper. But unlike Starbucks, Dunkin will allow customers to flavors, milk and cream, and
sugars to your beverage for no extra charge. Not only does Dunkin provide a cheaper
alternative, but their cup sizes are much larger than Starbucks. A medium iced beverage at
Dunkin is 24 fluid ounces compared to Starbucks’ medium which is only 16 fluid ounces.
6. Based on your analysis, what is your firm doing well? What could your firm be doing
better? Offer some detailed actionable recommendations the management team of your
chosen firm can implement.
Starbucks excels at providing premium products, excellent customer service, and created a
third place filled will the ‘Starbucks Experience’. Starbucks customers are very loyal to the
brand, even when making coffee at home, customers are opting for Starbucks brand coffee.
qualities Starbucks and its partners have, are hard and costly for competitors to imitate.
Starbucks also have created a global brand with strong market position. Starbucks is
exceptional at locating its stores areas with upper class residents, in high traffic, high
visibility areas. Starbuck could benefit from expanding its product mix and offer more
variety. Starbucks could expand its product line of bottled cold pressed juices and sparkling
water for those who are looking for a quick option. Starbucks could benefit from offering
more healthy quick retail options for beverages and food. In alinement with Starbucks’
mission, Starbucks could offer more of a variety of healthy retail items. Some of these items
could be a variety of wellness shots, more vegan and vegetarian food item options, and
gluten free food item options. Starbucks could also benefit from expanding their retail line
and operations, selling packaged coffees, beverages, and tea through large retailers. Building
a relationship with large retailers with similar target markets such as, Trader Joe’s, Sprout’s,
and Whole Foods, can help increase shelf space for more Starbucks’ retail line. With
competitors like Dunkin selling almost identical drinks, Starbucks should emphasize
production differentiation and sell drinks exclusive to Starbucks. Starbucks relies heavily on
the United States market so by expanding more in other countries, Starbucks’ profit will be
less sensitive to U.S. economic disturbances. By partnering with more food delivery service
like Grubhub and DoorDash, Starbucks can retain customer loyalty, especially during the
pandemic. Starbucks could introduce a menu offering different roast and flavors from around
the world, which can be beneficial when opening new locations in different countries.