Marketing Analysis : Marketing Mix

Starbucks uses price targeting to identify customers willing to pay more by charging different prices for products that cost essentially the same to produce. Starbucks’ menu has products ranging from $2.20 to $3.40. This price difference stems not from a $1.20 difference in production cost, but rather a subtle way of encouraging customers to signal their willingness or ability to pay higher prices, and therefore allow Starbucks to increase its profits.

There were two main start-up decisions. The first is the choice in furniture. The option was given to choose either Used Furniture for $2,000, or several other choices for $4,000. These others were New Modern, New Green, Urban, and New Elegant. So, sticking with my theme, I went for the Used Furniture. Being located where my new coffee shop is and well as my expected general customer classification, I don’t have the liberty to charge a premium for coffee. According to Kate Taylor in her article Some Starbucks locations quietly raised prices on brewed coffee and cookies on Pumpkin Spice Latte launch day, she says, “Starbucks just quietly raised prices at a sizable chunk of locations.” Starbucks can reach a much larger crowd than my simulated shop, therefore, I decided to take my approach differently with the cheaper route.

Flight Centre is Found by Graham Turner in 1981, its first store open in Sydney, increases day by day, Now they 2500 worldwide stores which operate Australia, USA, India, China, New Zealand, Hong Kong, South Africa etc. They are first ever decline in the profit year 2005. More where stores available in all prime location near to all amenities and public can reach their easily.

Starbucks customers are often extremely loyal and return to Starbucks in a regular pattern. They attempt to maintain the latest trends and choose Starbucks, although it is more expensive than generic coffee brands, because the quality is assured.

In addition to the trade-offs Howard Schultz and Starbucks made. Another consists of the company’s management deciding to invest a significant amount of capital to provide the highest quality coffee products for their customers. Providing quality coffee requires extreme dedication and

Starbucks has created a competitive advantage with their product quality by setting themselves apart from their competitors. “The Company has stayed with the upper-scale of the coffee market, competing on comfort rather than convenience, which is the case with its closest competitors, McDonald’s and Dunkin Donuts” (Mourdoukoutas, Panos). Consumers believe they are receiving a better product and experience when they purchase from a Starbucks as opposed to another large food service company that may sell coffee.

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

On the other hand, Starbucks pricing strategy is based on, differentiation, quality and authority value. Starbucks deliver high value to the customer through buying quality coffee beans, assuring their staff to be well trained, and create an environment for customer to enjoy coffee. Although the price of a cup of coffee in Starbucks is higher than other coffee shop, but customers are ready to pay more for the coffee and luxurious image with all the facilities inside the store.

There are many sellers in the market heating up pricing competition. Competitors like McDonald’s, Dunkin Donuts, Peet’s Coffee and other specialty coffee companies incentivize price wars. Furthermore, coffee’s demand is elastic which makes it difficult to increase prices without greatly reducing the demand. This makes differentiation and positioning very important. Also, it is easy for customers to switch from coffee vendors. Whichever company is most convenient for the customer will likely win the business. Competition is a top priority in the industry.

Specific target audience: In the 1990’s, Starbuck primarily targeted towards the affluent, well-educated, white-collar patrons (skewed female).

Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

The next exhibits show payroll structure and income volume per location in 2002 and product mix for North American company-operated stores. Exhibit 6 shows US retail coffee market predictions till 2005 years. It clearly shows changing in Americans’ coffee drinking style into specialty coffee. It is very important for Starbucks because company’s main market is specialty coffee. Next of the exhibits, shows positive customer snapshot scores for North America stores. Those snapshots suggest further company’s success. The only issue we can find is the product quality. According to the exhibit product quality went down during 3rd quarter of 2002.

Starbucks is competing in an industry where marketing principles has to follow the differentiator strategy or they will lose market share. The company goal is to create high value for its customers, or the customers will simply find another place to spend their money. Starbucks marketing principles are the basis of the company's competitive advantage within the coffee industry. Starbucks products are associated with high quality, and the company dedicates itself to producing high quality products. Because of this association with high quality, Starbucks has been able to charge a higher price or premium for its products. As long as the company can protect its reputation for high quality and strong values, it will be able to maintain its premium prices.

Starbucks is and will continue to be one of the largest distributers of a cup of coffee today and into the future.  The Starbucks mission to “inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” directly correlates with the experience a customer has in each store. They have many ways to differentiate in comparison to competitors because they provide an experience while shopping for a coffee allowing them to charge a premium price.