In 1971 Starbucks began when three friends-English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker opened a store called Starbucks Coffee, Tea, and Spice in the touristy Pikes Place Market in Seattle .’
The company also has a partnership with the Tazo Tea Company. Starbucks has a loyal coffee and tea drinker fan base.
The higher prices are a direct result of their ingenious marketing strategy.
Starbucks is the largest coffeehouse company in the world. There are more than 13,100 Starbucks stores in the world, spanning 40 countries.
Michael Porter, author of Competitive Strategy, uses a five forces model to analyze an industrial environment and to develop an optimum strategy for success within a given industry based upon specified parameters. The five variables responsible for the forces analyzed using this model are the industry suppliers, buyers, potential new entrants, substitute products and the competition among existing firms.
The rivalry between existing seller in the market
In the specialty eateries industry the main competitors for current Starbucks in US are Diedrich Coffee, Seattle's Best Coffee, and Einstein/Noah Bagel Corporation. In the industry the main competitors for Starbucks are Gloria Jean’s 249 retail stores owns by the Canadian franchiser , Florida-based coffee chain Brother’s gourmet 250 franchises in the Chicago area. And third one and also strong one is The last strong competitor is Seattle’s Best Coffee.
Starbucks, being the world leader in its industry, has controlled access to distribution channels. Starbucks is constantly innovating and showing strong product differentiation in their industry that is one of Starbucks’ success key.
The best way to evaluate this threat is to ask whether other industries can satisfy the customer need that this industry is satisfying. This is why image is very important for Starbucks, as well as the company's ability to innovate and differentiate.
Starbucks strategy is fairly simple: increase the perception of high quality of a commodity product, adapt stores to the consumers’ lifestyle, and covers its existence areas completely. Starbucks demonstrated in the past its strength and ability to sustain growth even during recession, and while analysts believe that Starbucks growth will slow down with regard to its past, but the company still growing. Starbucks continues to keep its customers happy and rely on non-traditional means of attracting new customers; that is the Starbucks strategy. Conclusion
Recommendation 1 - Starbucks should continue to open new locations worldwide. 2 - Increase the advertising from 1% to 10% at least. 3 - Reduce the perception of there is no competition out. 4 - Extend its menu selection to include drinks related to particular cultures. 5- Increase selection for Children’s Drinks.