Future Management Challenges at Starbucks and Peet - Case Study Example

? STARBUCKS v PEETS Contents Contents 2 Introduction 3 Fundamental philosophical differences between the two companies 3 Launch and handling of products and services 4 Marketing of products and services 5 Approach to e-commerce 6 Future challenges that each competitor faces 7 Important decisions 7 Fundamental differences in Vision statements 8 Specific competitive advantages 9 Strategic moves 9 Company background, comparative statistics, and conclusion 10 References 11 STARBUCKS v PEETS Introduction Owing to different preferences brought forward by various coffee drinkers, there are diverse views expressed by these coffee drinkers as regards Starbucks and Peet’s coffee stores. Still others reflect on basics such as internal affairs of the company and future prospectus set in place by the firm. These two coffee stores are part of the largest coffee houses with the biggest chains of coffee stores in separate locations in the world (Ford, Sturman, & Heaton, 2011). Their intense performance, growth, and investments warrant investigative studies. As such, this paper will seek to analyze the fundamental philosophical differences in their styles of management, how they launch and handle products, as well as their systems of marketing products and services. Additionally, this paper will develop a face-off strategy based on electronic commerce approach that sets one rival company apart from the other. Other aspects that this paper will resolve to explore include future challenges that these companies face and how the decisions that they make affect the company’s performance. Fundamental philosophical differences between the two companies According to reliable sources, Starbucks does not have any philosophical management styles. However, it does put a lot of emphasis on some strategies that makes it flexible and different from its competitors. For instance, the company puts a strong sense of ownership on its staff. From the highest rank to the lowest level, every employee has the responsibility and dedication to carry the success of the company with a strong and encouraging context (Ford, Sturman, & Heaton, 2011). In addition, Starbucks management style revolves around the belief that, everything concerning coffee matters. On the other hand, Peet’s coffee store practices an autocratic style of management whereby, leaders at the headquarters makes all the decisions while the subordinate staff implements them (Mottern, 2002). This is a very sharp fundamental philosophical difference between these two stores since analytical research and analysis describes Starbuck’s system of management as permissive. Launch and handling of products and services More focus based on establishing how Starbucks and Peets launches and handles their products and services set forth that, both companies maintain database records in which they keep customers’ trends (Pride, Hughes, & Kapoor, 2010). However, Starbucks is different from Peets and the rest of the competitors in that, it uses factors like business-to-business strategies of marketing to launch and handle products (Smith, 2007). It also incorporates considerable measures that comprise of customer pinpoint and identification of early adopters where the company involves three main types of customers. They include program buyers, transaction buyers, and relationship buyers. In this case, Starbucks launches and handles its products through a chain of network created by these types of customers. Other methods incorporate use of the internet and massive television and radio advertisements. As in the case of Peet’s, this coffee store is unique from Starbucks as it uses sub elastic measures to launch and handle its products. First, it tests its marketing strategy then introduces the concept of marketing implementation (Mottern, 2002). Agreeably, it is hard to dash headlong to launch a product without first carrying market testing. After this stage, Peet’s uses its relations department to initiate campaign roll out aimed at launching a new product or service (Smith, 2007). Given these stages, this company finalizes its launching and handling process upon attaining concise market coverage whereby the product is already in the market and responding appropriately. Marketing of products and services At Starbucks, there conventional marketing strategies that transformed one coffee store into thousands of coffee outlines globally and are still expanding. The secret ingredient towards this success accords marketing strategies employed by this company. First, this company applies strategic marketing strategy called the third place. In this scenario, Starbucks creates a place that acts a go between everyone at home or works (Ford, Sturman, & Heaton, 2011). This strategy attracts many customers through its experience, unique, and relaxing atmosphere hence suits the strongest concept of customer attachment (Smith, Smith, & Bliss, 2011). Customer satisfaction as a marketing strategy for this company works well given the fact that their customer service is unique and provides the best experience (Pride, Hughes, & Kapoor, 2010). Another strategic marketing factor used by Starbucks is its perfect coffee cup. This puts a concrete history regarding product quality whereby customers derive satisfaction through its delicious and rich cup of coffee blended with a unique aroma. Peets uses marketing strategies that are inferior compared to Starbucks. This is because, this company operates just 192 coffee stores all over the States but uses a nationwide marketing strategies that involves the internet, national scale of advertising, and brand recognition scale. This is a preferably applicable mode of marketing (Smith, 2007). However, it is somehow not strategic because advertising a product in a place where it is not available is wastage of resources and energy. Moreover, this coffee store uses third party retailers to market its products and services where it engages multiple channels of distribution. Their marketing strategies also involve identification of viable markets and location of suitable places for bringing their products and services (Smith, Smith, & Bliss, 2011). Approach to e-commerce From 16 to over 70 years in business, Peets coffee house’s ethos of 1960s are long gone. Today the atmosphere is different and volatile. Alfred Peet, the founder of this company has had the ability to maintain San Francisco individuality, which is a unique identity with a mastered art of staying in contact with your clients. As a result, this company is unique due to its highlighted system of keeping in touch with the existing core customers and building new ones through electronic marketing (Smith, 2007). This firm uses an integrated marketing communications that employs consistent tones of e commerce and channels of sales such as blog site, Website, Twitter, and email marketing as well as banner advertisements among others. The giant coffee maker, the Starbucks, has a uniquely set effort towards digital marketing and presence. As of today, this company provides one of the most appealing online systems where it gets to interact with its customers through a default page designed systematically to handle the Starbucks Card (Pride, Hughes, & Kapoor, 2010). Analytical survey puts this company at a superior position approaching electronic commerce given the point that, with the Card, a customer can order, fill, and use it online. This service sets the company uniquely variant from the others. Nevertheless, what sets Starbucks as a rival to Peets is its global awareness. The latter focuses on national scale where it is partially available however, the former focuses on a worldwide spectrum. It has a tab on its Facebook page, Around the World, which focuses on promoting activities globally. Future challenges that each competitor faces Based on analysis Starbuck’s strengths and weaknesses as well as threats, the future challenges that this company is likely to face include increased competition due to increased opening up of companies in the same line of business (Pride, Hughes, & Kapoor, 2009). Furthermore, future economic prospect highlight that, this company stands at a high risk of encountering changes in economic environment. With reference to the kind of customer response that this company has had in countries such as Quebec and Israel as England, there are high chances that Starbucks with face change in customer perception sin many other countries worldwide (Ford, Sturman, & Heaton, 2011). In the case of Peet’s, analysts point out that this company faces continued low level of employee satisfaction and as a result, this poses a serious challenge in the future as regards the company’s performance given the fact that most companies perform best due to high morale of employees (Smith, 2007). Apart from that, the company has small product mix such that, even if it sets foot on making more product mix policies, it will take the company an infinite amount of time to employ the required status of product mix. Important decisions Part of decisions made by these two companies was essential for their well-being for they are still in business even up to date. One of the most important decisions that Starbucks has ever made since its establishment based on marketing approach. When Schultz decided to put in place a strategy that encouraged content promotion, he constantly expressed his ideas towards the essence of the formula (Pride, Hughes, & Kapoor, 2010). Cognitively, this strategy turned out to be one of the most successful methods of marketing that this company ever employed. Through content promotion, the company keeps on updating its clients constantly by availing specials and information regarding ne products and services. This system based on content facilitated communication since customers could ask questions and the company could consider them (Smith, Smith, & Bliss, 2011). This was an outstanding element of success. According to Christopher Mottern, the Chief Executive Officer of Peets, the most important decision that this company ever made since its foundation based on taking the company public. With reference to this company’s marketing strategy, the company was resolving to work extremely towards maintaining its super premium position (Mottern, 2002). For years, the company worked tirelessly to ensure a great entry with a product based on quality and figure and after some years, Peets emerged with a super premium product exactly the way they desired. With the help of the product, the firm was able to expand and gather more customers since it had a super premium position significant for attaining bigger market (Pride, Hughes, & Kapoor, 2009). This decision place the company at an active position to compete with Starbucks and the rest healthily. Fundamental differences in Vision statements In the vision statement, Starbucks differs with Peets in the sense that, the former promises its customers the finest coffee with a purveyed premier whereas the latter swears to provide a profound brand that attracts loyal and dedicated following of customers. Additionally, Starbucks vows set in place the most recognized company brand in the world in the future. As in the case of Peets, this firm aims at attaining a gold and standard coffee and tea specialist company in the world. These are fundamental differences stated in the two companies’ vision statements thus sets them apart in terms of future prospects regarding their clientele (Pride, Hughes, & Kapoor, 2009). Specific competitive advantages It is not possible for Peets to compete healthily with Starbucks. This is because of the fact that, Starbucks is a gigantic coffee maker with coffee stores globally unlike Peets who operates in the States alone. Therefore, Starbucks has a competitive advantage over Peets due to its large number of outlets as well as its strategic placement of coffee products in the market (Pride, Hughes, & Kapoor, 2010). These companies faced a number of challenges while in their daily duties. For instance, in May 2008, Starbucks faced serious challenges upon opening up a branch at St. James Street in Brighton, England (Smith, 2007). Over 25, 000 residents vowed to petition the move complaining that the company set the store without proper planning regulations. However, in June 2009, the company over powered the challenge when a government official permitted the store to remain operational. Strategic moves Sometimes back, a number of news sources including business weekly, Financial Times among other circulated reports stating that Starbucks was the verge of buying Peets. Sources claimed that these two companies were in talks for having Starbucks acquire its rival Peets however, the talks declined (Smith, Smith, & Bliss, 2011). It is understandable that if only they companies could have acknowledge the matter, Peets would face serious effects made by its rival Starbucks strategic move. In spite of that, these two firms still have success stories. Starbucks has a success story whereby, Howard Schultz, a former Starbucks employee bought the company from the founders and turned it to be a homier related atmosphere where people could have a third place (Pride, Hughes, & Kapoor, 2010). This strategy turned Starbucks into a thousand of coffee stalls opened up in 44 countries. Company background, comparative statistics, and conclusion Starbucks came into being on the 31st day of May in 1971. Since then, it has grown from one single coffee stall located in Seattle, Washington, to over 6400 operating coffee stalls in 44 different countries (Smith, 2007). In 2009, the company had 128,898 employees and a pool of clients amounting to 5.5 million per day. For the year ended October 3, 2010, Starbucks had annual sales revenue totaling to $10.7 billion. Alfred Peet opened the first Peets Coffee and Tea store on the fourth month of 1966 in California. In 2010, the company had 193 retail locations in the US with employees amounting to 3750 as of March 2009 (Ford, Sturman, & Heaton, 2011). Peets has average annual sales revenue of $248.8. In conclusion, these two companies are comparable but Starbucks takes the lead due to its many merits highlighted and discussed in this paper. References Ford, R., Sturman, M. & Heaton, C. (2011). Managing Quality Service in Hospitality: How Organizations Achieve Excellence in the Guest Experience. New York: Cengage Learning. Mottern, C. (2002). The Grandfather of Specialty Coffee. Wall StreetCorporate Reporter. Vol. 7 (3). Pride, W., Hughes, R. & Kapoor, J. (2009). Business. New York: Cengage Learning. Pride, W., Hughes, R. & Kapoor, J. (2010). Foundations of Business. New York: Cengage Learning. Smith, A. (2007). The Oxford Companion to American Food and Drink. Oxford: Oxford University Press. Smith, J., Smith, R. & Bliss, R. (2011). Entrepreneurial Finance: Strategy, Valuation, and Deal Structure. Stanford: Stanford University Press. Read More