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Market Analysis of Starbucks - Research Paper Example

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Market Analysis of Starbucks

Its expansion has been based on foreign direct investment and also acquisitions of rival coffee houses. Starbucks’ success from the late 1990s onward has been to its dedication in providing consumers with a gourmet coffee experience, a means of differentiating the company and also establishing pricing that was higher than industry norms per cup of its products. This high pricing model is supported by advertising and the comparable, tangible quality of its products that continue to satisfy consumers that are willing to pay this extra price for the Starbucks experience. Description of International and Domestic Markets Starbucks does not target specific market groups, rather it has adopted a mass market advertising strategy positioned always on quality compared to competing coffee houses. However, the domestic market consists generally of high income consumers, professionals, and those with above-average household and discretionary income. There are also psychographic elements of Starbucks’ positioning strategies, appealing to those who find ostentatious consumption to be important as it relates to their social reputation. “Beyond signaling of quality, there is some status symbol effect to what coffee you are drinking” (Aronin, Fetterman, Liu & Peng, 2004, p. 3). ...
These two markets make up approximately 10-15% of the American population and are usually associated with white collar career-minded individuals. The international market is scattered and does not fit any specific personality, lifestyle, or income profile. Starbucks operates in collectivist cultures where tradition and family are valued and also individualist countries that promote social self-expression, finding favor in both in terms of profitability and consumer following. In China, marketers for Starbucks stand outside of Starbucks facilities, using a handheld clicker each time they achieve new traffic (Boone & Kurtz). Market research identifies that it is the younger, more fashionable cultures that frequent the organization. In Austria and Canada, it is generally the teens, tourists and young adults that favor Starbucks coffee (Boone & Kurtz). SWOT Analysis of Starbucks To understand the market potential of the company it is necessary to understand where Starbucks excels and where the business is lacking in key areas. Strengths Considerable cash capital that provides opportunities for expansion and a high credit worthiness for lending purposes or foreign investment. Backed by years of quality positioning and quality-focused advertising that has established a well-recognized brand and considerable consumer following. High pricing model that contributes to higher capital growth. In-store innovations such as its Coffee Master program that teaches customers about the subtleties of coffee, referred to as the “cupping ceremony,” similar to wine-tasting seminars (Helm, 2007). Partnerships with foreign coffee producers that express its commitment to corporate social responsibility that gains market attention and loyalty and also ...Show more

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RUNNING HEAD: Starbucks Market Analysis Starbucks Market Analysis Miralnd (Ericia) Freeman UOPX Professor Richard Pearl December 9, 2011 Starbucks Market Analysis History of Starbucks Starbucks opened its first coffee hours in 1971, a privately-owned organization founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker…
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