Faced with the challenge of entering a new competitive market Starbucks must compete to retain brand recognition of its primary products, yet increase awareness of its new product line.
Starbucks is the leading retailer for roaster and brand specialty coffee in the world (See Figure 1). It has over 7,500 stores, which are located in the United States, Canada, Europe, Asia and the Middle East . Besides high quality coffee drinks, Starbucks sells bottled coffee drinks, such as Frappuccino® and Starbucks DoubleShot.
Starbucks revenue is growing by 20% a year and is opening approximately three stores every day. Starbucks is capable of managing its successful operations by having steady market growth. It achieved this by financing through their cash flow instead of franchising, selling stock or increasing their financial leverage . Its strategy to success is blanket an area completely. This approach is to cuts down on delivery and management costs, shortens customer lines at individual stores, and increases foot traffic for all the stores in an area, that gives Starbucks a competitive advantage.3
At first only yuppies went to Starbucks, but now it attracts a much wider demographic of customers including people of different ethnic backgrounds and ages. Today, Starbucks has the striking number of 25 million people visitors in its stores each week . This success is due to the combination of high quality drinks and friendly environment with good music, comfortable chairs, and good services. This creates the Starbucks experience which customers can relate to that lead to brand loyalty. In addition, Starbucks needs to deal with customers cultural preferences in all its worldwide locations to maintain customers View More »