Strategy Clock – Starbucks
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In 1970s, the first Starbucks coffee shop opened. After 30s years developed, Starbucks Coffee Company become the leading retailer, roaster and brand of specialty coffee and owned more than 5000 coffee shops all over the world. Why Starbucks can work so successfully? I will analyze Starbucks and its strategies with the Strategy Clock.
The Strategy Clock is based on the work of Bowman. Its a suitable way to analyze a companys competitive position in comparison to the offerings of competitors. As with Porters Generic Strategies, Bowman considers competitive advantage in relation to cost advantage or differentiation advantage.
It included:
Route 1 is the ЎҐno frillsЎ¦ strategy, which combines a low price, low perceived product/service benefits and focus on price-sensitive market segment.
Route 2, the low-price strategy, seeks to achieve a lower price than competitors whilst trying to maintain similar product/service benefits to those offered by competitor
Route 3 is the hybrid strategy, which seeks simultaneously achieving differentiation and
a price lower than competitors
Route 4 is a broad differentiation strategy which seeks to provide product or service that offer benefits different from competitors and that are widely valued by buyers. The aim is to achieve advantage by offering better products or services at same or higher price.
Route 5 is a focused differentiation strategy seeks to provide high perceived product/service benefits justifying a substantial price premium, usually to selected market segment. In many markets there are described as premium products and are usually heavily branded.
A failure strategy is one which does not provide perceived value-for-money in terms of product features, price or both.
In my opinions, the position of Starbucks is between a broad differentiation strategy and a focused differentiation strategy.
As weЎ¦ll see, StarbucksЎ¦ product development is guided by its Ў§positioningЎЁ strategy. It is imperative for the firm to be different from competitors in ways that are important to customers. StarbucksЎ¦ key differentiations are unique product and service, consumption experience, and ubiquity.
StarbucksЎ¦ coffee made from Arabica coffee beans from carefully selected suppliers in specific countries. The beans are roasted to reach StarbucksЎ¦ standards through its own process. The company goes to extreme lengths to buy the very finest Arabica coffees available on world markets, regardless of price.The companyЎ¦s culture is built on very strict standards for how coffee should be prepared and delivered, each Starbucks employee is trained to ensure that customers receive knowledgeable service.
Where a cup of coffee would typically cost 50 cents, the charge at a US Starbucks is around $1.75. Consumers are willing to pay these higher prices, because they are not only buying a coffee, but also making a social statement at the same time. Consumers are buying an experience, a lifestyle and an attitude. Starbucks Experience is about passion for a quality product, excellent customer service, and people. Starbucks do their best to makes their coffee shops cosier and look more like a neighbourhood hangout