Starbucks started with just one coffee shop way back in 1941 in Seattle US. Since then spreading love with coffee and eventually striving hard to make it next stop other than Home and Office has paid off and Starbucks made legendary moves worldwide.
With revenue in access of 22 Billion for 2017 its one of the most profitable ventures in the world. The Starbucks growth story can be directly associated with its growth in number of stores over the years as shown in the table below:
As of 2017 Starbucks has 26696 Stores worldwide.
Starbucks Head office: 2401 Utah Avenue South, Seattle, Washington, U.S.
Executive Chairman: Howard Schultz
CEO: Kevin Johnson
SWOT Analysis of Starbucks Coffee:
The Brand Starbucks: The brand value of Starbucks is second highest only nest to McDonald’s which is at 44 Billion USD as on 2017. With such a dominant position brand Starbucks is way ahead in creating a mesmerising effect to its target customers.
Target Audience: For a well positioned coffee shop brand target audience has spread across age group which acts as sustainable growth driver over a long period of time. From millennials to professional Starbucks has positioned itself as choice for everyone with its high-quality products and store ambiance.
Reason for visit: Starbucks touched upon many good reasons for people to connect with and make regular visits to their stores. Be it for a millennial centric quick product or professional’s choice for meeting and working while being a part of great customer service and ambience. Everything adds up to keep target audience come back again.
Reach: Almost every famous and successful FMCG brands across the world have established strong network of stores. Starbucks is the strongest franchises in the world with more than 25500 licenses shops in the world as of 2015.
Ethical Sourcing: One of the primary reasons for the brands continuing dominance is control over quality and consistency is delivering its customer promise through world class or best in class products. For example, Starbucks has partnered with Ethical Tea Partnership (ETP) for Tea and for Coffee through the programmes called Sustainable coffee challenge led by Conservation International to make coffee the world’s first sustainable agriculture product. The said initiatives create a ripple effect in consumer behaviour as target segment for Starbucks are most often the well-read people, this add value and increase the brand loyalty.
Starbucks Weaknesses in SWOT:
Pricing: Price determines the volume its always economies of scale even at customer reactions and purchases. This is where Starbucks is behind many regional and cost centric coffee shops. Especially in developing world where pricing still dominates and pause the growth available to concur.
Focus: Its focus has been US market and Europe where the company generates its majority of the revenues. The product portfolio looks and feels like American across geographies. If Starbucks has to growth and capture meaning full market share across the globe the focus has to shift from being US brand to regionally imbibed brand.
Starbucks Opportunities in SWOT:
Launch new verticals: With premium brand appeal across globe, Starbucks has huge opportunity to launch smaller stores for price conscious audience mainly in small towns. Where brand recall can seamlessly integrate with price tag.
Emerging Markets: Going out for coffee in emerging markets is a trend which has established itself in recent years. Be it for young or for working professionals with product expansion and right pricing this growing market certainly shall act as a catalyst for Starbucks in coming decade.
Starbucks Threats in SWOT:
New Entrants: Coffee shops are on a upswing and this trend has invited many new entrants across globe and pose a serious challenge to Starbucks future growth mainly in emerging markets where price still determines consumer choice. On the other hand, where quality matters the new entrants branding capacity with digital play has opened new opportunities and offer great brand ROI this brand building trend for premium competitors shall eat into Starbucks market share.
Raw Material Cost: To deliver quality coffee and products with appreciable customer experience comes with huge cost in terms of procurement of quality raw material, keeping quality check at multiple sourcing points, processing and transportation along with well-trained manpower cost. All of which reflects in selling price where positioning can be a lone and smart differentiator for premium coffee brand such as Starbucks. This control over cost is inevitable to beat the competition.
Substitute products: Growing trend of alternate beverages is picking up with ever changing preferences from millennials group. This may give rise to new beverages which shall pose serious threat for coffee chains where the theme is centred on coffee beverages and diversion may have direct impact on its core brand activities.
Health Conscious: Health is becoming centre point of consumption across FMCG products. The changing consumer behaviours may also have implications on regular consumption of coffee and its effects, especially among premium and urban customers. Starbucks products next big challenge is to promote its product range as healthy mix which add value and offer taste as a tradition.
The above points summarize on one unique thing about Starbucks coffee is the first choice for coffee lovers. The growing market dynamics both in developed and emerging markets need constant innovation in product lines at different price points.
Some of the best products of Starbucks are:
Teavana Shaken Iced Passion Tango Tea Lemonade
White Chocolate Mocha
Iced Hazelnut Macchiato
Pumpkin Spice Latte
Iced Cinnamon Dolce Latte
Java Chip Frappuccino
Strawberries & Creme Frappuccino