Starbucks Market and Customer Analysis - Research Paper Example

Starbucks Market and Analysis Starbucks Market and Analysis Starbucks Market Analysis Starbucks currently enjoys an estimated 36.7% of the coffee market share across the United States. Although the bulk of its customers are mainly located in upscale suburban areas and cities, Starbucks is able to sell as much coffee as that which is sold by convenience and fast food stores combined. Throughout the company’s history, Starbucks has been able to gain a large share of the market by specifically catering to a well-defined target audience. Starbuck’s Target adult market In venturing into the Xiamen, China target market, Starbucks primary adult market is will comprise of women and men aged between 25 and 40 years of age. This market group accounts for nearly half of the business conducted by the company in the United States. To appeal to this market group, Starbucks will effectively utilizes contemporary and hip designs that are consistent with its décor and advertising. The company will also work to ensure that it maintain the perception of its products as being a status symbol as this is a common factor that greatly motivates their buying decisions. The company’s primary customers will be urbanites that enjoy relatively high income level, have professional career in addition to their being focused on social welfare. The focus on social welfare is also another key attribute that informs their buying decisions. OFarrell (2014), point out that in different markets across the world, it is estimated that this target audience continues to grow at the rate of about 3 percent annually. Young Adults About 40 percent of Starbucks’ total sales in markets around the world is accounted for by young adults that are aged between the ages of 18 and 24 years and this market will be a key target in the venture. Starbucks will solve the problems for this specific market groups by positioning itself as a place where it is possible for college students in the town to easily hang out, write term papers, study as well as meet people. To directly achieve this objective, Starbucks will engage in the immediate introduction of new technology as soon as this technology becomes available. The company primarily focuses on social networking and as well as the active cultivation of what is socially considered to be a cool image. According to OFarrell, (2014) this specific target market grows by an estimated 4.6 percent each year. Kids and Teens Kids and teens will also comprise of a large part of Starbuck’s target audience. Customers aged between 13 and 17 years of age generally account for only 2 percent of Starbucks’ sales in different markets, of note however, is that most of the items that are purchased for consumptions by kids in this target audience are usually purchased by the kids parents. Whereas children will enjoy the steamed milk commonly referred to as babyccinos and the caffeinated, sugary, whipped cream topped coffee drinks, Starbucks will help teens in solving the problem of where to hang out as it allows for teens to hang out or study at its outlets. Starbucks Market Analysis The Strengths and Weaknesses of Starbucks’s Products and Services as it Ventures into the new Target Market One of Starbuck’s key strengths is seen to pertain to the company’s strong market position and global brand recognition. Starbucks enjoys a significant geographical presence across the world in addition to its maintaining an estimated 36.7% of the market share within the United States. The company will be able to leverage is rich brand equity by merchandizing a wide range of products as well as licensing its brand logo to outlets across its new venture market of Xiamen, China. Another key attribute that is considered to be a key Starbucks strength is the fact that the company produces products of the highest quality. Starbucks gives the highest importance to the quality of their products as well as avoids the standardization of quality even in the face of higher production output levels. This attribute is expected to aid the company in the quick capture of a significantly large share of the Xiamen market. As a result of its numerous social responsibility initiatives, Starbucks benefits from enjoying the goodwill of all its customers across the world. Starbucks stores are designed to be community friendly and focused on the recycling and reduction of waste products. This attribute is expected to help the company attract more customers as it expands into the new market. Weaknesses One of Starbucks’ key weaknesses is the fact that most of its products are generally perceived to be quite expensive. While Starbucks goes to great length to ensure that its products are of the highest quality and that the entire Starbucks experience is unique, the high cost of its products might at times forces its customers in the new market to similar products that are offered by its competitors at a lower cost. Like all large corporations, Starbucks has come under increased scrutiny. This has forced the company to invest in corporate social responsibility activities as well as in the maintenance of tight controls over labor practices. Competition Starbucks faces intense competition in the coffee market and some of its biggest competitors around the world who constantly attempt to take the company’s market share include Dunkin Brands, Costa Coffee, Pete’s Coffee, as well as a number of mom and pop speciality coffee stores. Starbucks biggest product is its coffee and it is important for Starbucks to implement strategies that will enable the company to obtain a share of the market which is currently mainly dominated by numerous mom and pop’s specialty tea and coffee shops. In expanding to the new market, a key market reaction that is expected from Starbuck’s competitors is the reduction of product prices and creation of similar products to those offered by Starbucks. This can have the market risk effect of greatly reducing the company’s profit margins. However, Starbucks can respond by utilizing its consistently providing superior products to its customers as well as enhancing the whole “Starbucks experience” that has served the company well across the different markets that it has ventured into across the world. According to Law (2014) Xiamen, China market has a population of nearly two million individuals and is widely celebrated as being the capital of China’s tea-sipping, and slow living culture. The customer purchase decisions in this market are mostly motivated by cost, quality and environment. The Starbucks experience will be tailored to satisfy all these motivations as the company expands into this market. To penetrate this market, Starbucks will look into either buying out local franchises within the city or licensing out its logo to already established outlets. References Law. V. (2014). Starbucks Pushes Major Expansion in China as Coffee Culture Emerges. Retrieved on August 14, 2014 from http://www.nbcnews.com/news/asian -america/starbucks-pushes-major-expansion-china-coffee-culture-emerges-n175141. OFarrell. (2014). Who is Starbucks Target Audience?. Retreived on August 14, from http://smallbusiness.chron.com/starbucks-target-audience-10553.html Read More