The Resources And Capabilities Of Starbucks Corporation Marketing Essay

Reputation: Starbucks has found pride in its quality atmosphere, product, alliances, partnerships, and overall structure. It counts on its valuable reputation to keep customers coming back. There are no companies similar in any way to Starbucks in the industry. It would take a company a huge amount of time and effort to create a reputation similar to Starbuck’s and it would be difficult to compete. Starbucks thrives on its reputation and takes advantage of the doors it opens. This gives Starbucks a sustained advantage.

High Employee Retention: Starbucks benefits from high employee retention by saving on training costs and having experienced workers that are invested in the company. This quality is extremely valuable in an industry where employment turnover is generally great. Creating a structure that allows a company to treat its employees the way that Starbucks does is difficult and Starbucks makes use of its experienced employees by promoting from within. This gives Starbucks a sustained advantage.

Equipment: Starbuck’s expensive automated equipment is valuable in saving time and creating a consistent taste. At this point not a lot of coffee sellers have switched to the automated machines. At any point competition could raise the money and purchase the equipment. This gives Starbucks a temporary advantage.

Marketing Strategy: Having a marketing strategy based on logo and store recognition is valuable in creating buzz. It is also rare that a company is not bombarding the public with reasons to buy their product. It would be quite simple for another company to switch to Starbuck’s type of recognition marketing. This gives Starbucks a temporary advantage.

Main Product Line: The product that Starbucks sells is what generates the majority of their profits. Unfortunately coffee is widely available and there are other quality options. This puts Starbucks on an even playing field with competitors.

Customer Service: With a high level of importance put on customer service, customers know they will always be treated well in Starbucks. This is definitely a valuable capability, but not one that is rare or difficult to imitate. This also puts Starbucks on an even playing field with competitors.

Current Strategies

Starbucks Corporation definitely uses a strategy of differentiation to gain a competitive advantage. The initial concept was to create a “third place” in customer’s lives. Shultz wanted to create a “familiar and welcoming refuge from work or home where they could relax in a safe public setting and enjoy a sense of community (Gulati, 2008).” In order to achieve this, Starbucks has a very consistent and recognizable atmosphere that is unique to their brand. They have similar décor and music playing in every store. No matter where a particular store is located it feels like a Starbucks.

The company created a sense of differentiation by creating their own coffee culture. The size title of tall, grande, and venti were introduced in Starbucks. The general vibe of the stores is unique in the industry they are in. They also create signature drinks like the cinnamon dolce latte and the caramel frappuccino that are only available in their stores.

Yet another way Starbucks tries to differentiate themselves from competition is by portraying a socially responsible image. Starbucks is involved in the Fair Trade movement which makes sure coffee growers are not exploited and receive a set price and livable wage for their beans. “Starbucks’s involvement with Fair Trade helps the coffee growers form cooperatives and links them directly to coffee importers, who are also encouraged to develop long-term relationships with the growers and to provide financial credit (Gulati, 2008).” They also go to great lengths to encourage environmentally friendly behavior by using recycled materials and putting research into more ways to cut waste. They encourage reusable tumblers and have a goal to have recycling available in all their stores by 2015 and be serving 25% of beverages in reusable cups (Recycling, 2010).

Starbucks is recently venturing into new product markets as well. They launched their new instant coffee Via in 2009 with hopes of a good performance in the $17 billion market (Reuters, 2009). They have added more sandwiches and other foods to their menu to try to reach out to the lunchtime market as well.

Partnerships are also a way that Starbucks is getting its name and products into regular stores. Teaming up with consumer product companies like Kraft, Pepsi, and Unilever has allowed Starbucks to get products into grocery stores while sharing logistics costs and using existing distribution networks (Gulati, 2008). They have been able to sell whole bean and ground coffee next to other brands on grocery store shelves to always be an option for coffee drinkers. They also offer coffee flavored ice creams and bottled beverages in grocery stores. A different kind of partnership recently created is with Apple music. The stores playlist can be brought up on Itunes in real time while inside the store for an integrated experience (Searcey, 2008). The partnership also allows stores to give free music downloads featuring new artists to all customers.

Having a high store presence is an important part of Starbucks strategy as well. Licensing out the Starbucks brand fulfills a goal to reach customers through multiple points of contact. Through licensing Starbucks has become a staple in airports, bookstores, hotels, and grocery stores. In order to maintain close control of how the brand is portrayed Starbucks carefully chooses partners based on reputation and commitment to quality and that agree to train employees the Starbucks way (Gulati, 2008). By licensing instead of franchising Starbucks also feels it can retain more control.

Overall, the Starbuck’s strategy is to have an experience rather than a beverage as their product and to present that experience in its own culture. They want the brand to be differentiated through a quality product distributed with great customer service and a feeling of social responsibility. They want their product to be first choice and easy to access at any time.

Exhibits and references

Value

Rarity

Difficult to Imitate?

Organization

Competitive

Advantage

Reputation

yes

yes

yes

yes

sustained

High Employee

Retention

yes

yes

yes

yes

sustained

Equipment

yes

yes

no

no

temporary

Marketing Strategy

yes

yes

no

no

temporary

Main Product Line

yes

no

no

no

parity

Customer Service

yes

no

no

no

parity

Exhibit A

Gulati, Ranjay, Sarah Huffman, and Gary Neilson. “The Barista Principle.” Strategy and Business (2008): n. pag. Web. 23 Apr 2010. .

“Recyclying and Reducing Waste.” Starbucks. Starbucks Corporation, 20/04/2010. Web. 23 Apr 2010. .

Reuters, . “Business.” The New York Times. The New York Times, 13/02/2009. Web. 23 Apr 2010. .

Searcey, Dionne. “Business.” The Wall Street Journal. The Wall Street Journal, 12/02/2008. Web. 23 Apr 2010. .