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Starbucks Coffee Company Case Study

Essay by   •  March 4, 2012  •  Case Study  •  520 Words (3 Pages)  •  1,917 Views

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Starbucks Coffee Company started operating in 1971 in Seattle, Washington, United States of America. In 1990s, the demand for coffee increased and this creates opportunity for Starbuck to expand its business. By 2000s, about 15,000 Starbucks coffee shop opened all across the globe (Starbucks, 2009). The company's main products are beverages and retail items that are both related to coffee. Though, they also sell other kind of beverages such as tea and hot chocolate as well as pastries. One of the reasons why I chose this company for the new product invented is because of its market structure. We can see that it has a monopolistic competition characteristic which means there are several sellers of the similar product but slightly distinguished products (AmosWEB, 2000-2010). The advantage of this market structure is that the producer can set up the price and quantity of its product without affecting the market price as a whole. Thus, this is why the new product fit perfectly in Starbucks Coffee Company because it is globally known in the market of selling coffee.

SWOT analysis

In a SWOT analysis (Datamonitor, 2010), it is found that the company has several strengths such as the capability of research and development, established relationship with well-known companies such as Kraft and wide range of coffee products sold in the retail shops. The only weakness of this company is product recalls which affects the brand image and margin. In term of opportunities, this company has stable credit ratings which help in increasing stakeholder's confidence. Besides that, its initiates in cost reduction that assist in improving margins. Last but not least, the company's threats are reduce of demand due to health consciousness and operating margins affected by the increased of wages.

New product, an Instant coffee self-heating canned drinks

The product idea for this company is a range of coffee related beverages in a form of instant self-heating canned drinks. These drinking cans will have an inner chamber which holds the drink and an outer chamber which contains chemicals that can perform exothermic reaction. Consumers can activate the process by pressing the button at the bottom of the drinking cans. The can should have an outer layer that is heat resistance so that consumers can hold their hot beverages without getting hurt. According to Maslow hierarchy of Needs (1943), people need to fulfil their needs in order to be motivated. The bottom of the pyramid is the psychological needs where a person deprives for food and shelter to be motivated. Thus, this product fits well in this category and will give motivation to consumers. The diagram below is an illustration on how the self-heating canned drinks will look like.

Segmentation

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