Starbucks Case Study

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Starbucks, despite fierce competition, hope to increase its market share and maintain as the number 1 coffee retailer in the US, with the help of new innovative products and technology.   
Lets study about Starbucks market structure as a specialty coffee retailer in US, it's characteristics and their latest market strategic moves to show their interdependency with their rivals.  
MARKET STRUCTURE(OLIGOPOLY)
Starbucks currently holds 33% of the market shares in the US. It has more than 11,000 stores in the country. It's main competitors are Dunkin Donuts (23%, 6,000 stores in US) & McCafe (26%, 14,000 stores in the US)   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oligopolists differentiate their products through 
 
• Physical qualities 
• Sales Locations 
• Service provided with products 
• Product's perceived image in consumer's minds 
 
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Physical Qualities 
Premium coffee & specialty coffee is what Starbucks customers is after. Starbucks products pricing are premium, due to the company's commitment to quality products and high level of customer services. Specialty coffee accounts up to 75% of Starbucks sales.   

Starbucks primary targets are designed to maintain repeated business among it's targeted groups.  Adults aged 25 to 40, which they describe as upscale coffee drinkers, due to their high income. This group accounts up to 49% of their business. Another group aged 18 to 24, mainly are students account for 40% of their business.   

As compared to Starbucks, customers of Dunkin Donuts look for value for money and their boarder selection of food. McCafe, since its launch in 2009, had provided customers alternative options, with its lower priced coffees.   

All 3 firms provided basics coffees like latte, cappuccino, mocha, hot chocolates with each firms having its own specialty flavors and food. Although Starbucks coffee is more costly than the other 2 firms, it still remains as the number 1 coffee retailer in the US. This highlights its popularity among customers and superiority in the market.   

Here are some of the products which they have in common. 
|Products  |Starbucks Price  |Dunkin Donuts  |McCafe  | |Cappuccino- 12 oz  |$2.99  |$2.46  |$2.29  | |Latte – 12 oz  |$2.99  |$2.46  |$2.29  | |Iced latte- 12oz  |$2.60  |$3.25 (16oz)  |$2.29  | |Iced Mocha - 16oz  |$3.75  |$3.36  |$2.79  | |Espresso  |$1.45  |$1.35  |$1.29  | |Mocha Frappuccino  |$3.99  |$3.36  |$2.99  | |Mocha  |$2.99  |$2.23  |$2.29  | |  |Most Popular  |Most value for $ and wide range of products  |Cheapest, most number of stores  |

*All prices in US dollars. 
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Services Provided with Products 
Starbucks positions itself as a place where colleague students can hang out, study and meet people. Its appeal to this group directly through technology as soon as it is available, focusing on social networking and cultivating a cool image. Stores are made as comfortable and relaxing as possible by using comfortable furniture and relaxing music.   

Sales Locations 
After recovering from a period of over expansion in 2008, which they were forced to close down 600 stores under-performing whose locations are not ideal, Starbucks stores currently are mostly selected at high...
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