A competitive advantage denotes a firm 's ability to achieve market and financial superiority over its competitors (Collier, 2013). To obtain a competitive advantage a company should outperform others in areas such as productivity, quality, price, service, technology, and/or a higher profit. Starbucks coffee company is a prime example of a business who has achieved a widely recognized competitive advantage in their industry. The following research described in this paper was written to give a clear picture of the competitive advantage of Starbucks.
Cost & Price Strategy Traditionally, Starbucks has held on to a very precise pricing strategy. The firm has been perceived by consumers as selling products priced for quality. The target market for the brand is one that will spend the difference for a Starbucks coffee over its discount counterparts, because those individuals are willing to pay for the quality that comes along with the brand name. For in-house products and specialty beverages, Starbucks justifies its steeper pricing by capitalizing on product differentiation and higher quality standards. As a result, the customers who purchase the brand are loyal, returning customers and the price sensitive consumers are weeded out. While the strategy for in-house product pricing may narrow the market for Starbucks, it helps the firm to establish brand equity and customer loyalty (Dawson, 2013). In contrast to the pricing for in-house products, in 2013 the company has implemented a new pricing strategy for their packaged coffee. The company has adopted a more competitive pricing strategy -- lowering the cost by 10% (Zimichi, 2013). Lowering the cost of the packaged products to value prices gives the company a more vast market. Due to the lower prices, Starbucks has now opened up an opportunity to compete with its competition not only by quality, but by pricing as well.
According to the Starbucks mission statement, the company strives to
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