Starbucks Is A Premium Brand Commanding Premium Prices Marketing Essay

Starbucks is No. 1 forte java retail merchant of – in footings of market portion and market capitalisation. ( 1997, ?4596.6 million and gross revenues growing 20.9 % )

It is a planetary administration with 16,000 java stores in 15 states world-wide.[ 2 ]

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Strong trade name image associated with high quality java and first-class client service – “ The Starbucks Experience ” .

Extensive shop web, 8,500 stores are owned by Starbucks straight. The company franchises and licenses 6,500 stores. It has developed first-class accomplishments in franchise direction.

Due to its specialism in all things coffee – it achieves high purchasing volumes – graduated table economic systems and utilizes international sourcing, some from just trade providers.

Committed work force, one of Fortune Top 100 Companies to Work for[ 3 ]


Starbucks is a premium trade name commanding premium monetary values. As competitory force per unit areas addition, the company could be undercut by lower monetary value challengers such as McDonalds or Costa Coffee.

Starbucks is seen as an “ American Global ” , possible perceptual experience that large American ironss are tramling on national civilizations, “ Starbucks was treading on Chinese civilization ”[ 4 ].

Over-dependency on java and java related merchandises.

United statess based company, focal point on the US domestic market.

Repute with force per unit area groups. Criticized for non utilizing more Free trade merchandises[ 5 ].


Possible impregnation in the java, cafe market. In the US, 600 underperforming company-owned shops were closed[ 6 ]. Consolidation on the high street, turning competition from national trade names and new entrants, aggressive selling ( monetary value wars, publicities ) , seting force per unit area on net income borders. Companies seek cost nest eggs and new manner to distinguish to retain clients.

Several militant groups maintain web sites knocking the company ‘s fair-trade policies, labour dealingss, and environmental impact[ 7 ].

Recession or downswing in the economic system affects consumer disbursement, with less disposable income to pass. Consumers defect to take down monetary value locales and rivals.

Raw stuff cost lifting – Starbucks is exposed to rises in the cost of java, labour and dairy merchandises, and inauspicious alterations in exchange rates[ 8 ].


Significant chances exist, particularly outside domestic US market for joint ventures. Starbucks could get the better of planning limitations, cut down costs through co-locating at supermarket ironss, saloon & A ; eating houses.

Merchandise scope variegation into greater nutrient scopes and non-food points. The company has experimented with warm sandwich lines, and I-tunes ( music nexus )[ 9 ]. Besides, sold music Cadmium ‘s and linked with nines ( e.g. book nines ) etc.

Licensing its name ( e.g. ambient java through supermarkets ) could supply new watercourses of gross[ 10 ].

Through CRM and database selling it could aim its high net worth clients and construct greater trueness with client base. The debut of trueness strategies such as Starbucks Card, free re-fills and engineering ( free downloads of music ) provide a competitory border to its value proposition.[ 11 ]

Continued focal point on bettering efficiency and effectivity in the administration, from procurance, to provide concatenation to client service bringing[ 12 ].

Become more of a socially responsible trade name. Better public dealingss activity, presenting more just trade merchandises, better distribution of net incomes to husbandmans and ethical sourcing patterns.

Toyota Motor Corporation


Global organisation, with a strong international place in 170 states worldwide.

High fiscal strength ( 1997, gross revenues turnover, ?131,511 million ) , gross revenues growing of 29.3 %[ 13 ]

Strong trade name image based on quality, environmental friendly ( greener ) , customized scope.

Industry leader in fabrication and production. Maximizes net income through efficient thin fabrication attacks ( e.g. Entire Quality Management ) and JIT ( Just in Time ) fabrication and first mover in auto research and development[ 14 ].

Excellent incursion in cardinal markets ( US, China, EMEA ) and now the 2nd largest auto maker in the universe, exceling Ford.


Nipponese auto maker – seen as a foreign importer.

Production capacity. Toyota produces most of its autos in US and Japan whereas rivals may be more strategically located worldwide to take advantage of planetary efficiency additions.

Some unfavorable judgment has been made due to large-scale re-call made in 2005, quality issues.


Innovation -first to develop commercial mass-produced intercrossed gas-electric vehicles ( gas and electric ) , e.g. Prius theoretical account. Based on advanced engineerings and R & A ; D activity. With oil monetary values at an all clip high – this investing and broadening of merchandise portfolio fits consumers looking to alternate beginnings of fuels off from gas gulping autos[ 15 ].

To spread out more sharply into new sections of the market. The launch of Aygo theoretical account by Toyota is intended to take market portion in young person market.

To bring forth autos which are more fuel efficient, have greater public presentation and less impact on the environment.

To develop new autos which respond to societal and institutional demands and wants. The development of electric autos, intercrossed fuels, and constituents reduces the impact on the environment. Toyota ‘s Eco-Vehicle Assessment System ( Eco-VAS ) has helped in production, use, and disposal[ 16 ].

Continued planetary enlargement – particularly in the emerging markets e.g. China and India, Russia, where population and demand is speed uping.


Impregnation and increased competition, intense selling runs increasing competitory force per unit areas[ 17 ].

Shifts in the exchange rates impacting net incomes and cost of natural stuffs.

Predictions of a downswing in the economic system e.g. recession, will impact auto purchases ( particularly new autos ) . As family budgets tighten – this could take a diminution in new auto gross revenues and possible rationalisation of franchises.

Changing demographics e.g. figure of big households is worsening. Sabotaging the demand for big household autos[ 18 ].

Changing usage – households utilizing the auto less for taking kids to schools. Home bringings. Businesss – curtailing concern travel ( tele-conferencing ) . Governments promoting alternate signifiers of conveyance – cycling and inducements to utilize public conveyance across Europe.

Rising oil monetary values ( fuel costs ) and the costs of keeping autos. Increase in households who have chosen non to have a auto, or decided to utilize their auto less.[ 19 ]

Cadbury Plc


Cadbury is the largest planetary confectionery provider, with 9.9 % of planetary market portion.

High fiscal strength ( Gross saless turnover 1997, ?7971.4 million and 9.4 % )[ 20 ]

Strong fabrication competency, established trade name name and leader in invention.

Advantage that it is wholly focused on cocoa, confect, masticating gum, alone apprehension of consumer in these sections.

Successfully grown through its acquisition scheme. Recent acquisitions, including Adams, 2003, enabled it to spread out into of import markets like the US market.


The company is dependent on the confectionery and drink market, whereas other rivals e.g. Nestle[ 21 ]hold a more diverse merchandise portfolio, where net incomes can be used to put in other countries of the concern and R & A ; D.

Other rivals have greater international experience – Cadbury has traditionally been strong in Europe. New to the US, possible deficiency of apprehension of the new emerging markets compared to rivals[ 22 ].


Worldwide – there is an progressively demanding cost environment, peculiarly for energy, conveyance, packaging and sugar. Global supply concatenation in low cost locations[ 23 ].

Competitive force per unit areas from other branded providers ( national and planetary ) . Aggressive monetary value and publicity activity by rivals – possible monetary value wars in developed markets.

Social alterations – Rising fleshiness and consumers obsession with Calories numbering. Nutrition and healthier life styles impacting demand for core Cadbury merchandises.[ 24 ]


New markets. Significant chances exist to spread out into the emerging markets of China, Russia, India, where populations are turning, consumer wealth is increasing and demand for confectionery merchandises is increasing.

The confectionery market is characterized by a high grade of amalgamation and acquisition activity in recent old ages. Opportunities exist to increase portion through targeted acquisitions[ 25 ].

Key to survival within the FMCG market is increasing efficiency and cut downing costs. Cadbury Fuel for Growth[ 26 ]and cost efficiency programmes seek to convey cost nest eggs by: 1 ) Traveling production to low cost states, where natural stuffs and labor is cheaper two ) cut down internal costs – supply concatenation efficiency, planetary sourcing and procurance, and wise investing in R & A ; D.

Invention is cardinal driver. To react to alterations in consumer gustatory sensations and penchants – healthier bites with lower Calories need to be developed. R & A ; D and merchandise launches have led to sugar-free & A ; centre filled masticating gum assortments and Cadbury premium indulgence dainty. Low-fat, organic and natural confectionery demand appears strong.

McDonalds Corporation


McDonalds has built up immense trade name equity. It is the No. 1 fast-food company by gross revenues, with more than 31,000 eating houses functioning Burgers and french friess in about 120 states. Gross saless, 2007 ( 11,4009 million ) , 5.6 % gross revenues growing[ 27 ].

Good invention and merchandise development. It continually innovates to retain clients in the concern.

The McDonalds trade name offers consumers pick, sensible value and great service

Large sums of investing have gone into back uping its franchise web, 75 % of shops are franchises[ 28 ].

Loyal staff and strong direction squad.


Core merchandise line out of line with the tendency towards healthier life styles for grownups and kids. Product line to a great extent focused towards hot nutrient and Burgers[ 29 ].


Quality issues across the franchise web.


Joint ventures with retail merchants ( e.g. supermarkets ) .

Consolidation of retail merchants likely, so better locations for franchisees.

Respond to societal alterations – by invention within healthier lifestyle nutrients. Its move into hot baguettes and healthier bites ( fruit ) has supported its new placement.

Use of CRM, database selling to more accurately market to its consumer mark groups. It could place likely clients ( based on mold and profiles of shoppers ) and prevent trade name exchanging[ 30 ].

Strengthen its value proposition and offering, to promote clients who visit java stores into McDonalds. The new “ formats ” , McCafe, holding Wifi internet links should assist in pulling sections. Besides put ining kids ‘s play-parks and its focal point on educating consumers about wellness, fittingness.

Continued focal point on corporate societal duty, cut downing the impact on the environment and community linkages.

International enlargement into emerging markets of China and India.


Social alterations – Government, consumer groups promoting balanced repasts, 5 a twenty-four hours fruit and veggies.

Focus by consumers on nutrition and healthier life styles.

Competitive force per unit areas on the high street as new entrants offering value and greater merchandise scopes and healthier life styles merchandises. E.g. metro, supermarkets, M & A ; S.

Recession or down turn in economic system may impact the retail merchant gross revenues, as family budgets tighten cut downing spend and figure of visitants.

Pressure groups – environmental.


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