Table of Contents
Executive summary
This report highly depended on secondary sources of information regarding different companies. The report applied a comparison analysis of the various sources before the report creation phase that is the main section. Majority of secondary sources applied in this research include scholarly journals, books and articles published by different authors. Other sources used in obtaining information include websites such as Starbuck.com, MacDonald.com and Dunkin. Donald.com. The three websites were utilized in supplementing and comparing the information obtained from the books, articles, and journals. Donald.com. The main findings of this report include:
- Starbucks is the major global coffee competitor firm in the globe compared to other firms.
- Starbucks produces unique and high-quality coffee products.
- Starbucks coffee is the most expensive compared to other global market competitors.
- MacDonald and Dunkin Donuts are Starbucks major competitors within the coffee market.
Starbucks should aim at reducing its prices close to the competitor’s price within the Qatar market. This initiative will facilitate attraction of new customers and higher revenue generation within Qatar. To uphold its global position within the market Starbucks should adopt production of new coffee brands as the mean of differentiating itself from other competitors. Additionally, Starbucks should focus on new production technologies within the coffee industry as a means of improving its coffee quality within the market. The focus on new production technologies will help the firm to counter competition from the two close competitors hence upholding a higher market position.
Introduction
Starbucks is one of the global competitive firms in the provision of best and most preferred coffee in states such as Qatar and America. Starbuck coffee was pioneered in Seattle in 1971 by three partners namely Zev Siegel, Jerry Baldwin and Gordon Bowker. Starbucks ventured into the market by setting up various coffee stores within Seattle with small roasting services for the customers within the Seattle city. In 1982 Howard Schultz was recruited as the new sales manager who was to oversee both the sales and marketing operations within the company (Cooke, 2010). In 1987 the Starbuck directors realized that their firm was not performing well and decided to sell it to Schultz. As the new director, he implemented the new Italian culture which made Starbuck be a prominent coffee bar.
Currently, Starbuck is one of the major coffee producers with the best-preferred coffee drinks in Qatar and other states like America. The company offers a wide range of products such as salads, espresso beverages, whole bean coffee and ground coffee. According to Douglas, (2017) the dominant brand of coffee provided by this company is the Toffee Nut Latte coffee which is commonly consumed by the majority of people within Qatar. The coffee brand is mostly purchased by both young and old population in Qatar with its primary customers as the young generation.
Toffee Nut Latte is combined with warm toasted nuts and blended with fine espresso. In addition to this process, the coffee is later topped with smooth steamed milk, toffee nut shakes and whipped cream. The Toffee Nut Latte has several health-related benefits in that it contains a low percentage of calories. In comparison to other brands of products like yogurts within Starbuck, this brand of coffee has a lower percentage of calories. Consequently, its suitable for consumption since it does not accelerate health risks such as obesity (Douglas, 2017). The main reason for the selection of this brand is due to its competitive advantage to the Starbuck company. Consequently, the product has earned Starbuck a good market reputation in the coffee industry.
Situational analysis
Competitor analysis
Starbuck Coffee has various substitutes threats within the market such as tea, alcoholic and non-alcoholic drinks. The listed products have the opportunity of substituting the coffee drinks within Starbucks. Starbuck main competitors in coffee provision include the Dunkin’ Donuts and McDonald’s Company.
Dunkin’ Donuts
Dunkin Donut firm is a coffee house established in Massachusetts, the USA in 1950. The company has expanded in the last decade thus becoming one of the most significant threats to Starbucks coffee houses around the globe. This company was initially established a donut manufacturing firm, but it later shifted its attention to drinks such as coffee as a means of improving revenue. The Dunkin Donuts introduced its “America runs on Dunkin” advertisement campaign in the year 2006 (Roberto, 2017). This advertisement rally aimed to market its new coffee and to win competitor firms such as Starbucks.
McDonalds McCafé
McDonald’s was pioneered in 1993 in Australia as a coffee processing house with high-quality coffee drinks. In 2015 financial year McDonald’s was among the best coffee selling houses followed by Dunkin Donuts that was position three. In the 2015 fiscal year, the company generated over $ 1.4 billion from its 4,500 coffee houses in various states (MacDonald, 2017). McCafé is termed as one the cheapest coffee seller compared to Starbucks. The McCafé company sells its coffee at $2 less expensive than Starbucks coffee company. The McCafé company uses the “I love it” motto to advertise its product on the market. Other marketing strategies used by this company to spread the news about its products include the use of research specialist within different states.
The strengths and weaknesses of the three companies (Starbucks, McDonald and Dunkin Donuts) can be illustrated using the table below:
| Company | Strengths | Weaknesses |
| Starbucks | ● Provides high-quality brands ● Extensive market coverage within the coffee industry ● Use of recent technology ● High product awareness/advertisement | ● Higher pricing strategy compared to competitors ● Poor control over outlets outside the US ● Higher operational expenses
|
| Dunkin Donalds | ● Offers good and customer appealing breakfast menu ● Presence of centralized supply chain ● High brand awareness/advertisement | ● Slow international growth ● Poor franchise affiliation ● Extreme competition in new countries |
| McDonald’s | ● Cheap and affordable pricing strategy ● Massive expansion into other parts of the globe ● Poor & inefficient means of advertisement | ● Provision of low-quality food with health-related risks ● Stagnant financial progress in developed nations |
Fig 1: Strengths and weaknesses between Starbucks, Dunkin Donalds, and McDonald’s.
SWOT analysis
Strengths
- High-quality products: Starbucks focuses on the production of high-quality brands like Toffee Nut Latte brand which has low calories percentage.
- Well recognized products: The Starbucks Toffee Nut Latte has given the company a good name within the Qatar market and other regions.
- Use of recent technology: The company has adopted the e-commerce and use of mobile apps such as Starbucks app. The Starbuck app facilitates placement of online orders by customers within the Qatar market.
Weaknesses
- Higher pricing strategy: The Starbucks coffee has a higher price compared to the MacDonald one within the Qatar market.
- Poor control: There is poor control of Starbucks outlets in Qatar due to capital requirements such as labor and transport.
- High operational cost: The cost of operating in Qatar are high regarding both capital and learning of non-American culture making it uneconomical to expand in Qatar.
Opportunities
- Technological advancements: The improvements in the field of technology such as mobile banking and computerization are excellent opportunities for growth. Such break will help the company to improve customer services and reduce wait time.
- Expansion to new regions: The higher demand for Toffee Nut Latte is one of the most viable business opportunity for establishing various outlets within Qatar.
- New brands: The company has an opportunity of developing new brands that are unique and market them within the Qatar market.
Threats
- Economic crises: Issues such as the inflation of fuels and other commodities like sugar within Qatar is likely to impact the business negatively.
- Extreme competition: Competition from other coffee companies like MacDonald is a threat to this company.
- Market volatility. The market for high-quality coffee has been affected in the recent years which has remained to be a significant threat to coffee industries.
| Strengths | Weaknesses | Opportunities | Threats |
| ● High-quality brands ● Use of recent technology ● High brand awareness | ● Higher pricing ● Poor control ● High operational cost | ● New brands/products ● Technology advancements | ● Market volatility ● Economic Crises ● Extreme competition |
Customer analysis
The primary target market for Starbucks is the old aged, white collar staff class and students’ population. The company has its location in some of the busy cities within Qatar where it attracts the three types of customers. In its mission, the company focuses on creating a place where all workers from the offices and place of work would land and refresh themselves Starbucks Coffee, (2009). The working class in Qatar consumes the highest volume of coffee from Starbuck compared to the student’s population who are also significant consumers.
The company has also established several outlets within the big learning institutions like universities and colleges as a means of targeting the younger generation. The establishment of coffee bars within the colleges and universities has been a strategy for selling and marketing the Toffee Nut Latte brand which is commonly consumed by the young people (Technavio, 2007). Additionally, the company has also created several facilities that are enticing to the younger generation like the provision of music systems within the coffee bars.
We can do it today.
Starbuck has used movies as an initiative for attracting the young people between the age of 18-30 years within their coffee houses. In the last years, the younger generation within the Qatar region has recorded a high demand for the Toffee Nut Latte brand which is more expensive. Starbuck also targets on old age population that is individuals above 60 years of age. The company has been producing low sugar and calorie brand of coffee such as Toffee. This has led to processing of this brand in large volume to supply the youth generation within the market. The major segmentation base used to segment Starbuck’s market is the demographic segmentation. The primary market segment can be summarized as below.
Product positioning
Starbuck company is one of the most prominent coffee providers within the Qatar market, its well-recognized for the provision of unique and high-quality coffee. Starbucks mainly uses demographic segmentation to position its products within the Qatar market and other global markets. For instance, the company targets the working class (white collar workers), youth and students. This target market has facilitated the firm to position its outlets in venues such as near large government offices like the embassies within Qatar. Other places where the firm has positioned its outlets to target the white-collar staff include airports and in tall buildings hosting a large population of employees Starbucks Coffee, (2009). Additionally, Starbuck places itself in densely populated regions such as urban centers to serve an extensive market within. Hence it has various branches in the densely populated cities within the Qatar market.
This company has also specially positioned itself to serve different students within the Qatar market. The company has established several coffee outlets in places like universities and colleges where students can access coffee and other products from Starbucks. Starbuck coffee houses have also developed students appealing services like provision of movies, songs, magazine, and novels. This has been implemented to attract more students to the market. Additionally, the company has positioned its brands such as Toffee Nut Latte in a unique way different from competitors such as MacDonald and Dunkin Donald. This brand has a different flavor, taste and appearance compared to other brands of coffee from the market (Cooke, 2010). The coffee brand is also processed using different ingredients that make it unique. Through this brand, Starbuck has positioned itself as a healthy institution that serves old aged people with diabetes and obesity. This has given the company a proper position in the market to serve the elderly age population especially those with medical disorders like diabetes and obesity.
Marketing research
When analyzing the strengths, weaknesses, opportunities, and threats within Starbuck, I utilized various sources such as secondary sources of information. In examining the strengths of the company, I applied primary sources from the company reports and journals. The company reports and journals provided adequate information that facilitated the development of these strengths. The use of secondary sources in analyzing the company strengths was limited to sources within five years of publication. In examining the company weaknesses, I applied comparison criteria of secondary information obtained. For instance, I used primary and secondary data from Starbucks competitors to come up with the company weaknesses.
The opportunities within Starbucks company were established through the utilization of website and other secondary information such as company reports and journals. The journals were used in studying coffee trends in different regions within Qatar. The main criteria applied in the determination of the existing opportunities is the compare and contrast method where information from various articles and journals was subjected to thorough scrutiny. In this analysis, secondary sources such as the Starbucks report were much considered in developing the existing opportunities within the coffee industry. The data concerning the customer’s demands and revenue was obtained through keen investigation into company records such as the financial reports and physical visits to the company premises. The physical visits to the company were applied as the last option for acquiring general knowledge regarding the company location and products offered. The company visit provided the overall view of the company operations within the Qatar region.
Phase 2
Marketing mix
Product
The Starbucks Toffee Nut Latte is one of the unique coffee brands compared to other coffee competitors within the coffee industry. The Toffee Nut Latte has gained much popularity within the coffee market thus becoming a competitive advantage to Starbucks firm. This brand of coffee has given the company an excellent reputation for marketing its coffee and other products within the Qatar market. To ensure a broad market coverage within the coffee industry Starbucks has focused on establishing its outlets within densely populated areas and close to its target customers.
Toffee Nut Latte brand of coffee has various health benefits to people with old age-related medical conditions such as obesity, hypertension, and diabetes. This brand of coffee is known for its lower percentage of calories stated to be zero percent. The lower calories within this brand of coffee highly favor the obese individuals who are coffee consumers. The indicated health benefits have made the brand to gain much demand within Qatar.
Toffee Nut Latte brand of coffee is at the growth stage of the product lifecycle within the Qatar market. This stage gives Starbuck an opportunity to invest in the brand within the Qatar market. Starbucks has more chances of generating revenue from this brand of coffee especially in new regions within the Qatar coffee market. As argued by Faarup, (2010) growth stage is the best stage for companies to make the massive investment in the market since the returns are very high. Apart from coffee drinks, Starbuck has embraced the marketing of other products such as yogurts, strawberry, salad, cream and many others. This product mix has enabled Starbucks to generate higher revenue from different product lines. The company focuses on creating a unique brand of coffee that will differentiate the company from other competitors.
Price
The price of coffee from Starbucks company is much higher compared to other competitors within the market. For instance, the Starbucks coffee is $2 higher compared to the MacDonald coffee which is still sold within the Qatar market (MacDonald, 2017). The coffee from Starbucks stores is also more expensive compared to other substitute products like juice and alcoholic drinks.
The underlying pricing objective of this company is to sell its product to the white-collar staff and enlightened people within the Qatar market. For example, in its marketing strategy, the company mainly targets the white-collar staff from a different organization in that they have enough money to purchase their coffee. Additionally, the students are also in a position to afford the high pricing strategy imposed on the Starbucks coffee. In marketing its coffee brand, the company aspires to provide high-quality coffee to its customers who are one main reason for its high-priced coffee. High quality and unique products will always be accompanied by higher prices within the marketplace (Belch, 2018). The company encompasses on selling its coffee at a higher price to regain the capital invested in the processing activities. For instance, Toffee Nut Latte brand undergoes different processing procedures which make it the most expensive coffee within the Qatar market.
The pricing method applied by Starbucks company in selling their product is premium pricing. Starbucks coffee is sold at higher prices compared to other competitor companies like MacDonald and Dunkin Donalds all within the Qatar market. Additionally, the company uses the premium pricing strategy because its coffee is unique and different from other brands within competitor firms. According to Belch, (2018) high-quality product company will apply premium pricing which is the same case to higher priced Starbucks coffee.
Place
Starbucks company has the best distribution channels that play a more significant role in enduring broad market coverage within the Qatar market. The company uses a wide range of distribution channels such as both direct and indirect distribution channels. The main indirect distribution channels include the Villaggio and El Emadi center that mainly deals with wholesale services. The two-channel supplies other firms with whole bean coffee thus generating more revenue. Through its direct distribution channel, Starbucks has established various coffee houses within the Qatar region. Its outlets mainly focus on the densely populated area where the target customers exist. Starbucks has developed different coffee houses within different cities in Qatar as a means of improving the Qatar market coverage. Additionally, Starbuck has several outlets within the densely populated colleges and universities.
The current Starbucks outlets within the Qatar market include Qatar University, City center Doha (level G conference center street), Hamad hospital, Hyatt Plaza (Al Waab street) and Landmark mall. The Qatar University is one of the major distribution outlets that have high revenue generation within the company Starbucks Coffee, (2009). This university has dense population thus giving the Starbucks company an opportunity to sell its coffee to a large population. The city center Doha outlet is also another outlet that serves a wide range of customers within the city thus generating higher revenues within Starbucks. The Hamad hospital outlet located in Qatar mainly targets customers with medical disorders such as diabetes and obesity hence the primary brand of coffee sold in this outlet is Toffee Nut Latte brand. Hyaat and Landmark Plaza outlets facilitate a broad market coverage within the region since they host large no of staff. The distribution channel can be summarized using the table below:
| Direct channel | Indirect channel |
| Qatar University | Villaggio store |
| City centre Doha (level G conference centre street) | El Emadi centre |
| Hamad hospital, | |
| Hyatt Plaza (Al Waab street) | |
| Landmark Plaza |
Fig: Analysis of distribution channels
Promotion
Starbucks uses a variety means of promotions to penetrate within the local Qatar market. Some of the promotional factors used by the company include individual communication, sales promotion, and advertisement. The individual communication method entails interviewing of the Starbuck customers on the services provided by the company. The personal communication encompasses on gathering customers feedback on quality and satisfaction (Faarup, 2010). Usually, the company usually hire experts to conduct field interviews within the market (Belch, 2018). During marketing event, the company typically provide free vouchers to various customers, especially when opening new outlets. The free coupons help the customers to know more about the company products and taste. In addition to these vouchers, the company also provides customers with free milk and other brands of coffee at zero charges as a means of promotion
The company also advertises its products via the television and internet media. The company uses the slogan of “Starbucks Doubleshot. Bring on the day” to advertise itself on the television media. The slogan of “Starbucks Doubleshot. Bring on the day” aims at marketing the Doubleshot brand which is not common within the local market. The slogan implies that the Doubleshot is the best for breakfast and thus every customer should adopt it. The advertisement message is received by a large number of the audience within a short time. In addition to this slogan, the televisions run different photos of the company brands with their benefits and prices listed. The company adverts have also dominated the google where the majority of its product photos are displayed to users. As revealed by Egelhoff, (2008) the use of internet in product promotion is one of the fastest and cheap media in the recent century. The current promotional objectives within Starbucks company include creating product awareness and upholding strong customer relationship within the market.
Conclusion and recommendations
Factors of success
Starbucks company has encountered good financial performance within the recent years in Qatar thus becoming the best performing coffee company. The success of this company can be linked to various elements within the organization such as:
We can do it today.
Proper product positioning: Starbucks has mainly focused on demographic segmentation in its market position criteria. In this case, the company outlets purposely concentrate on serving the white-collar staff, students, sick population densely populated regions. This segmentation has helped the company in establishing various outlets within the Qatar market making it possible for the customers to access the company products easily. For example, the company has positioned its outlets near government offices and university to serve the white-collar workers and students. The culture of placing the outlets within customer proximity has enabled the company to generate more sales.
Brand awareness: The Starbucks company has gained high popularity in the processing of unique brands of coffee such as the Toffee Nut Latte brand which is different from other competitors’ brands within the market. The uniqueness of its brands has enabled the firm to market its coffee within the Qatar market with less competition from firms such as MacDonald. The production of unique brands has also earned the company excellent reputation within the coffee industry.
Use of technology: In the recent years the company has adopted current techniques in the payment and order acquisition procedures. Recently the firm introduced a mobile app known as Starbucks app which has relieved the customers from making long queues to make an order. The Starbucks app has also reduced the wait time for customers during order acquisitions. The adoption of new mobile banking services within the company has also reduced the resources needed for hiring cashiers.
Recommendations
For Starbucks to achieve greater success and extreme financial progress the company should consider following recommendations:
Reduction of prices: Starbucks should lower the cost of its coffee to suppress competition from other firms like MacDonald. The initiative of reducing the price close to the prices of the competitors will encourage the majority of people within Qatar to switch on to Starbuck coffee consumption. This strategy will attract new customers thus increasing the company by a higher margin in future.
Development of new products or brands: The company should invest resources towards the development of new unique brands within the Qatar market. Creation of new product will enable the company to market its good without much competition from the competitor firms within the Qatar coffee market. Consequently, new product will improve the company reputation in the coffee market.
The positioning of the company outside Qatar cities: Starbuck should develop a culture of establishing coffee outlets outside the Qatar cities to serve more customers. This move will help the firm to acquire new customers from the less developed regions thus boosting the annual revenues generated. Starbucks should also participate in the move towards having more locations within Qatar thus targeting the general populations without any division based on either demographic or psychographic aspects.
Focus on new means of promotion: Starbucks should concentrate on the recent technology when developing the promotional methods. In the recent century, there have been great improvements in technology which can be used by the company to promote its coffee within the Qatar market. Facebook is one of the recent technology that the company should apply in advertising its coffee in Qatar.
Appendices
Appendix 1. Strengths and weaknesses between Starbucks, Dunkin Donalds and McDonald’s
| Company | Strengths | Weaknesses |
| Starbucks | ● Provides high-quality brands ● Wide market coverage within the coffee industry ● Use of recent technology ● High product awareness/advertisement | ● Higher pricing strategy compared to competitors ● Poor control over outlets outside the US ● Higher operational expenses
|
| Dunkin Donalds | ● Offers good and customer appealing breakfast menu ● Presence of centralized supply chain ● High brand awareness/advertisement | ● Slow international growth ● Poor franchise affiliation ● Extreme competition in new countries |
| McDonald’s | ● Cheap and affordable pricing strategy ● Massive expansion into other parts of the globe ● Poor & inefficient means of advertisement | ● Provision of low-quality food with health-related risks ● Stagnant financial progress in developed nations |
Appendix 2. Starbuck SWOT analysis
| Strengths | Weaknesses | Opportunities | Threats | ||||
| ● High-quality brands ● Use of recent technology ● High brand awareness | ● Higher pricing ● Poor control ● High operational cost | ● New brands/products ● Technology advancements | ● Market volatility ● Economic Crises ● Extreme competition |
Appendix 3. Analysis of Starbuck distribution channels
| Direct channel | Indirect channel |
| Qatar University | Villaggio store |
| City centre Doha (level G conference centre street) | El Emadi centre |
| Hamad hospital, | |
| Hyatt Plaza (Al Waab street) | |
| Landmark Plaza |
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- Cooke, J. A. (2010). From bean to cup: How Starbucks transformed its supply chain. Cscmp’s Supply Chain.
- Douglas, A. (2017). How Starbucks conquered the world: Success story. I love English World: Dépassez Vos Frontière.
- Egelhoff, T. (2008). How to market, advertise, and promote your business or service in your own backyard. Hoboken, N.J: John Wiley & Sons.
- Faarup, P. (2010). The marketing framework. Aarhus: Academica.
- MacDonald. (2017). Annual reports and accounts for the years ended 30th June 2017. MacDonald.
- Roberto, M. (2017). Shorter Lines at Starbucks and Dunkin’ Donuts.
- Starbucks Coffee, (2009) Starbucks extends licensing agreement with long-term partner, Maxim’s caterers limited, to accelerate growth in Singapore.
- Starbucks website. https://www.starbucks.com/
- Technavio, R. (2007). Global Organic Coffee Market 2017-2021 – Market analysis and top drivers by Technavio. Business Wire