Coffee became a classy drink with the introduction of the coffee pub culture which was pioneered by Starbucks a coffee cafe and retailer based out of USA. The coffee retailer started off as a roaster and seller of ground coffee beans and then went on to become one of the largest chains of coffee pubs having operations across the world. Starbucks currently has around 24,000 outlets in around 70 countries across the globe.
The menu of Starbucks consists of freshly brewed varieties of coffee including flavored coffees, various types of tea, varieties of baked and non-baked snacks and flavored drinks and yogurt. The company registered a revenue of 23 billion USD in the year 2017 and the company has become the market leader in the segment not just in the US but globally.
Strengths in the SWOT analysis of Starbucks
The following are the strengths of Starbucks:
- Precise segmentation: Starbucks has targeted the right segment of the market which is the premium one in the market.In order to target this segment, the company has focused on providing comfort than convenience and value-added services which make the customer feel that it is worth what is being paid for.
- Bundling of services: Starbucks is a classic example of how services can be bundled. A typical service in Starbucks includes the products provided in a comfortable ambiance which includes slow service, comforting music and a nice environment where one wants to spend a lot of time to unwind and relax.
- Suitable for all kinds of people: Though the core product is coffee, Starbucks has a number of other items in its menu which makes it suitable for all types of people and of all age groups. The other items include flavored coffees, various types of tea, varieties of baked and non-baked snacks and flavored drinks and yogurt making it the right place to hang out for everyone.
- Store Ambience: The store ambiance in Starbucks is consistent in all its outlets. The green color, the plush seating, low and comforting music, free wi-fi, books, organic art on the walls, warm colors, and green uniforms. This ensures that the customer feels the same and is treated the same way in any Starbucks outlet irrespective of the location.
- Good Marketing: Starbucks gained popularity as a concept as well as a brand because of the good marketing is undertaken by the brand. This includes content and social media marketing in which Starbucks was one of the pioneers and has the presence in websites like Twitter, Facebook, Pinterest, G+, YouTube, and My Starbucks Ideas.
Weaknesses in the SWOT analysis of Starbucks
Some of the key weaknesses of Starbucks are :
- Attracting customers to the store: Starbucks is finding it increasingly difficult to secure more business and attract new customers to the cafe. The store traffic dropped by 11 % a trend which has been fuelled by mobile ordering.
- Lowered net sentiments: Brands like Starbucks survive on the extent of sentimental value that customers attach to the brand. With the recent announcement by the CEO to include refugees in the employment list against Trumps decision to refuse refuge to them and the low popularity of the red cups, the sentimental value of the brand has reduced drastically.
- Lowered traffic in malls: The traffic in malls has fallen drastically as people have got bored of the ambiance in them. Starbucks has most of their outlets in malls and the lowered traffic levels here have resulted in affecting business negatively.
- High cost of innovation: Starbucks has been struggling to stay in the market and in order to beat the competition, it is becoming critical that they innovate in all aspects like price, promotions, store layout and design in addition to the menu. This is proving to be costly for the company.
- Food: Food has always been a huge challenge for Starbucks. The company which was in operation for almost four decades has modified its menu a number of times, making some critical changes such as removing breakfast sandwiches since it reduced the effect of coffee. Improvisation in the menu and the research involved in it is the weakness of Starbucks.
Opportunities in the SWOT analysis of Starbucks
Some of the opportunities include :
- Increased preference for eating out: As against the last decade, more people prefer to eat out and this is creating a lot of new trends like increased propensity to spend and less time to spend on cooking. This is likely to create an increase in the business of fast food as well as for coffee retail.
Threats in the SWOT analysis of Starbucks
Some of the threats include:
- Competition: Some of the major competitors of Starbucks are Mac Donalds, KFC, Dunkin Donuts, Mad Over Donuts etc.