Essay about Integrative Case 1.1- Starbucks

682 Words Jan 14th, 2016 3 Pages
Amanda Fevurly
19 January 2016
FINA 375
Jiri Tresl
Integrative Case 1.1- Starbucks While coffee is a simple product, the “Starbucks Experience” that is mentioned several times throughout the case is exactly what creates value for their customers and makes their company successful. Their strategy includes creating a home away from home included as a part of their day-to-day routine that reflects the personalities of their consumers and community. Consumers are willing to pay more for Starbucks because they have a greater perceived value through experience. Regarding Porter’s Five Forces, Starbucks confronts a variety of challenges that has presented difficulties specifically from 2007 to 2010. Starting with the competitive rivalry
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While Starbucks does buy high quality coffee beans, Starbucks does diversify a large part of supply through more local providers. They successfully control much of the supply chain, which decreases their costs without sacrificing their quality.
While considering the vast rivals in the coffee industry, Starbucks’ value proposition and strategy relies on the customer experience in the specialty coffee industry. While the idea of coffee is relatively simple, Starbucks gives its consumers a unique experience by implementing an atmosphere that urges its consumers to stay around and chat with a friend, read a book, or study. They offer free wifi, comfortable chairs, notable customer service, and a quiet ambiance often placed in high-traffic locations that makes a consumer extend their time at Starbucks and therefore encouraging them to purchase more. This strategy sets Starbucks apart from McDonalds or Dunkin’ Donuts.
Not only do they spend more time in Starbucks, consumers’ return again and again, giving Starbucks recurring revenue and making a customer’s lifetime value exceed their competitors. Their high profit recurring revenue stream comes from their consistent product quality, atmosphere, and price. While the product is in not classified as a subscription, it almost acts as one because customers make it into their daily life. With the ease of technology to auto-load money onto your Starbucks app or

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