Marketing Minutes with Jennifer – Sample SWOT analyisis for Starbucks
Jennifer McClelland | RSS | 1 Comment
If you noticed over the past few months I have talked about Starbucks more than a few times, well the reason was because I was in a marketing class the required a large group project with the subject being Starbucks. Here’s the SWOT analysis we turned in with our Account Planning section.
Of course, this is just a sample SWOT…Starbucks has many more strengths and weaknesses definitely.
SWOT Analysis Chart
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Strengths -Retail stores and footprint.8 - Starbucks’ commitment to the environment.20 -Starbucks’ brand name recognition. *** -Employee benefits lead to employee retention as well as lower turnover overall.21 |
Weaknesses - Small amount of product diversification. - Expense versus competitors’ offerings. -Overexpansion leading to financial issues.22
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Threats - The current downturn in the economy means that people are trying to cut back on expenditures, premium coffee being one of them. - Other brands emerging into a category where Starbucks has been the only national chain. |
Opportunities
-Retail opportunity outside the United States. - Product diversification outside coffee and snacks. - Offer Fair Trade and organic products in stores. Starbucks is a leader in Fair Trade coffee purchases, putting it front and center could help the image that socially responsible consumers have about the company.24,25
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*Please see next page for more detailed analysis.
Starbucks SWOT Analysis
Strengths
-Retail stores. Starbucks operates in all 50 states plus the District of Columbia as well as 43 countries outside the United States. It has 7,087 company-operated and owned stores and 4,081 licensed stores that are in the United States as of February 2008.8 However, in July 2008, it announced the closing of 600 of its stores bringing the company operated store total closer to 6,400 stores.
- Starbucks is committed to the environment. The company’s environmental mission statement is: Starbucks is committed to a role of environmental leadership in all facets of our business.20 It has led the way in its market by buying and selling more environmentally friendly products as well as instilling environmental responsibility as a corporate value.20
-Starbucks also has a well recognized brand name. Starbucks ranked at number 88 in 2008 on BusinessWeek’s Top 100 Global Brands Scoreboard.*** Having so many stores open has made Starbucks a household name and the market leader in its category.
-It has been one of Fortune’s top 100 Best Companies to Work For since at least 2006, and has never ranked lower than 29 since then.21 Starbucks goes as far as to offer full benefits to part-time employees.
Weaknesses
-Starbucks depends on the sale of its coffee products. The company has little product diversity when it comes to menu offerings for food items such as breakfast sandwiches or lunch time options. Currently, Starbucks offers muffins, scones, cookies, and sweet breads as its only food items in most stores.
-Starbucks offers coffee at prices higher than competitors. For example, McDonald’s has begun to sell premium coffees now at prices consistently lower than Starbucks.
-Overexpansion in the past has led to financial problems for the company now. In July 2008 it announced the closing of 600 stores across the United States. It also announced that it would only be opening fewer than 200 stores, rather than the 250 it had planned for the fiscal year beginning September 29, 2008.22
Opportunities
-Starbucks has retail opportunity outside the United States, but must conform to the culture it is opening its stores in to avoid being seen as a “virus.”23 This means that Starbucks can integrate its coffeehouses with cultures that are unfamiliar with the concept instead of expecting cultures to form around Starbucks.
- It should diversify its product line to include food items that could be seen more as meals than “snacks.” It was shown in the primary research that many of the respondents who ate food with their coffee preferred breakfast foods. Starbucks doesn’t have a large breakfast food menu currently.
- Starbucks could retail its Fair Trade coffee and other items in stores. It has the opportunity to shed some light on its fair trade performance and the publicity could benefit the company’s social responsibility aspect. In 2006, Starbucks was North America’s largest purchaser of Fair Trade Certified coffee (12 million pounds in 2006); however the news went largely unnoticed.24 In 2009, Starbucks plans to purchase 40 million pounds of Fair Trade coffee and this creates a great public relations opportunity.25
Threats
- The current economic situation is hurting Starbucks. Consumer spending is down and one of the first things that have to be cut from budgets is “premium” coffee. When a cup of coffee made in the home costs less than $1 to make, Starbucks’ $3 plus tall coffees are not cost effective to a family trying to cut back.
- Other brands and chains are beginning to take away customers from Starbucks either through taste or price. McDonald’s is one example, offering McCafe drinks geared toward Starbucks customers. However, unlike McDonald’s, Starbucks has little to offer in the form of meals.
REFERENCE:
BusinessWeek Online, (2007, August 6). Top 100 Global Brands Interactive Table. Retrieved March 8, 2009, from BusinessWeek Online: Top 100 Global Brands Interactive Table Web site: http://bwnt.businessweek.com/interactive_reports/top_brands/index.asp?sortCol=brand&sortOrder=DESC&pageNum=1&resultNum=110
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Tags: strengths and weaknesses, product diversification, style definitions
Krys | Thu, Jul 09 2009
That is true, everyone is trying to cut costs, but maybe Starbacks will be lucky and people who buy coffee there will be loyal customers? Maybe people who buy there aren’t that affected anyway.
Or maybe starbucks should release an “economical cup of coffee” for a lower price for those affected.
I’m sure that they will come up with a solution, let’s hope they won’t start cutting down on costs of coffee beans and thereby providing lower quality coffee.