Starbucks Coffee’s Generic Strategy (Porter’s Model)

Starbucks Coffee uses the broad differentiation generic strategy. In this generic strategy, the goal
is to make the company different from other competitors. It is such difference that makes
Starbucks stand out. The company’s emphasis on specialty coffee easily differentiates Starbucks
cafés from many other establishments that offer coffee. However, the application of the broad
differentiation generic strategy also extends to other areas of the business. For instance,
Starbucks uses its sustainable and responsible sourcing policy to differentiate its products from
competitors. This generic strategy is also manifested in the company’s culture. While
competitors like McDonald’s and Dunkin Donuts emphasize low cost, Starbucks Coffee
emphasizes a warm friendly ambiance that people enjoy.

An implication of the broad differentiation generic strategy is that Starbucks Coffee must
continue innovating to ensure differentiation in the long term. This generic strategy could lose its
strength when competitors also find ways to stand out. To address this issue, Starbucks keeps
innovating its product mix and supply chain. In applying the broad differentiation generic
strategy, Starbucks focuses on specialty ingredients and products, such as baked goods that do
not have high-fructose corn syrup. Starbucks also innovates its supply chain to satisfy its generic
strategy through a continuing search for the most sustainable and finest ingredients. Thus, based
on this generic strategy, Starbucks Coffee’s strategic objective is to innovate products and its
supply chain.

Starbucks is succeeding in maintaining its long lasting growth because of its various strategies related to
pricing of the product, product development and market development. Also all existing products of
Starbucks are identified by its value and quality. Starbucks has managed to increase its profit and market
share with its expansion strategies and by various joint ventures with other related companies. In United
States Starbucks has collaboration with companies like Dreyer's ice cream and Sazaby which further
increases their share in the market.

Starbucks positions their products based on quality and image rather than price. Starbucks created the
coffee shop revolution, and they have had the ability to be the public educator on espresso coffee.
According to magazine article found on [Link], the company’s brand is a member of the coming
century’s top twenty-five brands (2). It is critical that Starbucks position their brand for what the brand
stands for: an innovative industry leader that produces high quality products. Brand image, as already
shown, is a goal that all the future functional strategies will work to attain.

Strategies for Reaching Global Markets

It seems as if Starbucks tends to expand into global markets through joint ventures. As Kelly and
McGowen (2012) explain a joint venture is when multiple companies come together in order to pursue
the same goals and opportunities (Kelly & McGowen, 2012, p. 43). Taking this a step further, it seems as
if the joint ventures that Starbucks pursues are set up more as partnerships. A partnership, as defined by
Kelly and McGowen (2012), is a “voluntary agreement under which two or more people act as co-
owners of a business for profit,” . Starbucks strategy involves engaging in smart joint ventures with the
right companies, such as their successful alliance with Pepsi-Cola Co., and rolling out fresh, new
initiatives, including a new product line of hot sandwiches and breakfast food and new drinks such as
coffee liqueurs. The Starbucks strategy is now also expanding online, allowing customers to pre-order
and prepay for products via the Internet.

Environmental strategies: They involve changes based on location, time or place where you can
enjoy the behavioral problems and examples include: the change of the communities with the
implementation of the new strategy, avoiding the configuration situations, because unexpected
behavior of customers, etc.

Behavioral strategies: These involve changes because of the consequences or past behavior of
customers and employees. These can be explained by examples: an increase in corporate social
responsibility to achieve the objectives of the organization, improvement of the reward for
keeping the desirable conditions for employees, etc.

Starbucks business strategies are generally used to ensure the effective flow of the business operations.
Starbucks sets its prices on a simple idea: high value at moderate cost. When people feel like
they are getting a good deal for their money, they are more likely to pay a higher cost. Quality is
key. Starbucks has to maintain strict quality controls in its coffee sourcing as well as in its
customer service and peripheral products to justify its costs.

Starbucks also spends a lot of time and energy differentiating itself from the competition. You
can see this in the design of its coffee shops, the music played there and the types of products it
sells, such as coffee-brewing equipment and jazz CDs. Starbucks makes sure to keep current on
the latest technology, often times being the first to introduce the newest advancements to its
customers. For example, Starbucks was one of the first companies to adopt location-based
promotions and mobile payments.

Points to Learn from the Starbucks Marketing Strategy

Every business can learn from another, especially if a particular business is one that has
displayed tremendous success over the years. The Starbucks Corporation and its successful
marketing strategies are definitely something that anyone interested in business can learn about.
What sort of techniques did the company use, and how were these able to reach out and attract
millions of people worldwide? Some of their best strategies are outlined below.

 “Perfect Cup of Coffee” – Starbucks history has shown that they place a huge emphasis
on product quality. Their coffee, even if priced slightly more expensive than expected, is
notorious for satisfying customers with its rich, delicious taste and aroma.

 “Third Place” – From the very beginning, the Starbucks marketing strategy has focused
on creating the “third place” for everyone to go to between home and work. Creating this
unique and relaxing “experience” and “atmosphere” for people has been very important
 for the company as they have realized that this is one of the strongest concepts attached to
the company, to which customers have been strongly attracted.

 “Customer Satisfaction” – Customer satisfaction is a very important issue with

Starbucks. From entrance to the store to the very last drop of their coffees, it is a must
that customers feel the uniqueness of enjoying their Starbucks coffee experience. Without
a doubt, Starbucks Coffee Company knows the answer to the question, "Why is customer
service important."

 “Creating a Starbucks Community” – The Starbucks marketing strategy has even

expanded to create a community around their brand. On their website, individuals are
encouraged to express their experiences with Starbucks history, and the company strives
to “personally” join in the discussions. This technique was cleverly pointed out by
Webolutions: The Strategic Marketing Agency in their “Starbucks Marketing
Observations” article.

 “Smart Partnerships” – Starbucks Coffee Company has been known to create strategic
partnerships that demonstrate the fact that another way to grow your business is to partner
smart. Over the years, the Starbucks Corporation has greatly increased sales just by using
this strategy.
 
 “Innovation” – Through the years, the Starbucks Coffee Company has been known to
think up creative and innovative ideas to add to their products or services. They’ve added
different flavors to their coffee, more food on their menu, and even became one of the
firsts to offer internet capability in their stores.

  “Brand Marketing” – The Starbucks marketing strategy has always focused on “word-
of-mouth” advertising and letting the high quality of their products and services speak for
themselves. For years, this has been uniquely Starbucks, and it has played a huge part in
making Starbucks Coffee Company a success. The definition of viral marketing speaks to
this new word of mouth that Starbucks has run with, and made their own.