Almost everyone has heard of the multinational coffee giant, Starbucks – its headquarters in Seattle serving as a beacon of its success. But what’s the secret to that success? How is it able to offer products that are appealing across so many different countries?
The BCG Matrix is a handy analysis tool utilized by businesses to sort their products based on market growth and industry share.
This article examines Starbucks’ BCG Matrix and showcases the company’s effective approach in standing out in the highly competitive coffee market. Prepare yourself a cup of hot coffee as we delve together into the world of BCG Matrix of Starbucks.
Brief Overview of Starbucks
Seattle-based Starbucks is the world’s largest chain of coffeehouses, providing an impressive range of beverages from steaming hot to refreshingly cold. The menu includes whole bean coffee options, tea varieties, pastries, snacks, and most locations offer complimentary Wi-Fi internet access to patrons.
Starbucks, the renowned coffee chain with a global presence of more than 33,000 stores and 9,000 in the US alone, is recognized as a pioneer in driving the second wave of coffee culture. Its exceptional offerings and experiential services have garnered immense popularity among consumers worldwide.
Starbucks is known for delivering premium coffee drinks and exceptional customer service. Additionally, they provide a variety of merchandise such as T-shirts, cups, and mugs which are typically available only on seasonal or limited time basis.
Starbucks’ food division has shown exceptional growth and is projected to double its size by 2021. It reflects the coffee giant’s strong presence in the global coffee industry and millions of customers worldwide it caters to.
Quadrants of BCG Matrix Analysis for Starbucks
Starbucks’ Question Mark
In the BCG Matrix of Starbucks, question marks denote business units with high market growth but low relative market share. These units are uncertain and require large investment to increase their market share and generate profit as cash cows in the future.
1. Starbucks Merchandise
Starbucks merchandise is a critical element that has contributed massively to establishing its brand identity. The company showcases exclusive seasonal products like Tumblers, Mugs, and T-shirts that customers cannot resist purchasing.
Starbucks merchandise items are so popular that they often sell out within days due to their premium and exclusive positioning. Customers take pride in owning these unique designs, making them highly coveted pieces.
An opportunity exists for e-commerce sites to cater to overseas buyers who are eagerly seeking and purchasing rare items. Starbucks’s success in this field notwithstanding, the clothing and general merchandise sector has ample room for growth.
Starbucks merchandise is often considered a Question Mark due to the brand’s current position in the market, leaving room for potential future growth.
2. Packaged Goods Business
Starbucks is uncertain about its packaged goods business. While the company has global marketing support from Nestle, it struggles to gain traction in a market with limited growth and a small share. However, Starbucks remains nimble in its food offerings and plans to increase its food business by 100% by 2021.
Starbucks’ strong brand and loyal customers position it to capitalize on the potential of turning its packaged goods business into a cash cow. The company’s future strategy for this uncertain division is worth observing.
Starbucks’ Cash Cow
In BCG Matrix analysis of Starbucks, the coffee business is regarded as a cash cow – products with a high market share but low growth rate.
1. Starbucks Coffee
Starbucks has established itself as a premier coffee chain by providing a top-notch experience and consistently delivering high-quality products. From the perfect cup of coffee to exceptional customer service, Starbucks has set a standard unmatched by its competitors. The company’s strategic approach focusing on price and quality has given them an edge over their rivals.
The company has relied on the coffee business as its main source of income since it was founded. This division has experienced exponential growth and established a dedicated customer base over the years.
Starbucks revolutionized our coffee consumption and lifestyle with its unique coffee drinking experience. The company stands out for its exceptional approach to the overall coffee experience.
Starbucks provides a wide selection of beverages, from hot to cold drinks, including whole bean coffee and micro-ground instant coffee.
Additionally, the establishment offers an exquisite espresso menu that highlights their artisanal approach. As a result, loyal customers are provided with distinct flavour profiles that continue to shape the contemporary coffee landscape.
2. Starbucks has successfully added Frappuccinos and blended beverages to their offerings as a lucrative revenue stream. These customized drinks are popular among various customer preferences and have become an iconic symbol of innovation and creativity at Starbucks.
The overwhelming popularity of these indulgent concoctions continues to impress, making them an essential part of the company’s business strategy.
Starbucks’ Stars
Stars in the business world are products or units that hold a significant market share and exhibit swift growth. One perfect example of this is Starbucks, where their coffee business represents a prime case of a star product.
Starbucks’ Food Business
Starbucks has transformed its food business and it’s paying off. With plans to double their food offerings by 2021, the coffee giant is boldly stepping out of the box and testing new menu alternatives.
Hot breakfast sandwiches have become a popular addition to the company’s menu, complementing their signature coffee offerings well. To cater to the high demand for protein and healthy snacks, Sous Vide Egg Bites were launched in early 2017. Since then, these egg bites have experienced impressive growth of over 60%.
Starbucks has carved out a unique place for itself in the food industry, catering to a specific set of customers with great success. The secret to their triumph is staying attuned and responsive to customers’ preferences while delivering a broad spectrum of delectable and healthy meal options.
As Starbucks sets its eyes on doubling its food business in years to come, it will continue leading the way by innovating fresh ideas and pursuing untapped markets.
Starbucks’ Dogs
According to the BCG Matrix of Starbucks, products falling under the Dogs quadrant are those with minimal market share or potential for growth.
1. Evolution Fresh, a line of juices and smoothies by Starbucks, serves as an example. Although the acquisition was initially hyped, the popularity of these products falls short compared to Starbucks’ coffee-based options.
2. The juice and smoothie market poses intense competition, leaving Starbucks to navigate the challenge of standing out among well-established industry leaders.
3. Teavana hot teas are one of the dogs in Starbucks’ product line-up. Despite the global rise in tea consumption, Teavana has not experienced the same level of success as Starbucks’ coffee beverages.
Competing against dedicated tea houses, and specialty brands that already have a dominant position in this sector make it challenging for Starbucks to establish a firm foothold in this market segment.
Implications for Starbucks’s Future
9 Implications for Starbucks’s Future that you need to know!
1. To meet the rising need for eco-friendly options, Starbucks should prioritize sustainability in both their packaging and supply chain procedures.
2. The company ought to prioritize digitalization and refine their online and mobile ordering systems to provide added convenience for customers.
3. Expansion into developing countries such as India and China has the potential to drive significant revenue growth for Starbucks.
4. The food offerings at Starbucks can attract more health-conscious customers by introducing nutritious options to their menu.
5. Many people are choosing a vegan or vegetarian lifestyle, and as such, there is a growing demand for plant-based options. The company could benefit from considering this trend and introducing more plant-based menu items.
6. Starbucks should continue to innovate and introduce new products to keep up with changing consumer preferences and trends.
7. The well-being of employees should be a top priority for a company seeking high satisfaction and retention rates. To achieve these goals, improving employee benefits and providing regular training can be effective strategies.
8. Starbucks ought to broaden its revenue base by exploring fresh ventures centered on tea and snacks, therefore diversifying its businesses.
9. Starbucks can enhance its marketing strategies and deliver an exceptional customer experience by utilizing extensive customer and sales data.
Conclusion
The BCG Matrix analysis for Starbucks sheds light on its strategic position across its different business units. With a significant market share in both coffee and food, the brand has diversified into merchandise and packaged goods. In summary, these insights render valuable takeaways for the company’s future direction.
The unit analysis has divided the Starbucks assets into four categories: stars, cash cows, question marks, and dogs. This framework can guide decision-making and help choose appropriate strategies for each unit.
The BCG Matrix underscores the importance of innovation to stay ahead of market shifts and remain competitive.
Starbucks has successfully maintained its premium positioning by offering a quality product and superior customer service. However, to ensure long-term growth and success, it is crucial to seek new opportunities and invest in profitable business units continually.
References;
Starbucks Corporation’s Analysis & Intensive Growth Strategies Report (2022) Available at: https://ivypanda.com/essays/starbucks-corporations-analysis-amp-intensive-growth-strategies/
ophia Morgan (2018) BCG Matrix and VRIO Framework for Starbucks. Available At: https://www.case48.com/bcg-matrix/12753-Starbucks
