Starbucks, Customer & Competitive, Analysis

Through its stores, it also sells a variety of pastries, and coffee-related accessories and equipment, such as espresso machines. In addition to the retail stores, the company also sells its imported coffee beans through a specialty sales group, a direct response business, online at Cutbacks. Com, and supermarkets. Also, through its Joint venture partnerships the company produces and sells bottled Production@ coffee drink and a line of ice creams, as well as a line of teas. * *Schultz Caffeinated Crusade, Brandywine, XX (27:21-25), July 5, 1999. This paper will focus exclusively on analyzing the retail coffee shop side of the

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Cutbacks business, and will not evaluate the current supermarket, online, or group sales channels. Marketing Program Overview Cutbacks marketing objective has been to establish itself as the most recognized brands in the world. As part of its marketing strategy, Cutbacks intends to expand its retail operations, grow its specialty sales, and introduce new products through existing and new distribution channels. From the beginning, Cutbacks has minimized the traditional brand-building strategies in its marketing strategies that rely on heavy advertising.

Instead, the many has relied on three principals: building trust with your customer, hope with your employee, and give back to your community. The company felt that it did not need traditional advertising as it was able to effectively communicate the value of its products through the benefits the customer would receive through the purchasing experience, such as by meeting coffee quality expectations, providing knowledgeable staff (which are trained to be experts in coffee), providing a comfortable and inviting atmosphere.

Therefore, although what is sold through the outlet stores is basically a modify product, the selling process is what adds a great deal of value. Customer Segmentation Analysis been identified as the Students, the Leisure, and the Rush Crowd. A detailed segment analysis has been performed and is highlighted in the segmentation grid shown on the next page, along with our analysis summary. Customer Segment Summary The Students: This segment primarily represents the clientele of university and college towns: college and post-college students.

This segment, typically within the 18 to 22 age range, has lower income and therefore is very price sensitive to exposable goods such as coffee. Their interest in going out to a coffee shop is driven by social interaction and a focus towards concentrated study during school semesters. The Students segment can be persuaded to go to a coffee shop if doing so is the popular or trendy thing to do. This segment purchases coffee at coffee shops primarily to create energy for study or to drink for pleasure with friends. The Students may go to a coffee shop 1 to 3 times per week, depending on the time of the school year and the Students’ study load.

During the non-school season, coffee shops hat are targeted towards the Students segment generally have a temporary dip in revenue and profitability due to lower student inflow. However, on an ongoing basis the Students segment offers good, recurring profitability. The Leisure: This segment represents family/friend focused coffee drinkers that enjoy a good conversation over a cup of coffee/snack. This segment, ranging from 16 to 65 years old, represents individuals with various education and income levels. Sensitivity to the price of disposable goods is also variable.

Leisure can be found going to coffee shops in couples or groups to enjoy the overall leisure experience. Similar to the Students segment, the Leisure segment is likely to spend some time relaxing in a coffee shop, rather than behaving in an “in-and-out” manner. However, unlike Students, Leisure can be found in coffee shops more frequently throughout the year, primarily on weekends. The Leisure may go too coffee shop 1 to 2 times per week, bringing friends, family, and their kids along, which can translate into greater food and merchandise purchases.

This is because in addition to coffee, this segment also purchases complementary items that further enhance the coffee drinking experience. Placing coffee shops in major rural and city intersections has been Cutbacks’ primary way to attract the Leisure customer segment. The Rush Crowd: This segment primarily represents busy working professionals, typically aged between 22 and 55, with mid to high income and education levels that seek to drink coffee to start the workday off right. Unlike the Leisure and Students customer segments, the Rush Crowd does not have time to enjoy an extended coffee-going experience away from the office.

As a result, this segment typically exhibits an in- and-out behavior when purchasing coffee at coffee shops and does not really care bout the ambiance of a coffee shop. The Rush Crowd is primarily drawn to purchasing coffee from a coffee shop because it is fast, nearby work, and good quality. This segment also my bring co-workers along to the coffee shop when buying coffee in order to have a quick co-worker “bonding” experience or business experience versus the cost of the coffee. The Rush Crowd can be found in small and large cities, and the segment is very condensed in high occupancy business buildings.

Individuals in this segment may go too coffee shop more or less every workday morning. Understanding What Customers Value Each customer segment receives value through Cutbacks’ coffee shops in distinct ways via the customer’s experience. A detailed analysis of the customer purchase and usage experience for each segment is provided in Exhibits A-I . 1 through A-I . 3. As shown in the Exhibits, some similarities and differences exist among the purchase and usage experiences of each segment.

A summary of the key findings in the customer purchase and usage experience is provided below. Understanding the Customer Experience – Summary In summary of the findings from the customer purchase and usage experience of each segment shown in Exhibits A-I . Through A-I . 3, the Students and the Leisure segments received value by having a place to gather and have a pleasurable experience. Conversely, the Rush Crowd receives value by having the coffee shop very quick and efficient and in a location where they can get in and out as fast as possible.

Of course, in regards to actually drinking coffee at Cutbacks, all three segments receive value in consistent and high quality taste and a variety of drink and complementary food items. Naturally, each segment will have a specific preference regarding the “personality’ of the coffee shop that the segment goes to in order to get his high quality coffee. The following grid translates the identified customer purchase and usage experiences of each customer segment into preferred coffee shop “personality’, thus providing further understanding into what customers value.