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Qn. 1. Starbucks’ strategy in terms of positioning, trade-offs, and fit


Subject Business Pages 2 Style APA



At the time of the case study, Starbucks Corporation adopted a range of strategies. For instance, at the corporate level, the company was focused on long term growth through market penetration and market development. If further sought growth through specialty sales by cooperating with reputable brands. Starbucks’ business-level strategy was to differentiate its processes and products to attract premium prices. Its functional strategies focused on realizing efficiency and effectiveness in each department. These different types of strategies informed Starbucks’ positioning in the minds of the consumers. Before positioning itself, the company segmented the customers based on their consumer behavior, geographical attributes, psychographic factors, and demographic dynamics (Fayvishenko, 246). For instance, the company preferred North American and Pacific Rim markets because of the vast potential and positive attitude towards Starbucks specialty coffee. Segmenting helped Starbucks target service focused on customers. This meant trading off-market focus in favor of providing superior services to its customers. This targeting is manifested in the company’s commitment to the Starbucks Experience.

Guided by this analysis, it is convincing to note that Starbucks positioned itself as a high price high-quality brand. By taking this position, the company dissociated itself from positions such as high price-low quality, low price-low quality, and low price-high quality. Starbucks’ superior positioning is evident in the company’s commitment to own its retail stores, which is considered as a fundamental vehicle for growth. The company hired passionate and knowledgeable employees with university or college education and trained them on coffee and customer service to enhance their ability to provide an unforgettable customer experience. To enhance its market leadership and superior position, the company produced high quality branded merchandise. It sourced the highest quality specialty coffee in the world and only used reputable coffee-making equipment from Gaggia, Bodum, and Krups. Starbucks intended to increase its brand recognition and equity through specialty sales whereby it entered into partnerships and alliances with different companies to increase its brand visibility. This includes partnering with United Airlines, Nordstrom, PepsiCo, and grocery channels namely Dreyers’ Ice Cream. The company sustained its high-price high-quality position through marketing its intention to provide the best customer experience. This positioning strategy perfectly fits the company’s other strategies.

Qn. 2: Evaluating Starbucks’ strategy in terms of strengths and weaknesses

Starbucks positions itself as a premium brand committed to serving the best quality coffee in an inviting, captivating, and friendly environment. An evaluation of the premium positioning strategy elucidates its strengths and weaknesses. According to Kachra, positioning Starbucks as a premium brand will enable the brand to sustain its reputation as a first-to-category or first-to-market brand (16). With such a reputation, the firm will be able to hold onto most of its market segments. This means that the premium positioning will help Starbucks retain its current customer base while attracting and converting more customers to be loyal users of its coffee products, cafes, and accessories. Secondly, premium positioning allows the brand to be associated with high-quality services and products. In the long run, the positioning justifies charging customers a premium price for their products and services. As such, the company optimizes its profitability. Third, premium positioning has enabled Starbucks to leverage economies of scale. Being a reputable brand has made Starbucks a sought-after brand by both customers and suppliers. This is evident in the case study as all the suppliers, with the world’s best specialty Arabica coffee, consider Starbucks before other coffee stores. In return, this advantage acts as a barrier against new entrants who might want to enter the industry and compete at the same level as Starbucks.

There are more strengths to premium positioning than weaknesses. Fayvishenko explains that some of the main disadvantages of this positioning are that it is vulnerable to changes in economic dynamics (246). Since the brand targets high-income earners, a disruption in income, especially during a recession, could trigger a switch in consumer behavior favoring alternative and generic brands that are commoditized and low price. Secondly, it is costly for Starbucks to maintain premium positioning. As noted in the case study, the company is forced to partner, contract, and associate with premium brands, even when the collaboration does not contribute to its bottom-line. For instance, the case study laments how Starbucks has to enter into contracts with Dreyer’s Ice Cream, Pepsi, and grocery channels to sustain its premium image while making limited profits. In particular, the ice cream segment only contributed $500,000 of the earnings made by the company in the 1997 financial year.

 Qn. 3. Recommendations for strengthening Starbucks’ strategy going forward

First, it is prudent to endorse current strategies used by Starbucks to reinforce its brand equity. This includes the marketing department’s input, which consistently seeks to inform the customers that the Starbucks business model is not focused on selling coffee but on creating an experience. As noted in the case study, the marketing department should continue pursuing its goal of becoming a preferred consumer outlet and consumer brand. This means the brand should guide the consumers into transitioning their retail-centric view of Starbucks. Instead, they view it as a customer-centric brand whose role is to provide uplifting and memorable moments to the people each day. This means the brand needs to go beyond providing coffee, and instead, provide the best ambiance and be strategically located in places with high human traffic. This commitment will ensure that the brand creates a total coffee experience.

As part of pursuing superior and premium positioning, it is recommended that Starbucks continues to give its brand meaning by considering the following propositions. First, the management needs to make the brand a status symbol. Campbell, Katherine, and Duane explain that perception is important in achieving a desirable status symbol (40). It is important that Starbucks continues its association with other premium brands and enlarges its portfolio of partnerships to enhance its brand equity and brand visibility. By creating a perception of a strong and customer-centric brand, the brand will reinforce its status in the eyes of the customer.

Additionally, Starbucks must make its brand symbolic. The management should not only focus on growing the brand, but also investing in initiatives that will redefine what the brand stands for. For instance, Starbucks should invest in corporate social responsibility to give back to the communities (Campbell et al. 40). One of the best strategies is through investing in the supply chain. For instance, Starbucks could focus on Certification Programs to ensure ethical sourcing of coffee. Likewise, it could give back to customers through training programs to enhance their knowledge of specialty coffee.
Sewdas et al.’s (2017) study employed, there are very little room for generalizing the study’s findings.  


Campbell, Katherine, and Duane Helleloid. “Starbucks: Social responsibility and tax avoidance.” Journal of Accounting Education 37 (2016): 38-60.

Fayvishenko, Diana. “Formation of brand positioning strategy.” Baltic Journal of Economic Studies 4.2 (2018): 245-248.

Kachra, Ariff. Starbucks. Ontario: Ivey Publishing, 1997.

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