SWOT Analysis of Starbucks

In 1971, Starbuck’s opened its first location in the touristy Pikes Place Market in Seattle. The Starbucks name is derived from the coffee-loving first mate in the novel, Moby Dick. The logo, a two-tailed mermaid encircled by the stores name, continues with the theme and background of the name. From the beginning, Starbucks prides themselves on not only providing their customers with high-quality whole bean coffees, but also with providing them with an inviting atmosphere.

The mission statement, “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time”, is seen today in the more than 15,000 locations in more than 150 countries.

Strengths and Weaknesses

In my opinion, the top two strengths of Starbucks is their strong brand image associated with their high-quality coffee and their committed and strong workforce. Their top two weaknesses in my opinion are their high premium prices and lack of internal focus.

Strength 1 – Strong Brand Image

According to G Serrano, “The strongest attribute that consumers associate with the Starbucks brand is its being known for specialty/gourmet coffee. Starbucks is a widely-recognized brand. Its top-of-mind recall is high. It is both a household name and a buzzword. ” By becoming a household name people go to Starbucks to get the “Starbucks Experience”. This means that Starbucks has made their stores so inviting that people actually get up early in the morning, grab the paper or a good book and drive down to the local Starbucks and basically just chill out.

They provide an optional light snack, a good cup of coffee, free Wi-Fi and the comfort of your own home. Being highly recognized for all of the above qualities has contributed in the growth and expansion of their many locations throughout the US and abroad. This is a huge strength in that that being on top of the market share pretty much ensures that no matter what they will continue to stay on top because of their branding and their popularity.

Strength 2 – Committed and Strong Workforce

Not only does the coffee drive customers to Starbucks, but the dedicated employees who care about their jobs and their customers do as well. Starbucks thinks so highly of their employees, they call them “partners”. The partners are the ones who create the atmosphere that makes the customers feel the way they do about Starbucks. As Hammers stated in her “Workforce Management” piece, “The company’s rich benefit blend keeps turnover low and employee satisfaction high. And that’s why it’s the Optimas Award winner for Quality of Life. As business owners and managers, our job is to make sure that our employees or partners, for that matter, are happy and well-trained. When this happens, as it has with Starbucks, it outwardly shows to the clientele and it makes them want to come back time and time again.

Weakness 1 – High Premium Prices

Starbucks is a premium brand that commands premium prices. As competitive pressures increase, the company could be undercut by lower price rivals such as McDonalds or Duncan Donuts. Recession or downturn in the economy, like we are facing now, affects consumer spending. If Starbucks continues to increase prices over the next few years in the face of increasing coffee prices, there could be a downside to their forecast. In this highly competitive market and with less disposable income to spend, consumers turn to lower priced venues and competitors. ” Starbucks should look into some sort of cost saving efforts when it comes to the coffee beans that they buy. I know they are known for their premium brands, but with prices on the steady increase something.

Weakness 2 – Lack of Internal Focus

Starbucks has grown by leaps and bounds over the past decade or so. They seem to be consumed with growing their market share by increasing the amount of locations they have within the states as well as abroad. Serrano states just this point in saying “The growth strategy was not really the failing point. In fact, this augured well for the company’s bottom line. What the company’s executives failed to see was the fact that if it wanted to saturate the market, its product and service offerings were not really meeting the characteristics of the market.

That is why the market perceived Starbucks as merely concerned with growth in the number of stores and profits. The wide potential market base did not see Starbucks as concerned with their needs. ” Starbucks goes through a lot of effort to get the opinions of their partners and their clients. They even have a board of people who read the queries on a monthly basis to see where improvements can be made. Since they are putting in all the effort, they need to follow through and start listening to the very people that give them their profits. Expanding will do no good if you don’t have any customers.

The more they neglect what their partners and customers are saying, the more they are going to lose touch.

Opportunities and Strengths

In my opinion, the two biggest opportunities for Starbucks are increasing their CRM and database marketing and expanding into new product lines.

Strength 1 – Increasing CRM and Database Marketing

One of the greatest opportunities for Starbucks is to increase their CRM and Database Marketing. At the moment Starbucks just asks you what you want, you pay for it, they make your drink and you are on your way.

In order to better serve their clients and give back to them, they could come up with some type of rewards program. Many large retailers and food chains have already begun these programs. This would help them stay in touch with their clients by sending them emails of upcoming events, new drinks and new offers. They could also attach a rewards program for the customers who have a daily addiction to their drinks. This basically becomes a win-win situation for not only Starbucks but for their customers as well.

Strength 2 – Expanding Product Lines and Services

We all know that Starbucks has the best selection of coffees around. Unfortunately, that is all they do. I think one of the greatest opportunities for them would be for them to expand their food line to go along with their drinks. Seeing that they are open all day long and into the night, they could benefit greatly by developing a larger lunch line. They currently have small salads and finger sandwiches at some of their locations. By increasing their menu they could also increase their profits. This would help give them a competitive advantage of other cafes along the same lines as them.