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MKT 4710 Marketing Strategy

Published : 28-Sep,2021  |  Views : 10

Questions:

1. Can Starbucks create value through its diversification strategy? Will management be able to create valuable, rare, and imperfectly imitable economies of scope through its expansion into juice, tea, pastry, and new distribution channels or will the expansion be the downfall of Starbucks as it was in 2008?

2. Does Starbucks have a core competency in establishing differentiated, premium products in previously commoditized markets or is this merely an invented competency?

3. Do competitors represent a significant threat to Starbucks competitive advantage through their additions of customized, higher quality coffees to their menus?

4. Should Alex Poole sell his Grandma Starbucks stock or keep it in her portfolio?

Answers:

The diversification strategy shall help the brand to explore new business opportunities. Diverging into newer products and service lines shall help the sustainability of the brand in the face of extreme business competition (Thompson 2013). Restricting the product range shall invariably stagnate the business growth of the firm in the long run.

Expanding into the juice, pastry and tea channels shall assist the brand to achieve increased sales revenue .In addition; this shall increase the visibility of Starbucks in the domestic as well as in the international market. According to Hollensen (2015), the downfall of Starbucks in the year 2008 was due to the financial meltdown not only in the US but through the global market. This not only affected Starbucks but the entire food and beverage industry. In this regard, it can be said that the present situation of Starbucks cannot be compared with the market state few years ago. Thus exploring other than the existing market shall help Starbucks in offering a wider range of product lines to consumers.

Berthon et al. (2012) mentioned that being an international brand Starbucks has the required characteristics like superior business infrastructure, customer service policies and the necessary funding to develop distinctive and premium products for the domestic as well as the international market. The brand posses the inherent business attributes to successfully diverge into other product lines and market segments. Morgan et al. (2012) mentioned that the leadership of Starbucks has shown the required competency in the past to strategically guide the brand to a profitable position in the international market. Starbucks has implemented a flexible and effective enough to help assist the brand to adapt to the ever-changeable market condition. Besides this, it has developed potent marketing and operational strategies to attract prospective consumers towards the brand

Starbucks has been pro-active to prevent any threat from the substitute rival competitors. Hollensen (2015) mentioned that the brand has been selling its coffee products in the supermarkets as well as the mass outlets. This is apart from the customized stores offer Starbucks coffee and other beverage products offered to consumers. The brand has established sampling events in its stores to encourage tasting specialized Starbucks brewed coffee. These attributes assisted Starbucks to achieve a prominent place in the food and beverage industry. Starbucks also invited reporters to savor the exclusive coffee to achieve publicity for the brand. Therefore, the substitute brands or the competitors present in the market do not posses any apparent threat to the business sustainability of Starbucks.

The Starbucks stock has been showing considerable financial viability. In the terms of the present market condition, the stocks can be called profitable. Thompson (2013) mentioned that in the US, the brand has a considerable market demand, and there is substantial sales revenue for the brand. As per Nov 2013, a Starbuck share was trading at $80 per share. Thus, the Starbuck share identified as commercially profitable if kept for a long time. Keeping these factors into consideration, Alex Poole can keep his grandmas share in the portfolio.

References

Berthon, P.R., Pitt, L.F., Plangger, K. and Shapiro, D., 2012. Marketing meets Web 2.0, social media, and creative consumers: Implications for international marketing strategy. Business horizons, 55(3), pp.261-271.

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

Morgan, N.A., Katsikeas, C.S. and Vorhies, D.W., 2012. Export marketing strategy implementation, export marketing capabilities, and export venture performance. Journal of the Academy of Marketing Science, 40(2), pp.271-289.

Thompson, C., 2013. "Small but Mighty," Small Business Marketing Strategy for Entering into New Market Segments (Doctoral dissertation).

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