S. versus the loyalty to Dietrich's Coffee in Southern California. Differentiating on specific types and flavors of drinks, smaller coffee shops and larger, more globalized chains seek to define their brand and unique value proposition primarily through the use of unique drinks. Despite these efforts however, new product development is a weakness in this industry. The lack of new product development expertise often leads coffee retailers to offer enhanced services including WiFi internet access (Clark, 19-20). In summary the customer for retail coffee is changing to be more discerning regarding service while also being loyal not so much on price but on the total in-store experience.
Strong Dependence on the Supply Chain for Profits
The entire retail coffee industry is highly dependent on the very volatile commodity of green coffee beans, which routinely have tariffs imposed on their export by South American nations. In addition to this dependency on coffee beans, the industry is highly dependent on the price of dairy products and milk specifically, which is used in many of the industry's higher-margin drinks including cappuccinos and lattes. Raw milk prices globally are expected to rise significantly this year due to the economic downturn, which will directly impact the profitability on a per-drink basis.
Summary
Despite a global economic downturn coffee consumption continues to grow at an 8% rate through 2008 (Perlik, 43). The industry's dynamics...
This strategy was combined with the company's focus on CAFE-based compliance and support for Fair Trade-based trading practices with coffee suppliers. This renewed focus on managing their supply chains to tighter levels of profitability and performance metrics including increasing quality standards has led to a significant reduction in operating expenses and control of variable costs (Starbucks Investor Relations, 2011). Starbucks was also able to manage costs of closing locations
Starbucks Coffee Industry: Assessing Competitive Dynamics on the Future of Starbucks The United States is one of the most profitable markets for coffee globally, generating $29B in sales in 2012, yet it is also one of the most volatile from an economic and supply chain perspective as well. The many challenges Starbucks faced in 2009 and the decision to lower prices was one driven by the mercurial nature of the U.S. coffee market
Howard Schultz Case Analysis - Howard Schultz Starbucks Coffee Company CASE ANALYSIS-HOWARD SCHULTZ STARBUCKS COFFEE COMPANY Case Analysis - Howard Schultz Starbucks Coffee Company Company Overview Starbucks Corporation is the first organization to specialize in marketing and retailing of specialty coffee in the world. Established in 1985, Starbuck operates in more than 50 countries, and the company sells varieties of coffee and tea beverages through the company trademark. In addition to the Starbucks trademark, the company
These two factors of aspirational value of the brand and customer experience are what also make this factor a very critical opne in the augmented analytical framework. Market Growth The growth of coffee retailing continues to be flat, only generating 5% growth on a compound annual basis (Joo, Min, Kwon, Kwon, 490). This is forcing coffee retailers to concentrate on highly differentiated approaches to selling. For Dunkin' Donuts their approach is
Retail Supply Chain Analysis Company X is a well-established online retailer based in Great Britain. It sells a variety of food and non-food related products and delivers them to the consumer's doorstep. In an era in which consumers are increasingly turning to online retailing as a convenient way to shop and "add more hours to the day," a number of online retailers are becoming even more aggressive in the UK market,
The figure to the right shows the current promotional materials used throughout the Starbucks locations to promote the Christmas Blend. In addition, Starbucks is offering coupons on Christ Blend bundles with coffee mugs and discount pricing on the combination of these two items. The promotion strategy is aimed at sustaining the pricing and margins on bundles with the brand loyalty that the Christmas Blend evokes (Starbucks Investor Relations). Finally, the
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