Starbucks Augmented Porter Five Forces Market Analysis
This paper applies the augmented market analysis framework proposed by Slater and Olson to Starbucks Coffee. Building on Porter's classic Five Forces Model, the augmented framework introduces Complementors and Market Turbulence as distinct analytical categories. The paper examines each of the six dimensions — Complementors, Composition Competition, Customers, Market Growth, Market Turbulence, and Profitability/Risk/Strategy — as they relate to Starbucks' competitive position. Key themes include Starbucks' reliance on customer experience as a differentiator, its use of disruptive product innovation, supplier power under Fair Trade sourcing commitments, and increasing competitive pressure from fast-food entrants such as McDonald's McCafé.
- Introduction: Augmented Porter model applied to Starbucks
- Complementors: Food, music, and customer experience as complementors
- Composition Competition: Disruptive innovation and competitor focus
- Customers and Market Growth: Brand loyalty and flat industry growth
- Market Turbulence: McCafé entry and competitive shakeout
- Profitability, Risk, and Strategy: Price wars, risk, and experience strategy
- Suppliers: Fair Trade sourcing and supplier power
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What makes this paper effective
- Clearly maps each section to a specific dimension of the augmented framework, giving the analysis a disciplined, structured form that is easy to follow.
- Uses concrete, real-world examples — such as Australia as a product test market and McDonald's McCafé as a disruptive competitor — to ground theoretical concepts in observable business behavior.
- Connects supplier power directly to Starbucks' Fair Trade sourcing policy, demonstrating how ethical commitments interact with competitive cost structures.
Key academic technique demonstrated
The paper demonstrates applied framework analysis: taking an existing theoretical model (Slater and Olson's augmented Porter framework) and systematically applying each of its dimensions to a real company. Each section functions as a mini-analysis tied to one analytical category, showing how a business student can operationalize academic frameworks using industry evidence.
Structure breakdown
The paper opens with an introduction explaining how and why the augmented model differs from the original Porter Five Forces. It then dedicates one section to each of the six framework dimensions: Complementors, Composition Competition, Customers, Market Growth, Market Turbulence, and Profitability/Risk/Strategy, before concluding with a section on Suppliers. Each section is self-contained but collectively builds a comprehensive competitive portrait of Starbucks.
Introduction
In their article "A Fresh Look at Industry and Market Analysis," Slater and Olson recommend a revised framework built on the classic Porter Five Forces Model. The most significant differences between the original Five Forces Model and the augmented model are the consolidation of competition categories and the introduction of a new category: Complementors. The revised framework also defines Market Turbulence as a stand-alone attribute, reflecting the recessionary climate that has emerged globally and the generally more volatile economic conditions since the Porter model was first developed over twenty years ago (Slater, Olson, 16).
The augmented model for market analysis is ideally suited for analyzing Starbucks, as the chain continues to evolve. Each of the six dimensions of the augmented model is applied to Starbucks Coffee in the sections that follow.
Complementors
As defined by Slater and Olson, complementors are products that augment and strengthen a company's core offerings. For Starbucks, this includes the addition of breakfast sandwiches and an increasing reliance on selling music CDs. Additional complementors include the company's strong focus on the overall customer experience, which serves as a key competitive differentiator relative to well-entrenched regional chains such as Dunkin' Donuts.
The fact that customers visit Starbucks to meet with friends, hold class meetings, or simply relax away from school or work also adds to the highly differentiated nature of the customer experience — itself a major complementor for the chain. Over recent years, Starbucks has continued to focus exclusively on those areas of its business model that support and strengthen the overall customer experience.
Composition Competition
Slater and Olson draw an important distinction between disruptive and sustaining innovations. Starbucks practices disruptive innovation on a continuous basis from a product standpoint, often investing more than the industry average in research and development (R&D). The company is known for maintaining an ongoing new product development pipeline operating simultaneously across hemispheres, preparing next-generation products in real time.
Starbucks also has a strongly seasonal focus in its new product development process, which leads to new drinks and food products being tested in one hemisphere in preparation for seasonal launches in another. Australia is frequently used as a test market during the western hemisphere's winter months, anticipating major product introductions during spring and summer throughout North America. Competitively, Starbucks concentrates its attention on dominant chains rather than on the many independent, mom-and-pop shops scattered throughout the countries in which it operates.
References
Seong-Jong Joo, Hokey Min, Ik-Whan G. Kwon, and Heboong Kwon. "Comparative Efficiencies of Specialty Coffee Retailers from the Perspectives of Socially Responsible Global Sourcing." International Journal of Logistics Management 21.3 (2010): 490.
Stanley Slater and Eric Olson. "A Fresh Look at Industry and Market Analysis." Business Horizons 45.1 (2002): 15.
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