The Bowman’ s strategy clock suggests that Starbucks falls under the category of Focused differentiation. This category is characterized by high price and high perceived value. Starbucks charge premium price for high quality coffee, unique ambience and customer experience. The high perceived value allows the company to build a strong brand awareness which acts as a competitive advantage for the company. The rival brands of Starbucks like Café Nero and Dunkin Donuts fall under Differentiation and Hybrid category. Café Nero has medium perceived value offered at a medium price, thus it follows a ‘ differentiation’ approach.
On the other hand Dunkin Donuts falls under the ‘ hybrid’ category, which is characterized fair perceived quality at a lower price. Although Dunkin Donuts does not offer unique in-store experiences like Starbucks but it has captured consumer preference by product quality and competitive pricing (MarketLine, 2014). The perceptual map shown above highlights the relative position of Starbucks based on two parameters, product quality and price. The graph suggests that Starbucks offers high product and service quality at a higher price than its competitors. The high product and service quality has allowed the company to enjoy the leadership position in the market. The graph shown above suggests that the company has incorporated an appealing aesthetics which offers the customers a unique ‘ Starbucks experience’ , thereby gaining higher preference from the niche customers.
However, the figures also suggest that the Starbucks’ pricing is higher than its competitors, as a result, the value proposition of Starbucks does not appeal to budget-conscious customers. The rival companies like Café Nero, Costa, McDonalds, etc offer fair quality products at a lower price to attract the mass market, thereby gaining a larger consumer base. The external drivers put a significant effect in the business operations of a company.
This section discusses the external drivers and its affect the business of Starbucks by using PESTLE analysis.
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