PRODUCT LIFE CYCLE, SWOT ANALYSIS AND COMPETITIVE ANALYSIS OF STARBUCKS

TERM PAPER

Topic-Product life Cycle, SWOT Analysis and competitive analysis of Starbucks





Submitted by
Susan George

ROLL NUMBER – AUD0236
ENROLLMENT NUMBER- A40106412022

BACHELOR OF BUSINESS ADMINISTRATION- GENERAL

AMITY UNIVERSITY DUBAI CAMPUS
DECEMBER 2012








ABSTRACT

Starbucks is the market leader in the beverage industry.Starbucks is known world-wide for its high-quality food products and the differentiated "Third Place" atmosphere. A brief summary of Starbuck's History and a detailed introduction on Product Life Cycle is included in the beginning of the project.
We can understand Starbucks as a company better after reading SWOT Analysis and the Product life Cycle which is done.This project mainly deals with The Product Life Cycle of Starbucks. It includes the stages the product goes through after development, from its introduction stage to the present stage of the company.
The Marketing Mix of Starbucks in United Arab Emirates is done.
The competition between Starbucks and Costa is analyzed.Costa and Starbucks compete on their advertisements.








REVIEW OF LITERATURE

This term product life cycle was used for the first time by Mr. Theodore Levitt in a Harvard Business Review article: "Exploit the Product Life "in 1965.

The product life-cycle theory is an economic theory that was developed by Raymond Vernon in response to the failure of the Heckscher-Ohlin model to explain the observed pattern of international trade.
DR Rink, NE Spears and PR Steffens are some researchers who have done research on product life cycle












ACKNOWLEDGEMENTS


I wish to thank Mr.S.Sreedharran for his advice and guidance. I appreciate their effort of providing necessary information regarding the paper & also for their support in completing the paper.

I would also like to express my gratitude towards my parents for their encouragement and support.

Lastly, I would like to extend my sincere thanks to all those at Amity University Dubai who have willingly helped me out with their abilities.
.












CONTENTS
1) Introduction
2)Starbucks history
3)Swot analysis of Starbucks

4) Product life cycle
Introduction stage
Growth stage
Maturity stage
5) Starbucks in uae
6) Competitors
7) Discussion and conclusion
8) References









INTRODUCTION
In the last five years, the coffee brewing industry has seen so much activity in terms of massive changes in the landscape of coffee brewing companies. These changes range from mergers and acquisitions to changing consumer tastes and finally, to different branding strategies. These activities are expected to continue over the course of the next ten years.
Product life cycle
The product life cycle (PLC) is the stages that a product may go through over time. According to Philip Kotler it is "an attempt to recognize distinct stages in sales history of the product."
It includes the stages the product goes through after development, from introduction to the end of the product The PLC is a beneficial tool that helps marketers manage the stages of a product's acceptance and success in the marketplace, beginning with the product's introduction, its growth in market share, maturity, and possible decline in market share..Most Product life cycle curves are portrayed as bell-shaped.
PLC concept can be used to analyze a product category (liquor), a product form (white liquor), a product (vodka) or a brand (Smirnoff).Not all products exhibit a bell-shaped PLC.
The various product life cycle stages are:-
The Introduction Stage
It is the first stage of the product life cycle after a product is launched.. The introduction stage is the same as commercialization, or the last stage of the new product development process. Marketing costs are typically higher in this stage than in other stages. Communication (promotion) is needed to generate awareness of the product and persuade consumers to try it, and placement alternatives and supply chains are needed to deliver the product to the customers. Profits are often low in the introductory stage due to the research and development costs and the marketing costs necessary to launch the product.
The length of the introductory stage varies for different products.. An organization's objectives during the introductory stage often involve educating potential customers about its value and benefits, creating awareness, and getting potential customers to try the product or service.
Product pricing strategies in the introductory stage can vary depending on the type of product, competing products, the extra value the product provides consumers versus existing offerings, and the costs of developing and producing the product. Organizations want consumers to
Growth stage
A company sometimes increases its promotional spending on a product during its growth stage. In other words, although the company must still inform and educate customers, it must counter the competition. Emphasizing the advantages of the product's brand name can help a company maintain its sales in the face of competition. Although different organizations produce personal computers, a highly recognized brand such as IBM strengthens a firm's advantage when competitors enter the market. New offerings that utilize the same successful brand name as a company's already existing offerings, which is what Black & Decker does with some of its products, can give a company a competitive advantage. Companies typically begin to make a profit during the growth stage because more units are being sold and more revenue is generated.
The number of distribution outlets (stores and dealers) utilized to sell the product can also increase during the growth stage as a company tries to reach as much of the marketplace as possible. The price of the product itself typically remains at about the same level during the
Maturity Stage
Many companies enter different geographic markets or international markets as a strategy to get new users. A product that might be in the mature stage in one country might be in the introductory stage in another market. For example, when the U.S. market became saturated, McDonald's began opening restaurants in foreign markets. Cell phones were very popular in Asia before they were introduced in the United States. Many cell phones in Asia are being used to scan coupons and to charge purchases. However, the market in the U. S. might not be ready for that type of technology.


Older consumers in international markets are being targeted with different products.
Modifying the product, such as changing its packaging, size, colors, or quality can also extend the product's maturity stage. The 100 Calorie Packs created by Nabisco provide an example of how a company changed the packaging and size to provide convenience and one-hundred-calorie portions for consumers. While the sales of many packaged foods fell, the sales to over $200 million which prompted Nabisco to repackage more products. Kraft Foods extended the mature stage of different crackers such as Wheat Thins and Triscuits by creating different flavors.
The Decline Stage
When sales decrease and continue to drop to lower levels, the product has entered the decline stage. The stages of the life cycle where sales drop and companies must decide whether to keep, modify, or drop a product. In the decline stage, changes in consumer preferences, technological advances, and alternatives that satisfy the same need can lead to a decrease in demand for a product.
Computers replaced the typewriter and calculators replaced adding machines and the slide rule. Eight-track tapes, which were popular before cassette tapes and CDs. Some products decline slowly. Others go through a rapid level of decline

Videocassette recorder (VCR) like this has declined

STARBUCKS HISTORY
A Past Worth Remembering
"A heady aroma of coffee reached out and drew me in. I stepped inside and saw what looked like a temple for the worship of coffee.... It was my Mecca. I had arrived." — Howard Schultz on his first visit to Starbucks in 1981


Starbucks opened operations in Seattle's Pike Place Markets in 1971 with the future aim of providing coffee to a number of restaurants and surrounding bars. With the recruitment of Howard Schultz who led the marketing and retail efforts of Starbucks in 1982, the company took a change in direction through the views of Schultz, who after visiting Italy tried to adapt the same principles in order to a strong bar culture. Schultz then utilized Starbucks ability to provide excellent quality coffee beans and opened up a new store which brewed coffee from these particular beans called Il Giornale. By 1987, Il Giornale had decided to take over the assets of Starbucks and also, further changed its name to Starbucks Corporation. By the end of the year, Starbucks had increased the number of stores to 17 and furthered its location span by entering Chicago and Vancouver.

HOWARD SCHULTZ –CHAIRMAN OF STARBUCKS

In 1990, the company took further steps forward with expansion of the Seattle headquarters and an increase in resources with the opening of a new roasting plant. Relationships and other ventures also took off during the early nineties as the company looked to development organizations to further its progress. By 1995, the company really established its name with the opening of the 676th store as well as increasing the products in store with the addition of compact discs a result of a previously popular experiment with in-house' music. In 1996, the company kept on stretching its reach by entering into the market of Japan, Singapore and Hawaii. This was achieved through joint ventures including the one formed with Sazaby Inc., which pushed through the development of coffee houses in Japan. By the year 2000, things had progressed so far that 3,300 stores were already opened, the company had ventured into countries ranging from England to Australia and a website was created to keep up operations with the latest technology. The current international situation for Starbucks seems to be an emerging part of their business and the reorganization of this is proved by their aim to become a leading global company through making a difference in people's lives all around the world). This goal is quite close to being achieved as proved the Starbucks current locations in international markets and the successfulness of these ventures. The current countries in which Starbucks are located in are: Australia, Bahrain, Canada, Hong Kong, Israel, Japan, Kuwait, Lebanon, Malaysia, New Zealand, Oman, Peoples Republic of China, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Switzerland, Taiwan, Thailand, United Arab Emirates, United Kingdom, and the United States

Starbucks has a clear set of guidelines which has to be followed and uses these as a direction tool for the future of the business. Traditionally, the guidelines would more appropriately be connected to the vision; however the company has set them with the mission statement.

The six principles of Starbucks are stated as
Provide a great work environment and treat each other with respect and dignity.
Embrace diversity as an essential component in the way we do business.
Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to our communities and our environment.
Recognize that profitability is essential to our future success.




SWOT Analysis of STARBUCKS

Strengths

Developed a niche in the market as a high-end brand of coffee, offering rich, exotic coffee blends
The atmosphere in their coffee bars provides customers with a feeling of sophistication, style and a sense of knowledge. This has turned into a Starbucks culture.
Have attracted employees who are well educated and eager to communicate the message of their product.
High visibility locations to attract customers
 Established logo, developed brand, copyrights, trademarks, website and patents
 Good work environment
Good relationships with suppliers
 Customer base loyalty

 Weaknesses
Many people believe that coffee is a substitute product. This means that people are willing to find other means of consumption if price increases or availability is diminished.
Although Starbucks provides excellent customer service due to their loyal and dedicated employees, they do this at a cost. They pay their employees more than restaurants and retailers. Furthermore, they offer benefits to full-time and part-time employees. This results in high costs for the company.
Lack of internal focus (too much focus on expansion)
Ever increasing number of competitors in a
 growing market
Cross functional management
Product pricing (expensive)
Opportunities
Emerging international markets.
Technological advancements
 New products
Distribution agreements
 Brand extension
 Emerging international markets
 Continued domestic expansion/domination
 of segment
 Large market; appeals to adults, teens, and has kid friendly products as well.
These opportunities are related to serving customer needs because Starbucks will be able to satisfy the desire for their coffee –along with the experience– in other countries. Emerging international markets allow Starbucks to expand while our country is experiencing and economic recession. Furthermore, technological advancements allow Starbucks to increase quality and decrease waiting time. Technology is continuously improving, making things quicker, faster and better. It most certainly will make its way towards the coffee business.
Threats
Economy experiencing a recession.
Emergence of competitors.
Rise in the cost of coffee & dairy products.
Increased competition from coffee shops and others (restaurants, street carts, supermarkets)
US market saturation
Coffee price volatility in developing countries
Negative publicity from poorly treated farmers in supplying countries
Consumer trends toward more healthy ways and away from caffeine
Fragile state of worldwide production of specialty coffees
Alienation of younger, domestic market segments
Corporate behemoth image
Cultural and Political issues in foreign
 countries

These threats are related to serving customer's needs because they impact the price the consumers pay for a cup of coffee. While our economy is experiencing a recession, consumers who are not loyal coffee drinkers are likely to look for substitute products. This is because substitute products, such as coffee from McDonalds are less expensive. These competitors are emerging and flourishing during this economy because gourmet coffeehouses like Starbucks are having trouble lowering prices while the cost of coffee beans and dairy products are rising.










Product Life Cycle OF STARBUCKS













THE INTRODUCTION STAGE

Consumer resistance to change
Starbucks' entry into Chicago proved far more troublesome than management anticipated. The first Chicago store opened October 27, 1987, the same day the stock market crashed. Three more stores were opened in Chicago over the next six months, but customer counts were substantially below expectations—Chicagoans didn't take to dark-roasted coffee as fast as Schultz had anticipated. At the first downtown store, for example, which opened onto the street rather than into the lobby of the building where it was located, customers were hesitant to go out in the wind and cold to get a cup of coffee in the winter months. Store margins were squeezed for a number of reasons: It was expensive to supply fresh coffee to the Chicago stores out of the Seattle warehouse, and both rents and wage rates were higher in Chicago than in Seattle. Gradually, customer counts improved, but Starbucks lost money on its Chicago stores until 1990, when prices were raised to reflect higher rents and labor costs, more experienced store managers were hired, and a critical mass of customers caught on to the taste of Starbucks products.
The entry into San Francisco proved more troublesome because of an ordinance there against converting stores to restaurant-related uses in certain prime urban neighborhoods; Starbucks could sell beverages and pastries to customers at stand-up counters but could not offer seating in stores that had formerly been used for general retailing. However, the city council was soon convinced by café owners and real estate brokers to change the code. Still, Starbucks faced strong competition from Peet's and local espresso bars in the San Francisco market.



When star bucks entered continental Europe it had to encounter established coffee cultures, anti-American sentiment at times, and 121000 existing espresso bars in Italy-the ultimate challenge.
When the company first ventured into Japan and Singapore in 1996, in Japan the company went against the Japanese love for cigarettes and refused to allow smoking in its coffeehouses, arguing that smoke would overwhelm the coffee aroma. Contrary to some predictions, Japanese women loved the smoke-free stores and men followed suit.
Losses

From the outset, the strategy was to open only company-owned stores; franchising was avoided so as to keep the company in full control of the quality of its products and the character and location of its stores. But company ownership of all stores required Starbucks to raise new venture capital, principally by selling shares to new or existing investors, to cover the cost of expansion. In 1988 the company raised $3.9 million; in 1990, venture capitalists provided an additional $13.5 million; and in 1991 another round of venture capital financing generated $15 million. Starbucks was able to raise the needed funds despite posting losses of $330,000 in 1987, $764,000 in 1988, and $1.2 million in 1989. While the losses were troubling to Starbucks' board of directors and investors, Schultz's business plan had forecast losses during the early years of expansion.

 
Product- One wall was devoted to whole-bean coffees; another had shelves of coffee products. The store did not offer fresh-brewed coffee by the cup, but samples were sometimes available for tasting. Top-quality, fresh-roasted, whole-bean coffee was the company's differentiating feature and a bedrock value


Price- Initial prices were high as they had to meet Major operating costs such as labor, cost of sales, Lower output, sales absorbing fixed costs and Major start-up expenditures such as property and equipment
Place- By the early 1980s, the company had four Starbucks stores in the Seattle area and could boast of having been profitable every year since opening its doors.
Promotion- Gordon Bowker remained involved as an owner but devoted most of his time to his advertising and design firm, a weekly newspaper he had founded, and a microbrewery he was launching (the Redhook Ale Brewery).

GROWTH STAGE

Product- Starbucks continues to use product modification to appeal to global market. In Japan and china, new snacks were created and drinks undergo style modification. Starbucks Coffee jelly and Green tea Frappuccino are a part of Starbucks many product line extensions. For each product mix Starbucks has a different marketing strategy depending on the country.

Price- In 2009, Starbucks revamped it pricing structure. Starbucks redesigned its menu to feature lower priced brewed coffees and offered promotions on its drinks. Starbucks increased the prices of its higher end and more complex drinks. The Frappuccino and Caramel macchiato were raised by 8%, because dun kin donuts and McDonald's cannot compete. Starbucks is using the lack of competitors and gaining profit from its most devoted consumer of the drinks.

Starbucks pricing may be considered unnecessary for more practical people, but this is America, and Americans are fascinated by the term of luxury. Starbucks sells itself on luxury and whether or not people can really afford it, they will still buy it. When a customer buys a cup of quality, it is seen as a small investment for quality. People who are all about luxury will never have a problem dishing out the extra bucks to receive it. Starbucks is aware of this and therefore can raise the price, because they have a strong net of devoted customers who may complain about the price increase, but you will see them with Starbucks the next day.
Place


Starbucks continues to expand the company by acquiring 16000 stores worldwide. Every day it opens 2 stores worldwide. Almost 85% of its sales come from its stores. So it is opening new stores at a breakneck pace.6 years ago it had just 1015 stores –that's 400 fewer than it built last year alone.
In 1992 and 1993 Starbucks developed a three-year geographic expansion strategy that targeted areas which not only had favorable demographic profiles but which also could be serviced and supported by the company's operations infrastructure. For each targeted region, Starbucks selected a large city to serve as a "hub"; teams of professionals were located in hub cities to support the goal of opening 20 or more stores in the hub in the first two years. Once stores blanketed the hub, then additional stores were opened in smaller, surrounding "spoke" areas in the region. To oversee the expansion process, Starbucks created zone vice presidents to direct the development of each region and to implant the Starbucks culture in the newly opened stores. The entire new zone vice presidents Starbucks recruited came with extensive operating and marketing experience in chain-store retailing.
Starbucks' store launches grew steadily more successful. In 1995, new stores generated an average of $700,000 in revenue in their first year, far more than the average of $427,000 in 1990. This was partly due to the growing reputation of the Starbucks brand. In more and more instances, Starbucks' reputation reached new markets even before stores opened. Moreover, existing stores continued to post year-to-year gains in sales.
Starbucks had notable success in identifying top retailing sites for its stores. The company had the best real estate team in the coffee-bar industry and a sophisticated system that enabled it to identify not only the most attractive individual city blocks but also the exact store location that was best. The company's site location track record was so good that as of 1997 it had closed only 2 of the 1,500 sites it had opened.
International Expansion
In markets outside the continental United States (including Hawaii), Starbucks' strategy was to license a reputable and capable local company with retailing know-how in the target host country to develop and operate new Starbucks stores. In some cases, Starbucks was a joint venture partner in the stores outside the continental United States. Starbucks created a new subsidiary, Starbucks Coffee International (SCI), to orchestrate overseas expansion and begin to build the Starbucks brand name globally via licensees; Howard Behar was president of SCI.
Going into 1998, SCI had 12 retail stores in Tokyo, 7 in Hawaii, 6 in Singapore, and 1 in the Philippines. Agreements had been signed with licensees to begin opening stores in Taiwan and Korea in 1998. The company and its licensees had plans to open as many as 40 stores in the Pacific Rim by the end of September 1998. The licensee in Taiwan foresaw a potential of 200 stores in that country alone. The potential of locating stores in Europe and Latin America was being explored.
Beyond opening new shops, Starbucks is expanding each store's food offerings, testing everything from Krispy Kreme doughnuts and fresh field's gourmet sandwiches to Greek pasta salads and assorted chips.
By offering a beefed –up menu, the company hopes to increase the average customer sales ticket while also boosting lunch and dinner traffic.

Promotion- Most of Starbucks advertising is done in and outside of its retail chains. Starbucks in store advertising helps customers get comfortable in the comfy chairs relax to relaxing music and have the choice of spending hours sitting without even having to make a purchase. Which compels the customer to actually spend money because they almost feel like their taking Starbucks for granted. The Average Starbucks customer visits the store six times per month, while Starbucks most loyal visit 16 times per month. Starbucks lack of advertising must be doing something right.

When it releases a commercial, the commercial receives huge popularity. The commercials have driven up sales and received very positive feedback. Starbucks reported 26% of respondents like them and the commercial appeals equally to men and women. The music is the key the success of each commercial. Although Starbucks executives are happy with the feedback, they want to stick with creating unique and welcoming first handed experiences for all customers.
Sales rise faster



Almost 85% of its sales come from its stores. So it is opening new stores at a breakneck pace.6 years ago it had just 1015 stores –that's 400 fewer than it built last year alone.

Production facilities are streamlined to meet the fast moving sales- Starbucks focuses on reliability, responsiveness, assurance, empathy, and tangibles (RATER) to increase service quality. When Starbucks restructures the way they serve coffee to decrease service time, they make sure it does not affect reliability. With the addition of special espresso machines, Starbucks has greatly increased their dependability.
Starbucks is planning to move farther down the growth stage of their product life cycle with the introduction of hot breakfast sandwiches... Even if they are still at the growth stage of their product life cycle, introducing a new item to their menu will hopefully keep them from entering the maturity or even the decline stage. The new hot sandwiches are classified as a new product line. It allows Starbucks to enter an established market different from the one they are currently in. Starbucks brand equity is known to be fairly high, so the introduction of Starbucks sandwiches will automatically give value to the sandwiches.

Product improvements
star bucks has partnered with several firms to extend its brand into new categories.eg-it joined with Pepsi Co to stamp the star bucks brand on bottled Frappuccino drinks and a new Double Shot espresso drink,Starbucks ice-cream marketed in a joint venture with breyer's is now the leading brand of coffee ice-cream.
MATURITY STAGE
Starbucks comes to maturity where the product becomes cash cow. This can be proven how fast Starbucks and how fast it can change people's behavior and lifestyle.Starbucks sales always rose every year, the image strongly attached to people's mind and the company have a strong financial to support all of its new retails
Product
Starbucks Coffee has introduced summer beverage products that do not contain elements of pure coffeepackaged products, such as bottled Frappuccino and the instant coffee via.
It has entered into a country with packaged goods and following later with cafes, something Starbucks has never done before, is suddenly on the table.
In addition to time-tested marmite and cheese Paninis, U.K. menus now include a frothy drink called the flat white that was popular at independent cafes, and all espresso is now Fair Trade, a certification that carries a lot of weight in Europe.
Price
- Uniform and lower prices
The coffee giant isfighting back against rivals' claims that the company's coffee drinks are expensive and the notion it is losing share to cheaper coffee makers.
As it reported a 77% drop in quarterly profit, the company said it will adjust its pricing in some markets, lowering prices those on basic drinks. For example, Starbucks will offer a "grande" size iced coffee for less than $2, shaving as much as 45 cents off the price, depending on the market.
The company has been trying to promote value in other ways, too. Starbucks recently entered the instant-coffee market with it'sVia brand, a product billed as offering a cup of Starbucks coffee for less than $1. It also pairs breakfast sandwiches with drinks for $3.95.
Starbucks has been cutting costs and closing stores in an effort to boost profit. In January, 2-011 Starbucks announced plans to lay off 6,700 employees and to close 300 more stores on top of the 600 announced last year. With closings and openings, the net store count will rise by 20 by the end of the fiscal year, Starbucks said.
Place
Development of new markets-The vast majority of coffee in America is bought in stores and sipped at home. To capture this demand,Starbucks is also pushing into America's supermarket aisles.However,rather than going head-to head with giants such as Procter and Gamble,kraft,starbucks struck a co-branding deal with kraft.under this deal,starbucks will continue to roast and package its coffee, while Kraft will market and distribute it. Both companies benefit: Starbucks gains quick entry into 25000 U.S supermarkets supported by the marketing muscle of 3500 Kraft salespeople.
-Beyond supermarkets, starbucks has forged an impressive set of new ways to bring its brand to market.eg-host Marriott operates star bucks kiosks in more than 30 U.S airports and several airlines serve Starbucks coffee to their passengers.Westin & Sheraton hotels offer packets of Starbucks brew in their rooms. And Starbucks recently signed a deal with borders books to operate coffee shops within the bookshop's superstores.
And the website, starbucks.com has become a kind of "lifestyle portal" on which sells coffee, tea, coffee making equipment, compact discs.
In recent years Starbucks had begun entering into a limited number of licensing agreements for store locations in areas where it did not have ability to locate its own outlets. The company had an agreement with Marriott Host International that allowed Host to operate Starbucks retail stores in airport locations, and it had an agreement with Aramark Food and Services to put Starbucks stores on university campuses and other locations operated by Aramark
Starbucks also had a specialty sales group that provided its coffee products to restaurants, airlines, hotels, universities, hospitals, business offices, country clubs, and select retailers. One of the early users of Starbucks coffee was Horizon Airlines, a regional carrier based in Seattle. In 1995, Starbucks entered into negotiations with United Airlines to have Starbucks coffee served on all united flights. There was much internal debate at Starbucks about whether such a move made sense for Starbucks and the possible damage to the integrity of the Starbucks brand if the quality of the coffee served did not measure up. After seven months of negotiation and discussion over coffee-making procedures, United Airlines and Starbucks came up with a way to handle quality control on some 500-plus planes with varying equipment, and Starbucks became the coffee supplier to the 20 million passengers flying United each year.
In addition, Starbucks made arrangements to supply an exclusive coffee blend to Nordstrom's for sale only in Nordstrom stores, to operate coffee bars in Barnes & Noble bookstores, and to offer coffee service at some Wells Fargo Bank locations in California. Most recently, Starbucks began selling its coffees in Chapters, a Toronto book retailer with sites throughout Canada, and in Costco warehouse club stores. A 1997 agreement with U.S. Office Products gave Starbucks the opportunity to provide its coffee to workers in 1.5 million business offices. In fiscal 1997, the specialty sales division generated sales of $117.6 million, equal to 12.2 percent of total revenues.
Promotion-
It has reached a normal ratio to sales.Starbucks is making efforts to rationalize the existing budget though the total expenditure does not expand ,major share of the expenditure goes to distribution and brand promotion to keep the dealer's loyalty intact. Advertising emphasizes the difference between one brand and those of competitor's .As a result, Starbuck's weaker competitors leave the market.

Development of style change
-new store concepts-in Seattle, it's testing café Starbucks ,a European style family bistro with a menu featuring everything from huckleberry pancakes to oven-roasted seared sirloin and Mediterranean chicken bread on focaccia.In san Francisco it's testing circadian-a kind of bohemian, coffee house concept with tattered rugs, high-speed internet access and live music















Starbucks in UAE
At a time at which Starbucks has reached saturation point in some parts of the West - in July it registered its first loss in 16 years as a public company, last week closed 61 of 84 cafes in Australia and it will also shed 600 stores and 1,000 jobs in the United States - its presence in the Emirates is growing. With its strong economic growth, expanding population and an increasing number of tourists, the UAE is already Starbucks' fastest-growing market in the Middle East.
According to industry statistics, the UAE is currently experiencing a retail boom, meaning that the potential for all retail outlets and food chain franchises is huge. Retail space in the UAE is expected to grow to 4.25 million square meters by the end of the decade - an increase of 209 per cent from today's figures. From the first branch at Dubai airport in 2000, Starbucks has grown steadily. There are now 67 stores; Dubai has the lion's share, with 47; Abu Dhabi currently has 14. The Alshaya Group, the Kuwait-based retailer which manages Starbucks in the Middle East, plans to increase its network of stores, which comprise some 40 brands, to more than 3,000 by 2011, from a current base of 1,400. And, when the gargantuan Mall of Arabia opens in Dubailand in 2010, the world's largest Starbucks will be housed in its centre court.
Starbucks remains ever popular with coffee drinkers of all nationalities, and continues to be bringing a new dimension to the strong coffee culture existing in the region.

Product
Starbucks has been clever, too, about adapting its offerings to the local market. Its sweet, syrupy blended drinks and sugary pastries are especially popular; last year, during Ramadan, it brought out the Date Frappucino, the first localized beverage to be specially created for customers across all stores in the Middle East. Available for just one month, the drink combined date juice with coffee, milk, ice and cream and was accompanied by a pistachio date cake and an almond and date delight. Starbucks also brought out a selection of traditional Arabian coffees, including Arabian Mocha Timor - "complex and medium bodied with a clean finish, an exotic blend of Arabian Mocha Sanani and East Timor coffees offering delicious, upfront berry notes", Arabian Mocha Sanani, "a profound single origin coffee with spicy, berry notes" and the Arabian Mocha Java, "a blend of distinction which complements cranberry, chocolate or orange flavors".

Date Frappuccino


Price
The prices of the products are as follows
Dhs 8-12-Tea,Coffee and Cappuccino
Dhs18-20-Frappacino
Dhs 10-Donuts,Cookies and chocolate bars
Dhs12-Dhs 15-Double Chocolate Muffins
Dhs16-Chocolate Brownie

Place
There are now 67 stores; Dubai has the lion's share, with 47; Abu Dhabi currently has 14.

Starbucks store in Abu Dhabi
Promotion
Starbucks was the first international coffee house to have a bilingual MENA website, a pioneer step that affirms its leadership of the industry.
The English and Arabic website is part of Starbucks' on-going commitment to the local community and the first step towards a fully integrated digital platform to keep it connected with its customers.
The user-friendly website, designed specifically for the MENA region, reflects Starbucks' proud heritage of producing outstanding quality coffee without compromising a strong commitment to sustainable and eco-friendly practices.
The website provides users with detailed information on the latest offerings from Starbucks, local community initiatives, and blog posts from the team and their local partners. The site can also show users the location of the Starbucks store closest to them.



Competitors
Going into 1997, there were an estimated 8,000 specialty coffee outlets in the United States. Starbucks' success was prompting a number of ambitious rivals to scale up their expansion plans. Observers believed there was room in the category for two or three national players, maybe more. Starbucks' closest competitor, Second Cup, a Canadian franchisor with stores primarily in Canada, was less than one-third its size; Second Cup owned Gloria Jeans, a franchisor of specialty coffees, with stores located primarily in malls throughout the United States. No other rival had as many as 250 stores, but there were at least 20 small local and regional chains that aspired to grow into rivals of Starbucks, most notably New World Coffee, Coffee People, Coffee Station, Java Centrale, and Caribou Coffee. Observers expected many of the local and regional chains to merge in efforts to get bigger and better position themselves as an alternative to Starbucks. In addition, numerous restaurants were picking up on the growing popularity of specialty coffees and had installed machines to serve espresso, cappuccino, lattè, and other coffee drinks to their customers.
The company also faced competition from nationwide coffee manufacturers such as Kraft General Foods (the parent of Maxwell House), Procter & Gamble (the owner of the Folger's brand), and Nestlé, which distributed their coffees through supermarkets. There were also a number of specialty coffee companies that sold whole-bean coffees in supermarkets. Because many consumers were accustomed to purchasing their coffee supplies at supermarkets, it was easy for them to substitute these products for Starbucks.
Starbuck's Five-Force Competitive Analysis









Costa Coffee is a coffee house company based in the United Kingdom founded in 1971 by Italian brothers Sergio and Bruno Costa, as a wholesale operation supplying roasted coffee to caterers and specialist Italian coffee shops.Some products of Costaare espresso,espresso doppio,ristretto,macchiato,americano,flat white,cappuccino,caffe latte,mocha
Strengths:
It has products that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products .It has grown significantly over the years, and has experienced global expansion.
Its main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, Costa Coffee can see how their individual products perform within the United Kingdom, or even at stores at a glance. IT also supports the company's efficient procurement.
It is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.
It's lead consultants have established a strong reputation within the market.
It has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.
Weaknesses:
Is one of UK's largest company in coffee brewing and but has a weak control of its empire, despite its IT advantages. This could lead to a decrease in productivity in some areas where they have the least control of.
Since Costa Coffee sells products across many sectors, the company may lack the flexibility that some of its more focused competitors possess.
Operates globally, but its presence is located in only relatively few countries worldwide.
Some of the company's weaker branches lack market presence or reputation
Some of the company's personnel still lack the essential skills base in many areas.
The company is still vulnerable to the temporary losses of its vital staff (e.g. being sick, leaving).
The company's cash flow is unreliable especially in the early stages of a new product development.
Opportunities:
Taking over, merging, or forming strategic alliances with other coffee companies while focusing on strong markets like Europe or the Greater China Region.
The branches of Costa Coffee operate only on trade in a relatively small number of countries all over the world. Thus, this would open the opportunities for future businesses in expanding various consumer markets, such as those in China and India.
The opening of new locations and branches offer Costa Coffee the opportunities to exploit market development. This could lead to the diversification of the company's branches from large super centers to local-based sites.
Opportunities exist for Costa Coffee to continue with its current strategy of establishing large branches worldwide.
Is continuously expanding, with plenty of future opportunities to exploit for success.
The local councils of Palm, Inc. are in the process of encouraging local businesses with work whenever possible.
The competitors of Costa Coffee may be slow to adapt to new technologies especially the ones that it releases.
Threats:
Being number one means that Costa Coffee is the target of competition, the company to beat, both locally and globally.
Being a global retailer means that Costa Coffee might be exposed to political problems in the countries where the company has operations.
The production costs of most consumer products have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat.
The latest developments in information technology which could possibly change the markets might challenge the company's ability to adapt to these changes
A slight shift in focus of a large competitor might wipe out any market position that Costa Coffee has achieved over the years. This could force the company to specialize in rapid response but good value services to local businesses. This would put so much pressure on the company's consultancy staff to keep informed with the latest changes in technology where possible.


Costa has undertaken the offensive strategy which is appropriate for a firm that is number 2 or possibly number 3 in the market. Costa's primary concern is the strength of the Starbucks's position, not the own strengths and weaknesses.
Why Starbucks should be careful?
People would buy Costa as some products are cheaper
Costa may havegrown over the years and has experienced global expansion. It may become the market leader.
Current recession may impact the sales of Starbucks
Starbucks facing huge resistance in international countries over cultural and political issues.

Price
Starbucks has opted for competitive pricing that is nearly half the coffee chain's charges elsewhere in the world -- with a cup of coffee costing about Rs 80 for a small offering and Rs 165 for a large one.
Starbucks's competitors such as CCD, Barista and Costa Coffee are unlikely to go in for price war, and plan to continue with differentiated pricing strategy.
Price comparison of the Starbucks and Costa inKensington,UK









Competition in social networking sites
Starbucks had a head start with an 8 times higher number of stores (248 compared to the 30 Costa Coffees) when the number of check-ins made during the Olympic Games (July 27th – August 12th) with the same period a month before was compared.

Although Costa has fewer stores, it's consistently getting more check-ins on average. But when analyzing the direct impact of the Games, Starbucks is the winner with a 36% increase (it grew from 1,800 to 2,451 check-ins). The Olympic traffic helped Starbucks catch up with Costa, which actually went down by 1% during the same time period (from 306 to 303 check-ins a month later.
Starbucks check-ins reached their peaks on the days of the swimming, tennis and athletics finals and the final ceremony day

Their Facebook communities for the UK are of similar size – Costa Coffee has over 698 thousand and the Starbucks Page over 877 thousand fans. But there wasn't much Olympics activity on the walls, Costa posted a poorly engaging post on August 3rd: "The Olympics are in full swing and we have to say: We are loving it! If coffee drinking were an Olympic event, we'd definitely win gold. What quirky discipline would you win a medal in?" It generated 121 Likes and 48 Comments. Starbucks knows that pictures generate the highest Engagement Rates so it bet its card on a patriotic sunny picture with a refreshing drink and a British flag with the London Eye in the background worth about 6 thousand Likes







The AD war


 Costa and star bucks has an advertisement war.
Costa coffee has claimed victory in its battle with starbucks over an aggressive advertising campaign in which it claimed that "7 out of 10" coffee lovers preferred its coffee. The advertising standards agency has not upheld any of starbucks' complaints concerning the poster campaign, which started in march last year, and also contained the line "sorry starbucks - the people have voted".Starbucks said that the slogans "starbucks drinkers prefer costa" and "7 out of 10 coffee lovers prefer costa" were misleading and that the research that led to Costa's claims was flawed.
 
Costa's research, conducted by marketing consultancy tangible branding, subjected 57 people to a blind tasting of cappuccinos from costa and starbucks .







DISCUSSION
Starbucks positions their products based on quality and image. Starbucks created the coffee shop revolution, and they have had the ability to be the public educator on espresso coffee the company's brand is a member of the coming century's top twenty-five brands .It is critical that Starbucks position their brand for what the brand stands for: an innovative industry leader that produces high quality products. Brand image, as already shown, is a goal that all the future functional strategies will work to attain.

Starbucks must differentiate their products based firstly on image and secondly on the product itself. Considering that international markets such as Italy are renowned for high quality coffees, it will be difficult for Starbucks to differentiate their products on quality alone. Combined with its research and development emphasis on product development and being the first mover into a market, Starbucks should differentiate its new products based on their unique features and brand image.
Starbucks must position its brand as an experience. The Starbucks' experience is what will entice new customers to visit their locations and create customer loyalty. First impressions will be vital in ensuring repeat customers.

Starbucks will be able to combat the threats of bargaining power of buyers, substitute products, and competitive forces by continuing to market based on their highly differentiated products and unique brand image.
The competition between Starbucks and Costa is mainly based on promotion. There is no price war.
STARBUCKS can follow defensive strategies only should be pursued by the market leader. The market leader is the firm who has attained that position in the mind of the consumer. It can introduce products better than their existing ones.
COSTA can follow flanking strategy which is not a direct attack on the leader, but rather, an attack in an area where the leader has not established a strong position. It can introduce something new which Starbucks has still not introduced.
CONCLUSION
The main objective was to determine the SWOT Analysis and the Product life Cycle of Starbucks. The competitive analysis of Starbucks was also done.
Although Starbucks has reached its maturity stage in America and Europe ,its still in its growth stage in the Middle East and Asia region.
Costa may have grown over the years and has experienced global expansion.Although Starbucks faces close competition from Costa, Starbucks always have a clear advantage than its competitors.Starbucks has emerged as the coffeehouse leader with over 11,000 stores in the US and a 42 percent market share as compared to Costa's 37.6% market share.
Possibilities of related future research
Starbucks and Fairtrade coffee-Fairtrade coffee empowers small-scale farmers organized in democratically-run cooperatives to invest in their farms and communities, protect the environment, and develop the business skills necessary to compete in the global marketplace.
Starbucks Coffee and Health-There is rising health concerns on the amount of calories in a cup of Starbucks Coffee.
Conversion of Starbucks Coffee Grounds into Bio-Plastic-Starbucks is planning to convert coffee grounds and leftover bakery goods into bioplastics, laundry detergents and other everyday products.








REFERENCES
History of Starbucks -http://hbr.org/search/starbucks/
Growth strategy - http://djchuang.com/2007/starbucks-growth-strategy/
News from http://news.starbucks.com/article_display.cfm?article_id=342
http://www.ineedcoffee.com/section/business/ http://espresso101.com/newsletter/422.I
http://espresso101.com/newsletter/422
http://www.janhoo.com/skole/university/excelsior.html
http://gmr-online.com/search_results/3/index.html?search=starbucks&x=11&y=13
On Starbucks' Cameo Role in the Galleon Trial - Law Blog - WSJ
http://www.portafilter.net/uploaded_images/0307_coffee_ov1_small-761196.jpg
http://www.mediastudiesgoodies.com/system/files/Sorry-Starbucks-001.jpg
http://dubaisession.com/wp-content/uploads/starbucks-costa.jpg
http://upload.wikimedia.org/wikipedia/commons/6/6f/Starbucks.png
Introduction of Product life cycle- http://catalog.flatworldknowledge.com/bookhub/2030?e=fwk-133234-ch07_s02
Swot analysis of starbucks- http://mamelendez.wordpress.com/other-work/swot-analysis-for-starbucks-coffee-company/
Starbucks in UAE
www.thenational.ae/arts-culture/a-grande-plan
http://article.wn.com/view/2012/09/28/Starbucks_to_open_first_India_store_in_October_9/
http://www.mhhe.com/business/management/thompson/11e/case/starbucks-2.html
http://www.dooyoo.co.uk/restaurants-cafes-national/costa-coffee/1164479/
Swot analysis of costa
rodenberg.nl/publications/.../COSTA_COFFEE_vs_STARBUCKS.pdf
Competition in social networking sites
http://www.socialbakers.com/blog/796-olympic-games-boosted-starbucks-check-ins-by-36
The AD war
http://www.caterersearch.com/Articles/16/06/2010/333808/Costa-claims-victory-in-ad-war-with-Starbucks.html












FINDINGS

From this project, I learned that although Starbucks is the market leader now, it had faced many problems when it started in Seattle.
Later on,Starbucks modified its product to appeal to global market
Starbucks redesigned its menu to feature lower priced brewed coffees and offered promotions on its drinks
Starbucks in the United Arab Emirates is still growing and it is a market that can develop more in the future.
Although Starbucks faces close competition from Costa, Starbucks always have a clear advantage than its competitors.
Nowadays Starbucks face increased competition not only from established coffee chains but from small firms like coffee shops and restaurants, street carts and supermarkets.
In the present scenario, Starbucks is facing many problems like rise in prices of dairy products, rising health concerns, availability of substitute products etc.