Starbucks’ Differentiation Strategy
One of Porter’s generic strategy is the differentiation strategy. The differentiation strategy focuses on creating services and products that can be easily distinguished from the competitor’s products and services in the market. The distinctive factor can be quality, feature, design, brand, marketing, distribution channel, functionality, durability and customer support. The basis for creating the differentiated products can be the product, pricing and organization. In this blog, we are going to explore how the differentiated strategy has been fruitful to Starbucks.
Starbucks is one of the world’s greatest and most profitable coffeehouse chain. It offers a variety of high-quality products like coffee, tea, cold beverages and food items. Starbucks has actively adopted the differentiation strategy in the ways below:
1. Quality
Starbucks purchases high quality of coffee beans and grocery items to prepare fresh food. They have specific guidelines about the preparation of food and beverages, for example, it is a mandate to serve the espresso within twenty seconds of brewing. They avoid sub-standardizing products to achieve a greater production output.
2. Diversity / Product Differentiation
Starbucks offers several items that comprise of coffee, beverages, muffins, cakes, sandwiches, bagel and other food items. Within each category, they offer a variety of products and accommodate customized request so that each customer’ s wish is fulfilled.
3. Technology
Starbucks leverages cutting-edge technology both in terms of the machines, brewers as well as Information Technology. Starbucks owns a fancy website, the mobile application on both Android and iOS and invests a large amount of money to grow on the technology front.
4. Service
Starbucks is known to provide the best service – both in terms of the product that is offered and the way in which it is delivered. Starbucks personnel are known to be friendly, well trained, respectful, responsive and always ask for feedback.
5. Human Resource Management
Starbucks has extremely trained and pleasant personnel. The amount of financial resources, time, training and effort that have been invested in these employees has worked in Starbucks’ favour. They have also included health insurance benefits, retirement benefits and stock options for their employees depending upon certain factors. This encourages the employees to deliver the best service.
6. Global Brand Recognition / Marketing
Starbucks has adopted the consistent brand marketing approach and has invested millions of dollars in marketing. It has chains all over the globe and a huge customer base owing to its reputation. It has also established a goodwill in the society and promotes and claims to be environment and community friendly. The cups, plates, spoons used in the store are all recyclable and reduce the waste.
7. Strong Market Position
The trust and loyalty that Starbucks has secured through its excellent in-store service, is being used to gain a strong market position. Starbucks has established tie-ups with giant firms like Tazo, Jim Beam, PepsiCo that encourage customers to purchase the product that is associated with Starbucks.
All said and done – Starbucks is the best at what it does. Clearly, the absence of a strategy would not give Starbucks the position it has. It is a leader in the market and has premium stores in prime and strategic locations. I am going to go and grab a coffee now – you should too! :D
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