Description
Existing
companies diversify their products all the time to enter new markets.
For example, McDonald’s began offering premium coffees in 2005, thereby
creating competition for more traditional coffee shops like Starbucks.
Although many would argue there wasn’t competition across all consumer
groups and Starbucks could have just ignored this attempt at market
entry, to stave off any potential competition, Starbucks (in attempts to
avoid seeming ‘elite’) focused marketing efforts to become more
mainstream and indeed, McDonalds began losing the ground it had gained
in its battle for the nation’s coffee drinkers. To
continue to press into the market and regain their lost market share
(and in hopes of gaining even greater market share), McCafé U.S. created
a new brand identity in 2019, including gold cups to “match our gold
standard for quality coffee” and a new brand tagline ‘Good is Brewing.’
Starbucks then placed more emphasis on their app, encouraging customers
to order ahead. This proactive tactic became a competitive advantage
during the shutdown in March, 2020 as their app had over 16.8m users who
could easily order and pick up in the drive-thru or have carryout
service to the car. McDonalds responded by providing discounts to
customers who used their app and BOTH companies began engaging in
delivery (e.g., uber eats).Given
that McDonald’s closely monitors Starbuck’s strategic decisions and
imitates as many as possible, what should they (Starbucks) do? Ignoring
clearly isn’t an option as McDonald’s has encroached in their market
share, so what else can they do? Specifically, drawing from the
information presented in your text on competitive tactics, which tactics should Starbucks employ to counter the encroachment of McDonald’s into the premium coffee business (BE SPECIFIC – meaning, list several of the tactics described in your text and explain why Starbucks should use them)? Although
we all have our views on the shutdown, why it occurred, and the value
of it, this is not the purpose of this discussion. Your responses should
focus on tactics (listed in the text) that Starbucks should use to
counter McDonalds continued attempts to acquire premium coffee market
share and your rationale (based on course material) as to why those
tactics would be beneficial.
