Starbucks Competitive Advantages (9 Different Factors)

Starbucks is a large company. Although it’s not as well-known as McDonalds or Subway, these are the two other large coffeehouse chains in the US. As a whole, these chains have a lot of influence, and it’s not likely that Starbucks will lose any customers due to the increase in competition. The increase in competition is good for Starbucks, as they are likely to make more money.

So if you’re wondering whether or not Starbucks has a competitive advantage, I was wondering too, but I couldn’t find any.

Starbucks Competitive Advantage In 2022

The global coffee market is expected to grow at an estimated rate of 3% per year and has the potential to generate over $100 Billion by 2022. However, the global coffee industry has faced many issues during the past years. These include: (1) declining world coffee prices, (2) competition with emerging markets and (3) competition with local producers.

In case you have not heard about Starbucks’s operations, find out how the brand is different from the competition starting with its origins.

1. The Starbucks Experience

Howard Schultz wanted to make Starbucks a place that people wanted to work in, and a place we would want to hang out.

Most customers like the ambiance of the cafe as well as the coffee and food. However, they do not like the policy that they must purchase something from the cafe to be there.

Starbucks, however, has a large presence within urban areas which includes a store in the Empire State Building and a store in the Sistine Chapel. Even so, Starbucks has only a 10% presence in the United States.

2. Starbucks Offers Quality Products

However, many consumers, mostly the budget-conscious ones, have become willing to pay more than the original price for the name and the image of the brand.

In order to ensure quality, Starbucks only buys the best Arabica coffee beans. The coffee is brewed using the most sophisticated equipment available to keep the coffee tasting great.

When you are buying coffee at a café, you don’t have to worry about this. You are pretty much guaranteed to get the same cup no matter how it was made. But if you are drinking coffee in a store, you might not know whether it is freshly brewed or from a pre-packaged jar.

The founder of this company, a man named Howard Schultz, loved the taste of the coffee he drank, and wanted to make coffee taste as good as his own.

In order to ensure high quality coffee and other products, Starbucks buys only the best coffees available.
The company only sells coffee that has been freshly brewed and is free of preservatives and artificial flavors.

3. Starbucks Stores Are Strategically Located

Starbucks stores are strategically located in neighborhoods as well as high-traffic areas like downtown centers, shopping malls, and busy streets.

If something doesn’t make sense in the first sentence, it doesn’t make sense in another sentence either. You just have to decide which makes the most sense.
You also don’t have to use the verb, since the speaker is giving a list of locations.

Starbucks will never pick an under-traffic location to open a new store. However, they may select a location that will draw more customers than any location they have ever had before.

In these areas, the Starbucks coffee shops don’t see as much traffic. It’s a way that they’re trying to revitalize these neighborhoods.

4. Starbucks Has Embraced Innovation

Starbucks is constantly innovating its menu of drinks and food. Drinks like the Frappuccino, Pumpkin Spice Latte, cold brews, Refreshers, and more offer customers new tastes all the time.

New drinks and food items are introduced every season, and those that gain a following usually stay on the permanent menu.

Starbucks has always served coffee and other drinks. There has been and still is a lot of customer demand for healthier food and drinks, even organic and gluten-free food and drinks. The company started developing dairy-free and organic food and drinks to satisfy the customer demand.

This is a new move by Starbucks to add more non-dairy milk choices to the menu. These non dairy milk choices are available in most of the menu in the US.

5. Starbucks Uses Technology To Connect With Customers

Starbucks introduced social networking technology to connect with customers in a very direct way.

Customers can join the Starbucks loyalty program by signing up online or by downloading the Starbucks mobile app. It has over 11 million members.

Rewards members can order ahead using their accounts, which cuts down on waiting times in line at the store or the drive-thru. The menu on the screen can be expanded to include more items if needed.

Starbucks has a great app and rewards program that allows them to communicate effectively with customers.

6. Starbucks Has A Direct Connection To Growers And Suppliers

Starbucks has a direct relationship with farmers, and also has a long-term relationship with suppliers such as coffee roasters, who are responsible for roasting and grinding the beans they use.

In order to avoid the fluctuations in the supply of coffee, tea, and cocoa, Starbucks is focusing on its hands-on approach to developing the supply of these basic ingredients.

7. The Starbucks Global Supply Chain Is Vertically Integrated

Starbucks is vertically integrated, which means it has every stage under its control, and it is the only company that can make a smooth running smoothie.

The coffee is grown in Central America, mainly in Brazil and Mexico and shipped on a large scale, from the farm, to a port in San Pedro Bay, California, to be loaded on ships to ports around the world, then unloaded and distributed to stores.

In the past, Starbucks would use a supplier to take the raw coffee beans to a roaster, who would then get the beans roasted. The roasted beans would then be shipped to the company’s stores in the same packaging as the roasted beans had been delivered to the roaster. However, the beans could be stored for 1 to 4 years before they were used, which was not a good idea, because they could lose quality over time.

8. Starbucks Invests In Its Employees

Employees who work at Starbucks are given a number of benefits, such as a 401k plan, health insurance coverage, and a generous parental leave program. Employees who work at Starbucks receive a number of benefits, such as a 401k plan, health insurance coverage, and a generous parental leave program.

Starbucks employs an army of baristas and managers who are trained to be the best, so the company can offer their customers the best service possible and help make their coffee drinking and their life better in some way.

While Starbucks employees get stock options as part of their pay package giving them an actual stake in the company, they aren’t getting the same as Amazon’s employees do. They get employee stock options which are essentially a piece of a company. Meaning, they don’t actually get equity until the company has some value for them to actually cash in on.

9. Starbucks Does Not Have Any Franchises

While Dunkin’ Donuts and McDonald’s have a huge number of franchise stores, Starbucks does not have any.

Howard Schultz thought that franchise stores were unnecessary, and would only get in the way of a direct connection between Starbucks and its customer.

Starbucks does have some licensed stores, but it doesn’t have franchise stores, so it can maintain quality and a uniform customer experience in all its stores.

What Is Starbucks’ Generic Strategy?

A company’s business strategy is to differentiate its products from those of its competitors. The company may choose to differentiate in terms of price, quality, availability, or any other characteristic. In this case, the company hopes to win customer loyalty or market share by offering unique products or services.

To succeed as a leader in the market, you need to use innovation to deliver premium products to customers, who will come to identify the brand with said products.
To succeed, product differentiation is the way. It is the way that makes you different.

The marketing strategy is not only necessary to communicate our quality, but to also educate our customers about the benefits of our product.

Starbucks has successfully promoted a comfortable environment and has come to be associated with a welcoming space, where they can do such things as study, work, meet with friends and drink their coffee.

What is the competitive advantage of Starbucks? It is based on a few factors including innovation, the use of technology across all operations, and corporate social responsibility.

How Is Starbucks Different From Its Competitors?

What we were trying to do, and what we’re doing now, is to be super disruptive. We’re always trying to be different and to bring in new brands and new products to the store.

For example, instead of focusing on the bottom line to the exclusion of all else, Starbucks lives up to its commitment to social and environmental responsibility. In 2014, the company announced that it would end its use of palm oil, a greenhouse gas that contributes to deforestation.

I was speaking of ethical and sustainable sourcing practices. For example, Starbucks follows through on commitments to invest in its employees, the local communities, and the environment.

It is a good idea to consider the strategies that are used by a company in order to be able to understand what makes it successful or not.

For more info about these, check out our posts about the biggest Starbucks competitors, top Starbucks drinks and why does Starbucks coffee taste burnt.

Conclusion

Starbucks’ competitive advantage is its differentiated products and services, which is why the company has a market for premium products and services.

Starbucks has been able to increase global leadership in the coffee retail market by implementing customer research through using a marketing research company, which has helped to shape the company’s future strategy.

In other words, the company has been able to create a positive reputation in the marketplace by conducting research on the needs of its customers and then acting accordingly.