Wednesday, November 14, 2012

Competing as Starbucks

I would not call Starbucks's market a perfect competition market. Only because some of the business decisions "simplified" the experience - they do not change the market. It is still a market with huge companies or franchises where it is not simple to get into, every business is different and trying to differentiate their product from others. Starbucks is just trying to be effective by using new technologies even if it is changing the whole experience. It is good to stick to traditions but as a customer who pays $4-5 for a cup of coffee I would like service to be on the same level.(in our speedy lives we do not always ready to "stop and smell the roses")

Another problem - store closings. Obviously, if store doesn't make profits - it has to be shut down because main reason for opening it was to make profits. You cannot predict how economy will behave in the future. In times of recession, when people loose jobs, it is hard for any business to stay profitable and, I think, it was the main reason for those closings.

Starbucks doesn't charge for coffee - it charges for experience. You get a small coffee shop feeling when you come in, you can have a chat with your friends there. This is what you pay for. It is an experience that you cannot find in many stores. If they lower their prices - demand would increase and stores would not be able to handle increased amount of customers. Quality of service will suffer and they would loose clients who pays high prices but enjoys the experience.

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