Competitive Brand Strategy Analysis Anant Saxena
STARBUCKS – COMPETITIVE
BRAND STRATEGY ANALYSIS
MKTG 6550S – Brand Management
ANANT SAXENA
213994256
Starbucks - Competitive Brand Strategy Analysis
Nature of Market
Starbucks conducts its business in the generic Canadian ‘Retail Foodservice’ industry, which is further divided into the CAD 21.7 Billion ‘Full Service’ (e.g. family restaurants, diners, fine dining, etc. )and the
CAD21.6 Billion(Statscan) ‘Limited Service’ eating places (e.g. coffee shops, fast food shops, ice-cream parlors,etc.) based on the nature of services offered. Within this classification, the broad product market in which Starbucks directly competes is “Coffee and Snack Shops” ($10.2B - IB) This market has been growing at an average of 5.1% over the last five years and is expected to grow 3.4% in 2015. The growth has been driven by an increase in growing popularity of coffee, consumer spending based on Consumer
Confidence Index, and busier yet more social lifestyles and work culture.
In this product market, the customers expect to purchase coffee-based and other non-alcoholic beverages and ready baked goods, pay before receiving the food which could be consumed in the restaurant or taken away. 51% of sales come from coffee beverages, 34% from food, and the remaining from other beverages and products such as coffee machines and brand merchandise.
The key competitors for Starbucks in this market are Tim Hortons and Second Cup. While Tim Hortons leads the revenue share in this market at 69.1% over its 3,729 stores, Starbucks follows in second at
17.6% with 1,337 stores, and Second Cup at 1.9% over 350 locations, rounding up nearly 90% of the market. Tim Hortons is the oldest chain and focuses on convenience of location and great value at relatively lower prices. Their ‘Double-double’ offering is synonymous with coffee across Canada and even incorporated to the Canadian Oxford dictionary. Second Cup has drawn customers to its large variety of international coffee and signature offerings, such
BRAND STRATEGY ANALYSIS
MKTG 6550S – Brand Management
ANANT SAXENA
213994256
Starbucks - Competitive Brand Strategy Analysis
Nature of Market
Starbucks conducts its business in the generic Canadian ‘Retail Foodservice’ industry, which is further divided into the CAD 21.7 Billion ‘Full Service’ (e.g. family restaurants, diners, fine dining, etc. )and the
CAD21.6 Billion(Statscan) ‘Limited Service’ eating places (e.g. coffee shops, fast food shops, ice-cream parlors,etc.) based on the nature of services offered. Within this classification, the broad product market in which Starbucks directly competes is “Coffee and Snack Shops” ($10.2B - IB) This market has been growing at an average of 5.1% over the last five years and is expected to grow 3.4% in 2015. The growth has been driven by an increase in growing popularity of coffee, consumer spending based on Consumer
Confidence Index, and busier yet more social lifestyles and work culture.
In this product market, the customers expect to purchase coffee-based and other non-alcoholic beverages and ready baked goods, pay before receiving the food which could be consumed in the restaurant or taken away. 51% of sales come from coffee beverages, 34% from food, and the remaining from other beverages and products such as coffee machines and brand merchandise.
The key competitors for Starbucks in this market are Tim Hortons and Second Cup. While Tim Hortons leads the revenue share in this market at 69.1% over its 3,729 stores, Starbucks follows in second at
17.6% with 1,337 stores, and Second Cup at 1.9% over 350 locations, rounding up nearly 90% of the market. Tim Hortons is the oldest chain and focuses on convenience of location and great value at relatively lower prices. Their ‘Double-double’ offering is synonymous with coffee across Canada and even incorporated to the Canadian Oxford dictionary. Second Cup has drawn customers to its large variety of international coffee and signature offerings, such
References: Alvarez, A. (2015). Brewed awakening: High spending will boost sales, but industry maturity will stifle growth Cardwell, M. (2015, 03 09). COFFEE CONSUMPTION HABITS CONTINUE TO SHIFT IN CANADA. Retrieved from http://www.marketingmag.ca/: http://www.marketingmag.ca/consumer/coffeeconsumption-habits-continue-to-shift-in-canada-139728 Coffee Association of Canada. (2011). 2010 CANADIAN COFFEE DRINKING STUDY . Retrieved from http://www.coffeeassoc.com/: http://www.coffeeassoc.com/coffeeincanada.htm Coffee Association of Canada. (2012). Wake Up and Smell the Coffee! Retrieved from http://www.coffeeassoc.com/: http://www.coffeeassoc.com/coffee-in-canada/wake-up-andsmell-the-coffee/ Coffee Association of Canada. (2014). Canadian Coffee Drinking Study 2013 Highlights – INFOGRAPHIC. MarketLine. (2015). Company Profile - Starbucks Corporation. MarketLine. Retrieved from http://marketline.com Petrycki, O. (2013, 1 28). Tim Hortons Celebrates 50-Years Fresh. Retrieved from Tim Hortons: http://www.timhortons.com/ca/en/corporate/tim-hortons-celebrates-50-years-fresh.php Rheis, D. (2015, 05 12). Interview with a Starbucks Barista. (A. Saxena, Interviewer) Statistics Canada Statistics Canada. (2014, 9 26). Demographic Information - Population by Sex and Age Group. Retrieved from http://www.statcan.gc.ca/: http://www.statcan.gc.ca/tables-tableaux/sumsom/l01/cst01/demo10a-eng.htm Statistics Canada. (2014, 02 25). Food services and drinking places (Canada). Retrieved from http://www.statcan.gc.ca/: http://www.statcan.gc.ca/tables-tableaux/sumsom/l01/cst01/serv42a-eng.htm The Second Cup Ltd. (2014). Annual Report - 2013.