MKTG3040 Services Marketing: Starbucks' Case Study Analysis

This case study analyzes the challenges Starbucks faced in the Australian market, focusing on intense competition from local coffee shops and other global chains. The assignment identifies the problem as a lack of effective market expansion strategy due to the mature and sophisticated coffee culture in Australia, where consumers favor intimacy and local tastes. The study explores the significance of critical thinking in developing business strategies to overcome these challenges. Recommendations include in-depth market research, adjusting pricing strategies, creating unique product offerings, emphasizing value propositions like high-quality coffee and a welcoming environment, and establishing convenient store locations. The analysis emphasizes the need for Starbucks to differentiate itself and build a strong market presence in Australia by adapting to local preferences and providing a superior customer experience. The paper concludes by highlighting the importance of strategic marketing and critical thinking for sustainable business growth, especially in a competitive market.

Running head: SERVICES MARKETING
Services Marketing
Name of the student:
Name of the university:
Author note:

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Table of Contents
Introduction:....................................................................................................................................2
Identification of the problem:..........................................................................................................2
Conclusion and recommendation on how the problem can be resolved through Critical thinking
approach:..........................................................................................................................................3
Reference list:..................................................................................................................................6

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Introduction:
In the increased uncertainty in business environment, integrating creativity in the internal
functionality of a firm is one of the major factor. This is the way, through which the intense
competition in the market can be handled. According to West et al. (2015) there lies the
significance of critical thinking, which paves the way for corporate entities to generate new ideas
there by run the business with utmost efficiency. Present Paper will cover the significance of
critical thinking and problem solving in the context of Starbucks’. The problem, faced by
Starbucks’ will be discussed. Recommendation will also be provided for the firm, on the way
through which the firm can resolve issues through Critical thinking approach.
Identification of the problem:
Starbucks’- one of the major coffee chain is successfully running their business
throughout the world. The company has experienced sustainable growth along with striking rate
of profit for decades. However, there were certain issues, being faced by Starbucks’ in the way
of running their business in Australia. Proctor (2014) commented that it is that the coffee culture
of Australia is extremely mature and sophisticated. Still, intense competition in Australian retail
market has created barrier for Starbucks’ to introduce lifestyle coffee experience in the nation.
The inclusion of wide range of smaller boutique-style coffee shops have restricted the giant like
Starbucks’ to open coffee shops in Australia. The notion of intimacy, personalization and
familiarity with the local taste of coffee has made it difficult for Starbucks’ to drag the attention
of the customers. Based on the discussion of Spanjol et al. (2015) it can be said that lack of
effective market expansion strategy is one of the biggest issue faced by Starbucks’. This issue
has made it difficult for the firm to enter in the tough retail market of Australia.

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Chernev (2018) showed that during 2007 to 2008, the food and beverage industry of
Australia has experienced profit of more than $9.7. In-spite of this growth rate, the chances of
getting success in Australia is really uncertain for Starbucks’. Being the giant in global coffee
house chain, the existence of non-traditional competitors like Dunkin’ Donuts, Krispy Kreme, 7-
Eleven have restricted Starbucks’ to run their business successfully in Australia. In addition that,
Gloria Jean’s- the famous local coffee maker is leading the high street part of Australia. This is
also a great challenge for Starbucks’ to catch the attention of local customers of Australia. At the
same time, the companies like Coffee Club and Wild Bean are offering in-store experience
among the customers, which is similar to that of Starbucks’. These are the reasons, for which
Starbucks’ faced troubles in running business in Australia (Payne and Frow 2014).
Conclusion and recommendation on how the problem can be resolved through
Critical thinking approach:
Based on the discussion, it can be concluded by saying that, intense competition in
Australia due to wide range of coffee makers had created barrier for the companies like
Starbucks’ to run their business successfully in the nation. As Starbucks’ is the giant in the
coffee house chain, it is imperative for the firm to devise their business strategy. This is the key
of coping up with intense competition in Australian market. In the contemporary business
scenario, critical thinking plays a significant role in the way of running business in innovative
way. As stated by Tomczak et al. (2018) this is acting as one of the major strategic marketing
tool, through which sustainable growth of business can be promoted. As Starbucks’ is facing
massive challenges due to intense competition in the market, it is recommended for them to
incorporate strong business strategy in order to enter in Australia.

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In-depth market research is the initial step of entering into a new market. This serves the
firms with the capability to explore the strategies of competitions and design business plan
accordingly in order to stay aside from the competitors. According to the case study, the
existence of coffee house chains like Dunkin’ Donuts, Krispy Kreme, 7-Eleven is increasing the
toughness of Australian retail market. Thus, it is suggested for Starbucks’ to explore the factors
such as pricing strategy and quality of products and design their business strategy accordingly
(David et al. 2017).
Based on the case study, it is evident that, the local coffee makers like Coffee Club and
Wild Bean are providing services to the customers, which is similar to that of Starbucks’. This is
similarity is creating restriction for Starbucks’ to drag a potential pool of customers. In order to
mitigate this issue, it is recommended for Starbucks’ to make some of the unique products. This
is the way, through which they can be able to create positive perception among the customers.
Value Proposition is one of the major factors, through which a striking experience among the
customers can be created. Foxall (2014) observed that to strengthen the value of business, it is
recommended for Starbucks’ to serve high quality of site roasted coffee. A soothing environment
inside the coffee shop should be created for the sake of creating a charming experience among
the customers.
Freshly roasted coffee is to be served in order to ensure the quality of products. Excessive
price of Starbucks’ products is a major issue, which creates a reluctant attitude among the
customers to visit the coffee shop. As coffee is one of major part of lifestyle among Australian
people, they always seek for pocket friendly price to have coffee. Thus, it is suggested for
Starbucks’ to set competitive price of their products (West et al. 2015). This is the way, through
which they can offer products among the customers, which is the key of dragging the attention of

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a potential base of customers. Offering third place experience plays a major role in dragging the
attention of customers. In the tough retail market of Australia, Starbucks’ should place their
shops at convenient location, where people can spent some quality time. In addition to that, the
stores must be designed in such a manner, which can help in making the customers to stay
longer. Through this way, Starbucks’ can be able to stay aide from the hardcore competition and
thereby strengthen their position in Australian retail market.

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Reference list:
Chernev, A., 2018. Strategic marketing management. Cerebellum Press.
David, M.E., David, F.R. and David, F.R., 2017. The quantitative strategic planning matrix: a
new marketing tool. Journal of Strategic Marketing, 25(4), pp.342-352.
Foxall, G., 2014. Strategic Marketing Management (RLE Marketing). Routledge.
Payne, A. and Frow, P., 2014. Developing superior value propositions: a strategic marketing
imperative. Journal of Service Management, 25(2), pp.213-227.
Proctor, T., 2014. Strategic marketing: an introduction. Routledge.
Spanjol, J., Tam, L., Qualls, W.J. and Bohlmann, J.D., 2015. Enacting Change in Strategic
Marketing Decisions: The Role of Regulatory Focus in Teams. In Marketing in Transition:
Scarcity, Globalism, & Sustainability, 8(2), 37-37.
Tomczak, T., Reinecke, S. and Kuss, A., 2018. Marketing Implementation and Management
Control. In Strategic Marketing, 9(5), 223-244.
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage.
Oxford University Press, USA.