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Ansoff Matrix of Starbucks | Starbuck’s Ansoff Matrix

This article will cover the concept of Ansoff Matrix and talk about Ansoff Matrix of Starbucks.

Before we start let’s first understand what really Ansoff Matrix is?

Ansoff Matrix:

The Ansoff Matrix also popularly known as the Product/Market Expansion Grid, is a two-by-two framework used by management teams to evaluate growth strategies of a company.

It helps the management get an understanding of the risk involved in different growth strategies that they will be deploying.

  1. Market Penetration – The concept of increasing sales of existing products into an existing market
  2. Market Development – Focuses on selling existing products into new markets
  3. Product Development – Focuses on introducing new products to an existing market
  4. Diversification – The concept of entering a new market with altogether new products

To know more in depth about Ansoff Matrix, click on the below link

Ansoff Matrix of Starbucks:

The first matrix in the Ansoff Matrix of Starbucks is Market Penetration.

Market Penetration:

One of the least risky growth strategy in the Ansoff Matrix, Market Penetration encourages the company to increase the sales of its current products in the current market.

In order to increase the market Penetration, Starbucks can look into following things:

  1. Lowering Product Prices: Tier 2 and Tier 3 regions which contribute to low sales, Starbucks can look into decreasing the price of their products to attract more customers.
  2. Referral Programs: In addition to the existing Rewards scheme that Starbucks is already running, the company can start a referral program in which it ask its existing customers to refer new customers and get Starbucks merchandise in return.
  3. Discount Days: Starbucks can also look into running different marketing campaigns in which they can give discounts on its products on certain days to increase the sales.
  4. Happy Hours: Starbucks can also start Happy Hours concept during hours that have low business.

Market Development:

This is a pretty straight forward matrix in which the management has to take a call if they want to want to new regions or geographies.

Before moving into any new geography, Starbucks would need to do a thorough research. They would need to look at the demography of the region, their taste preferences, Local Competitors etc.

Post this analysis, the company can make a decision whether they would want to enter a new market or not.

Product Development:

Product Development strategy in the Ansoff Matrix of Starbucks is an important strategy. This strategy enables the company to decide whether or not they should expand their product mix. That is why it is also referred to as Product Expansion.

Starbucks can experiment with new flavour for their drinks or can also start a segment for healthy drinks that would cater to health conscious people.

Starbucks can all together launch a new product that they think is quick high in demand in the markets that they are operating.

Diversification:

You must have heard of McCafe by McDonalds. McCafe specializes in a variety of different types of coffee as well as smoothies, which attracts new customers that might not otherwise come to McDonalds for its burgers and fries, and gives McDonalds an edge over the competition.

That’s the Diversification that Starbucks should be looking at. If not, they should consider offering breakfasts, lunches etc and enter into the food market.

Starbucks can also diversify into providing healthy snacks which nowadays is gaining a lot of attention and popularity.

Diversification will surely help in increasing the revenue and sales of the company.

This concludes the article on the Ansoff Matrix of Starbucks.

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Categories: Ansoff matrix
Tags: Ansoff matrix of starbucksMarket development of starbucksMarket penetration of starbucks
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