Understanding the BCG Matrix of Starbucks
$12 for a cup of coffee! Yes, you read it right. That’s the price that you need to pay for 1 cup of Starbucks coffee.
But have you ever wondered what makes a $12 cup of coffee better than a $2 cup of coffee ?
Does Starbucks add some kind of magic potion in it or do they use rare quality coffee beans to make their coffee ?
What makes your business worth the price?
One word – EXPERIENCE
You can compete on price or quality, but it’s hard to compete on both.
Starbucks mastered both, they offered a premium quality product with far more superior service to their customers that they never expected.
It was the choice that the customers had to make, either choose Starbucks and pay more or go to someone else who’s cheaper while risking a lesser quality product or service.
Let’s see make Starbucks a success and understand the BCG Matrix of Starbucks
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For the first timers, let’s first check out what is BCG Matrix and it’s 4 quadrants.
BCG Matrix (also known as Growth share matrix) – The Boston Consulting group’s product portfolio matrix (BCG matrix) which was designed to help companies with their long-term strategic planning and consider growth opportunities by reviewing their portfolio of products and decide where to invest, to discontinue or develop products.
There are 4 quadrants in which the matrix is divided into.
DOGS: These are products with low growth or market share.
CASH COWS: These are low growth market products with high market share.
QUESTION MARKS or PROBLEM CHILD: High growth market products with low market share.
STARS: Products in high growth markets with high market share.
BCG MATRIX OF STARBUCKS
Starbucks offers Tumblers, Mugs, T-shirts, etc. to its customers, with most of them being limited edition, seasonal, and often sell out within days. Due to the brand’s exclusive and premium positioning, customers take pride in owning Starbuck’s merchandise.
There’s a crazy demand for exclusive designs that are especially hard to get, and some e-commerce sites exist purely for reselling and shipping these rare items to eager buyers overseas.
There is still a long way to go for Starbucks in terms of creating a strong footprint in clothing and general merchandise industry. For this reason, the best place for Starbuck’s merchandise is in question mark quadrant.
Contributing more than 25% to the company’s total revenue, Starbuck’s food business vertical has surely been the STAR for the company. With plans to double its food business by 2021, the company is going full throttle and experimenting with its food offerings and options. Its hot breakfast sandwiches complemented the brand’s signature coffee offerings so well.
Embracing the high customer demand for protein and healthy snacks, the company launched Sous Vide Egg Bites, which saw more than 60% jump since its launch in January 2017 .
The company has been able to create its own niche in the food industry catering to its own specific customer group.
Without a doubt the CASH COW for Starbuck’s is its coffee business. The bread winner for the company since its inception, Coffee business has grown leaps and bounds all these years, helping the company post strong financial numbers.
Despite facing competition from the likes of Barista, Cafe coffee day, Costa Coffee, etc. the company has been able to create its own set of loyal customers.
It’s overall coffee drinking experience that distinguishes the company from the rest. Since its inception in 1971, Starbucks has been instrumental in changing the way we consume and interact with coffee.
QUESTION MARK :
Starbuck’s packaged goods business is the most recent business vertical of the company. The company signed a deal with Nestle to market Starbucks Consumer Packaged Goods and Foodservice products globally, outside of the company’s coffee shops.
Starbucks Consumer Packaged Goods is operating in a low growth market and currently holds a low market share. The uncertainty that this business vertical holds in the future is the reason it is considered as a Question Mark for the company.
This concludes the BCG Matrix of Starbucks
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