Question

how can a coffee shop next to starbucks use the marketing 4 p's (place, product, promotion, price) to compete with starbucks?

Answer 1

The 4 P's of marketing are used to implement the marketing plan in the target market. Starbucks's brand image as one of the most loved coffee houses can largely be attributed to product differentiation and innovation. Starbuck's competitors include not only international brands like Dunkin Donuts and McDonald's McCafe but also small independent start-ups in the neighbourhood that are fast catching up.

These independent coffee houses can compete with Starbuck's by carefully studying Starbuck's marketing mix plan.

1. Product: Starbuck's offers different varieties of coffee by continously innovating new flavours aimed at different market segments. This strategy helps Starbuck's attract and maintain a diverse customer base around the world. Independent coffee houses must introduce new varieties of coffee by investing in research activities for coming up with innovative product ideas. Conducting customer survey is a method of knowing the tastes and preferences of different customer groups.

2. Price: Starbuck's follows premium pricing to maintain its brand image of a quality coffee house. Though, premium pricing is crucial for maintaining brand image, for competing effectively with Starbuck's, setting a lower price initially for a new product would help in gaining customer acceptance. As the customer base grows with time, the prices can be increased to match the quality of the product.

3. Promotion : Starbuck's has its presence in different parts of the world. Initially word-of-mouth marketing was used by Starbuck's for gaining popularity. Slowly it used other forms of mass communication like advertising for entering new markets. Social media is a cost effective place to promote a product and can help the product gain visibility very quickly. Competitors should be actively involved in promoting their products on social media and take advantage of the increasing popularity of it.

4. Place : Starbuck's sells its products at its own retail outlets. It also utilizes technology to the core by allowing customers to place their orders online and thus save time waiting at the coffeehouse. Competing with Starbuck's on this front is not easy due to brand loyalty enjoyed by most of its products. However, selling products at local retail outlets could help competitors gain market share though it should be backed by effective advertising for making the product known to the target market.