Question

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The Starbucks Corporation is serving up Internet connectivity, along with its coffee to its customers in all 3,000 of its North American outlets. This connectivity comes in the form of high-speed wireless LAN access. Prior to the implementation of this strategy, Starbucks conducted 80% of its business in the morning hours. By introducing access to this technology, Starbucks intends to drive more customer traffic into the Starbucks coffee shops during off-peak breakfast hours, and enhance their brand image. This service will be aggressively rolled out over the next two to three years, with the first installations to be completed this spring in the Pacific Northwest. The implementation of this strategy was driven by customers, who have pushed the company to offer Internet access. Starbucks followed through on the demands of their customers, and conducted studies to determine the most effective technology services to offer their customers. Starbucks chose to offer the high-speed wireless LAN access. Starbucks executives felt that this choice of technology would give the firm a sustainable competitive advantage, with higher-speed connectivity than the typical current offering, or likely to be provided in the near future by cellular phone carriers. This service is expected to be particularly attractive to "on the road" business people, who are looking for quicker Internet access than that provided from their 28.8K connection, typically offered in their hotel rooms. The high-speed access service will sell for fees ranging from $2.50 for 15 minutes of connectivity, to $59.95 per month for unlimited access.

TALKING IT OVER AND THINKING IT THROUGH!

Who is the primary target market for Starbucks' new high-speed LAN access, and what is the overall goal for implementing this strategy?

Which of the four types of market opportunities (growth strategies) represents Starbucks' new strategy discussed in this article? Why?

How does Starbucks' demonstrate a "marketing concept" orientation, as opposed to one that is strictly internally focused through its decision to implement this strategy?

How might the introduction of the high-speed wireless LAN provide a competitive advantage for Starbucks? In your opinion, is this competitive advantage likely to be sustainable in the long term?

THINKING ABOUT THE FUTURE! Starbucks may be looked upon as somewhat of a "pioneer" in implementing this wireless LAN connectivity in its North American cafes, and receive its just accolades for finally "stepping up to the 21st century." However, this concept is by no means new. Starbucks is actually quite a bit behind the times, when compared to the services offered in cyber-cafes throughout Europe for a few years now. It is the continental business travelers, accustomed to the European ease of public Internet access, who are likely the ones who "pressured" Starbucks to offer some kind of Internet connectivity in its shops, to meet a standard of service they have grown to expect. Starbucks must be careful not to "rest on the laurels" of their newly found competitive advantage. Other cafes and coffee shops, as well as copy centers and office supply stores can just as easily implement this wireless Internet connectivity. Many already offer similar Internet access capabilities for their clients. In addition, the product life cycle for high-tech services is extremely short. New technology platforms and standards for high-speed Internet connectivity may likely be introduced before Starbucks has even finished the two to three year rollout out of its service offering. SOURCES: "Starbucks takes Wireless Leap ", Computerworld, January 8, 2001.

Answer 1

Answer-1-Geographically target market for Starbucks' new high speed LAN access is customers in North American market. Its primary target market is "on the go" business people or business travelers who want high speed internet access because their hotel does not provide that fast internet facility and internet providers provide it very expensive in market. Starbucks wants to act as not just a coffee shop but as a on the go office where business people can keep their laptops and enable them to work while having their favourite coffee.

Overall goal of implementing this strategy is attract more customers to their coffee shops during their off-peak hours and also want to improve their brand image.

Answer-2- Starbucks's new strategy represents the "expansion strategy." Company has used this strategy to increase its sale during off-peak hours. Under its expansion strategy Starbucks has introduce the new feature to its coffee experience by providing the high speed internet to its customers.Starbuck wants to create product differentiation by providing this high speed data and believe that this strategy will provide competitive advantage.  

Answer-3-Starbucks demonstrate a "marketing concept orientation" which means providing the products in the market as per the customers' desire.By implementing this strategy which is based on the customers' desire or need, Starbucks has demonstrate a "Marketing Concept orientation" Because these are the business traveler or customers who have demanded or forced the Starbucks to provide the high speed Internet access. and on their customers demand Starbucks has conducted the research to find out the best technology services to provide to their customers.  

Answer-4-The introduction of high speed wireless LAN might provide a competitive advantage for the Starbucks because as we know providing internet to the customers is not at all a new concept but other coffee shops, book shops or Restaurants who are providing this service are not providing the High speed data to their customers.So, as per the Starbucks plan ,they are trying to attract the "on the go" business people who need the high speed data to do their business work. So, there is no doubt this service will provide a competitive advantage for Starbucks.

But in my opinion, This competitive advantage is not likely to be sustainable in the long term because life cycle of this service (high speed internet connectivity) is very short. As we know technologies are upgrading very fast and in 2-3 years this technology will not useless for the customers.So, This competitive advantage is not likely to be sustainable in long term.