Market structure is considered to be the way or nature of a market which is determined by the creativity and characteristics of those that subscribe to it. It is perceived to be influenced by pricing and non pricing factors regardless of the level of competition. Market structures involve various factors. Starbucks and Class room 48 are two unique organizations working in a similar market structure. They bargain in similar products. Be that as it may, their valuing and non evaluating approaches reciprocally contrast. The report contains both essential and optional information gathering strategies and investigation forms which are connected. The findings evaluate the same level of success for the coffee businesses except at different time intervals. The recommendation for the future study is the application of all stakeholder companies in the same market structure. This enables a reliable and realistic evaluation of the results.
Starbucks was started thirty years ago establishing only one store where it has come across much intensification since then. All this time, Starbucks has been aiming to create a place for customers to stop by the place of work and home. More so, it has been striving to provide customers with a relaxed atmosphere and a different experience.
Studies from Brain, (2013) show Starbucks as a monopolistic market structure. The reason is that it is a firm in the coffee industry which has many firms to compete with and has differentiated products. Additionally, there is a low entry to the market which offers it a privilege of non price competition. Starbucks happens to have a strong non-price strategy in branding its self. This is because the coffee cups which are green and white are designed specifically as a walking advertisement for the company.
According to Jang & Jung, (2013), Starbucks competitors are restaurants of quick service and specialty coffee shops. Few years ago, Starbucks have entered faced a stiff fight with competitors like Class room 48. All have been competing to attain a position as a coffee king. Each company has been striving to increase their menu options together with physical locations of their store. This is to ensure that they reach many customers as they draw away customers from the competition.
Compared to Class room 48, Starbucks has reported an increase in its total revenue in the last four quarters of 2016 which has been marked as 6.69%. Most of the competitors have recorded contraction in revenues of about -0.14% which was recorded in the same quarter.
2. Market Structure and competitive strategies
In Australia, the coffee is one of the most booming ventures in the country. As a result of its booming nature, it has enrolled the most astounding number of the new organization or rather business passages after some time.
2.1: Describing the competitors of the business
Starbucks development and extension has definitely changed the manner in which staple business is done in the nation of Australia. It is noticed that starbucks had figured out how to develop and extend because of its strategies on the structure of the market. For instance, it has had the option to turn out to be prominent because of its key rebate issuance. Accordingly, the market and basic supply industry in Australia has seen real contenders, for example, Class room 48. For this situation, littler players in the basic supply business have seen hardships as far as rivalry with the real players which makes the market structure progressively entangled to work in. This has been confirmed by the fall in benefits to all market players because of rivalry (Elfenbein et al., 2015).This implies that no business has accepted to leave the market but rather decided to cut prices and bear with the outcomes. This is done in a bid to lure and sustain customer. This, consequently, characterized the market structure as an aggressive one with numerous of all shapes and sizes donors who yawn for the piece of the pie. Starbucks ongoing extension and development in both south and Western Australia have energized different business players into the market.
2.2: Proposals for improvement in competition with the business
Starbucks has ruled the market extra time against its real rivals like Class room 48. It has been broke down that it constantly controlled the estimating power which set it in charge of the Australian market concerning basic need sells. As of right now, the element had made more stores that were intended to serve clients all the more effectively and determinedly with the best valuing arrangement. Subsequently, the organization won itself more customers to the detriment of its rivals, for example. Thirty premises indicate were estimated be the range by which starbucks would lead its rivals in the whole market that was cost aggressive. To be increasingly important, the organization further clarified that the returns coming about because of the additional sells would be directed into a back system for the organization to use as a cut-evaluating technique against its rivals, for example, Class room 48. For this situation, subsequently, different organizations would battle with operational expenses yet starbucks would be only taking advantage of its strengthening monetary fund’s (Cubbin, 2013). This inevitably puts it at the highest point of the market. Research specialists note that there was at one time a negative observation as to Class room 48's general store and its accomplishments. This was trailed by an examination clarifying how the costs were going down because of the value war with its significant rivals like starbucks. Numerous guides appear to comprehend that Class room 48 would happier quit playing the value war yet rather set out on quality and administration for every single thing they effectively auction. In such a market structure with high challenge, it is very unavoidable to confront a stale development. This isn't just experienced by Class room 48's coffee store yet in addition different players, for example, starbucks. Each basic supply shop or general store has actualized vital methods for beating the Hazard's engaged with the structure of the market.
Class room 48 has made a move to sell its basic need items on a vibe decent note while sitting tight for the financial limits of the family to recuperate. In a persistent examination of Class room 48's valuing power, the Australian parliament raised worry about why the top organizations were commanding the market by deciding the costs that clients needed to however at. This implied the littler organizations needed to pursue the costs set in spite of the mind-boggling expenses of activity. The suggestion was that Class room 48 and other significant players delighted in the market benefits while the littler basic supply coffee stores endured. In any case, in an ongoing report did by the Australian Council for Small Business, the issue has been tended to. Starbucks had begun before on enlisted a nine percent showcase esteem because of its estimating. Truth be told, it had been evaluated to move towards a fifteen percent record mark as it attempted to extend its activities all through the South and Western Australia. Be that as it may, things a very extraordinary now as the duopoly intensity of valuing appears to lapse or get over. As Class room 48 and starbucks attempt to intensely keep running on a premise of value being offered rather than the cost, yet with starbucks endeavoring to reestablish the greater part of its real store the nation over with the point of pitching crisp sustenance’s to the overall population, the whole demonstration could appear like a triopoly.
3. Growth Strategies
As a monopolistic structure, starbucks has introduced some barriers in its market to reduce its competition. For example, there is a requirement of strong brand recognition for any company entering the market. More so, there is a requirement for a company to have a large partnership with large international companies which serve as a potential entry to the market for new competitors. A company needs to have economies of scale and have a better purchasing advantage. A company needs to have a high investment in all aspects which also acts as a potential barrier to entry in the market (Brain, 2013).
3.1: Contribution by two companies for development and expansion
The recent record of Starbucks is that it made revenue of $19.2 billion. Studies show that Starbucks has operated in China for the last ten years with a booming business. It opened one branch which was the first one in Taiwan in the year 1998. For the last three years, Starbucks has recorded a 2.5 % GDP increase (Table, 2014).
3.2: Proposals for the growth of the business
Starbucks has taken an initiative of increasing employment to over 100,000 workers who have the low-income background. This employment has assisted workers between the age of 16 and 24 years to locate full time and part time employment. Together with this, the company provides internships and also training programs for the youths.
YearTotal number of stores globally
Starbucks sales breakdown
Single served coffee and packaged coffee5%
Coffee equipment plus merchandise3%
4: Pricing and non pricing Strategies
The report presents concepts regarding pricing between two identified companies, that is to say, starbucks and Class room 48. This is done in a bid to win over the Australian market structure. The concepts explore the pricing competition between the two companies and how they have struggled to stay on top of each other in the market. The study has been undertaken by collecting data. However, the methods used to collect the data in this context are through tow mediums which include primary and secondary data collection. These are exploited as below;
4.1: Pricing strategies for Starbucks and Classroom 48
Using the primary data approach involves evaluating concepts using a much more quantitative method. For example, exploiting this research report is done by evaluating concepts using a case study format. The case study involves an assessment of starbucks and Class room 48 coffee entities in Australia.
Both companies apply a pricing strategy coupled with other methods of market sustenance such as price skimming and product-line pricing among others. Considering starbucks and Class room 48 as the case study, their price related concepts seem to vary yet sometimes repetitively applied to challenge their opponents. In this case, an analytical overview of how both companies price and non-price is undertaken. Ascertaining starbucks and Class room 48 coffee entities requires a consideration of factors such as the advertising medium, operational methods and working time among others. These results are derived from an evaluation of both companies’ marketing strategies and the creative means in which they try to beat their counterparts in the coffee business. The data collected is secondary data and it involves ascertaining alternative methods of market capture other than pricing for the two companies competing in the same market
4.2: Proposals for pricing Strategies
Starbucks and Class room 48 are companies that are well profiled basing on the level of popularity as well as their indulgence in the most lucrative sector of the coffee business in Australia. Compiling information regarding the state of competition in Australia was carried out using a secondary data collection. In this case, the information collected was majorly from peer-reviewed sources. These resources were critically identified and evaluated thus extracting the most relevant and required data which has aided in the completion of this report. The data collection methods ascertain the structure of the market in coffee supermarket business in Australia which is deemed to be competitive. In addition, the major retailer's strategies used by both entities to grow their business is also identified
4.3: Difference between non price strategies of two companies
The quantitative approach to the data collection for this research report indicates that the competition between the two companies or rather business entities is tight. It is denoted that starbucks and Class room 48 are both instrumental players in the market. That is to say, they both lead and determine the market prices interchangeably (Campbell et al., 2015). However, this happens at different points in time especially when one of the companies introduces a new concept to the market. Considering the non-pricing strategy as used by all companies, they both fight to overtake in the market by introducing new products and ideas as it is observed in the case of starbucks.
4.4: Proposal for non price strategies
It is easy to think that starbucks holds a bigger advantage over Class room 48 in the history of the coffee business in Australia. However, it may be wrong. This is due to the fact that Class room 48 has taken on other competitors in both pricing and non-pricing activities. These other companies may include Woolworth which also trades in groceries and other related items. In this case, there are points in time where Class room 48 claims the top position better than starbucks, thus commanding the market prices and enjoying the returns. Considering the findings from the research conduct, it is noted that the companies in the competition are many. The companies with the best product and service potentially determine the price for the rest of the market players. However, it is not a guarantee that these top companies will enjoy the monopoly. This is backed by the fact that the Australian parliament holds the capacity to interfere in unhealthy competition.
To close, market structure is characterized as the business idea that contains the idea of the market just as its qualities, for example, evaluating, showcasing procedures, and numerous others. There are factors that establish a market structure. These are thusly recorded and quickly clarified. All together for any business to develop, they need to spread out methodologies particularly in an aggressive domain where the two organizations bargain in a similar product like on account of starbucks and Class room 48. Considering Australia and the basic supply general store business, it is viewed as a standout amongst the best and worthwhile space of business in the nation. This has been confirming by the aggressive idea of evaluating and non-estimating systems that have been connected in order to remain significant in business. The information gathering techniques in this are two. The first is the essential information gathering criteria and the second is the optional one. Be that as it may, these are assessed in subtleties. Discoveries from the investigation demonstrate that the challenge is the bottleneck. This is confirm by the between changing business sector administration for both starbucks and Class room 48.
Starbucks needs to do more innovation across its different customer stopovers. Although the company has introduced coffee pods, supermarkets retail and instant coffee, it needs to catch up with the society and introduces self-service station points.
Starbucks needs to increase the number of stores it improves store mix. It needs to have more outlets not only in the urban areas but also in the suburban areas.
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