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Business: Starbucks Vs Second Cup International

In running every business, there are some essential factors to be considered. The owners of the business have to do enough market research, do enough promotions to let people know of the business existence, ands do competitor analysis among other things. Promoting any business is the most crucial off all aspect after the business has been set up (Lovelock & Wirtz, 2012). It involves; advertisements, bonuses, discounts, sales promotion among other things. We will start by defining promotion. Promotion can be defined as development or continuous growth of something (Kotler, 2005). In relation to business and marketing; it can be defined as getting people to know ones products through the acts of discounting, advertisements and publicity (Rosenblum et al, 2011). In this case study, I will discuss the management strategies of Starbucks as well as the marketing and the promotion practices it is undertaking to sell its services.

The Starbucks is one of the greatest coffee houses in the world and has adopted many management strategies for it to retain this position. As a result, I feel that it would be better to compare it with another coffee house such as the Second Cup coffee house so that we see whether its management strategies are really working towards its goals of remaining at the top or not. The comparison is also necessary so as we can understand whether the Starbucks can adopt any other strategies ,more so in terms of services promotion so as to remain at the helm of the hospitality industry. The Starbucks is based in the United States of America while the Second Cup is based in Canada. These are two coffee houses that were started at almost the same time but have found themselves enjoying different levels in the service industry simply because of their management’s strategies (Cross, 2012).

There are also different analysis strategies that help in predicting or dictating the future of a certain business (Chisnall, 2005).  The Starbucks was set up in March 30th in 1971 while second cup international was setup four years later in 1975.  These two companies started at almost the same time, but different managements have had different managerial and operation strategies. Especially if, we were to look at their returns in terms of revenue and the prestigious positions they enjoy in the service industry, it is evident that there is a huge gap between them.  Starbucks is way much better off than the second cup international (Holmes, 2008). This can only spell two things: either the management took different levels promotion measures, or the second cup used wrong or inaccurate analysis tools. It can also show that Second Cup used ineffective SWOT tools of operations, that are supposed to help an organization to realize its strengths, weaknesses, opportunities and the threats encountered in running of the business. Strengths and the opportunities of a business are supposed to help it realize what the business is doing right and dedicate more effort towards these aspects, while weaknesses and threats help it realize what it is yet to do right so that it can adopt better strategies in addressing the revealed shortcomings. The most effective way of achieving this is using sound managerial and marketing tools. These marketing tools are market research, competitor analysis, products’ life cycle and the four P’s of marketing (Brotherton, 2003). The four P’s of marketing are the product, price, place, and promotion.  The four Ps also belong to another sub branch of business analysis tools referred to as marketing mix (Kotler & Armstrong, 2010). These are the business tools used in different brands used defining any business.

On revisiting the Starbucks and the second cup international, the second cup has had a history of changing hands in ownership while the Starbucks has been run by almost the same family ever since its foundation (Cross, 2012). Different managements bring forth new ideas that either affects any business positively or negatively (Lee & Carter, 2012). In this case, apart from the current management in power at second cup, their predecessors seem to have cared little less on the interests of the business. This is again shown when one compares the businesses. Ever since the starbucks foundation in Seattle on March 30th 1971, this corporation has grown tremendously from just a small coffee roasting and retailing company, to a worldwide corporation with branches in more than 60 countries (Daft, 2006). It enjoyed tremendous growth in the mid 1990’s enabling it to open 19,972 stores in worldwide. The star bucks also finds pride in operating different divisions under its umbrella as it also markets books, music, films and different brands of its products (Cross 2012, P. 55).

Second Cup International has not been left behind in enjoying consistent growth either. When it was first founded in 1975 by two business minded partners, Tom Culligan and Frank O’Dea, it was just a small coffee retailing company (Holmes, 2008). Since then, a lot has changed in management bringing new ideas into play, and it is now being led by The Second Cup Limited and The Second Cup Coffee Company Incorporation. In this leadership, this company has shown upward growth enjoying branches in more than 15 countries, and more than 360 cafés in Canada.

The Second cup is enjoying growth below the Starbucks incorporation. These statistics shows that second cup predecessors who never did thorough market research, properly address their competitors, their products life cycle or even the four Ps of business. If they did, they would have considered the effects of their existence in the market. This leads me to the discussion of most important analytical tools in business, and I will start with market research.

Market research can be defined as a collection of information needed by a certain business, to know all about the market they plan to invest in, and what its customers are like (Chisnall, 2005). This helps any business in getting an upper hand over competitors in the same market (Chaffey et al, 2009). Is there availability of enough clients to sustain the business? What are their strong locations for the intended business? These are questions that are supposed to be answered in any well carried out market research (Kotler, 2005). They provide a better frame work of the market size, its needs, and the competitors involved (Kotler & Armstrong, 2010). I believe that if these factors were considered, we would not have seen different management groups taking over The Second Cup: probably we would be talking of a different second cup.

This leads me to the next important factor of strategic management, which is competitor analysis (Chaffey et al, 2009). This can be defined as a process of defining the capabilities, and weaknesses of the competition in business. Competitor analysis is supposed to let the researcher think beforehand the defense mechanisms to use in case of an impending threat (Rosenblum et al, 2011). It is also a framework to help the researcher win the consumers of the same products. In other words; discover the opportunities and threats involved if action was to be taken (Lovelock & wirtz, 2011). I also think that predecessor managers of the second cup overlooked the fact that they would be entering in a competitive market of the service industry. The starbucks even had the opportunity of opening branches right at their neighborhoods’ (Daft, 2006). This is because they never took their chances seriously, and the Starbucks got to popularize themselves even in Canada, right where they are based.  This just proves that shoddy or insufficient competitor analysis was done. Other than market research and competitor analysis, there is also the products’ life cycle as another factor that dictates a lot on strategic management.

Product lifecycle can be defined as the time involved as ascertain products goes through it succession stages. These include its production, advertisements, changes in conditions and prize until when it is sold (Bowie & Buttle, 2004). This helps any business to project or determine the time needed for certain products to run out of the shelves and the amount of stock needed per production (Bowie & Buttle, 2004). These two coffee house giants produce perishable products. Therefore, at one time or the other, this is a condition to be considered when they are doing productions or even marketing. These factors tend to dictate a lot on running a business on a daily basis. This leads me to my last point which is the four Ps of marketing.

The four Ps in other words are the parts of business tool used in defining brands offered by any business (Lee & Carter, 2012). They include; products, price, place and promotion. These four aspects go hand in hand in business. The quality and the need of the product in a certain consumer region determine its prize (Brotherton, 2003). The prize then determines the place to set up a business and the means of promotion to be applied. Nowadays, any business can be promoted online since the internet has provided the cheapest and most efficient means of communication across the globe (Lee & Carter, 2012). The starbucks and the second cup have not been left behind either in terms of online marketing.

Each of the above factors has its advantages and disadvantages at the same time. For example, market research helps one to get to know his/ her intended consumer well, but it also sometimes discourages young investors (Rosenblum et al, 2011). It also requires a lot of capital that can be put into better use in setting up the business.

Competitor analysis helps in determining a competitor’s strengths and weakness. This helps one to capitalize on a competitor’s threats and weakness adding as an advantage (Chisnall, 2005). This analysis is also costly and requires capital that would probably serve better invested. It also takes a lot of ample time that would have been used to do something more important. If a young entrepreneur found almost nil weakness in their competitors, they are cowed to invest in the same business as they feel they would never make it to their levels (Kotler, 2005).

Product lifecycle has many advantages; it helps an entrepreneur predict on when to expect returns. It also helps an entrepreneur manage his production and dispatch routines (Chaffey et al, 2009). It also enables an entrepreneur understand his consumers’ season. However, it also has a common disadvantage with the above factors. It is time consuming; it requires capital and undivided attention.

The four Ps or the marketing mix has its advantage and disadvantages. In advantages, it makes people get to know of the business, and what is offered (Lovelock & Writz, 2011). It makes people understand the business deeper and generate interest among them in wanting to purchase the products. It also helps in developing the business in question even to wider regions. However, it also has its disadvantages; it requires a lot of compromise especially where discounts and bonuses are involved (Kotler & Armstron, 2005). It also requires more capital in all the marketing aspects. It is also consumes a lot of time, and it sometimes gets discouraging if people become uninterested

Companies like Starbucks and second cup use these aspects no matter how expensive, or tiring they are, because they need to continue making profit (daft, 2006). If a business is not making any profit when the cost of production is equated to the selling price, then it is doomed to fail. All means necessary are accounted for in keeping the business afloat. This includes, giving bonuses, intense marketing and advertisements, discounts among other practices (Bowie & Buttle, 2004). This ensures that a business remains relevant to its course. This just shows how much they are committed to remain relevant in their respective industries regardless of the input.

The best example nowadays is how many companies are using the internet in marketing themselves. In the case of Starbucks and second cup, both companies have Facebook and Twitter accounts on social media in trying to market themselves. They are also using these sites to communicate with their clients on the products best for them and how they should make them.

In conclusion, promotion is a major aspect in promoting any business. It is essential in any business for a number of reasons. First, it ensures that the business remains relevant to consumers on the products or services offered (Lee &Carter, 2012). It also ensures that a business remains committed to its sets of objectives. This ensures that even aspiring entrepreneurs’ are aware on the nature and progress of the business to venture into, and what to expect once in it. Therefore, this is one of the most essential management strategies although it falls under the marketing section.

 

 

 

 

 

 

 

References

Bowie, D and Buttle, F (2004) Hospitality Marketing. London: Elsevier. (available  as an ebook)

Brotherton, B (Ed) (2003) The International Hospitality Industry. Oxford: Butterworth Heinemann.

Chaffey, D., Ellis-Chadwick, F., Mayer, R. & Johnston, K. (2009) Internet marketing. 4th ed. England: Pearson

Chisnall, P. (2005) Marketing Research. 7th ed. London: McGraw Hill.

CROSS, F. B., MILLER, R. L., CROSS, F. B., & CROSS, F. B. (2012). The legal environment of business: text and cases : ethical, regulatory, global, and corporate issues. Mason, OH, South-Western Cengage Learning.

DAFT, R. L. (2006). Organization theory and design. Mason, OH, Thompson-South Western.

HOLMES, G.K., DAVIDSON, E. (2008). Who’s who in Canadian business. [Toronto?], Who’s Who Publications.

Kotler, P and  Armstrong G. (2010)  Principles of Marketing, 13th Ed.

Kotler, P. (2005) Principles of Marketing. 4th ed. Harlow: Financial Times Prentice Hall.

Lee, K. and Carter, S. (2012) Global Marketing Management, 3rd Ed. Oxford: Oxford University Press.

Lovelock, C. &Wirtz, J. (2011) Services Marketing. 7th ed. Upper Saddle River:: Prentice Hall

Rosenblum-Elliott, R., Percy, L. and Pervan, S. (2011) Strategic Brand Management. 2nd ed. Oxford: Oxford University Press.

Swarbrooke, J. and Horner, S. (2007) Consumer Behaviour in      Tourism. Oxford: Butterworth Heinemann

Upper Saddle River: Pearson Prentice Hall.


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