Product Market Growth Strategy - Starbucks

Product-Market Growth Strategies

The company that we chose is Starbucks

Explain why growth is important to a company

It is important for a company to grow in order to achieve long-term sustainability (e.g. profits). The ability for a company to grow and thus generate profits and capture customers is often the determinant factor if an organization will stay in business or not. As economies grow (which we know they do), markets grow and if a company wasn’t to grow it would shrink in relationship to the other aspects. Further, if a company doesn’t grow and just ‘stands still’ it cannot defend its market leadership and thus its competitors would easily increase their market share and potentially push the other company out of business. Also as a business gets bigger it will most likely be less affected by economical and environmental threats. Also looking from the perspective of shareholders – they’re expecting a return (increase) on their investments each year. This implies that the company needs to generate more profits each year – thus growth is important.

Give an example (from the company that you chose) of each of the four quadrants of the Product-Market grid. There could be multiple examples for each quadrant. If you have an empty quadrant, find an example from a different company.

Starbucks:

Market Penetration: Starbucks sells more coffee to customers with reloadable Starbucks cards. Additionally its loyalty program encourages customers to purchase more in order to reach different levels of ‘membership’. For instance if you collect 30 stars within a year it puts you reach the Gold Card member level and you enjoy certain rewards such as your own personalized Gold Card or a free drink every 15 Stars collected.

Market Development: Starbucks expands its market outside of the U.S. e.g. in Brazil and Chile, Asia and Europe.

Product Development: Starbucks developed ready-to-drink coffee beverages Double Shot and bottled Frappuccino.

Diversification:...