Starbucks V. Mcdonald's

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Date Submitted: 09/16/2012 08:42 AM

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Assignment 3: Starbucks v. McDonald’s

1. Identify and briefly discuss the Key Success Factors in the specialty coffee industry. (30%)

* Convenience - In today’s fast-paced world, people simply do not have the time to linger about anywhere. Even for Starbucks 80% of their orders are consumed outside the store. Now, it is essential to have a convenient model for these customers. Drive-through windows and efficient operations are essential.

* Brand Loyalty- Schultz would argue that the industry today is less about coffee than it is about a consistent coffee experience. The experience includes customer service and a great ambiance, not necessarily the quality of the coffee the customer is getting. Loyalty goes a long way with coffee.

* Price/Quality- Even though quality isn’t the number one key success factor, the relationship between quality and price are important in this industry. McDonald’s will not be successful if their lower quality product is sold at similar prices to Starbucks. Customers expect to get what they pay for. Quality isn’t just quality of the drink, it’s the quality of the whole experience.

* Product innovation/differentiation- Customers today want options, they value individualism and being able to customize products to their unique tastes. McDonald’s proves that this is a key success factor because they have expanded the customer’s options by giving them three flavor options instead of one simple drip coffee that had before.

* Atmosphere- Even though people are on the go a lot, the atmosphere/ambiance of a coffee shop has proven to still be important. Critics of Starbucks would say that there are experiencing recent downfalls but straying away from their romantic, theatric environment to more of a fast-food paced environment. McDonald’s has created a more comfortable environment as well. So even though the majority of customers are on the go, when the minority of them is in the store, they want the mood to be set just...