Sunday, July 13, 2008

Can Starbucks Outperform Rivals Through Market Research?

Student’s Question: Do you think Starbucks would have out-competed other firms with a stronger market research into "what people want" in terms of beverage?


Consumer’s market is dynamic rather than static. People are constantly looking out for something new especially after experiencing various types of coffee drinks. Then they will make comparisons & coming out with something ‘ideal’ e.g. the tastes that they want like what is the level of bitterness, strength of the aroma etc. Firms that produce the ‘ideal’ coffee will capture the larger market share

By engaging the service of consumer research house like AC Nielsen to unseal customers’ insight, Starbucks can outperform their rivals.


If Starbucks can do so, why not their rivals? McDonalds, Coffee Bean, Dunkin’ Donuts etc are large enough that they can too spend large proportion of their retained profits onto reinvestment. In economics normally the term reinvestment we meant firms spending money to enrich its business e.g. improve its product, improve customer service, R&D to discover more cost efficient method of production etc

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