Kelly A. Smith
MBA541 – International Business and Global Strategy
April 24, 2105
Table of Contents
A customer's perception of what the value is of a product or service has a direct impact on the actual price that is charged (BCS, n.d). There is no truer visual to enact this than the "war" between Starbucks and McDonald's regarding true coffee supremacy. The goal of this paper is to briefly compare and contrast the global marketing strategy of McDonald's versus Starbucks. For both of these corporate giants, it is about putting the right product in the right place, at the right time, with the right pricing (Mind Tools, n.d). As demographics morph from one generation to the next, habits and tastes also change, leaving the nearly $32 billion coffee market open to the best strategic marketer (Woolf, 2014).
Starbucks is a mega-juggernaut in the coffee industry. With more than 16,500 stores in 49 countries, they have always placed their focus on the coffee and maintained a certain level of competitiveness in pricing with their counterparts. They do, however, take into consideration the added costs of fair-market and a larger distribution ring (VCC, n.d), which affects their pricing. To promote their products, they focus on the internet, applications and social media contests to integrate their brand with the hottest trending technology (i.e. Instagram, Facebook, etc…). Starbucks can be found on military bases around the world and have more than 1500 stores currently operating in China (Mourdoukoutas, 2013), along with multiple stores throughout all of Asia and the U. K (Buss, 2013). They have become quite adept at utilizing indigenous culture and culinary touches within the regions that they occupy (Buss, 2013).
McDonald's is the world's largest hamburger fast food retailer that has capitalized on its "fast and convenient" marketing campaign through the early 2000's (Mourdoukoutas, 2013). It has since expanded its offerings to include their own version of high quality coffee and healthy drinks in a direct attempt to compete with Starbucks. They call it the McCafé line. They have exploded across the globe, making cultural accommodations and alterations in every corner they touch. As an example, they have opened as store in India that is vegetarian-only, catering to the cultural demands of the region (Patton, 2014). McDonald's is recognized as a fast-paced, convenient way to purchase food that is ready to eat and now they are on a path to overtake the coffee market.
The varying strategies for Starbucks and McDonald's have done both organization wonders in the realm of profitability and loyal customers. They have both taken to the global market with their perception of coffee and how it should be.
Starbucks has always maintained that coffee is for enjoyment, socialization and relaxation, promoting their stores as 'get-away' locations. They have always focused on the coffee, where it was from, how it is brewed and the atmosphere in which it is consumed. McDonald's focused on fast and convenient food items, slowly incorporating quality coffee into their menu – this is a stark difference. As Starbucks builds their stores world-wide with slick interiors, comfortable seating and local music, they are tapping into the younger generations across the globe that see this as a modern lifestyle symbol (Wang, 2012). They are creating a Starbucks generation.
McDonald's, however, is slowly turning to this mentality, remodeling locations internationally to provide a more relaxed and welcoming vibe that offers free Wi-Fi - all while keeping their prices below those of Starbucks. But the cost of changing strategic courses and remodeling all the various locations (and investing in $13,000 espresso machines) has been a