哲学文章,孔中窥得真理之貌,在和平年代简谱
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From the table, we can see having the convenient, high visibility and high traffic location is more important for both companies. Starbucks is affordable luxury in China, approximately same prices as New York, despite being having 1/6th of the GDP per capita. Luckin is trying to downgrade the luxury product by offering a similar experience with lower price.
3.2 Strategic planning comparison
As Luckin’s CEO said, they don’t have the time line for profit, what they care about now is the number of users. In another way, their strategy currently is to increase the market share, but the target customer is not overlap too much with Starbucks. Luckin coffee's target customers are not the coffee lovers and people who really understand coffee. Their main customers are those white-collar workers and new consumers who can start after solving “price and convenience" issues. These customers don't know much about coffee, and they are not able to taste the subtle differences between different baking beans and degrees. Luckin is focusing a lot on digital and opening many stores for pickup, relax and delivery. Their strategy is to use technology plus amount of stores to increase convenience to attract customers, and to pull their customers to their locations so that they can create the large potential undeveloped market, that’s why Luckin falls in midway between cost leadership and differentiation in mass market.
Starbucks is not only selling a lot of coffee beverage, but it is also selling an experience, a “third space” in your life so you can sit there to relax and chat with your friends, colleague. Starbuck have built the customer loyalty gradually for those high value consumers. The deal with Nestle will dramatically accelerate the new market development. The program for mobile ordering and delivery in China with Alibaba will definitely help them to against with Luckin’s new retail mode. With these activities, we can see Starbucks developed a long-term vision to localize their products to keep their position as the premium coffee brand in China.
3.3 Elements of the Product
Luckin Coffee is startup company with internet DNS. The gowth speed is really extraordinary as it took Starbucks about 12 years to open such many stores. But when we look at the elements of both brands, they are focusing on different areas and customers. All the features of Luckin product are about to gain more cusomters so they can have more market share. When we look at the elements of Starbucks product, they provide the features which make the consumers feel confortable and high value experience.
Elements of products
3.4 Conclusion
The average coffee consumption in China is only 5 cups per person and per year (20 in first-tier cities like Beijing, Shanghai, and Guangzhou), compared to 300 in the US and 360 in Japan. Since immensely profitable and with so much room for growth, both companies focus on their specific segment in the huge market by developing the individual strategic with less overlap products. Luckin Coffee targets to gain more customers by using the new retail mode while Starbucks concentrates on the high-end customers and enhance the customer loyalty to secure its market leader position. Luckin currently is selling the coffee products by using the internet mind, and Starbucks is not only selling the coffee itself, but also integrating the products and services into people’s daily life.
4. Stages of Product Life Cycle for Starbucks and Luckin Coffee Shop
Starbucks was founded in Seattle in 1971; Over the past 47 years, Starbucks has become the largest coffee chain in the world, Starbucks selling more than 30 types of coffee beans, hot and cold drinks, desserts and cups. More than 21300 stores have been established in North America, South America, Europe, the Middle East, and the Pacific area, Starbucks is the most famous coffee shop in the world.
In the past, Starbucks has already passed the development and Introduction period. In the early period of entering the market, people had less knowledge about Starbucks coffee even coffee, and people would not choose coffee as a drink, therefore there was the slower sales of coffee. The strategy adopted by Starbucks is word- of – mouth marketing and experience marketing, delivering the value of coffee to customers, and setting up the right price, place, promotion, product which is their smooth investment period.
Now, Starbucks is in a period of growth, their profits have changed from negative to positive. For product, the has personalized service (writing costumer names on the cup), and the correct values are recognized by more consumers, leading to profit growth. Starbucks pursues the quality of their product, constantly develops new tastes to cater customers from different countries, chooses a business area or shopping center area for their shop, designs the special stores in different countries or regions, they also have promotion in the holiday, such as 50% off second coffee, and the price is also in line with the income.
In the complicated Chinese market, Starbucks have also won a place; it is very remarkable that many Chinese customers give up the traditional tea and choose Starbucks coffee. Qinshi.Chen and Feifei. Zhang think “In the near future, Starbucks will enter maturity, and the product penetration rate at maturity is close to the maximum. The brand's product strategy during this period is to extend maturity and maintain relatively stable sales and market share.” Therefore, Starbucks should make customers buy more frequently and try to guide the market.
Starbucks is at the maturity stage of the Product Life Cycle since it is an already established company that considers increasing it is market share while Luckin is at the growth stage of the Product Life Cycle since it is instead focusing much of it is efforts towards introducing it is products. The activities in the different stages of a product’s life cycle are presented below.
5. Conclusion whether Luckin is competitor to Starbucks
Luckin and Starbucksare not competitorfrom our point of view. The reasons are firstly their target group is different. Luckin is targeting middle-class and above customers, compared Starbucks is targeting high-end income customers. Secondly from external analysis, their generic strategy is different. Luckin’s strategy was starting from differentiation in niche market and being in the middle of mass market at present. Starbucks starts from differentiation in niche market and developsstraightly into mass market. Thirdly, from internal analysis, elements of products, Starbucks sells relax and leisure rather than coffee and drinks. Luckin at the moment, sells convenience. Fourthly, Luckin was founded at the end of 2017 and it is in introduction phase while Starbucks was founded in 1971 and it is insteady phase of growth.
It is clear that the Chinese coffee shop industry is in a red sea market, with competition particularly fierce, with 140,000 coffee shops in China in 2018.
The competitive structure of the coffee industry is Monopolistic Competition. There are many competitors, the entry Barriers are very low.Product Differentiation, with Many Substitutes. Type of Competition is Substitution competition. The coffee that can be substitutes because have similar features and provide the same basic function,For example, juice, milk tea, tea, etc.So the actual number of competitors is far greater than the current number, because the entry threshold is very low, basically do not need a large number of fixed assets, some new coffee shops can use the Internet in a short period of time for brutal growth.
However, according to the latest Internet Statistics, Starbucks still occupies a dominant position in the Chinese market.
By comparing Starbucks with luckin coffee, it's clear that Starbucks has an advantage in how to make a good coffee shop. Starbucks is a premier roaster, marketer and retailer of specialty coffee. Through its various value-added services, the company not just sells coffee but also creates a differentiating coffee-drinking experience to its in-store customers and meets their unstated needs. Starbucks has done better in improving customer experience and supply chain management. The biggest advantage of luckin coffee is the combination of online and offline. But Starbucks is also learning and using this model, and has made many progress. Luckin coffee also relies heavily on capital markets for cash subsidies, leaving them with no stable source of Finance and a need for continuous financing. Starbucks has no such problems at all. |
