Ansoff Matrix

Ansoff’s matrix allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new markets. By analyzing whereabouts Starbucks are at the current moment in time, we can suggest areas of improvement/consolidation. PRODUCT S Existin g Market Penetration

 Espresso Existin g

 Cappuccino  Mild, smooth and bold coffee’s

New

Product Development

 Starbucks VIA Readybrew  Starbucks card

MARKETS Market Development

 Frappuccino blended coffee New

 Frappuccino light blended coffee

Diversification

 Mugs  Tumblers  Coffee machines

 Traditional Coffee’s with ice.

Conclusion Starbucks have a good range of products targeting both existing/new customers and existing/new markets. However their development of completely new products could be an area of improvement. This is because Starbucks VIA Readybrew (their main product development) is only available in London coffee shops and therefore the amount of revenue the product will generate is restricted. Furthermore, although Starbucks has diversified, the products under this heading are still drinks based. The company could spread its risk and increase its chance of long-term success if it diversified into a completely new market.

Shops in UK

Time in business (UK)

Starbucks

733

11 years

Average number of stores opened in a year 67

Costa Coffee

1000

38 years

26

Caffe Nero

360

12 years

30

1000

Number of shops opened

500

0

10 Conclusion

20

30

40

The graph shows that Starbucks is expanding Number of years since establishment in UKat a far faster rate than either of its main competitors, Costa Coffee or Caffe Nero. This is because, as we can see from the table, Starbucks has opened an average of 67 shops per year since its establishment in the UK, 37 per year more than its closest rival.

Shops in UK

Shops in % of London shops in London

Shops in Birmingh am

% of shops in Birmingha m

Starbu cks

733

262

36%

4

0.5%

Caffe Nero

360

100

27%

6

1.7%

50

% of shops in London (Largest city in the UK)

25%

Conclusion There is a significant opportunity that Starbucks is failing to exploit. It has opened a large number of shops in London however it has only 4 shops out of 733 located in the5% 2nd largest 2.5% city in the UK, Birmingham. This equates to 0.5% of its shops of shops in for Birmingham (2nd largest in compared % with 1.7% Caffe Nero whichcity means Caffe Nero is in the UK) a stronger position to take advantage of the large population in Birmingham. However Caffe Nero has by no means established itself in Birmingham, therefore Starbucks has the opportunity of increasing market share if it takes relevant action.

City

Population

London

7.2 Million

Birmingham

992000

http://www.ukcities.co.uk/populatio ns/