article link : http://online.wsj.com/article/SB10000872396390443890304578006650462123038.html?KEYWORDS=starbucks+gives+single+serve+a+shot
Starbucks is currently in the midst of launching their newest product, the Verismo single-cup espresso based beverage machine. The Verismo has unique pods that contain coffee and milk, and when used together, can product a latte. This machine has a unique new sleek style, to better fit on top of a kitchen counter, and is also capable of making shots of expresso. This machine is going to be sold at high- end kitchen good stores such as Sur La Table, and Williams Sonoma, as well as in select Starbucks locations. It will be priced at $199 and and the larger version will be priced at $399.
Previous data has shown in the last year only 4% of coffee makers made a profit from selling espresso machines. This means starbucks is taking a large risk entering the espresso machine market. Chief Executive, Howard Schultz, stated in his most recent interview that Starbucks is making a bet with this new machine.
So, with last year espresso machine sales at a mere 4%, and the Chief Executive officer admitting that this is a big risk, why would Starbucks enter into this market? Well, I believe we can look at Chapter 12, regarding Operations and strategy in a global environment, for some answers. Starbucks has one of the most, if not THE most crucial advantage over competitors; Starbucks has brand recognition. Starbucks differentiates themselves from other coffee shops because they provide an “experience”, which sets them apart from the rest of the many places you can get a cup of coffee. But, their newest product launch had nothing to do with this in store “experience”, rather, it is about bringing Starbucks “experience” into your own home. The competitive advantage is about differentiation, cost leadership, and response. Starbucks new Verismo machine touches upon all three, with a strong emphasis on differentiation because there are currently are no other machines like it on the market. According to our book,Competing on differentiation means, “the uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts the customer’s perception of value- and in this case, the Starbucks customer values their own time, their coffe, and their loyalty to the brand itself.
I think this coffee maker will be successful? Will it be a positive thing for Starbucks?
What strategies and data do you think Starbucks is using to make sure sales of this machine are successful?
The operations managers job is to provide competitive advantage and increase productivity… Do you think the OM Manager is doing this in this instance?