1.Write a literature review (an overview) of the state of competition in the industry in recent times, and developments that have and might occur in it
2.Write about how the companies are trying to grow their business. Recommend growth strategies.
3.Discuss the pricing and non-pricing strategies used by the businesses (based on your observations). You may support these observations by citing published works that speak about similar used elsewhere (news articles, books, reports, journal papers). Recommend strategies.
Overview of the Food and Beverage Industry in Sydney
The current report is based on analysis of the Food and beverage industry in Sydney Australia in which the rivals are Starbucks and Max Brenner. Both the companies are well settled in the market and are arch rivals of each other and they provide nearly the same range of products to their customers. Both the company have originated from America and are now Operating in different parts of the world. Starbucks is the company Established in Seattle Washington whereas Max Brenner is based in New York City within the USA. The companies are giants in the market and render in different parts of the firm which makes both the company globally present and international operating companies. Starbucks is considered to be a brand for being a coffee shop store. The beverages brand all around the world also gets to know the exciting aspects of Max Brenner coffee. However, it is a chocolate restaurant chain and Retail Company operating in different parts of the world (Huang, Rice, Galvin & Martin, 2014).
It is to be mentioned that both companies have different identities which are that Starbuck is known for its coffee another beverage product range and Max Brenner is known for its chocolate product which make them special. Both the companies and their respective brand have high goodwill in the food and beverage market. The same goes in the Australian Food and beverage industry. Both of these companies are giants in their own ways. Although it can be said that Starbucks is slightly bigger in operational and fiscal context with respect to the Max Brenner. In this report, there will be discussion over the existing rivalry between two companies in Sydney.
The current research has been conducted through the use of primary and secondary research techniques in which both primary and secondary data was collected through which data analysis was done and the findings of the current report were extracted. This helped it a better understanding of the competition within the Food and beverage industry of Australia. The report will shed the light of the different marketing aspect between these two companies to measure the nature and extent of competitiveness which is there within the organization. The current report covers the market structure and industry competitiveness which is there in the market for current situations. The marketing and the comparison between these companies will be laid out to measure which company is doing better in the market. It is to be mentioned that the report further discusses the growth and pricing strategies which has been used by the subjected companies to grow and increase the competitive advantage to the other in the market. At the end of the report, a proper conclusion will be drawn on the discussion and findings which has been gained through the current report. In this day there will be an effective report which will be created on the subject topic and which is spread efficient information between the competitive rivalry of Starbucks and Max Brenner.
Market Structure and Competition between Starbucks and Max Brenner
The state of competition within the Australian food and beverage industry is immense t companies LIKE Heavenly Chocolates, Max Brenner and Starbucks hashave been marked giants and there is another firm too which have to grow in the market competitors or are still growing at a rapid pace. Hence there are various companies in the company and their increasing numbers of customers too. It is to be mentioned that the competition within the market is growing which is the state of competition is high and companies are working to gain a competitive advantage in a very evident manner which increases the overall state of competition within the market. There are new entrants two which are entering the market at a rapid pace to gain and monetize their products.
Market structure is best defined according to the organisation or the company talked about in the r given paper. In the given research paper, two well known and established companies have been discussed they are Starbucks and Max Brenner. The proposed market research on its structure has been done upon Sydney, Australia. Most important aspects of the Market structure research are the comparison between competition and pricing. The conducted research paper and the market structure have been done with the help of the secondary data collected (Hadi, Sutiarso, Awaluddin, & Herlambang, 2018). The two companies taken in the following research are good in their fields and can be treated as the competitors in the same field. The following study is conducted on the basis of the secondary data collection and has been done for Starbucks in the case of the market share. In the Australian coffee market, the most popular coffee which is been used is Latte and the total coffee industry is around 1.43 bln USD (data of 2017). Almost 75% of the coffee in Australia is conducted instantly (Lovelock & Patterson 2015).In the country 95% of the coffee outlets are independent, meaning the restaurants don't have to be dependent upon any kind of outsourced or 3rd party, for providing the required raw materials for the coffee and other pieces of stuff. Only 5% of the outlets are dependent upon the series of the sources production. In the case of Starbucks, it had 20 outlets across the country. But due to the lack of resources and the dependency factor of the company, more than two-third outlets were shut down. The main reason for this downfall was the already established Australian coffee culture (Donnelly, Simmons, Armstrong & Fearne, 2015). The main common culture about the two competitors we have that they are on the same field of the food and beverages. Now take the second company in consideration, Max Brenner. The Max Brenner is one of the biggest chocolate manufacturing and selling company worldwide also comes under the food and beverages. According to Lee, Hallak & Sardeshmukh (2016), the revenue of the Max Brenner is discussed below with the help of the secondary research. The total revenue of the Max Brenner in the year 2107 was 312 million US dollars. The annual growth of the industry was 2.3% from the year 2013-2018. In accordance with Bragg, Roberto, Harris, Brownell & Elbel (2017), there can be several difficulties for the new entities in the Australian market, the firms like who want to get established Network, maybe challenging. It can be said that both the companies have tried best to establish and have a proper network in the Australian market but due to the already established network of the Australian Society of food and beverages, it becomes hard to established their fields (Weller, Kleer, & Piller, 2015).
Growth Strategies employed by Starbucks and Max Brenner
During the primary research and interviews taken by some of the managers in Sydney's food and beverage market its has been seen that both the companies are following on their core competencies. Starbucks core competencies are there coffees and they are still maintaining the quality of their coffee and adding more varieties and flavour to them. And similarly, like Starbucks, Max Brenner also maintaining their quality of chocolates and expanding the varieties. During the primary research, it has been also seen that both companies are adding new items to their menu in order to grow their businesses. And also one of the best core competencies of both the companies is their outstanding customer service. Both the rivals companies Starbucks and Max Brenner followed a good growth strategy according to some reporters and researchers. After the completion of primary research and the data which are collected during the research, it has been that they can also increase their growth in Sydney Australia by some growth strategies which are as follows:
- Increasing digital engagement: Both companies can increase digital engagement of the customers by providing some discount if the payment of the bill is done digitally (James, 2016). As in Sydney Australia, it has been seen that one-fourth of the people of Sydney prefers digital payment. So in order to attract the customers both the companies can provide or 10 or 20% discount in order to increase their sells and expand their business.
- Growing the numbers of stores: Both companies can also increase growth by increasing numbers of the store. According to Birkin, M Clarke & Clarke (2017), the companies can also try drive-thrus in some areas of Sydney food market. Both the companies Starbucks and Max Brenner are opening up express stores which essentially function as a walkthrough in Sydney. This strategy will help the companies in order to increase store penetration in the market. As secondary research shows that companies will see a minimum of 5% comparable growth in the market of Sydney by implementing this growth strategy.
- Lifting the coffee and chocolate experience: According to the data collected during the primary research, it has been seen that both the companies are pulling all stops in order to position itself as the most preferred coffee and chocolate shop. Both companies can lift their experience by adding different items to the menu and makes the experience more premium to the customers. Companies can change the portfolio of their new stores and can hope to address the problems of competition in the market and ubiquity by delivering customers the highest quality of chocolate and coffee with some new items and varieties (Barringer, 2015).
- Creation of new occasions for the customer: Both companies can increase their growth in the market by the creation of new occasions for the customer in the market. Breakfast and lunch hours are the fastest growing daypart for the companies. According to Chimhundu, McNeill & Hamlin (2015), both the companies can offer and launch new item which was aimed to enticing a greater number of customers to their stores. This can be done by offering new and innovative food and beverage options for customers during day hours.
Pricing strategy is one of the most significant factors which plays an important role in the operational activities of the firm and to help them grow there monetary stand and position within the market. Through secondary research, it can be said that both the companies have a good amount of goodwill within the market so they have a brand value which affects their pricing strategy in an effective manner(Davcik, & Sharma, 2015). Starbuck has been a tag of being and proving a premium product to the customers and has become a status symbol for many in the past decade. The pricing strategy which is used by the firm is called premium pricing strategies. In accordance with the current pricing strategy of the firm it prices its product premium; this means the price of the product is kept high to maintain its premium status in the market. The company does this to maintain a high quality of production and the quality of the products as well. No this has worked for the firm as the company take the product as a luxury and premium products through they are attracted towards to the products in an evident manner. Starbucks through this has used its brand to effective pricece their product premium (Cowling & Tanewski, 2018). On the other hand, Max Brenner is also a company which has earned fame and brand value in the recent days. This is because of the high-quality chocolates and beverages which it has offered to its customers. Now the company believes in maintaining the quality of the products and to render producer at an attractive price so that more amount of customer are that towards the products. In such a case, the company uses Cost Plus pricing method of pricing. In such a pricing method, the company incurs profit over the cost of the products which it has put into the production of the product (Shaw, 2016). Through this, the acts of the production are efficiently maintained over the product and there is stagnant cost available for the company for future production. In this way, the company are a good margin of profit on each unit of sells. It can be said that through the secondary data it has been found that both the company use stated methods of pricing to their financial advantage and incur a good amount of the revenue through such proper pricing method. As the Starbucks has premium pricing method the company incurs higher revenue in respect to the Max Brenner in the market (Hafez Al Kotob, Mahmoudi, Hajisami, & Wee, 2018). This means that Starbucks has premium pricing which makes the price higher than that of others but the demand of the product is Laos high because of its brand value this is the reason why the company earns better profit than Max Brenner which is also earning a good revenue through sale use the Cost plus pricing method which is suitable for its operational values.
Pricing and Non-Pricing Strategies used by Starbucks and Max Brenner
Through the use of primary method of research interviews and observation it was found that the storekeepers and managers of other company thinks that the two companies have efficiently use the pricing strategy to the benefit byut Max Brenner now has to change the following and has to shift to a better pricing strategy which will help the following to earn higher amount of profit for the future operations. Dome stated that Starbucks has been losing some customer due to its premium pricing method but still has a customer base which will help the following in its prolonged existence within Sydney’s food and beverage market (Zhou, & Gupta, 2018).
Max Brenner is recommended to change its pricing strategy although the following has worked for its. It is time that the company looks forward to earning a high amount of profit through which it can be financially stable. The company has created a brand value for itself which is why the company has a good customer base in the market. As the company produces good quality of products the customer will not disappear even though the company increase the prices. Although there can be an effect on the overall sales after the few time everything will settle and the company will grow its customer base as well as their sales in Sydney's Food and beverage market. Hence, it is very probable that the company uses a premium pricing strategy to benefits its overall financial and operational stability (Fan, Lau & Zhao, 2015).
Concluding in the light of above context it can be said that both the companies have been good in providing and creating effective marketing strategies in order to deal with the competitive nature of Australian Food and beverage industry. Both the company has coped up with increased competitive pressure and have made their place worth in Sydney's market. It has become very evident through t5he above research the market aspects of both the firm has been described and discussed in prominent which has laid out the major parameter based on which a company can operate in the food and beverage market of Australia. It is to be mentioned that through the above analysis and research it has become very prominent that both Starbucks and Max Brenner has used prominent strategies which have helped them achieve success in their operations although there some races and strategies which will have to work on in fast-changing market dynamics and increasing market pressure. The current research was important to know the competitive rivalry between two food and beverage companies which are operating the firm to see examples of operations which is to be carried out within the market in order to acquire sustainable rate of growth and achieve success within this market.
There are some recommendations which are to be made and which have been gained through the current research and they are as follows:
- Companies should use effective marketing strategy in order achieve competitive advantage over the others companies in the market. This will help in better marketing products which help the firm to grow in the market.
- A new company should use an effective pricing strategy so that they are able to operate and monetize their products inefficient way which will help them to achieve financial stability.
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