The paper "Comparing McDonalds and Starbucks Businesses" is a good example of an essay on marketing. Market segmentation is a concept in economics and marketing. A market segment refers to a subset of a market that comprises firms or people who have one or more characteristics that drive them to demand similar products or services based on products’ qualities such as function and price. A true market segment is distinct from other market segments, is homogenous within the segment, responds in a similar manner to a market stimulus and can be accessed by a market intervention.
Market segments allow marketers to divide people based on these characteristics and charge them different amounts. Different firms develop different ways of segmenting their market and creating product differentiation strategies which give a firm a temporary competitive advantage. To gain a competitive advantage in the sale of coffee in Australia and the US, McDonald’ s stores decided to set up McCafe to cater to the coffee lovers segment. McCafe was different from other regular McDonald’ s stores in that they sell items such as lattes and cappuccinos in real cups and cakes are lined up in display cases, unlike the usual patisseries.
On the other hand, Starbucks ' mode of segmenting its market relied on the provision of fashionable, spacious interiors. This mode of segmentation was not able to win the market for the firm in Australia however because of the entrenched coffee culture. The target market is the people or firms to which products or services are developed. The target market for McDonald's is coffee lovers initially in Sydney, Australia. On the other hand, the target market for Starbucks is new markets with no café culture like the United States and other countries such as the UK, most of Asia and Canada.
However, the firm’ s efforts to enter the target market with established coffee culture have been futile as exemplified by its unsuccessful entry in the Australian market. The market composition for the two firms has been mainly coffee lovers. Customer Loyalty brand loyalty Double Jd Customer loyalty is the loyalty to the brand and to the company. A comparison of McDonald’ s and Starbucks shows that McDonald's has high customer loyalty in Australia as opposed to Starbucks while Starbucks has high customer loyalty in the USA.
Brand loyalty is the trust of the customer that the brand will continue to deliver on its promise to the customer. Many customers in Australia love McCafe as opposed to coffee offered by Starbucks. Thus the brand loyalty for Starbucks in Australia is low as opposed to that of the McCafe brand of McDonald’ s. This is done through communication, customer service, and trust and loyalty programs. Starbucks, failure to win the Australian market could have been due to poor communication and loyalty programs.
the firm, seem not to have made enough market research in Australia because whereas the café culture in Australia favored small, boutique and very European style café culture, Starbucks wanted to impose a United states’ café culture of fashionable, spacious interiors.