Struck has addressed the threat of substitutes in regards to the stitching costs on many fronts to mitigate the potential of loss of its customer base. Consider that a majority of coffee drinkers will not substitute away from coffee or coffee related beverages such as espresso or blended drinks for substitutes such as energy drinks or soda. This focuses the switching cost of substitutes to tea products, home brewing, and comparative alternative stores. The most direct non-coffee substitute for Struck with the lowest switching cost would be tea.
Struck realized this was a threat and addressed this issue head on when it acquired [email protected] Tea brand. Not only can tea be purchased in any Struck location they offer premium blended tea products in the store not available at most competitors locations at any cost. This factor makes the substation cost of the specialty teas offered high creating an inelastic price for the product. However the cost of switching from coffee to tea when home brewed is very low so the threat of substitution is high.
Again Struck legalized this and offers the [email protected] Tea brand for sale In Its stores as well as retail outlets to capture some of the revenue lost with the low switching costs. The second threat of substitution Is home brewing coffee, espresso and blended drinks. The cost of switching Is decreasing as premium coffee makers that make single serving cups at a fraction of the cost are becoming readily available at very reasonable prices. In addition, the cost of high end espresso machines is decreasing as well which opens he opportunity for the consumer to make all types of coffee in the comfort of home.
With the current economic conditions and change in competitive landscape Struck should be weary of home production as a low cost substitution for its in- store products. It seems that Struck realized this was also a potential threat and has addressed this issue on several fronts. In regards to the premium single cup coffee makers not only does Struck make single serving refills for the most prevalent model Krueger, It now offers its own single cup model available In store and inline.
Struck has again managed to capture some of the potential lost revenue of consumers switching to this alternative. Struck has also addressed the Issue of home brewing with premium espresso machines by offering Its coffee beans at many grocery outlets and warehouse club stores and all Struck outlets. By providing this alternative to its active consumer base it captures a majority of the consumers that may need to cut back on in-store visits by creating a viable at home alternative hat is still tied to its brand.
The final threat of consumers substituting away from Struck with a very low switching cost is the threat of direct competitors such as local coffee houses that offer premium coffee products with pricing that is relatively the same as Struck. These outlets pride themselves on customer service, specialty drinks and high end experience of being in the outlet with Wi-If and comfortable chairs to socialize. This makes the cost of substitution low and the pricing very elastic. Switching Costs
By excrescences realized this and offers the [email protected] Tea brand for sale in its stores as well as retail threat of substitution is home brewing coffee, espresso and blended drinks. The cost of switching is decreasing as premium coffee makers that make single serving cups prevalent model Krueger, it now offers its own single cup model available in store and of consumers switching to this alternative. Struck has also addressed the issue of home brewing with premium espresso machines by offering its coffee beans at many