Starbucks Marketing Analysis
Starbucks Coffee Company is the leading retailer, roaster and brand of specialty
coffee in the world. The goal of Starbucks is to establish the company as the premier purveyor of the finest coffee in the world while maintaining the organization’s uncompromising principles. In addition, Starbucks wants to develop its brand beyond being the preferred outlet from which to purchase coffee to becoming the preferred consumer brand.
The coffee company has capitalized on the new found popularity of specialty coffee with its addition of coffee bars globally. Starbucks Common Stock increased from $3.31 per share in 1994 to $10.00 per share by the mid 1990’s. Despite the success of Starbucks, the company is faced with many challenges to continue the growth of its business. The key strategic problem that Starbucks faces is maintaining the quality of their brand while leveraging the brand image and going into different sales and distribution channels.
SWOT Analysis
Strengths
1. Is the leader in specialty coffee industry (p7).
2. Its commitment to quality (p7), values (p8), & principles (8).
3. Its policy toward its employees (pgs 8, 17).
4. Its openness to innovation
a. Pepsi-Coal – Frappuccino.
b. Distinct Roasting equipment and process. (longer shelf life; p10)
c. AOL Café.
5. Worldwide resources for coffee beans.
a. 50% from Latin America.
b. 35% from Pacific Rim.
c. 15% from E. Africa.
d. SB trains exporters.
6. Supply Chain Operation (SCO)
7. Page 11:
a. Its coffee.
b. Employees.
c. Merchandising.
d. Ownership philosophy.
e. Real estate approach. (Location, building, & cluster strategies)
f. Image.
8. Extensive training for Starbucks’ “baristas” (employees).
9. Mall kiosk program.
10. Its Brand image.
11. Key specialty sales partners (p14).
12. Diverse distribution channels. Such as:
a. Grocery chains.
b. Dreyers.
c. Pespi-Cola.
d. Kiosks.
e. Airlines.
13. “Encore” mail order program (p16).
14. The vision and leadership of Howard Schultz (pgs 16 – 17).
15. Its Six Guiding Principles.
Weaknesses
1. Rapid growth is taxing SCOs (p11; also see Strengths #7)
2. The challenge of finding good employees (p12; also see Strengths #8)
3. Consisten...
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...t being only for breakfast to it being an anytime beverage.
5. Starbucks is to be not just coffee, but an experience.
6. Retail system is Starbucks’ anchor of its brand-building strategy, this can “catapult” Starbucks beyond its roots (by a report from Merril-Lynch).
7. Grocery store sales are not essential for survival, but are necessary to remain a major player (Orin Smith, p15).
8. Supermarket merchandising will pull customers out of lower priced categories of coffee to the higher priced specialty coffee brands (p13).
9. “Starbucks’ has executed its strategy to near perfection (quote from an investment company, p19).
10. Starbucks expects to have 2,000 retail stores by the year 2000.
My Opinions –
My opinions are embedded in the “Issues Analysis” section of the paper.
Assumptions –
1. Coffee sales in specialty stores will increase from 19% to 54% by 1999 (see Facts #8).
2. Starbucks estimates a growth of 17% by 1999 (p5).
3. Starbucks expects a lower cash investment to open future stores (see Exhibit 4).
4. Starbucks expects to increase its number of stores on the Asian-Pacific Rim from 13 to 100 by 1999 (Ex. 5).
Although there are several specialized coffee players in the market today, one cannot overlook the magnitude of success and grandeur that Starbucks has achieved over the past many years. Its fast-growing coffee house along with tea and sandwich restaurant chain now makes it a dazzling investment idea.
... also justified to an extent owing to the high quality products that Starbucks uses to prepare its coffee and the kind of customer service that it provides. All these factors have helped Starbucks survive and be successful in the market. The brand is ranked among the most valued global brands and chiefly it is the brand’s commitment to quality and customer service which is behind the success of this brand. Apart from everything Starbucks applies a premium price to its products so that it can continue to offer premium quality to its customers. The brands popularity can be clear from the fact that despite the high prices its demand has not fallen down and continues to increase only. The way Starbucks has continued to achieve financial success when other brands were going for price cuts shows how its price strategy has helped it remain competitive in the market place.
Starbucks hold high regards in the coffee house industry. On news.starbucks.com, the chief financial officer Scott Maw urges that the position that Starbucks hold in the coffee house industry, is that “Comp growth: 20 consecutive quarters of comp growth of 5% or greater; In the US, our largest
Starbucks is the world’s largest specialty coffee retailer, Starbucks has more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products. Starbucks Corporation was founded in 1985 and is based in Seattle, Washington. (Bramhall)
There are several factors that were the framework for Starbucks successes. One major factor was that they brought back the trend of coffee drinking. With this vibe established that they were able to charge a premium for every cup of coffee - everyone wanted to go to Starbucks! Along with the trend that was created, they had great customer loyalty, with their best customers visiting up to 18 times in one month. This customer loyalty was no mistake, as one of their mantras was to create an experience and always say yes to the customer. They really were striving to be the Ritz Carlton of coffee.
“Coffee has become more than just a shot of caffeine. It 's a $30 billion-a-year national industry, a foodie fixation, an affordable luxury, a boost of disease-fighting antioxidants, a versatile ingredient, an intoxicating aroma and a beverage that brings people together.” Because of all these factors, Starbucks has a very diverse audience and numerous competitors in the industry. As of 2011, coffee shops have maintained an average growth rate of 7% a year, and Starbucks alone is the third most recognized restaurant chain in America. The specialty coffee industry will continue to grow because of the variety of drinks and the appeal of specialty coffee
Starbucks is one of the largest coffee franchises in the world. With over 26,000 stores in 64 countries, the company has the right to brag about this. One of the problems which Starbucks is currently being faced with is the brand being watered down by over expansion and a too diverse product mix. With McDonalds and Dunkin Donuts entering into the specialty coffee market, Starbucks needs to alter the path which it is going in order to remain competitive in this industry.
Starbucks portray a number of issues that may affect the company’s’ growth in the near future. To clearly understand these issues, they will be analysed in order to understand and create recommendations to assist in the growth of a successfully company.
We can guess the extend of the starbucks popularity and expansion from the fact that starbucks is opening almost three stores in a single day which is amazing and thats makes it revenue to grow constantly but in order to manage that profitablility starbucks need to implement a policy which is focused on constant and product and market
With that store being there to help support new stores that would be entering the region. The goal was to have around 20 stores after two years of entering a market and have those stores expand even further into smaller cities and suburban locations. They also started to add drive-through because it made it more convenient for parents with small children. Some of the drawbacks of drive-through were that it took away from impulse buys and sometimes created bottlenecks in the line. Licensing the brand was also a great way that they expanded their business; by putting Starbucks in airports in malls they create a lot of foot traffic lead to successful stores. Starbucks carefully considered their image and the image they wanted to uphold when choosing licensees. The international market is now where Starbucks has the most potential to grow. As of right now Starbucks has plans to open 1,400 new stores in China. That’s more than half of the store it already has in China. The growth technique that I was most impressed with was that having two locations so close to each other would not saturate the market. The first store would see a drop in sales at first but would bounce back and the new store would grow. I notice we have that here, at Target in uptown you can actually see the Starbucks across the street while you are in line. Both seem pretty busy most of the time too.
Technology is universally and allows the presentation through all the tasks whether it is economics, advertising, stream chain.
There are many topics that arise throughout the case with Starbucks Corporation. Starbucks Coffee is located worldwide and there are many different ways to look at this situation. The company offers a unique range of coffee, lattes, espressos, and café style drinks. The company intended to reach a specific target audience, but has ended up in many different markets and has been growing rapidly. Starbucks has greatly used the “youth appeal” strategy to gain entrance into new markets. However, such enthusiasm cannot be counted on indefinitely; other strategies are always in the works. Over time Starbucks has been able to acquire a solid brand reputation and has a world renowned company logo.
Koehn, N.F., Besharov, M.A., & Miller, K. (2008). Starbucks Coffee Company in the 21st Century. [Case study]. Boston, MA: Harvard Business School Publishing.
Starbucks is an international coffee house and it was created in 1971 when they opened the first store in Seattle, Newcastle. Currently, they own 21,000 stores in 65 different countries of the world, and their passion for the great coffee, excellent service and community interaction exceeds cultures and languages (Starbucks, 2014). This company is the number 1 brand coffeehouse chain in the world due to the best roaster, marketer and seller of speciality coffee. Its main slogan: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time” (Jurevicius, 2013).
Expansion of Domestic and International retail markets: With the target of 2000 stores by year 2000, Starbucks is on an expansion mode. They are expanding into the international markets and simultaneously they are diversifying in the domestic markets also. Initiatives like Frappuccino and the Doppio cart are part of this.