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Executive Summary……………………………….3
Introduction………………………………………….4
Competition…………………………………………..5 & 6
Target Market………………………………………..6- 8
Marketing Strategies………………………………8
Customer Service……………………………………9 & 10
SWOT analysis………………………………………11 & 12
Works Cited/ References………………………..13
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Executive Summary
Statement of the Problem
We have come to an executive conclusion with an attempt to eliminate any distinctive competencies that the Starbucks firm may face.
Background
The coffee market composes of daily and occasional coffee drinkers. Even if consumers don’t purchase coffee products, they are still provided with a social atmosphere and appetizing food choices. Though other competition offers a great cup of coffee, they don’t offer the amenities that Starbucks provides. With a growing trend of coffee houses, competition and possible threats are growing rapidly. Therefore, Starbucks needs to stay up to date and provide a unique experience to coffee shoppers on a daily basis.
Discussion
Starbucks has primarily focused on reputation of high-quality products, atmosphere and service. They implement market strategies by continually promoting a positive image of the store. As a result of the marketing strategies, customers have developed a strong loyalty and dedication to the company through continuous purchasing. Starbucks achieves this by creating a positive image, status and emotional attachment. When you enter a Starbucks, you are guaranteed high-quality service and premier products. This leads consumers to an emotional attachment and instant gratification. Since Starbucks mainly targets a higher class of coffee drinkers, it even gives the middle class the opportunity of prestige.
To justify Starbucks success, effectiveness relies on following the trends they have used thus far. Starbucks differentiates itself from competitors by offering friendly, efficient service which contributes to the consumer’s personal experience. Since the trend of e-commerce is increasing, maintaining internet reliability will promise a future to their internet consumers and availability of at home coffee products. If they continue to build upon the base they have created, the assurance of success will remain superior to their competitors.
Recommendations
 Maintain current image and trend through quality products and atmospherics
 Associating location placement to match with their current pricing strategies with current area demographics
 Keep the perception of high pricing equals high quality
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Introduction
When people think of the one place having the worlds best coffees, they think
Starbucks. The original store opened in Seattle, Washington in 1971 and since then,
Starbucks has expanded to 30 countries, with over 6000 stores (A Brief History of
Starbucks) internationally, meaning more than one store is opening per day (Gamble et al). The seafaring symbol itself comes from the classic American novel, Moby Dick by
Herman Melville which of course the word Starbuck comes from the coffee loving mate
(A Brief History of Starbucks). Starbucks is not only importing the world’s finest coffee in the world, they also became one of the first companies to offer their part-time employees stock options.
Starbucks offers everything from frozen beverages such as Frappuccino’s, to those warm lattes and teas, as well as warm breakfast sandwiches, bagels and different types of pastries. The Starbucks phenomenon has also gone on to sell equipment and accessories that are in fact coffee related, as well as compact discs ranging (A Brief
History of Starbucks) from artists such as Sheryl Crow to Stevie Wonder. Their mission statement fits this world known corporation perfectly stating “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.” (A Brief History of Starbucks)
With the three men that first invested their own $1350 as well as taking out a
$5000 loan, Jerry Baldwin, Gordon Bowker and Zev Siegel (Gamble et al.), Starbucks has only grown and increased their revenue over the years. However they did not rely on any marketing strategies, they were more focused on brewing the best coffee there was for the local clientele. Starbucks depended mainly on word-of-mouth to get more
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people into the stores, and then they depended on the quality of their product to give customers a sense of discovery and excitement (Gamble et al.), and keep them coming back for more. They built customer constancy cup by cup as customers developed their appreciation of the best coffee beans the world had to offer.
By the time 1982 rolled around, the investors had lost Siegel as he wanted to pursue his own personal interests in life, and were interested in a New Yorker by the name of Howard Shultz. Mr. Shultz was more interested in Starbucks because he knew that by expanding across the United States, there were far more opportunities for
Starbucks to grow, rather than just staying in Seattle, with the original store. Baldwin and Bowker were cautious at hiring an outsider because they did not like the idea of expanding since that would commit themselves to taking Starbucks in a new direction.
Shultz visited Milan, Italy and experienced their idea of an “espresso bar” then came back to the states and knew they needed to stop serving just coffee, beans, and equipment, and start selling lattes and cappuccinos. The Starbucks in downtown Seattle was the test spot and in the corner of the store, there was an “espresso bar” set up and within days, sales went from 250 drinks per day, to well over 800, with lines out the door and to the sidewalk (Gamble et al.).
As reported in 2001, Starbucks gross profit was estimated at 1,536.2 million dollars while their Earnings per share were recorded at 32.5. (Morningstar.com)
Competition
There are several other competitors in the coffee industry. One arising competitor is 7-11. 7-11 offers various beverages such as cappuccinos, hot chocolates, teas and coffee products. They also offer breakfast foods such as danishes, donuts and pastries. Another
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competitor is Sheetz. With their slogan being “Not fast food. Better food fast,” they are known for their fast service and quality products, and serve similar products as
Starbucks. Sheetz offers four different types of coffees, Cupo’ccinos and pastries to add to Starbucks competition. One other competitor is Gloria Jean’s. Their menu is almost identical to Starbuck’s with products such as teas, seasonal coffees and cocoa products.
The last competitor of the coffee market is WaWa ( www.wa-wa.com
) stores. Similar to
Sheetz ( www.sheetz.com
) , WaWa offers various service and products. Both Sheetz and
WaWa have accompanying gas stations with various food choices. WaWa also offers their original blend of coffee along with hot chocolate and cappuccinos. The coffee market is becoming more globalized and is expanding; therefore, Starbucks must continue to seek defining features to differentiate themselves in the market.
Target Markets
Where as most companies try to establish and concentrate on one target market to achieve a maximum profit, Starbucks is quite the opposite. You would never see a
Toys R’ Us commercial targeted to adults playing with the products, naturally since most adults don’t play with these toys. Starbucks on the other hand offers such diversity in their market they can find a median of interest to all types of people, even those noncoffee drinkers. They are able to serve not only serve a great coffee or latte, but a cup of variety and culture as well.
Since an average of twenty five million customers visit starbucks every week, there has to be a fair amount of diversity, being as one target market wouldn’t be that high (Asmus). To prove the point of diversity I will start with Starbucks youngest consumer, the tweens and teenagers. Tweens are those who are not quite teenagers but who are closely related and follow most teenage trends. These collections of customers
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spend the least amount on coffee and pastries a week, but contribute to the company as a whole. This group of people doesn’t need to be of a certain ethnicity or gender, it applies to all. The next and largest group would have to range from teens to mature adults within the age range of 16-50, these people tend to have more of an income and follow social drifts within their community. With the modern motif of coffee increasing starbucks has formed an image, consequently molding their customers into brand loyal customers. They have created a so called “espresso culture” that all their customers can fit into to socially. Whether the company is giving students a place to study, read, or even just socialize, it offers something for everyone. As for the older customer, they are able to come in a get a quick high quality coffee or pastry before, during or after work without disrupting their busy lifestyle. Many starbucks offer Internet access, workstations and even comfortable seating for even the busy executive to get work done in a more relaxed atmosphere.
To further gain you attention on Starbucks current target markets ill focus you on the company’s presence in 33 international markets (Asmus). Thirty-three international markets is quite a large number to state that starbucks only has one target market.
There target markets in America are mostly narrowed down to those who enjoy the finer tastes and atmospheres of coffee shops. Here in America Starbucks originated in big cities like Manhattan. Being how this city is so diverse in culture it allowed a little bit of something for everyone to enjoy no matter what your tastes. Now with over 7300 retailers around the world, starbucks offers their services and pleasures just around the corner (Asmus) .
As for other target markets, Starbucks has opened retailers in Latin America, Asia
Pacific and even in Europe (Asmus).
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With its five star service, high quality products and immaculate environment,
Starbucks has created their own target market. They have created a culture to those coffee and non-coffee drinkers, they have turned the simple idea of a coffee shop into a place with style, class and charisma. With the continued increase in sales and loyalty, today’s first time guest will become tomorrow’s regular customer
.
Marketing Strategies
As the years progressed, Starbucks Corporation not only expanded their stores in the United States, they also began mail order sales, setting up stores internationally, spending more money on employee training, as well as opening specialty stores in airports around the globe. Starbucks management believed that its direct-response marketing effort would help pave the way for retail expansion into new markets and reinforce brand recognition in existing markets (Gamble et al.). As of 1998, Starbucks was the only company with anything close to national market coverage, and they still have every intention of becoming the most recognized and respected brand of coffee in the world (Gamble et al.). The famous coffee company has efforts underway to increase their area of interest by their joint ventures with Pepsi and Dreyer's, their move into supermarkets for selling coffee, and the possibility of marketing fruit-juice drinks and candy under the Starbucks label (Gamble et al.). Another part of their marketing strategies is their well known advertising. They use print, radio and television mediums to effectively promote their brand to their customers. These marketing techniques will correspond to the drive Schultz's posses as a way to constantly reinvent the way
Starbucks does business on a day to day basis.
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Customer Service
One of the basic ways Starbucks differentiates themselves from competitors is by their customer service. Starbucks has created “a third place between home and work where people can go for personal time out or to relax with friends” (Peter-Donnelly).
When a consumer thinks of customer service- fast, friendly and efficient are just some of the words that come to mind. Starbucks offers all of these and more, which makes it own the market with 30 percent market share (Peter-Donnelly). Consumers can enjoy premium coffee, at a bit higher price than competitors, but social environment and customer service attributes make up for lost ground.
Starbucks has a total of 10,000 employees working worldwide (Peter-Donnelly).
Starbucks has an employee training program, while hiring 300-400 employees per month and educating them on courses such as “Brewing the Perfect Cup at Home” and
“Coffee Knowledge” (Peter-Donnelly). Another way of caring about consumers is how employees are trained to remind customers to purchase new beans weekly and that tap water might not be sufficient enough for brewing good coffee. Also, they are encouraged to share their feelings about coffee selling and being employed by Starbucks.
Employees are also given guidelines for maintaining self-esteem while on the job
(Peter-Donnelly). That is a great tactic for portraying a positive facet of Starbucks because if a consumer comes in and sees a employee who is in a good mood and confident, then a customer will get the perception that they are going to feel like that as a result of drinking a cup of coffee. Employees are also taught to listen and acknowledge customer comments and knowing when to ask for help (Peter-Donnelly). Some statistics of Starbucks employees are; 80 percent are white, while 85 percent have some education behind high school, with the average age being 26 (Peter-Donnelly).This isn’t surprising
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when considering the pricing of products and placement of stores. With an annual turnover rate of 60 percent, compared to 140 percent in the fast food industry,
Starbucks has a good knowledge of how to gain employee loyalty (Peter-Donnelly).
Customer service is not only relative to the fact of how a service or a product is delivered, but also in the environment of the store. Starbucks not only offers hot and cold coffee beverages, but also serves full meals, pastries, and alcohol (Peter-Donnelly).
The store environment is also very relaxing with soothing music, and comfortable seating. Starbucks also provides magazines for reading entertainment and also laptop connections if you want to bring your computer. Starbucks also has drive-thru stores if you’re in a rush and want to get your product and go.
You know what to expect when you see the green Starbucks circle, great service and a personal area you can call home. Starbucks also implements seasonal promotions to promote the benefits of a Starbucks Experience ( www.starbucks.com
). Finally,
Starbucks also provides Office Coffee service and Small Office Coffee delivery that can provide 20-50 employees with coffee ( www.starbucks.com
). These programs can be ordered online, making convenience a huge part in their customer service attributes.
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SWOT Analysis
Strengths:

Excellent product diversification. Example: coffee, baked goods, music, etc.

Established logo, copyrights, developed brand, trademarks, websites and patents.

Company operated retail stores, international stores

Highly visible store locations to attract consumers

Valued and motivated employees-low turnover rate

Not franchised

Leader in coffee industry

Product of globalization
Weaknesses:

-Increasing number of competitors growing in the market

Too high of a concentration of stores in the same area

Cross functional management

Expensive
Opportunities:

Expansion into retail operation

Technological advancement

New distribution channels

Launch new products

Further international market expansion

Brand extension
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Threats:

Competition restaurants, supermarkets, other coffee shops, and other caffeine products.

US coffee saturated market by 2004

Coffee price volatility in developing countries

Poorly treated farmers struggling to make a life, negative publicity

Consumer health
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Works Cited/ References
"A Brief History of Starbucks." History of Starbucks. 2004. Starbucks
Corporation. 20 Feb. 2006 < http://www.starbucks.com.au/en -
AU/_About+Starbucks/History+of+Starbucks.htm>
Asmus, Peter. “Starbucks: A model Global corporate citizen.” Starbucks coffee company.
15 Feb. 2006. http://www.business-ethics.com/starbucks_coffee_company1.htm
.
Gamble, John E., and Arthur A. Thompson. "Starbucks Corporation." Strategic
Management 1999. 20 Feb 2006
< http://www.mhhe.com/business/management/thompson/11e/case/starbucks-
2.html
>.
Gokhale, Ashish, and J. Paul Peter. “Starbucks” reprint in Melvin R. Mattson, Marketing
Management Case Analysis by Teams. Boston; McGraw-Hill, 2005. pp.8-11
“SWOTAnalysis Starbucks” Marketing Teacher.
<http://www.marketingteacher.com/SWOT/starbucks_swot.htm>
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