BUS 665 Strategic Marketing
Case 2- Starbucks
January 25, 2013
Briefly synthesize the key information presented in the case Starbucks today is one of the world’s best known brands. Howard Schultz built an amazing coffee empire. Mr. Schultz had a vision of selling high quality coffee in a comfortable and enjoyable atmosphere. And he was not only a good visionary but also a great leader who cares about employee health benefits and allow to employees working more than 20 hours a week. That is why the company would attract people who were well-educated and eager to communicate their passion for coffee. He is an professional skill in internal marketing to hire, train, and motivate able employees who want to serve customers well. Moreover, national expansion gave his chance to go public after testing Chicago and onward to California and beyond. In 1991, Schultz introduced a stock option plan for everyone including part-timers who had been with the company for six months. He also needed invest for further expansion in 1978-1991. Due to his past performance, he inspired investor confidence, so the venture capital firms supplied 28.5 million in 1990 and 1991. Going public made him and his team getting a great benefit at the beginning. Otherwise, stock market is always fickle. After all-time high, their stock dropped and lost a huge money in 1995. Actually, the company already prepared to make a quantum leap in growth. Under his leadership, their shop pervaded every corner, such as lobbies, airport terminals, and supermarkets even in stand-alone stores. More and more stores were opened leading to net revenue and net earnings increasing quickly in 2006. Recruiting high-level executives from relative industries and training newcomers systematically, the company entered large markets rapidly. Schultz also created a new beverage---Frappuccinos expanding the food menu. By late 2007, all of the world was influenced by economic crisis. Starbuck’s stock stayed firm against others. And the company also was assailed by competition from McDonald’s which upgraded its coffee and spent double cost advertising than Starbuck. But the company always relied on word-of mouth to win the low cost competition and work efficiency to adding new expresso machines and buy the maker of a high-end coffee brewing machine. Surprisingly, the sheer numbers of people in China made the company an enormous opportunity. Now, Starbuck are working on global strategy accelerating foreign growth and countering their imitators.
Apply the historical and current theoretical frameworks to analyze the situation With integrated marketing, the marketer create, communicate, and deliver value for consumers through marketing activities as Marketing mix which is four Ps of marketing: product, price, place, and promotion. 1) Product – The first thing to be define what kind of product will be develop need, when you want to start a business. Therefore Product is also the first variable in the marketing mix. Schultz created his own Italian-style coffee and kept training his baristas to learned updated quality standards ensuring every beverage and very experience is fight for every customer, every time. The company’s health-care coverage include part-timers to assure every employee under a harmonious work environment servicing their customer with smile faces. Schultz also introduced Starbuck feature---Frappuccinos. 2) Pricing – Pricing of a product lies on Multiple factors and hence it is constantly updated. Major consideration in pricing is the costing of the product, the advertising and marketing expenses, any price fluctuations in the market, distribution costs etc. When Starbuck planned to add lattes and cappuccinos to their stores, McDonald’s tested markets such drink near $3. Price also affects by your competitors. Pricing is used for sales promotions in the form of trade discounts. Starbuck tested $1 drip coffee in a few stores....