Starbucks, Case Study

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December 3, 2012
December 3, 2012
Andrei Gavriluta
Strategic management
Birkbeck, University of London
Andrei Gavriluta
Strategic management
Birkbeck, University of London
Starbucks in the us: too much coffee spilling all over?
Coursework - Essay
Starbucks in the us: too much coffee spilling all over?
Coursework - Essay

Table of Contents

I. SUMMARY1
II. CASE STUDY ANALYSIS 1
i. STRATEGIC POSITIONING AND MARKETING MIX1
ii. PORTER’S FIVE FORCES2
iii. SWOT ANALYSIS3
iv. EXTERNAL ENVIRONMENTAL FORCES – PEST ANALYSIS3
III. CONCLUSIONS4
IV. REFERENCES5

I.
II. SUMMARY
Starbucks dates back from 1971 and is based in Seattle, Washington. The company was founded by Gordon Bowker, Jerry Baldwin and Zev Siegl and it started as a local coffee bean roaster and retailer. Since its birth, Strabucks has experienced a rapid growth and by 1987 the company reached a total of 17 stores (Starbucks 2012). Around 1987 the company was sold to Howard Schultz. He merged Starbucks with Giornale, thus creating Starbucks Corporation. Nowadays, the company runs worldwide and has passed the 18,000 store mark, distributing their products on all continents in over 60 countries (Starbucks 2012). The company has gained its brand reputation by offering a wide and innovative range of products, such as: hot and cold drinks, coffee beans, salads, hot and cold sandwiches, sweet pastries, snacks, but also items like mugs and tumblers (Starbucks 2012).

III. CASE STUDY ANALYSIS
Based on the curriculum studied throughout the module and the undertaken research on Starbucks, this essay will analyse, examine and assess the competitive strategies pursued by Starbucks over time and how it has achieved (or not) aligning its competitive strategy with its corporate growth ambition of market penetration in the US.

i. STRATEGIC POSITIONING AND MARKETING MIX
The consumer defines the position of a product on the basis of numerous criteria, such as price, competitor, quality, product class and others (Kotler and Armstrong 2004). Starbucks managed to distinguish itself amongst competitors with its high quality products and innovative customer experience, which proved to have given them an important strategic advantage. One of the main features that differentiated them from competitors is that they offered “a neighbourhood gathering place” (Starbucks 2012). Starbucks was no longer a place where people could just buy coffee, tea or have treats, because it became a part of the customer’s daily routine – something inseparable. Additionally, in the 1980s people became brand sensitive and as a result, companies had to change their strategy. Thus, Starbucks found themselves replacing transactional marketing with relationship marketing, where the customer’s opinion became, what they considered to be, one of the factors that could push a company to the top in the market (Kotler 1986:119). By presenting innovative products, creating high standards and offering excellent service, Starbucks managed to position themselves as a premium brand in the coffee industry (Gangadharan 2010). The company used TQM (total quality management), where all employees were continuously participating in improving the overall quality of products (Kanji 1996:7). For example, because their staff had to go through an “efficient” training, they were able to satisfy the customer’s expectations for the money they were spending (Gangadharan 2010). Later on, the company started developing and offering new products, thus showing how cautious they were about keeping their high standard and maintaining their premium brand image. Usually the consumer uses the price of a product as an indicator of quality. That being said, Starbucks was perceived as an expensive brand with high quality products that were worth buying (Dalrymple and Parsons 1986:53). According to Brassington and Pettitt, the interaction between personnel and customers is of...
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