Starbucks Case study
Dr. A. Widgeon
March 8, 2013
Starbucks is a coffee sensation that is sweeping the world by storm. It all began in 1971 when the first store was opened in Seattle Washington. Starbucks started out as a single coffee shop that sells high quality premium coffee beans. In the 1980’s they expanded their locations but remained in the state of Washington. Starbucks has now expanded its locations all across the US and Canada and many other countries around the world. Starbucks has managed to become the number one coffee selling company in the world without utilizing a huge advertising budget. Starbucks advertising and public relations campaigns consist mainly of news media and social media efforts to get their brand in the spot light. Starbucks rise to fame began slowly and by word of mouth. They generally try to avoid traditional media but have in recent years begun to promote their product due to competition and a minor decline in sales in some stores. Starbucks is a household name today but it did not begin that way. Starbucks rise to fame came about because of Gordon Bowker and Jerry Baldwin’s love of Peets Coffee. It all began in 1971 when Baldwin, discovered Peets coffee in Berkley while attending school in California. Baldwin introduced his roommate Bowker to Peets coffee. The two men then partnered with a friend named Zee Siegel to start up a coffee store in Seattle Washington.
The company grew but very slowly because advertising mainly consists of word of mouth. In 1981, ten years later, Starbucks had only grown to four stores and one roasting plant in Seattle. It was about this time that the present Chairman, Howard Schultz began to take note of the company. Schultz met with Baldwin and Bowker and immediately fell in love with Starbucks Coffee. Schultz became the marketing manager for the company in 1982 and went to Italy on a business trip in 1983 to research news to market Starbucks products. This business trip gave Schultz new idea of creating a coffee shop that serves espresso coffee by the cup.
After many years of planning and development Schultz idea was put to the test at Starbuck’s newest store where Schultz opened up a coffee bar. Schultz’s idea was highly successful. “The concept was a hit and within 2 months that store was serving 800 customers a day, three time as many at their bestselling whole bean locations” (Tuck, p.2, 2002). Schultz wanted to continue the trend of success but Baldwin was more inclined to selling top quality whole bean coffee. With the blessing of Starbucks Schultz joined forces with Dave Olsen and launch the Il Giornale venture which was very successful. Baldwin and Bowker bought Peets coffee in 1983 and by 1987 they decided to sell Starbucks in order to focus their attention on roasting the best coffee bean rather than running a coffee shop. Schultz managed to pull together a group of investors and buy Starbucks for 3.7 million dollars. Schultz then converts his three Il Giornale stores to Starbucks because Starbucks was a well-recognized brand compared to Il Giornale. In 1989 Schultz acquired experienced management personnel to help build the company. In 1991 Starbucks began doing mail orders, airports and other retail stores. By 1992 Schultz took the company public by trading in the New York stock Exchange (NYSE) under symbol (SBUX). After this Starbucks took off like a wildfire and began opening stores all over the USA, Canada, Japan and other countries. By 2002 Starbucks grossed a whopping 3.5 billion in annual revenue with over 5800 locations in many different countries. Starbucks continues to expand until Starbucks now has more than 18000 locations around the world.
Starbucks provide a huge line up of products such as hot and cold drinks food. Starbucks also sells products in supermarkets such as bottled drinks, ice cream and roasted coffee beans. These bottled drinks...
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