Starbucks Hbr Case Study

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Starbucks Case Study
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Introduction Problem Identification Situation Analysis Alternative Actions Recommendation and Implementation Conclusion

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Starbucks’ brand strategy was captured by its “live coffee” mantra. Branding strategy:

coffee itself service atmosphere

Areas of focus:

ethical sourcing environmental stewardship community involvement The way I see it # 263 – Run when you can, walk when you have to, crawl if you must; just never give up. Dean Karnazes Runner and author of Ultramarathom Man.

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Coffee Handcrafted beverages Merchandise Fresh food Consumer products Brand portfolio

Starbucks story began in 1971. Back then Starbucks were a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market. The logo is inspired by the sea – featuring a twin-tailed siren from Greek mythology.

1971 1982 1983 1984

Starbucks History
Starbucks opens first store in Seattle’s Pike Place Market. Howard Schultz joins Starbucks as director of retail operation and marketing. Howard travels to Italy, where he’s impressed with the popularity of espresso bars in Milan. Howard convinces the founders of Starbucks to test the coffeehouse concept in downtown Seattle, where the first Starbucks Café latte is served

1987 1988 1991

Starbucks opens first store outside of Seattle area in Chicago and Vancouver, B.C. Offers full health benefits to full- and part-time employees. Becomes the first privately owned U.S. company to offer a stock option program that includes part-time employees.

1992 1995 1996

Completes initial public offering (IPO), with common stock being traded on the Nasdaq (SBUX). Begins serving Frappuccino blended beverages. Joins with Pepsi-Cola to begging selling bottled Frappuccino coffee drink.

Opens first store outside of North America in Japan. 1997 1998 1999 2001 2002 Establish The Starbucks Foundation, benefiting local communities. Acquires Tazo, a tea company based in Portland, Ore. Partners with Conservation International to promote environmentally responsible methods of growing coffee. Introduces the Starbucks Card. Starbucks enters into licensing agreements with national Fair Trade organizations to sell Fair Trade Certified coffee in the countries where Starbucks does business.

Problem Identification
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Slow customer service. Inadequate evaluation methods. Lack of a solid marketing team. Change in customer base.

Slow Customer Service
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Increased variety Same number of employee’s Did not want to increase number due to economy. Worked on enhancing barista efficacy.

Inadequate Evaluation Methods
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“Customer Snapshot” “Legendary service” Both gave great ratings. Customers had different ratings.

Lack of a Solid Marketing Team

Split into 3
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Marketing research Category Marketing

No chief marketing manager.

Change in Customer Base

Used to be

More educated , higher income bracket.

Now are

Younger, less educated, lower income bracket

Situation Analysis
Scope for Expansion (2003)

By 2003 there were 5,886 starbucks with a scope of expansion to almost 10,000 stores in US. Total Market Potential = Population X % spending on beverage X % spending on hot beverage X % of Coffee Drinkers

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Specialty coffee drinkers was an untapped market There were still 8 states with no starbucks and infact company was only in 150 of 300 metro areas

Situation Analysis
Actual Service Timing (2003)

3 minutes from Back-of-the-line to Beverage-in-hand. Impact on Customer Perceived Values

Situation Analysis
Scope for Product Innovation(2003)

New Flavors to capture more customers. Partner Acceptance of new flavors

Situation Analysis
Affects on Market Segmentation(2003)

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