A Market Analysis
Mission Statement and Objectives:
Starbucks advertises two essential mission statements. First and foremost, it strives to “establish [ourselves] as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while [we] grow(s).” (Starbucks) Reflective of its mission, Starbucks bases its strategic campaign and communications on six indispensable philosophies; structuring a pleasant work environment in which employees are treated with “respect and dignity,” incorporating diversity in all business aspects, purchasing, roasting and delivering fresh coffee, retaining satisfied customers, giving back to the community and environment, and developing profitability as it is pivotal to the company’s success (Starbucks). The company’s second mission statement reinforces one of its first objectives: “Starbucks is committed to a role of environmental leadership in all facets of [its] business.” (Starbucks) To abide by this philosophy, Starbucks researches current events and environmental issues, implements new solutions to stimulate change, purchases and sells environmentally friendly products, “instills environmental responsibility as a corporate value,” and analyzes progress of environmental projects (Starbucks).
Current Marketing Situation:
According to bellwetherreport.com, Starbucks is “the world’s number one specialty coffee retailer.” It further reports that the corporation has maintained this title for the past decade and has more than 13,000 coffee shops in over 35 countries. Approximately 5,500 shops are globally licensed and franchised, while about 7,500 of its locations are owned by the company directly in ten countries (bellwetherreport.com). In addition to its numerous franchises and licensed locations, consumers can also find Starbucks in grocery stores, other food and beverage distributors, shopping centers, airports, bookstores, hotels, airports and other high-volume venders (Misonzhnik). Starbucks’ recent third quarter of its fiscal year reported store sales growth up four percent and a 20 percent increase in net revenue to $2.4 billion. These numbers are low in comparison to Starbucks expectation that the company would see at least a six percent growth margin in this area. Despite this, Starbucks opened 668 stores of the 2,400 new stores, and it expects to open an additional 1,700 locations by the end of its 2007 fiscal year. (Misonzhnik) Starbucks is ranked as one of the world’s 50 most valuable brands (The Economist). However, the question remains if Starbucks can maintain this title as the market, still unsaturated, becomes bombarded by newcomers in the industry (see competitive analysis), and its revenue growth appears to be slowing.
Starbucks maintains a very broad consumer base. For the most part, “Starbucks brings in a higher-end clientele, which is more desirable…nobody is even close to them in terms of market dominance” (Misonzhnik). Starbucks’ brand name is so strong that it has developed a strong network of loyal consumers who will pay four dollars for a latte. Furthermore, “Starbucks customers are not known to be price-sensitive,” and rarely bat an eyelash at slowly inflating prices (Nation’s Restaurant News). Consumer and Economic Trends:
Starbucks recently announced that it was going to increase the price of its beverages by an average of nine cents per cup as a result of increasing prices of milk and coffee within the economy (Nation’s Restaurant News). This is the second time in its fiscal year that Starbucks has increased the price of its products.
In 2005, a study showed that Americans drank more than 300 million cups of coffee. The study also found that 15 percent of Americans, up from six percent in 2000, drank a cup or more of specialty coffee a day. Seventy-five percent of these coffee drinkers home brewed their daily intake. (Industry Snapshot)....