Starbucks Case Study

Topics: Starbucks, Coffee, Coffeehouse Pages: 19 (5076 words) Published: February 15, 2009
Starbucks Case Study [pic]
Overview

First Starbucks was a Private Company, from its inception in 1971, to it's initial public offering in 1992. We believe that there since the beginning, Starbucks strategy has been one of growth. They have demonstrated all dimensions of a growth strategy: Internationalization in expanding into new countries and the global market. It has shown concentration in being creative and relying on it's core competency of making high quality coffee and coffee equipment to develop new products and markets. Horizontal Integration has been evident in the many strategic acquisitions, partnerships, and joint ventures. Vertical Integration has been another key success factor as Starbucks Corporation has integrated backwards in opening coffee roasting plants, and forwards in controlling the distribution of it's many products. This growth has taken it from a single store in Pikes Place Market in Seattle, to a worldwide company with sales of over $2.1 Billion and operations in almost thirty countries, in just 21 short years.

Time line

■ 1971 – First Starbucks coffee shop opens in Seattle’s Pike Place Market – coffee bean roasting company ■ 1985 – Howard Schultz becomes CEO and founds Il Giornale Coffee Company – espresso beverages using Starbucks coffee beans ■ 1987 – Changes name to Starbucks Corporation

■ 1992 – IPO under the trading symbol “SBUX”
■ 1995 – Starbucks Coffee International opens in Japan ■ 1996 – Begins selling bottled Frappuccino drinks
■ 1999 – Acquires Tazo Tea company and Hear Music company ■ 2003 – Acquires Seattle’s Best Coffee
■ 2005 – Introduces Starbucks Coffee Liqueur; Acquires Ethos Water

[pic][pic] Analysis
■ Product
■ Price
■ Place (Location)
■ Promotion

Products (in store)
■ Starbucks sells brewed coffees, espresso beverages, cold blended beverages, food items, teas, branded coffee drinks, a line of ice creams, and a line of compact discs through its retail stores ■ Also offers pastries, sodas, juices, games, seasonal novelty items, and coffee-related accessories and equipment

Products

■ Starbucks also engages in purchasing, roasting, and selling whole bean coffees worldwide to grocery stores and large hotels

Price
■ Prices range from $1.00-$4.20 for drinks

■ Surprisingly, this is lower than its rivals, although not by much

■ Starbucks regular coffee was 4% less expensive
and its iced blended drinks were as much as 30% less expensive when compared with specialty competition ■ When compared to quick-service restaurants, however, Starbucks was more expensive. Dunkin’ Donuts’ 16-ounce latte is an average of 17% cheaper ■ Starbucks is planning to raise prices this year because of an increase in milk and green coffee bean prices ■ This could also be due to the fact that specialty competition has been charging more

Place

■ Operates in all 50 states plus the District of Columbia and Puerto Rico. ■ They also operates in 34 countries outside the United States such as Australia, Canada, China, Germany, Singapore, Thailand, and the United Kingdom to name a few. ■ Starbucks retail stores are typically located in high-traffic, high-visibility locations. ■ Because the Company can vary the size and format, its stores are located in or near a variety of settings, including downtown and suburban retail centers, office buildings and university campuses. ■ The Company can also locate retail stores in select rural and off-highway locations to serve a broader array of customers outside major metropolitan markets and further expand brand awareness. ■ While the Company selectively locates stores in shopping malls, it focuses on locations that provide convenient access for pedestrians and drivers. ■ To provide a greater degree of access and convenience for non-pedestrian customers, the Company has...
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