Starbucks Case Study
Introduction Problem Identification Situation Analysis Alternative Actions Recommendation and Implementation Conclusion
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.
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 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.
Slow customer service. Inadequate evaluation methods. Lack of a solid marketing team. Change in customer base.
Slow Customer Service
Increased variety Same number of employee’s Did not want to increase number due to economy. Worked on enhancing barista efficacy.
Inadequate Evaluation Methods
“Customer Snapshot” “Legendary service” Both gave great ratings. Customers had different ratings.
Lack of a Solid Marketing Team
Split into 3
Marketing research Category Marketing
No chief marketing manager.
Change in Customer Base
Used to be
More educated , higher income bracket.
Younger, less educated, lower income bracket
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
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
Actual Service Timing (2003)
3 minutes from Back-of-the-line to Beverage-in-hand. Impact on Customer Perceived Values
Scope for Product Innovation(2003)
New Flavors to capture more customers. Partner Acceptance of new flavors
Affects on Market Segmentation(2003)
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