Starbucks strategy
Introduction
The first Starbucks store was set up in 1971 by three individuals who had a common liking for coffee and exotic teas- Jerry Baldwin, History teacher Zev Seigel and writer Gordon Bowker. The store was named Starbucks Coffee, Tea and Spice in the tourist’s Pikes Place Market in Seattle. However, later the name was changed to Starbucks Coffee Company. The logo was designed to be a two tailed mermaid encircled by the store’s name. The name was inspired from the coffee loving character in Herman Melville’s Moby Dick
The store was a success with excellent sales records and thus several Starbucks stores mushroomed in several parts of the US. Howard Schultz later joined the company as a marketing executive and then acquired it in 1987.In 1992 Starbucks went public and was successful in marketing a regular everyday product as something premium.
As of now Starbucks with over 20000 stores has a worldwide presence in over 50 countries which is an enviable global presence. It has presence in Europe, Asia, South America, Oceania, North America and Central America. The strategic expansion to China and now its emphasis on other emerging nations like India are all well thought out plans. China has in fact been a success story despite being a traditional tea drinking nation. Expansion to Australia on the other hand was not as profitable a venture.
The strategy adopted by the company to open up several stores in a very small area has also been critically examined by analysts before. In 2007 it was estimated that Starbucks was self-cannibalizing at the rate of 30%. But at that time the coffee market in the US was still growing so it continued to open up new stores. This study thus analyses the decision making process that goes into the expansion strategy of a premium brand. [1]
Objective of the study
The study aims to understand how companies like Starbucks which specialize in a very typical kind of product deals with the uncertainty of expanding
The first Starbucks store was set up in 1971 by three individuals who had a common liking for coffee and exotic teas- Jerry Baldwin, History teacher Zev Seigel and writer Gordon Bowker. The store was named Starbucks Coffee, Tea and Spice in the tourist’s Pikes Place Market in Seattle. However, later the name was changed to Starbucks Coffee Company. The logo was designed to be a two tailed mermaid encircled by the store’s name. The name was inspired from the coffee loving character in Herman Melville’s Moby Dick
The store was a success with excellent sales records and thus several Starbucks stores mushroomed in several parts of the US. Howard Schultz later joined the company as a marketing executive and then acquired it in 1987.In 1992 Starbucks went public and was successful in marketing a regular everyday product as something premium.
As of now Starbucks with over 20000 stores has a worldwide presence in over 50 countries which is an enviable global presence. It has presence in Europe, Asia, South America, Oceania, North America and Central America. The strategic expansion to China and now its emphasis on other emerging nations like India are all well thought out plans. China has in fact been a success story despite being a traditional tea drinking nation. Expansion to Australia on the other hand was not as profitable a venture.
The strategy adopted by the company to open up several stores in a very small area has also been critically examined by analysts before. In 2007 it was estimated that Starbucks was self-cannibalizing at the rate of 30%. But at that time the coffee market in the US was still growing so it continued to open up new stores. This study thus analyses the decision making process that goes into the expansion strategy of a premium brand. [1]
Objective of the study
The study aims to understand how companies like Starbucks which specialize in a very typical kind of product deals with the uncertainty of expanding
References: [1] Case study report- How Starbucks should improve its business [2] Starbucks: Delivering Customer Service, Young Me Moon John Quelch, (Harvard Business Review July 10 2006) [5] Marketing Lessons: Whatever Happened To Starbucks, Knowledge at Australian School Of Business, September 07, 2010 [6] Effects of the 2007 Financial Crisis on Starbucks, International Journal Of Business Strategy , Volume 12,Number 1, 2012