COMPANY OVERVIEW Starbucks is an international coffee and coffeehouse chain based in the United States. Starbucks is one of the largest coffeehouse company in the world with around 11,006 stores located in the US and more than 16,000 stores in 58 countries (early 2009)
Company History 1971-Founded in Seattle, Washington by Gordon Bowker, Jerry Baldwin, and Zev Siegl. 1971-First Starbucks coffee shop opens in Seattles Pike Place Market-coffee bean roasting company 1985- Howard Schultz becomes CEO and founds II Giornale Coffee Company-espresso beverages using Starbucks coffee beans 1987- Changes name to Starbucks Corporation 1987-First stores outside of Seattle are opened in Chicago, Vancouver, British Columbia. 1995-Starbucks Coffee International opens in Japan 1996-Begins selling bottles Frappuccino drinks 2002-Fourtune magazine names Starbucks as one of the 100 Best Companies to Work for. 2003-Acquires Seattles Best Coffee
Problems What could Starbucks do to make its stores an even more elegant third place that welcomed, rewarded, and surprised customers? What new products and new experiences could Starbucks provide that would uniquely belong to or be associated with Starbucks? How could Starbucks reach people who strategic paths should Starbucks pursue to achieve its objective of becoming the most recognized and respected brand in the world?
Situation Analysis: Corporate Level Mission Statement Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.
Six Guideline Principles Provide a great work environment and treat each other with respect and dignity Embrace diversity as an essential component in the way we do business Apply the highest standards of excellence to the purchasing, roasting, and delivery of our fresh coffee Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success.
Environmental Mission Statement Starbucks is committed to a role of environmental leadership in all facets of our business.
We Will Fulfill Mission By…. Understanding of environmental issues and sharing information with our partners. Developing innovative and flexible solutions to bring about change. Striving to buy, sell, and use environmentally friendly products. Recognizing that fiscal responsibility is essential to our environmental future. Instilling environmental responsibility as a corporate value. Measuring and monitoring our progress for each project.
Target Market Businessmen and businesswomen between 25-40 years old
Various Markets Gourmet coffee- target 18-34 years old coffee drinkers want something more than just coffee (ex; Caramel Macchiato) Skinny Platform-lower in calories with sugar-free syrup, skim mild, or no whip cream. Non-Coffee Gourmet Drinks (Tea, Smoothies, Chi Latte, Hot Chocolate, Ice Tea) Bottled Coffee-for on the go that can be found at Grocery Stores. (ex; Double shot or Mocha Frappuccino)
Segmentation Strategies Focusing on the niche of gourmet coffee drinkers Make coffee stand out compared to others by provided Starbuck specialty coffee or gourmet coffee. Expanded product line after establishing the niche.
Competitors McDonalds (McCafe) Dunkin Donuts Specialty coffees sold at retail through supermarkets (Nestle) Kraft General Foods Procter & Gamble (marketer of Folgers and Millstone brands
Advantage Over Competitors Retains their brand competence by offer their own gourmet coffee. Provide consistency at every store.
Marketing Mix Products: Starbucks sells brewed coffees, espresso beverages, cold blended beverages, food items, teas, pastries and other coffee-related items. Prices: The price of a beverages range from $1.00-$5.00 dollars. Location: All over the world and the United States. Promotion: Starbucks has been able to use a standardized advertisement theme around the world in order to incorporate different cultures.
SWOT ANALYSIS Strengths Starbucks has a widespread global presence. It has more than 16,000 stores in 58 countires. Starbucks is a very profitable organization, generating revenue over $10,000 millions in 2008. With such high earnings, Starbucks has a strong financial base that can help them undertake up and coming businesses. (According to MorningStar) Starbucks is its continuous growth and expansion, has expanded over 11,0006 store in the US and 16,000 worldwide. They have a strong ethical values and ethical mission statement as follows, Starbuck is committed to a role of environmental leadership in all facets of our business.
SWOT ANALYSIS Weaknesses: Starbucks too dependent on a main competitive advantage, the retail of coffee. They have been facing many difficulties in some of its interntional operations like a joint venture in Shalom in Israel and closed six stores in Tel Aviv.
SWOT ANALYSIS Opportunities: Growth in Market Expansion like increase stores worldwide in Japan, China, India and Pacific Rim nations. Co-branding with other manufacturers of food and drink. Threats: Starbucks prices are kind of expensive. Increase in market entry of many competitor and copy cat brands that may pose potential threats.
Weigh Alternatives Limit Amount of Stores built in geographic area Individualize stores to make them seem unique Continue to embrace Green Marketing Consider TV as a way of attracting new consumers Offer promotions Make sure products are worth the money
Course Of Action Limit amount of stores built in same geographic area Over saturating markets causes profits to be spread thin over multiple stores. Therefore, limiting the amount of stores opened in a certain square mile radius will help stores from stepping on each others toes. Individualize stores to make them seem unique By moving away from cookie cutter stores, customers will feel less like they are in a fast food environment but rather a cool local coffee shop that has character and individuality.
Course Of Action Continue to embrace Green Marketing Starbucks has taken steps to make itself environmentally friendly and should continue to think of new ways to improve its environmental image. Starbucks is currently ranked #17 on the EPAs list of Top 25 Green Power Partners for purchases of renewable energy. Consider TV as a way of attracting new consumers Starbucks has not until recently advertised on TV. Increasing its exposure is a great way of informing potential consumers why Starbucks coffee is great. Also feeds into letting the public know about its steps to helping the environment.
Course Of Action Offer Promotions Offer consumers opportunities to buy their coffee at a discounted price by running Happy Hour specials. Another great promotion is Customer Loyalty Program that rewards customers who drink at Starbucks on a regular basis. Make sure products are worth the money If Starbucks prices are equal to or more than our competitors, they should make sure that the coffee drinks they produce are worth the money. Often times, people dont mind paying a little extra for something if it is better.
Action Plan Limit amount of stores built in same geographic area – Closed 977 stores (worldwide) - 300 stores in USA. Many stores are very close to each other, so the closing of stores does not mean a lot of lost business. Starbucks can afford to shut down more stores. Individualize stores to make them seem unique - Starbucks and Apple should build on their partnerships and start offering stores with pay-to- use Apple computers with internet. Continue to embrace Green Marketing - Starbucks was ranked #15 on the U.S. Environmental Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy.
Action Plan Consider TV as a way of attracting new consumers – Start playing commercials on TV and try to team with Apple for a Starbucks-Apple movement. Offer Promotions - Offer a punch card with a buy 5 beverages, get 1 free promotion. Make sure products are worth the money – Increase product quality awareness by advertising in magazines, newspapers, on TV, radio, and internet the superior ingredients quality. Offer YouTube specific commercials.
Industry Sales Trend 2008 Store closures led to pretax charges of ~ $338 million, including $8 million in severance costs and ~$130 in lease- termination costs and future lease obligations. Stocks have been on a decline since October 2006 and have fallen by 79% New global markets should bring in good money
Forecast Now – 1 Year Increase the global market. Set up new more stores in existing countries Control the amount of stores built in the same area Shut down appropriate stores
Forecast 1-5 Years Enter new global markets Some rich countries (high GNP) that lack Starbucks: Luxembourg, Norway, Denmark, Iceland Improve store design In an attempt to get away from the cookie- cutter store design; Starbucks will most likely redesign the stores and give them a more sophisticated