Hogeschool van Arnhem en Nijmegen

HAN University of Applied Sciences

E-Marketing Final Case Assignment:

Comparisons of Starbucks Coffee and Peet’s Coffee & Tea, and the Companies’ Online Websites

V.S.

Submitted to

Prof. Peter Steemers

By

Mr. Tisapol Ratitong ID# 470893 ti_zola@hotmail.com

November 11th, 2009

Table of Contents

1. Coffee War………….……………………………..……………………………2

2. Starbucks Coffee……….……………………………..………..….……………2

3. Peet’s Coffee & Tea……….…………………..………………......……………3

4. Websites Comparison……….……………………………………….....……… 3

5. 6 P’s on Company’s Website……….………………………..…………………5

5.1. Product….………………………………………………………………..5

5.2. Pricing.…………………………………...……………………………... 7

5.3. Place.………………………………………….……...…………………. 10

5.4. Promotion.…………………………………………………...………….. 17

5.5. People.…………………………………………………...……………… 19

5.6. Physical Evidence.……………………………………………………….20

6. Traffic Ranking……….………………………….………..……………………21

7. Vision Statement……….……………………...……..…………………………22

8. Mission Statement……….…………………………….…………………..……23

9. SWOT Analysis………………………..….……………….……………..……. 25

10. Summary of Strategies for Starbucks Coffee and Peet’s Coffee & Tea.……..... 28

11. Recommendation……………….……………………………………....……… 29

12. Conclusion….………………………………………………..……..………….. 29

13. Reference….………………………………………………………..………….. 31

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1. Coffee War

1.1 Introduction

Coffee, a brewed beverage from roasted seeds firstly found in the southern regions of the middle-East Asia and Southwest of Ethiopia, is currently one of the most famous beverages in the world. With its chemical properties that keep drinkers’ eyes wide-open, as well as the aromatic smell and the smooth taste of coffee that caught millions of coffee drinkers’ desires and addictions as morning, lunch and any free-time social drink nowadays. The coffee industry has become more and more competitive in the past few decades as the growing of interests in this type of beverage throughout the world. The popularity of premium roast coffee has begun since the emergence of the company named “Starbucks,” the world’s most recognized brand for coffee beverage at present. Starbucks has crated a new experience for coffee drinkers by generating a social gathering place for people to meet, enjoy their cups of coffee and experience the relax and “like-home” feeling in their coffeehouses. The company has started the coffee generation and coffee trend that influence consumers at many different ages, if not all crazy for coffee, to think of Starbucks as the first place in mind to gather up and meet new people, attracting in more individuals and enterprises to follow and try to imitate Starbucks’ business model, juicing up the competition in the coffee industry.

2. Starbucks Coffee

The company is an international coffeehouse chain and is based in Seattle, Washington, USA, made to life by Howard Schultz, the Chairman, President and CEO of Starbucks Corporation. With over 15,000 stores in 49 countries in the world, the company is listed as the largest coffeehouse company in the world. Starbucks Coffee is selling everything related to coffee including coffee beans, made-to-order beverages (mainly fresh brewed coffee), boxed tea, bottled beverages, baked goods and store-branded merchandises as well as home-kitchen scale coffee brewer. The company is putting much efforts and concerns on its employees, both part-time and full-time, by giving them exceptionally higher employee benefits, including healthcare and stock option programs, compared to other companies in any industry. By this, the employees feel happy working for Starbucks and have strong loyalty to its company, which will eventually be shown in the higher quality of service provided to the visiting customers. A part-time worker for Starbucks entitled to comprehensive health benefits, covering everything from medical, prescriptions, dental, and vision to hypnotherapy and naturopathy. The company also offers retirement savings plans, discounted stock options, income protection plans, adoption assistance plans, management bonus plans and support resources for child and elder care. Then, there is also the discounted Starbucks merchandise, the free pound of coffee or tea each week and all the drinks you can down during your shift.[6]

“Our mission statement about treating people with respect and dignity is not just words but a creed we live by every day,” says Howard Schultz, Starbucks’ CEO and president. “You can't expect your employees to exceed the expectations of your customers if you don't exceed the employees' expectations of management. That's the contract.”[6]

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The company has spent very little budget on their media advertisement and marketing campaigns but rather the “word-of-mouth” by their customers that made Starbucks’ business a huge success in a relatively short time. Their rapid growth and expansion of its numbers of store locations is among one of their successful strategies to capture the consumers for brand recognition, while emphasizing its quality of premium coffee through the “word-of-mouth” that build up their strong brand reputation in consumers’ minds. Starbucks has also tried to create their brand awareness and reputation through environment protection campaigns, using of recycled and recyclable products

Due to its macro-scale of business and its numbers of store locations worldwide, Starbucks’ effort to manage and control all of its branches is mostly done through sophisticated networking systems and the Internet. These systems efficiently help them control their inventory and the activities going on in each store around the world to share the information to the central system in Starbucks’ base in the U.S. for immediate responses and reacts instantaneously to any unexpected circumstances. Aiming at its loyal customers and their potential consumers, Starbucks’ own website is another approach to reach into every corner around the world and acts as the company’s showcase where they can effectively carry out special promotions and advertise their most recent events and campaigns to consistently keep their customers update with the company’s current activities and improve their business performance through the customer-oriented thinking at all time.

3. Peet’s Coffee & Tea

Founded by Alfred Peet in 1966 in Berkeley, California, the company has been the coffee business for more than 40 years and is specialized in coffee roaster and coffee beans. The store and its founder have a strong inspiration and significant influence to the emergence of Starbucks. The company went public in January of 2001, and has been listed as one of the main competitors for Starbucks with a annual revenue of around $400 millions dollars, compared to Starbucks’ annual revenue of roughly more than 25 times higher. Comparing to Starbucks, Peet’s Coffee & Tea has been growing much slower than its great rival. The company is mainly focused on its coffee beans and as a coffee and tea retailer rather than a coffee bar. This difference has positioned Peet’s to compete better in the market with Starbucks that has been carrying out its main products through its baristas and made-to-order premium brewed coffee. The company has around 200 store locations in the U.S., mostly in the state of California where its headquarter is, and small numbers of store locations outside its own state. In year 2007, Peet's opened its new and completely green roasting plant in Alameda, California--the only completely green roasting facility in the world. This new roasting plant replaced the former operations in Emeryville, California, and is expected to provide enough roasting capacity to allow Peet's to double its current annual sales to about $500 million per year.[5]

4. Websites Comparison

Starbucks is white snowflake background for their main page website, with the link icons arranged neatly for users to clearly glance through and select their link with

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little to no confusion. Most of the contents in the homepage screen is boundless and plain in colors, giving it a cleaner look and less crowded, and with the main graphic or video clips in the middle of the page for special events and promotions.

On the other hands, Peet’s website is rather bounded with boxes. Most of the icons and information are crowded in a page-size box, with the background color of brown color that reflects the color of coffee beans, their main products. Only having text icons and pictures, Peet’s website is more colorful and packed with many icons and promotions in the bounded homepage screen. The more detailed comparisons are explained in the following section of 6 P’s Analysis.

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5. 6 P’s on Company’s Website: Starbucks Coffee vs. Peet’s Coffee & Tea

5.1.1 Product: Starbucks Coffee

The company is selling almost everything you can find in its stores in their online store. Starbucks’ online store is selling everything from its signature coffee beans, Tazo Teas, Brewing Equipment, Drink-wares, Syrups and gift cards. Apart from its coffee related products, the company also sells the music records by Starbucks Entertainment that include the songs they play in their local stores for customers to create their own Starbucks experience at home, as well as the movies and books picked by Starbucks.

Starting with the coffee beans, Starbucks is selling all kinds of coffee beans named after their sources of raw materials such as Latin American Coffees, Africa Arabia Coffees, Asia Pacific Coffees, Multi-Region Blends, as well as their Specialty Roasts and Organic beans. The varieties of coffee beans offered in their online store covers all types of beans whether they want their beans to be mild, medium, bold, extra bold, whole bean coffee or ground for instant coffee. All these different types of coffee beans are introduced in details of where they are originated from and the uniqueness of each one in the websites, which help consumer choose among the types of coffee beans that suit their taste the most or best for any particular occasions. Starbucks is having their various types of coffee beans sold at different portion (by a pack of 1 lb. or a box of eighteen 2.5-oz. packs and 12 serving packs per box of Starbucks VIATM) for consumers to choose based on their individual desires.

Brewing equipment such as an espresso machine and coffee grinders are also sold in the online store, including brand-imprinted merchandise such as Starbucks brand cups and various kinds of mugs are readily available for instance purchase. Starbucks also promotes and sells in their website its customizable gift card that you can refill your money and use for purchasing at their local braches and online stores.

All pages in their product pages are decorated uniquely to distinguish the different among each type of coffee beans and products. The contents are clearly defined and easily to understand, having the background color and icons arrangement that is comfortable for your eyes and easily to scroll through, their product showing pages are enjoyable to go from one page to another and well define the aromatic experience of Starbucks.

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5.1.2 Product: Peet’s Coffee & Tea

The company is offering everything from its signature blends coffee beans, decaffeinated and beans collected from different countries of the world, its tea products, coffee gift sets including coffee pot, brewer and brand signature cups and mugs, as well as store gift cards.

Right from its main page, the shop icon is readily opened with sub icons of product choices for customers to directly choose to view (compared to Starbucks’s main page that customers have to click through to a sub page to begin selecting each type of product to proceed) and proceed to their quickly complete their purchase if they already have in mind what products they are looking for, as well as the “Express Buy” icon that gets customers to their best selling product lists that ease the customers for quickly choosing their popular products and complete their purchase. These icon layouts help reduce time and less complication to proceed to checkout.

Peet’s online store also provides information of each type of coffee beans, though the viewer has to click through “Grocery” and then “Our Coffee” icon to actually get to the product descriptions page, of which customers can read through the brief explanation and then select the particular beans that they desire, then another sub display pop-up will appear and there you can find very detail description, reading other customers’ reviews and make your own review, as well the bars that show the characteristics of coffee bean body and its liveliness for consumers to distinguish among the tastes of each product.

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5.1.3 Product: Comparisons

The varieties of products offered in both online websites are comparably similar due to the same core business the two companies are having. Both sites are selling coffee beans, both the common types of beans and their special signature beans, tea, coffee related merchandises and gift cards. Starbucks is having their various types of coffee beans sold at different portion (by a pack of 1 lb., a box of eighteen 2.5-oz. packs and 12 serving packs per box of Starbucks VIATM), whereas Peet’s only sell their beans in a pack size of 1 lb. Though having products in entertainment category such as music CDs, movies and books sold in Starbucks’ website, Peet’s online store seems to be less complicated for customers to proceed through to checkout with its “Express Buy.” Starbucks product description page appears to be easier to reach compared to Peet’s. However, the products are described in more details with actual product pictures and product characteristic level bars in Peet’s product description page where you can read others’ reviews and make your own review.

5.2.1 Pricing: Starbucks Coffee

Starbucks’ coffee beans are sold by a pack of 1 lb., pricing range of around $10 to $14 per pack; a box of eighteen 2.5-oz. packs priced around $43; and a 12 serving packs per box of Starbucks VIATM of around $10. Prices are also varied based on the way they are packed up for sales and special occasions in different time periods. Its Tazo Tea brand is sold by a box of two 24-piece boxes priced at $10, and an 8.8-oz. bag priced average of around $14 and ranges up to $42 per bag depending on the types of tea.

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Starbucks brand signature mugs are priced around $7-$11 each according to their designs.

5.2.2 Pricing: Peet’s Coffee & Tea

Peet’s coffee beans are sold at a price ranging from its house blend of $11 per lb. to a special type of beans that is priced up to $19 per lb. Its brand of tea is sold by a set of 25-bag package priced around $7 to $9, and a 4-oz. package priced from $12 to $20.

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Peet’s brand signature mugs are priced from $6 to $12 depending on the size, design and what material the mug is made from.

5.2.3 Pricing: Comparisons

The pricing strategies of these two companies are relatively similar, having comparable products offered at a competitively price range. Starbucks is, however, offering their coffee beans in many different packaging sizes and combos to better match with its customers’ preferences. Peet’s coffee beans are sold at slightly higher price than Starbucks if compared ounce by ounce, while there is no obvious distinction between the price of tea offered by each brand if compared between the same type of tea. The signature mugs of both brands are also priced in the same range. The two companies are offering very similar products, many of which are actually retrieved from the supplier sources locating at the same regions in the world that leads to the similarity in taste and smell, thereby generating a low switching cost for consumers to substitute between these companies’ products. These similarities in the two companies’ pricing strategies have created a difficult decision for a customer to select a product of one brand over the other; however, it is a matter of strong branding and customer loyalty that would determine their success.

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5.3.1 Place: Starbucks Coffee

- Physical Distribution: Starbucks’ coffee beans and other products are exclusively sold only in their online store or on the shelves in their local branches, rather through wholesalers such as Wal-Mart and Carrefour. This exclusive distribution of Starbucks help raise and maintain its brand value and sell it products at higher price compared to commodity coffee beans sold in the supermarkets. Starbucks’ use their online store and local braches to sell all of its products to its end users (customers) through direct distribution. By this, they avoid having to go through wholesalers and retailers, saving any cost related to indirect distribution and maintain a complete control over all activities, quality of services in product handling procedures and the product itself, as well as direct communication with its customers in terms of introducing new products, special news and events, and instant responses to complaints to keep customer satisfaction at its highest level. However, the company has realized its potential to grow its sales through some re-intermediaries that can broadly get to its customers such as ‘amazon.com’ or other similar intermediaries available online. Changing from exclusive to selective distribution channels help get Starbucks’ product across to more customers online, thereby generating higher margin through its online selling efforts.

These help Starbucks realize its growth in sales and more number of online shoppers to easily reach to Starbucks products without the need of directly visiting its own online store.

- Navigation: Starbucks’ homepage is decorated with light and warm color tones, clean layout and easy to understand texts that you would comfortable to stare at and glance around without tiring your eyes. The link icons and texts are not crowded on the page, but rather in a neatly grouping arrangement with only main link icons, shortcut links, and special promotions on the bottom portion of the page. The layouts of the icons and links are not bounded with boxes and lines, making the page to look wide,

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relax and comfortable to glimpse through. In the center of the homepage, Starbucks uses high bandwidth graphics to show playable video clips with music to promote its new events, having a ‘News Headlines’ bar just below the main graphic display to continuously display and rotate current events and company’s news. The homepage graphic display does not affect the page loading up speed when you open it but only when you click to play it, it seems to use up a lot of bandwidth and the video clip might not be continuously played if your Internet speed is not fast enough. The sub pages appear to have the same layouts as the main page. Having graphic displays that take up quite a bit of bandwidth in many of it sub pages slowing down the page opening speed and can be slightly annoying if your broadband speed is inadequate and if you already have specific destination to click through to.

However, the advertisement of its products, promotions and news events are cleanly displayed and reflects the warm, relax and comfortable experience you also find in Starbucks’ local stores. There are very little to none advertisements other those of Starbucks itself. Having less icons and links in each page, you need to click through more links to actually get you to the destination that you might want to go to in the first place. This might be one of their online strategies that Starbucks use to get the customers to walk through as many product sections as possible to get you to come across many of its products and possibly buy more items once the customers have actually reached to the checkout page. At the bottom of the main page, there are shortcuts that link to the company’s customer services and various ways to contact them, as well as the ‘frequently asked questions’ that quickly give you the answers to commonly found problems on their website. This ease of getting a contact with Starbucks make it deals better and quickly with complaints, questions and problems that customers might have and improve the customer relationship in the long-run.

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As my Internet provider speed where I conduct this research is relatively slow, the high-bandwidth graphic of many of Starbucks’ web pages are the problems for me. The contents on the graphic display may attract my attention and I want to play it on, but the streaming speed is not smooth and that distract me from continue viewing it. This is rather a problem that many visitors of Starbucks’ page have to face with, and the messages might not get across to many viewers no matter how interesting the company’s graphic video clips are. Though, I find Starbucks’ website very comfortable to click through due to its use of soft and comfortable colors for your eyes, with its user-friendliness and the icons and contents that are easily to understand and click through, guiding you to where you wish to go in their website without any hesitation or pullback.

- Reach: The percentage of global Internet users who visit Starbucks’ website can be found using ‘alexa.com’ website. The number of visitors around the world is fluctuated in the past 3 months in 2009. There were less number of visitors to its website in September than they are in November. This trend shows the growing of interests in Starbucks product by consumers around the world; one of the reasons might be from the change of consumers’ purchasing behaviors as the world financial downturn gradually recovers. The average numbers of visitors in Starbucks’ website is around 0.02 percent of global Internet users.

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- Localization: Starbucks has currently expanded its business to 49 countries worldwide. From its main page in Starbucks’ website, there is the ‘International’ icon on top of the page that links you to many different Starbucks’ websites for different countries and available in many different languages that Starbucks is operating in.

Each website is specifically made to meet the local market and consumers, offering different types of products, promotions, services, and product packaging that better suit with the local people and their uniqueness of demand.

Comparing between the U.S. website of Starbucks to its websites in China and Japan. There are the differences in background colors, icons and pictures layout, though all of them are composed of main graphic display in the middle of the main page that play moving clips and use relatively high bandwidth. Starbucks uses soft-pink background color for its online store in China with the default language of Chinese, but you have an option to switch to English language for foreigners living in that country. However, Starbucks’ website in Japan uses vibrant red color as their background rather than soft color tones like they usually use in websites in other countries, this reflects the difference in perception that different consumers living in the different parts of the world have, hence, difference in consuming behaviors.

5.3.2 Place: Peet’s Coffee & Tea

- Physical Distribution: Peet’s website is also aimed at direct distribution, where they can use their website to reach out to its end customers directly and sell its products without having to distribute through wholesalers and retailers to maintain high control over the quality of products and services carried its customers.

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Similarly with Starbucks, the company not only sell its product through its own website, but also adapt from exclusive to selective distribution channels by using re-intermediaries such as ‘amazon.com’ and other popular intermediary websites to push its sell and make it easier for consumers to reach its products.

- Navigation: Peet’s main page in their website is rather simple and takes up low-bandwidth, making it faster to load up the page compared to Starbucks. The pages is decorated with many sharp colors and dark tones that reflects the color of coffee, their core business. The main icons are readily available on the main page for you to select to where you want to go in their website, as well as the sub icons that slide down when you select the main icons and show the divided sub-sections for you to quickly get to your designated pages.

The main page of Peet’s website is stuffed with a lot of information already available for viewers to chooser right of, heavily focusing on introducing and selling its products and store promotions, making the page look less pleasant and lower value compared to Starbucks. The sub pages are mostly filled with text contents and pictures, making it faster to open them up. The unclean pages that are crowded with texts and pictures of Peet’s online stores help them get their product across to the customers with less effort; however, the pages are rather dull and show less culture of its brand to its coffee.

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It is easy to find a link to contact Peet’s customer service and company’s information, as there are icons that link to those pages on the bottom portion of their main page. In Peet’s own online store, the company has done well in grouping the popular products together and creates a direct link to page that sell their best-selling products right from its main page. The advertisements or links to any stores or products other than that of Peet’s are not available in their website.

Though it is a user-friendly website and very easy to navigate through Peet’s online store, I feel it is boring and not attractive to surf through their pages. The company is doing well in creating a website that is not complicated and consists of less links to proceed to checkout, but the pages are appeared to be dull and very focus on selling rather than educating the customers about their products and news events. Moreover, it is very fast to click from link to link without confusion, and take a short time to complete loading up a page.

- Reach: The percentage of global Internet users who visit Peet’s website is fluctuating around its average line of 0.002 percent in the last 3 months in 2009. The trend is also increasing from September to the end of November. This increasing of numbers of visitors might derive from its new ‘Peetniks’ program that the company is promoting through its website and trying to gain more customers to sigh for its automatic reorder program, as well as the better situation of the financial situation worldwide.

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- Localization: Peet’s Coffee & Tea mainly operates in the West Coast of the U.S. and the handful numbers of stores outside the state of California. The company is considered main rivals for Starbucks in the U.S. where they are headquartered. Since the company only operates in the U.S., Peet’s website is only available in English and only targeted the U.S. consumers and markets.

5.3.3 Place: Comparisons

The physical distributions of these two companies, in the U.S. at least, are relatively identical. Both Starbucks and Peet’s are focused on high-end consumer segments and sell their products exclusively only in its store branches. The two companies are implementing direct distribution through their own online stores, as well as adapting from exclusive to selective distribution in their online selling through the use of re-intermediaries that help them get their products across to the end consumers with less effort and wider range. Judging at their online websites, the main pages and sub pages of Starbucks are decorated with soft colors and fewer icons with the high-bandwidth graphic display in the middle of the page to emphasize the news events of the current period, compared to the main pages and sub pages of Peet’s that uses dark color tone for its background and are more crowded with links and contents (lower bandwidth) that gets you to where you want to go right from their first webpage.

Starbucks’ strategy is to try to use its user-friendly links with comfortable display to lure customers to walk around their website and try to educate them with their products, events and promotions before smoothly guide them to the checkout page with the possibility of picking up more products than the customers actually intended to buy in the first place. On the other, Peet’s website is rather simple with less effort to get to their product listing pages and proceed to check out and having an ‘Express Buy’ page that group up all its best-selling products together for the customers to quickly choose to purchase. Many of Peet’s web pages that are packed with icons and promotions can get customers to the products they are looking to observe or purchase quick and easy.

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Comparing between the reach of their websites by global Internet users in the past three months, ‘Starbucks.com’ website has been opened by Internet users globally 10 times more than ‘Peets.com,’ which has total visitors of around only 0.002 percent. The greater number of Starbucks website visitors is related to its much bigger size of business, its global brand recognition and store locations that operates in many countries worldwide. Starbucks has many websites available in many different languages for the local consumers in their target markets such as in Asia (‘Starbucks.cn’ and ‘Starbucks.co.jp,’ etc.) and Europe. The total number of reach will be higher than 0.02 percent if combine all of the company’s websites together. Starbucks has many different websites that are decorated uniquely to fit the local target markets in 49 countries worldwide and are available in many different languages; whereas Peet’s website is only available in English due to its business that is only available in the Western U.S. market.

5.4.1 Promotion: Starbucks Coffee

Starbucks is using many promotional strategies to introduce its new line of products, improve its sales and promote their brand awareness and customer loyalty. Using of its main page graphic display to promote its Starbucks (PRODUCT)RED items and (STARBUCKS)RED Card, advertising that every time a customer purchase one of these set of products, the company will make a contribution to the Global Fund to help the people fight against HIV disease in Africa. This social contribution will benefit Starbucks in both their public image through their donation and the increase in number of sales of its products.

The company is promoting many of its environmental and social responsibility campaigns to help raise its brand value to its customers by promoting its Starbucks Shared Planet web page that talks about their commitment to ethical sourcing of their coffee beans and trades, environmental friendly materials such as recycle and reusable cups, and their commitment to 1 million community service hours each year.

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Apart from their public relation campaigns, Starbucks also promotes their new products, Starbucks VIATM, its new on-the-go instant coffee packs, and the new products for the upcoming holidays on the main page of their website. The company is putting huge effort in social contribution to raise its public image, while sneaking in a little bit of their new product advertisement as their promotional strategies in their website.

5.4.2 Promotion: Peet’s Coffee & Tea

The company is promoting its ‘Peetniks’ program that customers can sign up for and the company will be notified when the customers are running out of coffee beans, then the company will automatically ship out a new set of order to the customers by the amount that they inform Peet’s in the program. This program helps diminish the time necessary for its customers to visit their website and make an order every time they run out of their coffee beans. The company promote this promotion in their main page as “Save 50% on Shipping & get a free pound of Holiday Blend” when a customer join its program.

The company is putting less effort on social contribution programs and environmental concern. Most of its promotion strategies are to increase its sales by offering cheap delivery method and free giveaways.

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5.4.3 Promotion: Comparisons

Starbucks is emphasizing on their public relation, social contribution and environmental concern campaigns in their promotional website pages to increase its public image and brand value to the customers while adding their new product advertisement along the side; whereas the promotional on its new services and products are the main promotional theme for Peet’s Coffee & Tea and little concern on the public relation. The differences between the two companies’ promotional strategies are due to their scale of business. Starbucks is an international corporate firm with great numbers of stores worldwide, the strong public image is very significant to the company’s brand value as a base to support their rapid expansion strategy to every corner of the world; whereas for Peet’s, the company scale is relatively much smaller and that its public image does not affect much on its sales and its business compared to Starbucks.

5.5.1 People: Starbucks Coffee

The company is putting much effort in creating new campaigns that deal with the social responsibility and environmental concern to build up its public image in their consumer’s mind and the societies they are doing their business in, as well as to create a world of learning about its company, its coffee, the company’s cultures and try to get them across to consumers through its own website. By creating value to its brand in consumers’ mind, the value of its product and services are added and Starbucks’ community is built. The company’s commitment to bringing great benefits for its employees and workplaces environment, which will eventually perceived and experienced by the customers through the quality of products and services provided to them.

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5.5.2 People: Peet’s Coffee & Tea

Peet’s is also trying to guide the customers to know more about their company, their people and the products they are selling in their websites. The company has put less concern on social contribution and environmental issues, and due to its smaller scale of business compared to Starbucks, Peet’s can focus more on selling of its products by carrying special promotions and deals to attract and retain its customers.

5.5.3 People: Comparisons

Starbucks’ strategy for its rapid-expansion of store locations is relied greatly on its brand image and public relation. Gaining of acceptance from local consumers and people in the society where they are planning to operate their business in, as well as putting high concerns in their own workforces are the key to their smoother business operation in the long run. Comparing Peet’s to Starbucks, the scale of the company is by far smaller than its rival and they are mainly operating in its birthplace and that the community and local consumers are familiar with its brand and the public relation has affected their business less than Starbucks, so they can emphasize more on promoting great deals and products in their website.

5.6.1 Physical Evidence: Starbucks Coffee

Once a customer has signed up for his/her account in Starbucks’ website, an immediate e-mail confirming that his/her account has been successfully created along with a welcome message and the e-mail address where a customer can use to contact the company’s online staff members for any customer account problems. After a new account has been created, a customer can choose to add a new Starbucks card containing his/her own information to use in the future with online purchasing in the company’s website for used for their customer relationship management. The credit card number will only requested once the customer has selected items toward the checkout page. This somehow makes its customers to feel more comfortable logging on to their own log in page without having to leave any financial-related information in the website until they choose to purchase something from the online store. During the registration the customers can choose to receive any newsletter or promotions from Starbucks in the future. The navigation experience is more of a gradual education toward Starbucks products and cultures through their web pages one by one, most of the company’s web pages are full with information related to the news and events about what the company is currently doing and the new lines of products and packaging for special occasions and social contributions for public.

5.6.2 Physical Evidence: Peet’s Coffee & Tea

When new customers first registered to Peet’s website, they are somewhat requested to key in their financial information (credit card number) before the registration of their new accounts are fully completed. This might scare consumers away from wanting to complete their registering. The customers may want to be a part of the company’s website and see what better deals they would get by creating their

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own accounts online. There is no confirmation letter to let you know whether your account information has proceeded or not, but they are asked to choose to subscribe to the company’s newsletter and promotions automatically sent to their e-mail address in future. The navigation is relatively straightforward; many of the web pages are filled with products, descriptions and prices for you to directly place in your online shopping carts and ready for checkout.

5.6.3 Physical Evidence: Comparisons

Starbucks is comparably better than Peet’s on their customer relationship management in trying to get their customers to register personal information in their website. The less in pressure results in the more willingness of online consumers to participate in Starbucks online website. The deals and sales promotions are much clearer showed in Peet’s online store, persuading online consumers to go quickly through their pages to checkout. Starbucks, however, is more toward creating its brand value and culture to online visitors, emphasizing on news events and public relation campaigns to raise their brand reputation toward the society.

6. Traffic Ranking: Starbucks.com vs. Peets.com

The traffic ranking of global Internet users from ‘alexa.com’ comparing between the two companies’ websites for the past three months, September to November 2009, is as shown below.

Starbucks.com (blue line) has attracted much more online visitors as well as the higher number of web pages on the site in the past three months (ranked in the top 7,000 most-visited websites in the entire world), resulting in a much higher traffic ranking compared to Peets.com (red line, ranked in the top 85,000 websites). The much larger number of viewers toward Starbuck.com is mainly due to the much larger business size and its worldwide operation compared to Peet’s Coffee & Tea that has much lower brand recognition since it only operates in the U.S. market.

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Comparing on the average time global Internet users spend on viewing each website, visitors usually spend around three minutes on Starbucks.com (blue line) and there is not much of a fluctuation between each day in the past three months. The average time online users spend on Peets.com (red line), however, fluctuates in a much larger fashion from one period to another.

These fluctuations might derive from different promotions and great deals the company promoted to support their sales during different occasions, attracting consumers to search around and stay in their website longer (around 4 minutes) in early September and slid down as most consumers were already aware of the deals and promotions to about 2.5 minutes per visit in early October, then climbs up again to about 3.5 minutes in the third quarter of October as new promotions, products, or annual occasions had been reached.

Starbucks.com, however, can keep its online viewers to spend time on its website in a much steady fashion (low fluctuation) based on the fact that the website is rather a front window for the company to educate and promote the news events, new products during different occasion and culture toward the online consumers rather focus on selling as in Peets.com, as well as the appearance of the website and web pages that are less crowded with information and texts but rather with attractive pictures, video clips and the use soft and cozy colors and page layouts that are comfortable to perceive.

7. Vision Statement

7.1 Starbucks Coffee

“To establish Starbucks as the most recognized and respected brand in the world.”[10]

Starbucks’ vision statement is very clear in a sense that they are trying to make their brand name and logo the first thing consumers everywhere in the world think of when they are thirsty or looking for places to hang out. The company’s main strategy is to rapidly expand its coffeehouse branches to as many corners domestically and

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internationally, and they strongly believe that eventually their vision will come to reality. Their vision statement is specific, measurable and realistic. The world’s number one brand recognition is the Coca-Cola Company. Coca-Cola has been in the carbonated beverages market for a very long time, so it is very difficult and quite long-term goal for Starbucks to compete for the top ranked brand recognition position. The goal is achievable, but it is not time-framed as it is long-term goal of the company.

7.2 Peet’s Coffee & Tea

“To be the gold standard specialty coffee and tea brand available to the world, with one of the most dedicated and loyal customer followings of any brand.”[11]

The vision statement is very straightforward as the company is consistently trying to bring out a premium quality of its specialty coffee and tea products to the world. Currently, the company is only operating mainly in the U.S. western market and has not expanded to international market yet. Peet’s Coffee & Tea has been in the coffee business for a very long time and it is trying to increase its brand reputation to a wider markets. The statement is specific as to be “gold standard” of coffee retail business, measurable by customers’ feedbacks and percentage of market share, achievable, realistic, but not time-framed.

8. Mission Statement

8.1 Starbucks Coffee

“To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.”[10]

While “to inspire and nurture the human spirit” of their mission sounds somewhat vague and not related to coffee, it tells consumers very well about their existence and the way they are doing their business. Starbucks’ mission is to expand their unique experiences offered to their customers every time they make a visit in any of their coffeehouses located anywhere in the world. The company continues to increase its numbers of stores and expand itself to every location worldwide to serve every consumers their premium roast cup of coffee and warmth welcome through their “like home” quality of services, gradually fulfill those experiences to as many neighborhoods.

8.2 Peet’s Coffee & Tea

“To enable and inspire customers to enjoy the daily pleasure of Peet's Coffees & Teas by providing a distinctive, superior product, superior coffee and tea knowledge and superior service to every customer, every day.

1. Create a work environment that values and promotes teamwork and diversity, where we treat each other with dignity and respect.

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2. Communicate honestly and directly to each other, our customers and our partners.

3. Remain dedicated to the highest standards of bean and leaf selectivity, our signature, artisan roasting process and freshness.

4. Expand and deepen the coffee and tea knowledge and passion among our own people.

5. Focus on developing fanatic customers, not just satisfied customers, who evangelize Peet's to others.

6. Positively contribute to the communities and environment of producing countries globally and in the communities we operate in locally.

7. Recognize that improving profitability over time is essential to our success.”[11]

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9. SWOT Analysis

Strengths Weaknesses

Starbucks Coffee

Brand recognition and customer loyalty

Extensive store network Diversified product ranges,

including non-coffee beverages and food items

Good work environment Strong Human Resource

Management and employee relationships

Social responsibility image Effective store location

strategy

Expensive product pricings Entire business relies on one

industry, risky in case of coffee industry breakdowns.

Market saturation Under Fair Trade Certified

coffee, paid 23% higher than market price

Low switching costs for consumers

Peet’s Coffee & Tea

Brand reputation, long presence in the market

High experience and knowledge in extensive range of coffee beans and related products

Strong customer base (in western U.S. market)

Only available in the western U.S.

Conservative image Low brand recognition Low switching costs for

consumers

Lack of social image, public relation and global contribution

Opportunities Threats

Starbucks Coffee

+

Peet’s Coffee & Tea

Regional and Global expansion

Widen its distribution channels (delivery, supermarkets)

Expand product ranges, food and non-food products

Growing of interests in lower-price coffee due to the financial situation

Possible saturation in coffee in the U.S. market

Higher prices of raw materials Intense competition from

rivals, eq. McCafe (comparative pricing), Dunkin’ Donuts (lower pricing)

Possible future trend toward substitution of coffee and social gathering places

Starbucks Coffee:

1. Strong Human Resources Management and Employee relationships + Global expansion:- To globally expand its stores, Starbucks can use its Strong HRM to manage

its branches in foreign countries through recruiting local employees with high potential and effectively train them to provide the same standard of services found in every Starbucks branches in the U.S. or any countries worldwide. With efficient employee benefit programs, the employees will

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feel secure and happy working for Starbucks, hence, the better the services provided to customers.

2. Brand recognition and Customer loyalty + Widen its distribution channels (delivery, supermarkets) and Expand product range:- Starbucks can also push out its products (coffee beans, tea, and

merchandises) to a broader range of distribution channels. With its strong branding and high recognition in the market, the company can use this advantage to sell its products over other brands on the shelves.

3. Expensive product pricings + Growing of interests in lower-price coffee due to the financial situation:- The financial crisis has strong influence in the consumers’ purchasing

behavior to prefer different brands of coffee with acceptable quality that offered at lower prices in the market. Starbucks can try to introduce a new line of coffee in their menu selling at lower price and try to capture the lower-end consumers. Though this strategy may decrease the brand image of the premium coffee Starbucks has over the years, the company needs to clearly distinguish between its premium product lines from its more affordable products to gain lower-income consumers while maintaining the loyalty of its higher-end consumers for its premium roast coffee.

4. Brand recognition + Possible saturation in coffee in the U.S. market Global expansion:- The increasing of new coffee-making companies and the higher competition

in the coffee business in the U.S. market has created a sign for the possible saturation of the market in the near future. Starbucks, with thousands of branches in the U.S. market alone, can use the strength of its brand image and reputation to emphasize on expanding to the worldwide market as many of the markets internationally are still at early ages of coffee trend. The company should maintain its standing in the U.S. market as the brand for coffee industry, and put more efforts in learning and adapt to international markets for rapid growth in the future.

5. Low switching costs for consumers + Intense competition from rivals such as McCafe and Dunkin Donuts:- Consumers have lower and lower switching cost due to the increasing in

availability of the premium roast coffee in the market. Starbucks can try to create a new line of products at lower price to compete with its rivals. Having their strong brand that mainly focused in making coffee as its advantage, consumers will have higher tendency to choose Starbucks over other brands if sold at the same price due to its brand.

6. Under Fair Trade Certified Coffee + Higher prices for raw materials:- Starbucks is under the Fair Trade Certified coffee that the company is

obligated to pay 23% higher than the actual market price of its coffee beans; the rising of prices for raw materials will definitely have great impact on the cost for the company. Starbucks can encounter this crisis by acquiring the suppliers of its raw materials to have higher control over the prices, as well as seeking for more suppliers in different region of the world to avoid the rising of supplier’s bargaining powers.

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7. Possible future trend toward substitution + Lower switching costs:- The coffee consuming trend is out of the company’s control. Starbucks must

consistently focus on its customers and be consumer-oriented to adjust its products or services to best meet the current consumer demands. This is considered as the long-term possibility that Starbucks might have to face in the future. Though, in many countries the trend of coffee drinking is still at a very early stage and the impacts on the company at the moment is still very low.

Peet’s Coffee & Tea:

1. Brand reputation, long presence in the market + Regional expansion:- The company can use its brand reputation and try to spread its braches

toward other regions in the U.S. market first and to measure its brand and product acceptance from domestic consumers. With the long presence in the coffee industry, the company can use its experience found on one region of the national market as a base to adjust their strategies to suit consumers’ demands determined by market research to expand its business to broader regions in the U.S.

2. High experience and knowledge in extensive range of coffee products + Expand product ranges:- Based on the facts that Peet’s has been in the coffee beans and related

products for a very long time, the company can use the market research to define what the customers really want with their coffee or products to go along with the coffee or tea to consistently develop new products to attract more customers and expand its product selections to satisfy existing customers and keep coming back to the stores.

3. Low brand recognition and Low switching costs for consumers + Growing of interests in lower-price coffee due to the financial situation:- The lack of brand recognition of Peet’s in other regions of domestic market

and the low switching costs for consumers to change their desires to purchase products from its competitors have created major problems for the company and the need of strategic adjustment to over these crisis. The opportunity created from the world financial crisis is that more and more customers are leaning from premium prices toward lower prices for coffee. The company will have to emphasize more on expanding its brand awareness to consumers around the market and differentiates its products to higher the switching costs for consumers and use the recognition of its brand to come up with new lower-price lines of products to capitalize on the new opportunity created by the change in the purchasing behavior of the consumers, as well as to continuously come up with new promotions and deals to make consumers feel they getting more (premium quality compared to lower price coffee, sales promotion) for less (money they pay) the higher prices of Peet’s brand of coffee is well deserved.

4. Widen its distribution channels (delivery, supermarkets) + Low brand recognition

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- One of the company’s main weaknesses is the lack of brand recognition in the U.S. market alone. The company is selling their product exclusively through its handful store locations, Peets.com website and online re-intermediaries such as Amazon.com to preserve its brand premium image and not mass selling coffee. Though, the distribution channels the company is selling their products through are limited and the expansion of its channels toward home delivery and occupying shelf-spaces in major supermarkets might be a way to rapidly increase its brand recognition and widen the consumer markets. The company may choose to only expand its products distributions through selecting only intermediaries with premium brands and avoid low-cost leadership wholesalers such as Wal-Mart to increase the ease of reach by its consumers while preserving its brand premium for coffee.

10. Summary of Strategies for Starbucks Coffee and Peet’s Coffee & Tea

Starbucks is clearly following its mission statement of consistently growing its business worldwide and reach out to as many consumers as possible, serving them with premium cup of coffee along with friendly services and comfortable atmospheres inside the coffeehouses to make customers feel “just like home” every time they visit, while expanding its culture and social contributions to the people around the world. Starbuck is using its website to rapidly expand its culture and brand, reaching its wing further to cover as many consumers online as possible.

All the strategies of rapid store expansion, strong customer relationship, as well as the great quality of services and products that meet an extensive range of consumer desires of Starbucks will bring forth financial success to the company and increase shareholder values, propelling Starbucks to move closer toward the company’s vision statement of becoming the most recognized and respected brand in the world. Starbucks’s online website, Starbucks.com, is well supporting their vision, mission and company’s goals. The way the company is trying to spread out its culture, unique aroma of its premium brewed coffee and the global contribution that reflects the company’s ultimate direction of creating the brand Starbucks to be the world’s listed number one brand in the future.

Peet’s Coffee & Tea is also trying to capitalize on its sales and brand reputation in the regions where the company is mainly operating in. Peets.com has created another significant way for the company to connect and reach out to its existing customers in its market, promoting its brand and products through sales and attractive deals such as ‘PEETNIKS’ to emphasize on creating customer loyalty to its brand through ‘automatically reorder’ program that knows when each customers participating in the program is running out of Peet’s coffee beans and other products and automatically place a new order for the customers periodically based on the amount they requested when they signed up for the program. The company is also using its website as a base to try to spread its image of passion for coffee and tea to the consumers’ perceptions.

Though Peets.com is appearing toward the selling activities rather educating customers and public relations as for Starbuck.com, it is doing well in supporting its vision, mission and goals of creating gold quality of products to people in around the

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world and becomes one of the most dedicated brands with strong customer loyalty by consistently come up with new products, deals and superior services that keep on satisfying its customers more and more everyday.

11. Recommendation

Starbucks.com and Peets.com are aiming at different approach, one is to increase its brand through products education and social contribution events while the other is more toward pushing its products to sell and sales promotions, though they both are moving in the same direction of attracting more customers and convincing them to have higher interests in their brands and products. Starbucks, having higher bandwidth graphics displayed in many of its webpage for new events and public relations, can emphasize more on creating product deals and promotions to increase its online sales. Though, it is very important to notice that Starbucks.com stands for much larger market coverage (Eastern vs. Western regions in the U.S., as well as many other countries that Starbucks uses its Starbucks.com website for rather than creating a special website for that particular country) than Peets.com, making it very challenging for Starbucks to provide promotions and sales deals to satisfy all the demands in numbers of areas.

Starbucks.com is doing well in making its high-bandwidth graphic to only work when consumers choose to play it, reducing the time to open its websites for online consumers with lower bandwidth Internet connection. Peets.com, with its much smaller scale of business and only operates in several states in the Western U.S., can control its website to aim at improving its sales of products. Based on the result shown in the traffic rank section, Peets.com can try to manage its promotions and deals in a more frequent manner to keep online consumers who visit its website to spend more time exploring their contents for a longer period in each month. Peet’s Coffee & Tea can also try to expand its products offering in more packaging sizes to satisfy more demands and compete strongly with Starbucks’ offers such as instant coffee packs.

12. Conclusion

In this report, the internal situation (strengths and weaknesses) and company’s external factors (opportunities and threats) of Starbucks Coffee and Peet’s Coffee & Tea have been studied and analyzed, as well as the comparisons on the different in online sales and marketing activities and the appearances presented on their online websites.

Starbucks.com website is well supporting what the company is actually doing ‘in real life.’ Most, if not all, the things they do and offer online is well matched with the company’s goals toward its mission and vision stated. Starbucks is clearly following its mission statement of consistently growing its business worldwide and reach out to as many consumers as possible, serving them with premium cup of coffee along with friendly services and comfortable atmospheres inside the coffeehouses to make customers feel “just like home” every time they visit, while expanding its culture and social contributions to the people around the world. All the strategies of rapid store expansion, strong customer relationship, as well as the great quality of services and

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products that meet an extensive range of consumer desires of Starbucks will bring forth financial success to the company and increase shareholder values, propelling Starbucks to move closer toward the company’s vision statement of becoming the most recognized and respected brand in the world.

Peets.com, on the other hand, is supporting its smaller operational scale through the strong enforcement of sales and promotions in it online website. The company is promoting its brand through specialty coffee with great deals and automatic reordering delivery program, all of which are leading to the company’s stated vision and mission of serving gold standard specialty coffee while promoting its brand loyalty along the way.

In my opinion, Starbucks should adjust its websites and the categories to make consumers who are only looking to purchase Starbucks products and not desire to read through all the product description pages to proceed through to checkout faster with no hustle. By providing pictures of product promotions as a quick link to its express online checkout page will help the company capitalize on the groups of consumers who demand quick online purchasing and transaction, thereby increasing the customer satisfaction to use its website, generating “word-of-mouth” from customers to customers and increase the number of traffic in Starbucks.com, hence, the increase in measurable online sales. Peets.com, however, can alter its online website to bring out the company’s culture to online viewers rather than only using the company’s website as a tool to increasing its sales, or else the image of its online website will eventually be a just another typical website that sells premium coffee products in consumers’ minds. The core value and brand culture of Peet’s Coffee & Tea can be enhanced to project a long-term profitability and customer loyalty. The availability of different languages should also be provided in Peets.com even though the company is only operating in the U.S. It is important to note that there are many foreigners livening the country especially in the western region of the U.S. such as Mexicans and Asians, the company can make these groups of customers feel that they are cared and put attention by the company and thereby leading to higher number of potential customers, a base for future growth and expansion toward other regions of the U.S. and nearby countries, and the increase in company’s sales and profitability in a long run.

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13. References

1. http://en.wikipedia.org/wiki/Coffee

2. http://www.starbucks.com/

3. http://www.peets.com/

4. http://en.wikipedia.org/wiki/Starbucks

5. http://en.wikipedia.org/wiki/Peet%27s_Coffee_&_Tea

6. http://www.evancarmichael.com/Famous-Entrepreneurs/643/Lesson-4-Pull-For-Your-People.html

7. http://www.businessweek.com/

8. http://www.amazon.com/s/ref=nb_ss?url=search-alias%3Daps&field-keywords=starbucks+coffee+bean&x=0&y=0

9. http://www.alexa.com/

10. http://en.wikipedia.org/wiki/Marketing

11. http://www.clintburdett.com/process/11_documents/documents_01_2_vision_style.htm

12. http://www.peets.com/who_we_are/history_mission.asp

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