STARBUCKS

Company Information and Background

Starbucks is known as the world’s #1 specialty coffee shop and has around 10,000 stores in more than 30 countries.

Starbucks is known as one of “The Best 100 Companies to Work For,” and was ranked fourth as one of the “Worlds Most Influential Brands”

The Starbucks company website explains that “Starbucks is named after the first mate in Herman Melville’s Moby Dick”

Mission, Goals, and Objectives

Starbucks states that its mission is “to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.”

Starbucks’ goals are to remain profitable and to produce social, environmental, and economic benefits worldwide.

The company’s objective is “to establish Starbucks as the most recognized and respected brand in the world.”

Business Structure

Starbucks is a corporation.

Howard Shultz is the company chairman and Jim Donald is the president and CEO of Starbucks.

Starbucks owns around 6,000 stores and offers licensees and franchises to run additional stores worldwide.

Competition

Starbucks’ top competitors are Caribou Coffee, Diedrich Coffee, and Dunkin Donuts.

Starbucks also competes with popular coffee manufacturers including Kraft General Foods, Procter & Gamble, and Nestle. Kraft owns Maxwell House, and Procter & Gamble owns Folger’s.

Market Segmentation

External Influences

Target MarketStarbuck’s is a business that is applicable to a

diverse group of people. Starbucks considers itself the “third place – a

place between work and home.” 1

• Suburban young adult• Professional on the go• Age:18-35• Single I

Internal InfluencesNeed Set

For the busy professional, Starbucks products are delicious, affordable and easily transportable goods that may be used for the need of hunger, craving, or caffeine.

For the young contemporary individual may see Starbucks as a trendy location to converse and gather with friends.

Emotional InfluencesEnergy BoostStress RelieverCelebration

Situational InfluencesPhysical Surroundings

DecorWireless internetLighting

Temporal PerspectivesDrive ThroughHours

Decision Making Influences

Brand Loyalty Starbucks is the leading brand and coffee shop out of all

chains and independent coffee vendors, making brand loyalty of customers, a major advantage

Starbucks has a reputation for being a delicious product, making the coffee drinking experience more of an indulgence than a routine

Product and Product Position

Starbucks Product Line

Starbucks offers a wide product line

Hot and cold coffee beveragesTazo teaNon-caffeine drinks: Hot chocolate, apple ciderIce cream, Frappachino’sFood- breakfast foods, sandwiches, dessertsBooks, Cd’s, board games, equipment Gift Cards, mugs

Product Positioning

Strong value propositionHigh-quality productsGreat service

Consumers perceive Starbucks as being the “best” coffee around

Consumers are willing to pay premium prices because of this perception

Great quality and customer service leads to:

Starbucks exceeding customer expectations

High satisfaction levelsLoyal and repeat customers

Pricing and Distribution Strategy

Pricing

External Starbucks focuses on

conspicuous consumption Designer coffee brand

due to them pricing above the market rate for a cup of coffee

Consumers want to consume a luxury brand

Pricing

Internal Status indicator → “I am

drinking Starbucks; I have money to enjoy a luxury beverage”.

Target market purchases the brand name

Situational Consumers like spoiling

themselves with the Starbucks brand (they feel that $3 for a cup of coffee/coffee beverage is money well spent)

Pricing

Decision Process Factors Each different Starbucks

location is priced differently (because people are willing to spend more for example in New York City, than Towson, MD)

Towson University Starbucks on York Road Pricing Guide

Distribution Strategy Luxury coffee with an

environmentally safe mindset

Convenience (with many Starbucks locations) is what the population segment wants

Starbucks used for business meetings (wireless Internet available at all U.S. locations), a social venue and place to just sit and relax

Distribution Strategy

Consumers are able to enjoy Starbucks wherever they are (multiple locations)

Retail gravitation model (consumer will pick store based on store size and distance from customer)

Brand first, then the outlet second

Promotion Strategy

Promotion Mechanisms

No direct promotionsCommercials

Movie promotions“Akeelah and the Bee”

Walking AdvertisementsCustomers carrying cups

“In Store” Promotions

Black Apron

“Drink of the week”

Equipment

Television Promotions Unnecessary

Several locations

Double Shot Espresso “Bring on the Day” Last aired Spring 2005

Caters to target market

http://video.google.com/videoplay?docid=1264727438510422007&q=starbucks+commercial&pl=true

Customer Service and Feedback

Highly trained employeesEnvironmentally-friendly and conscious to

consumersGreat relaxed atmosphere/ambianceFriendly communications between

customer and employees

Regulations

Coffee temperature-timing of deliveryWarning labels- Notifications of hot

beverage, “Contents: Hot Beverage Inside”

Protective sleeve providedAdditional mission statement for

environmentally sound products

Recommendations

Increase the number of drive-thrusCorporate cateringKeep stores open later at key locations

i.e. high area/city stores

Enhance the retail aspect of the businessAdd more food options in stores