Starbucks

Starbucks:
Marketing Plan
Anthony Arola, Jin Kim, Machaela Manning
Principles of Marketing, BUSA 30
Professor !armon
May "0, #00$
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Starbucks
Company Description
%n "&$", three frien's, Jerry Bal'(in, )e* Siegel, an' +or'on Bo(ker 'eci'e' to
open a coffee store at Pikes Place Market in Seattle, ,ashington- .hey name' this store,
Starbucks /offee, .ea an' Spice- .his store sol' coffee beans an' 'epen'able, high
0uality coffee making e0uipment- At this time, Starbucks (as consi'ere' a pri*ate
company- %n "&$#, the trio hire' !o(ar' Schult1 to manage the sales of retail an' to take
charge of the marketing of the company- After a trip to %taly, Schult1 opene' another
store, calle' %l +iornale, (hich (as e*entually combine' (ith Starbucks /offee, .ea an'
Spice- 2nce these t(o companies merge', they became kno(n as Starbucks /orporation-
%n "&&#, Starbucks became a public company, partnering (ith other companies,
such as Barnes 3 4oble, %nc- an' Pepsi/o- Starbucks /orporation gre( 0uickly, opening
many stores throughout the (orl'- Starbucks /orporation seeme' to be on its (ay to
achie*ing its goal of becoming the most (ell5kno(n coffee company in the (orl'- %n
"&&&, Starbucks ac0uire' the tea company by the name of .a1o- Also in this year,
Starbucks signe' a contract (ith Albertsons that (oul' allo( them to open multiple
coffee stan's insi'e of the grocery store- .here, they (oul' also sell their ne(er bottle'
'rink, the 6rappuccino, .a1o tea, an' other Starbucks merchan'ise- By #00#, Starbucks
ha' about 7,$0& 8a fe( years later this has more than 'ouble'9 stores throughout the
(orl', in almost thirty countries, selling ice cream, supermarket coffee beans, coffee
bre(ing e0uipment, coffee fla*ore' 'rinks, teas, books, an' compact 'iscs 8Kembell,
#00#9-
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Starbucks
Business Mission
Starbuck:s *ision is to become the most recogni1e' coffee bran' in the (orl'- %n
or'er to accomplish this goal, Starbucks follo(s four gui'elines- .he first of these is to
use the finest coffee beans to make their 'rinks- Starbucks pri'es itself on using the best
0uality supplies to make their pro'ucts- .he secon' component is to make sure that
consumers think of their store first, o*er all of the other coffee companies by creating a
memorable image- .he thir' component is pro*i'ing a summary of the role of (hat
Starbucks 'oes- .he company lacks in this component because it 'oes not specify (hat
business the company is in- ;%t assumes that as a recogni1e' bran' it 'oes not nee' to,<
be specific- 8Kembell, #00#9- .he fourth an' final component is to stri*e an' to reach the
companies full potential- .hese gui'elines are in an effort to make Starbucks the most
recogni1e' an' the most respecte' bran' of coffee-
Starbuck:s mission statement is to, ;establish Starbucks as the premier pur*eyor of
the finest coffee in the (orl' (hile maintaining =their> uncompromising principles =as
they> gro(< 8(((-starbucks-com9- Starbucks has si? gui'elines that they follo( (hen
making marketing 'ecisions- .he si? principles are@
Pro*i'e a great (ork en*ironment an' treat each other (ith respect an' 'ignity-
Ambrace 'i*ersity as an essential component in the (ay they 'o business-
Apply the highest stan'ar's of e?cellence to the purchasing, roasting an' fresh
'eli*ery of our coffee-
Be*elop enthusiastically satisfie' customers all of the time-
/ontribute positi*ely to our communities an' our en*ironment-
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Starbucks
Cecogni1e that profitability is essential to our future success-
8(((-starbucks-com9-
Starbucks is also concerne' (ith the (ell being of the en*ironment, so they ha*e a
secon' mission statement concerning the en*ironment- .his mission statement says,
;Starbucks is committe' to a role of en*ironmental lea'ership in all facets of our
business< 8(((-starbucks-com9- %n or'er to achie*e this mission, Starbucks has state'
that it (ill@
+ain an un'erstan'ing of en*ironmental issues an' share that information (ith
their partners-
Be*eloping inno*ati*e an' fle?ible solutions to bring about change-
Stri*e to buy, sell an' use en*ironmentally frien'ly pro'ucts-
Cecogni1e that fiscal responsibility is essential to their en*ironmental future-
%nstill en*ironmental responsibility as a corporate *alue-
Measure an' monitor progress for each proDect-
Ancouraging all partners to share in their mission 8(((-starbucks-com9-
Starbucks: mission is meant to benefit both its employees an' its customers-
Starbucks belie*es that it is important to make their employees happy, so they (ill, in
turn, to please their customers- Starbucks is kno(n for the goo' treatment of their
employees an' for their high le*el of customer ser*ice- .heir high 0uality pro'ucts also
make their name (ell kno(n an' respecte' by their customers-
Marketing Objective
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Starbucks
As of March "$, #00$, the company has about "3,000 stores, an' plans to ha*e at
least 70,000 stores (orl'(i'e- ,ithin the ne?t fe( years the company plans on attaining
this goal- /urrently, Starbucks has stores in thirty5si? 'ifferent countries inclu'ing Unite'
King'om, /ana'a, .hailan', Australia, an' Singapore 8Starbucks #00$9-
Starbucks belie*es it is important to ha*e a goo' relationship (ith their customers
(here*er they are locate'- 6or this reason, the company insists on using high 0uality
goo's an' ser*ices- .he company also pri'es itself on being *ery open to 'i*ersity
because they belie*e that (ithout 'i*ersity, their company (oul' not be as successful as
it is no(- .hey are kno(n to be accepting of 'i*erse groups of people because they bring
in i'eas for ne( gro(th opportunities- Jim Bonal', Presi'ent an' /A2 of the Starbucks
/orporation states, ;,hen (e embrace 'i*ersity, (e succee'< 8(((-starbucks-com9-
Starbucks belie*es that (ithout 'i*ersity, their company (oul' not ha*e gro(n into the
highly successful international company that it has gro(n into to'ay-
Situation Analysis
Industry Analysis
rends
/urrently, Starbucks has begun to look to international markets to further its sales
an' gro(th- .he company is no( pushing their bran' name internationally an' it is *ery
optimistic about their potential gro(th-
Starbucks (ill attempt to a'' stores in cities (here its logo are alrea'y commonly
recogni1e'- Sometimes, this means putting t(o 'ifferent Starbucks locations (ithin a
block of the other- !o(e*er in or'er to 'o this Starbucks risks cannibali1ation- Starbucks
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Starbucks
'oes a'mit to seeing see some cannibali1ation of their stores (hen t(o are operating
(ithin close pro?imity of each other-
Another reason for opening t(o stores close to each other is so people 'o not ha*e
to (ait in long lines to purchase Starbucks pro'ucts- .his ;close pro?imity< strategy
helps to ai' Starbucks in reaching their global store location goal- Buring this last fiscal
year, Starbucks a''e' FFE stores internationally- Starbucks 'oes not plan to stop (hen
they (ill ha*e a presence in 3F countries outsi'e of the Unite' States-
.hey are also looking to e?pan' into more Auropean countries such as Cussia,
(here they ha*e a strong bran' name recognition base- Gunker 8#00$9 says! Starbucks,
in the fourth 0uarter of the #00$ fiscal year, has opene' its first store in Mosco(, Cussia-
Cussia is one of the largest an' most rapi'ly 'e*eloping countries in Aurope- .his type of
gro(th presents an opportunity for international e?pansion for Starbucks-
Accor'ing to Starbucks gossip 8#00F9, Starbucks plans to open their first store in
Sao Paulo, Bra1il- .his (ill be 'one through a Doint *enture company, calle' Starbucks
Bra1il Comercio de Cafes- Bra1il is the (orl':s largest coffee pro'ucing country an'
coffee is (i'ely 'runk it Bra1il- %t also is the largest market in Hatin America-
Competitors
%n Starbuck:s annual report, Starbucks largest competitors are McBonal':s,
Bunkin Bonuts, Bietrich:s coffee, Pete:s coffee, .ully:s coffee, an' /aribou /offee
/ompany, %nc- !o(e*er, there is also the threat of substitution (hich inclu'es e*erything
consumers 'rink that 'oes not in*ol*e going to a Starbucks- .his can be as simple as a
consumer bre(ing their o(n pot of coffee at home, getting a cup of coffee from a gas
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Starbucks
station or simply 'rinking tea, so'a, milk, an' (ater- .he s(itching cost for the consumer
is *irtually none?istent because there are other options for the consumer to choose from-
S"O Analysis
Starbucks global presence pro*i'es the organi1ation (ith (i'esprea' bran'
recognition an' a strong customer base- /urrently, the company is e?tremely strong, an'
has numerous opportunities- !o(e*er, Dust as there are constant ne( opportunities that
Starbucks can obser*e, assess, an' e?periment (ith, there are fre0uent threats as (ell-
Aach of these threats has to be taken seriously-
Starbucks must continue to recogni1e that our (orl' is in a cycle of continual
change- .hey ha*e to un'erstan' their company:s strengths an' (eaknesses in or'er to
e*ol*e (ith their changing 'esires of the market- Starbucks nee's to analy1e their internal
issues, recogni1ing their strengths an' (eaknesses, buil'ing upon their strengths, an'
(orking through their (eaknesses-
6urthermore, an' most importantly, they nee' to focus e?ternally an' concentrate
on the (ants an' nee's of their customers- Starbucks nee's to take a'*antage of all
a*ailable opportunities an' protect themsel*es from potential threats-
Strengt#s
,ith all of the competition in the coffee in'ustry, Starbucks sets itself apart from
all other coffee manufacturers through their ability to bran' their pro'ucts through
pro'uct 'ifferentiation- .his is Starbucks: single greatest 'ifferentiation strength an' is
the main reason (hy they ha*e been able to maintain a competiti*e a'*antage o*er the
coffee in'ustry-
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Starbucks
Starbucks has currently taken o*er the coffee in'ustry in the US- Starbucks offers
a *ast range of coffee 'rinks, bagge' coffee beans, pastries, fruit 'rinks, an' e*en music-
!a*ing such a broa' range of items allo(s Starbucks to customi1e their pro'ucts to meet
the consumer:s 'eman's- Along (ith their be*erages, they ha*e also create' bottle'
coffee 'rinks an' ice creams that ha*e a''e' to Starbucks: bran' recognition an' pro'uct
portfolio- Because of this strong bran' name recognition, Starbucks has been able to
buil' a strong customer loyalty base-
A secon' strength to Starbucks is that it pro*i'es its customers an uni0ue
atmosphere- Starbucks offers its customers a place to sit an' ;hang out,< complete (ith
comfortable lounge chairs, (here music is playing, an' maga1ines are a*ailable, as (ell
as (ireless internet being offere' at many locations- By ha*ing this comfortable
atmosphere Starbucks sets itself apart from its competitors-
A thir' strength to Starbucks is ho( it has 'i*ersifie' into other pro'ucts other
than coffee an' confections- 2ne such e?ample is Starbucks entrance into the music an'
film in'ustry (ith the creation of Starbucks Antertainment- Me'ia Korea 8#00$9 says that,
the company has been in the music in'ustry since "&&E, operating un'er the name of
;!ear Music-< Starbucks create' !ear Music (ith /oncor' Music +roup, an' has sol'
their pro'ucts in their stores, creating a''itional re*enue for their company-
A final strength of Starbucks is that it is one of 6ortune .op "00 /ompanies to
,ork 6or in #00E 8S,2. Analysis@ Marketing .eacher, #0005#00$9- Starbucks pro*i'es
their employees (ith great benefits- .he company is a reporte' to be one of the better
companies to (ork for- .hey promote the i'ea of sustainability in the en*ironment an'

Starbucks
they also seem to be a highly ethical company- Amployees are often satisfie' (ith the
company because it is *ery stable an' takes goo' care of them-
"eaknesses
2ne critical (eakness that Starbucks faces is relying too hea*ily on the suppliers
of its pro'ucts- .he most critical being its source of coffee beans- ,hile it has spent years
buil'ing up strong relationships (ith its coffee bean suppliers from foreign nations, any
type of 'isruption (ithin its supply chain coul' hurt their bottom line- .hese 'isruptions
inclu'e ba' crops, social, economic an' political uphea*al (ithin the supplier countries-
!igh fuel costs an' 'isruptions on their shipping operations are all potential (eakness as
(ell for Starbucks- Buchanan 8#00$9 gi*es an e?ample of one of these 'isruptions (hen
he states that there (ill be shortage of fresh coffee beans in the (inter of #00$ because of
smaller coffee har*est in Bra1il-
Another e?ample of a single an' shortsighte' (eakness (ithin the Starbucks
supply chain is the %talian supplier of its espresso machines- .his company ser*ice
machines for both its 'aily operations an' those sol' (ithin its retail stores for its
consumers- .his particular small supplier is currently the sole source for all of the
Starbucks espresso machines an' parts- .his supplier is *ulnerable to the same threats as
the other suppliers an' recently ha' pro'uction problems 'ue to the high 'eman's of
Starbucks- Briefly, this company ha' troubles keeping up (ith the 'eman's of the
Starbucks /ompany- ,hile it (as e*entually able to catch up, this shortage 'i' ha*e an
a'*erse affect on Starbuck:s ne( store openings an' operations for a short time-
Another (eakness of Starbucks that has to be consi'ere' is its cultural
associations (ith the ,est 8in particularly America9- .he company has e?pan'e' their
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Starbucks
business into many countries throughout the (orl'- Cecently, BeiDing, the capital of
/hina, announce' that some of their people (ante' Starbucks out of their country
8BeiDing, #00$9- Starbucks sees /hina as its most potential market, so the company
thought they shoul' e?pan' into it- !o(e*er, the /hinese people 'o not 'rink *ery much
coffee- %nstea' of 'rinking coffee, they 'rink tea, (hich is the most common be*erage in
/hina- Starbucks is, therefore, promoting a pro'uct that 'oes not appeal to the people
they are trying to target- .his promotion backfire' on them an' no( groups of people in
/hina (ant the company out of their country- .he people of /hina also (ant Starbucks
out of their country because they *ie( Starbucks as an American company- .hey 'o not
(ant to lose their culture to American companies, such as Starbucks-
Opportunities
,ith Starbucks continuous gro(th, many opportunities ha*e surface' for the
company- %n fact, Starbucks has alrea'y ac0uire' o*er 70I of the specialty coffee
market, (hich accounts for "EI of the US market retail of coffee- Starbucks appears to
be boun' for further gro(th an' e?pansion in the future-
Starbucks has recently signe' an agreement (ith the (ine an' spirit group Jim
Bean Bran's to 'e*elop an' market a Starbucks bran'e' coffee li0ueur 'rink
8Batamonitor, #00E9- Hi0ueurs fla*ore' (ith coffee represent a goo' share of the li0ueur
market, an' this ne( pro'uct line (ill e?pan' its pro'uct mi?- %t (ill also attract ne(
customers an' significantly increase re*enues-
Starbucks also has to continue utili1ing their opportunities of entering the global
market- .he company (ants to e?pan' in areas such as Bra1il, %n'ia, an' Cussia
8Batamonitor, #00E9- As mentione' earlier, Starbucks belie*es Bra1il an' Cussia coul'
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Starbucks
be great markets for them- .he company is focusing on the cities (here the company has
a lot of room for gro(th-
#reats
Although Starbucks has e?perience' many opportunities an' much gro(th
throughout its history, there are many potential threats that the company has to be a(are
of- ;.he supply an' prices of coffee e?perience high *olatility- .he company:s
re0uirements for 0uality stan'ar' coffee e?poses it to multiple factors in the pro'ucing
countries, inclu'ing (eather, political an' economic con'itions (hich may a'*ersely
affect the company:s business- +reen coffee prices ha*e been affecte' in the past, an'
may be affecte' in the future< 8Batamonitor, #00E9-
.he (orl' coffee market is *ery competiti*e an' is gro(ing- .he specialty coffee
market has ha' many ne( entrants in recent years- As mentione' before, Starbucks:
maDor competitors inclu'e McBonal':s, ,en'y:s, an' .im !olton:s- Any of these
competitors (ith operating, marketing, an' financial resources coul' enter this market at
any time an' compete 'irectly against Starbucks- Starbucks is a(are of their competition
an' seems to be planning accor'ingly 8Batamonitor, #00E9-
.he company also faces threats of rising 'airy costs- Ca( milk price is increasing
'ay after 'ay- Milk an' other 'airy pro'ucts represent bet(een 35EI of Starbuck:s sales
an' sustaine' increase in prices coul' affect the company:s profit 8Batamonitor, #00E9-
Marketing Strategy
arget Market Strategy
Starbucks bases its o*erall marketing strategy on pro*i'ing their customers (ith
an uni0ue e?perience- .he company foun' that its customers come not only for its coffee
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Starbucks
but for the atmosphere that Starbucks pro*i'es- %ts customers come to talk (ith frien's,
rea', stu'y, listen to music, enDoy a 0uick snack, an' 'rink their coffee- .hus Starbucks
focuses on the image that it proDects to the public- %t (ants each store to be comfortable
an' uni0ue yet still feel like a coffee shop, a place (here customers enDoy coming to an'
stay longer than they plan- 8Kembell, #00#9-
Starbucks main target market is people (ho are e'ucate' an' ten' to rea' more
than a*erage- But although their typical customer ten's to be more e'ucate' their (ebsite
says that, ;Starbucks customers are people of 'i*erse ethnic, income, an' age groups (ith
*arying tastes an' interests-< 8(((-Starbucks-com9-
!o(e*er, recently, Starbucks has begun ;ina'*ertently< appealing to a younger
'emographic- .his younger 'emographic inclu'es stu'ents (ho are in Dunior high an'
high school- Some critics e*en think that the company is targeting chil'ren in an attempt
get them as customers (hen they are young- .his (oul' gi*e Starbucks a secure future
because as this generation continues to gro( ol'er, they (ill continue to 'o business (ith
Starbucks- Starbucks 'enies that they are targeting chil'ren but, as critics point out, they
continue to sell pro'ucts that appeal to chil'ren- 8A'amy, #00F9-
2*erall Starbucks tries to reach its customers (here*er they might be- ,hether
they are shopping, 'ri*ing to (ork, or taking a leisurely 'ay off Starbucks (ants a
con*enient location nearby- %f the customer 'oes not like stopping by its retails stores,
they offer (ays to or'er their pro'ucts online an' through the mail- A*en if an in'i*i'ual
'oes not 'rink coffee, Starbucks offers other pro'ucts such as tea- Starbucks tries to
appeal to as many people as they possibly can (ith 0uick an' easy5to5use channels-
Marketing Mi$
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Starbucks
Product
Starbucks offers its customers a broa' array of pro'ucts to try an' satisfy many of
its customers *arious nee's an' (ants- .hese pro'ucts that they offer inclu'e coffee, tea
cappuccinos, /B:s, BJB:s, books, ice cream, an' coffee accessories- !o(e*er (ith all
these 'ifferent pro'ucts Starbucks main focus is on their coffee-
Starbucks offers its customers a, ;fresh rich5bre(e' %talian style espresso-<
8Kembell #00#9- .hese espressos are ma'e of high 0uality coffee beans (hose
purchasing an' roasting are o*ersa( by Starbucks employees- 6urthermore each espresso
is re0uire' to ha*e a ;thick, uniform cream at the top of =the> Aspressos, strong fla*or that
is maintaine' K =so> that the freshness of the be*erage stays longer (hile un'esirable
fla*ors are minimi1e'-< 8Kembell, #00#9- Starbucks belie*es that these re0uirements are a
maDor part of their appeal- .hey think that the less they satisfy these re0uirements the less
likely the customer (ill (ant to go there- .hey also use many 'ifferent types of coffee
such as /olombia 4arino Supremo, an' /afL Jerona to appeal to a broa' range of
people-
%n a''ition to coffee Starbucks also ser*es tea- .a1o .ea, base' out of Portlan'
2regon, supplies the company (ith many premium an' herbal teas as (ell as tea
accessories- Starbucks chose to ac0uire this company in "&&& because it (ante' to attract
a 'ifferent 'emographic of customers- A lot of people (ho 'i' not 'rink coffee coul' not
come to Starbucks- Starbucks sa( that they (ere e?clu'ing some consumers- After
fin'ing out that these consumers (ho (ill not 'rink coffee usually 'rink something *ery
similar such as tea, they 'eci'e' to start selling it- 8Kembell, #00#9-
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Starbucks
At Starbucks stores they offer a *ariety of pastries an' confections to satisfy their
customers nee' for a snack- .hese snacks are there so the customer can ha*e something
to eat (ith their 'rink- 2r if that customer is late for (ork an' forgot to eat breakfast,
they can grab something 0uick to eat (hile they are getting their coffee- %n the Seattle
area Starbucks has also begun selling .op Pot Bonuts at their store- Many of the
customers in that area enDoy these 'onuts an' Starbucks chose to make this part of their
pastries an' confection section- .op Pot Bonuts is the only non5Starbucks pro'uct that
the company sells an' they chose to break their company policy to inclu'e it in their
store- 8Shult1, #00E9-
Starbucks has (hole an' groun' up coffee beans a*ailable for its customers to
purchase- .hey sell these beans for both 'rip coffee an' for espresso machines- Starbucks
also sells s(eets an' chocolates- .he s(eets inclu'e after5coffee mints an' lollipops-
.hey 'eci'e' to inclu'e chocolate in their pro'ucts, such as gift bo?es an' chocolate
bars, because chocolate an' coffee often compliment each other- ,hen one is bought the
other one is often bought (ith it-
At each Starbucks store there is coffee relate' accessories an' e0uipment
a*ailable- .hese inclu'e accessories such as espresso machines, stainless steal coffee
filters, cleaners, an' canisters- 8Kembell, #00#9-!o(e*er Starbucks is ha*ing a har' time
fin'ing (ays to sell these pro'ucts- .hey are often at high prices an' the customers (ho
usually come into the store 'o not nee' the pro'ucts- .hey come to Starbucks because
they enDoy coming an' they 'o not (ant to spen' the much money on an espresso
machine- %t appears that these pro'ucts are being targete' to people (ho 'o not (ant
them-
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Starbucks
Starbucks bases its (hole appeal on the en*ironment that it pro*i'es for its
customers- %t feels so strongly about this that it actually is part of the pro'uct that
Starbucks is selling- Starbucks belie*es that its customer 'o not Dust come in Dust to 'rink
their coffee, but to come in, sit 'o(n, rea', talk, listen to music, stu'y, an' 'rink coffee-
.here are e*en con*ersation topics on the si'e of each cup so that (hen they 'o sit 'o(n
they ha*e something to talk about- .he customers are buying the e?perience that
Starbucks pro*i'es (ith the pro'uct- .his inclu'es 0uick ser*ice, satisfie' employees
ser*ing the customers, access to the internet, an' an aroma that smells like a coffee
house- .hey are so committe' to ha*ing their stores feel an' smell like a coffee house
that they e*en prohibit their employees from (earing perfume an' cologne because it
takes a(ay the aroma of the coffee- %n a''ition to these things Starbucks makes sure that
they are en*ironmentally frien'ly so that it also a''s to their image that they are
promoting- 8Kembell, #00#9-
2ther pro'ucts that Starbucks sells are rea'y to 'rink coffee an' premium coffee
ice cream- .hey also sell music on /B:s, an' BJB:s at its stores- .he music is part of the
Starbucks e?perience an' they ha*e playing in the backgroun' of their stores (hile the
customer is 'rinking their be*erage-
Place%Distribution
Starbucks is the biggest coffee retailer in the (orl'- %t operates in a global
community (ith about "3,000 stores in 3F international countriesM ho(e*er most of their
stores are in the US- .ypically their stores are in high traffic, high5*isibility location (ith
the a*erage buil'ing si1e of ",E00 s0uare feet- .his inclu'es office buil'ing, shopping
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Starbucks
malls, grocery stores, an' retail centers- By ha*ing their stores these locations it allo(s
them to attract a high number of pe'estrian traffic- 8Kembell, #00#9-
%n a''ition to 'istributing their pro'uct they also ha*e agreements (ith other
companies that help out (ith the 'istribution of some of there pro'ucts- Starbucks
controls the maDority of its coffee sourcing, roasting, an' 'istribution to its retail stores-
But (hen another company, (ho shares Starbucks *alues, can pro*i'e a''itional a*enues
to reaching customer, they often (ill establish a relationship (ith them- .his is in an
effort to reach more of their customers (here*er they are- 8Kembell, #00#9- %f a company
has a popular retail space, Starbucks (ill license their operations to them- .his is often
the case at supermarkets, such as Albertson an' Safe(ay, (here Starbuck cafLs are in
their store-
.hey also ha*e a licensing agreement (ith Kraft 6oo's %nc- %n this agreement
Kraft has the rights to 'istribute an' market their (hole an' groun' up coffee beans
throughout the Unite' States grocery stores- Another agreement that Starbucks has is
(ith Pepsi/o, %nc- (ho 'istributes their rea'y to 'rink coffee pro'uctsM they also ha*e an
agreement (ith Breyers +ran' %ce /ream, %nc- that 'istributes their coffee ice cream- .he
Pepsi/o, %nc- an' the Breyers agreements are both E05E0 Doint *entures- 8Kembell, #00#9-
Starbucks coffee beans an' coffee accessories are also sol' through mail or'er
an' off of the internet- %t pro*i'es these 'istribution metho's for the con*enience of its
customer- .he pro'ucts through mail or'er an' the internet are all sol' in its retail stores
but Starbucks has this a*enue to satisfy all of its customers-
Promotion
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Starbucks
Starbucks has typically promote' its pro'ucts through less tra'itional a'*ertising
than other companies of their si1e- .hey rely on print a's an' on their image in mo*ie
an' tele*ision placement to promote their pro'ucts- .hey also 'o not a'*ertise through
tele*ision- .hey 'o not create commercials because they think that their customers rea'
more than a*erage an' they 'o not think tele*ision a's (oul' ha*e a big impact on their
target market- .hey also ha*e foun' they ha*e more success on a'*ertising on local
le*els that at national le*els, in (hich they use their print a's to appeal to their customers-
.he company belie*es that they (ill be able to better reach consumers through print a's
an' billboar's- 8Kembell, #00#9-
But more importantly Starbucks belie*es that its marketing strategy nee's to
create an emotional connection (ith its customers- .hat it nee's to be authentic an' reach
people in their hearts- Shult1, chairman of Starbucks sai' recently that, ; %t:s not goo'
enough to ha*e a goo' a', but e*erything you 'o helps complete the circleK the
packaging, the community in*ol*ement, the ser*ice all help buil' that emotional
connection-< 8Schult1, #00E9-So far it has been this philosophy that has built Starbucks
into (hat it is to'ay-
Starbucks has, ho(e*er, begun to look into more tra'itional marketing for the
future- .hey ha*e hire' a company calle', ,ie'en N Kenne'y to create an' a'*ertising
program- .his program (ill not in*ol*e tele*ision a's but it 'oes inclu'e other channels
that ;are consistent an' compatible (ith the e0uity< of the Starbuck bran'- 8Shult1,
#00E9-
Price
"$
Starbucks
Starbucks prices are more e?pensi*e than most of their competitors- .hey focus
more on the 0uality of their be*erages an' the e?perience that their customers get than
the actual price- .hey think that their customers buy their pro'ucts not because of their
price but because of their relationships they ha*e (ith their customers- %t is a ;balance
bet(een profitability an' social consciousness an' sensiti*ity-< 8Shult1, #00E9-
Implementation! &valuation! and Control
Marketing 'esearc#
Starbucks is constantly (orking on the research an' 'e*elopment of its
ne( pro'ucts- %t is also continuously looking for i'eas to make the Starbuck e?perience
more enDoyable for its customers-
2ne of these i'eas that (as intro'uce' in 4o*ember of #00" is the Starbuck car'-
.he Starbuck car' is a store *alue car' that can be gi*en as gifts an' it is use' to re'uce
time spent paying for 'rinks- So far this car' has been a success an' ;contributes to the
o*erall enhancement of customer:s e?perience-<
Another i'ea that (as implemente' to sa*e on the amount of time it took to make
'rinks in*ol*es ice scoops- Angineers at Starbucks notice that baristas ha' to take t(o
scoops of ice (hen making a *enti5si1e col' be*erage- .hey (ent back an' re'esigne'
the ice scoop- 2nce the stores starte' using the ne( scoops it cut off about "7 secon's
from the preparation time of the 'rink- .his (as in an effort to make sure that the
company hits its goal of getting the 'rink to its customers in three minutes or less- 8+ray,
#00E9-
Starbucks is al(ays looking for ne( (ays to impro*e their ser*ices to their
customers- %f a customer has a problem or a comment they can turn it into the comment
"
Starbucks
page off of their company:s (ebsite- By 'oing this the company has customer fee'back
to all of its ne( i'eas an' pro'ucts-
Organi(ational Structure and Plan
Starbucks ;has a*oi'e' a hierarchical organi1ation structure an' has no formal
organi1ational chart,< for its company- 8Kembell, #00#9- %t *ie(s its employees as
partners an' has outstan'ing employee benefits an' stock o(nership programs for its
employees- .he culture that Starbucks has create' is rela?e' an' supporti*e- %t makes
such a huge effort to take care of its employees because it belie*es that its employees are
a big part of their success-
)inancial Projections
Starbucks is a *ery profitable organi1ation- .heir net income an' re*enues ha*e
increase' e*ery year since the company:s beginning- Hast year, Starbucks earne' o*er
OEF7 million an' generate' re*enues of o*er O$-$ billion- .he regression belo( sho(s
nearly "00I of C s0uare- .his means that the results are almost "00 I reliable-
Cegression Statistics
Multiple C 0-&&EE$F$E
C S0uare 0-&&"$3#E0
A'Duste' C
S0uare 0-&&$FF$
Stan'ar' Arror ""&-F77
2bser*ations E
4et income
"&
Starbucks
$0
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
2002 2003 2004 2005 2006
Series1
Ce*enue
$0
$5,000,000,000
$10,000,000,000
$15,000,000,000
$20,000,000,000
$25,000,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Series1
Linear (Series1)
%n a''ition to this, Starbucks: #00F return on e0uity (hich re*eals ho( much
profit a company earne' in comparison to the total amount of sharehol'er e0uity foun'
on the balance sheet- 6or the last fe( years the C2A has been abo*e in'ustry a*erage-
SBUP McBonal':s ,en'y:s .im !olton:s
Bec 3" #00F #E-3#I ##-&3I "0-I 7-#$I
#0
Starbucks
Bec 3" #00E #3-FEI "$-"I 3-7EI #0-0$I
Bec 3" #007 "E-$&I "F-07I "F-&7I 4QA
Accor'ing to this of 'ata, (e can e?pect that the company (ill continue to
generate e*en more re*enue an' net income in the future-
Summary
Starbucks has become the most successful coffee chain in the (orl'- %ts multiple
stores throughout the (orl' generate great amounts of re*enue- .heir high 0uality
merchan'ise an' e?cellent customer ser*ice are the reasons (hy Starbucks is so
successful to'ay- Bespite its many competitors, Starbucks continues to flourish
throughout the (orl'- .he large amount of stores throughout the (orl' makes it easier to
compete (ith competitors-
#"
Starbucks
'e*erence:
A'amy, J- 8#00F, June #$9- +etting the Ki's !ooke' on Starbucks- The Wall Street
Journal. pp- B"
8#00$, March "#9- BeiDing ,ants Starbucks 2ut- The Wall Street Journal-
Buchanan, S- 8#00$, March "#9- /offee Coasters Stock Up- The Wall Street Journal,
pp /F-
+ray, S- 8#00E, April "#9- /offee on the Bouble- The Wall Street Journal- pp B"
Kembell, B-, !a(ks, M-, Kembell, S-, Perry, H-, 3 2lsen, H- 8#00#, April9- Catching
the Starbucks Fever. Cetrie*e' March #3, #00$, from http@QQ(((-aca'emicmin'-
comQ unpublishe'papersQbusinessQmarketingQ#00#5075000aag5catching5the5
starbucks5fe*er-html
Hamb, /- ,- 3 !air J- 6- 3 McBaniel /- 8#009- Marketing. 2hio@ .homson !igher
A'ucation-
##
Starbucks
8#00$9- Starbucks affirms 40,000 total store goal- Cetrie*e' May #, #00$, 6rom@
http@QQto'ay-reuters-co-ukQne(sQarticlein*esting-asp?R*ie(Scn3symbolSSBUP-2
3storyi'S#0E"##N"35Mar5#00$NC.CS3typeS0cna
8#00E, January #E9- Starbucks Cororation- Cetrie*e' May #, #00$, 6rom@
(((-'atamonitor-com
8#00F, Becember 039- Starbucks oens its first stores in !ra"il- Cetrie*e' May #,
#00$, 6rom@ http@QQstarbucksgossip-typepa'-comQTQ#00FQ"#QstarbucksTopens-html
S,2. Analysis Starbucks- 8#0005#00$9- Marketing Teacher. Cetrie*e' May ",
#00$, 6rom@ http@QQmarketingteacher-comQS,2.QstarbucksTs(ot-htm
Starbucks .akes a Step to Music in'ustry 8#00$, March "#9- Media #orea-
8#00E9- .he Art of /reating Passionate /onsumers@ !o(ar' Schult1- Cetrie*e'
March 30, #00$, 6rom@
kno(-kno(le'genet(orks-comQ#00EQspringQarticle#-html
Gunker, J- 8#00$9- Starbucks in $ussia Cetrie*e' April 30, #00$, 6rom@
http@QQgoingglobal-corante-comQarchi*esQ#00EQ0FQ"EQstarbucksTinTrussia-php
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