Starbucks Case Mine

8/7/2019 Starbucks Case Mine

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Starbucks Case StudyTejasvi, Sanjeev, Kaneej, Anand Gowda,

Keerthan & Jyoti Prakash


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Coffee market- a glimpse

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The practice of commercializing Coffee began in AD 1000with Arab traders brought the coffee tree from Ethiopia toMiddle East.From Arab Countries it spread to Europe

in 1500s. popularized as meeting placesin Europe & France

In 1940, Coffee Processors like Nestle(Hills Bros Brand), Kraft General Foods(Maxwell House), Procter & Gamble (Foglers) developed

Slight shift of Coffee users to soft drinks in 1980s.Increasing profit by- decreasing image advertising,increasing use of robusta beans, converting 16 ounce to 13ounce a can, coupons & in-store promotion.


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Starbucks-Background and

History Gerald Baldwin, Gordon Bowker, and Ziev Siegl opened asmall coffee shop in Seattles Pike Place Market in 1971

Howard Schultz Joined the Starbucks marketing team

Traveled to Italy in 1983 and became interested in theespresso bars and tried to bring it to America

Highly impressed by the Italian Espresso bars & Cafes.

Realized the fact that Americans lack the sense of servingCoffee in a relaxed atmosphere.

Founders sold the company to Shultz in 1987.

Began to open new stores and had 140 stores by 1992

Decided to take the company public and succeeded by openingmore stores

Shultz continued to take the position as chairman and chief global strategist and hired CEO Orin Smith in 2002


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Present Context

Leading retailer of specialty coffee beverages & beans relatedfood & merchandise.Annual sales in 2 005 were $5.3 billion wit a profit of $ 39 2 million.O wns & operates more then 5 2 00 retail stores & has licensedan additional 2 800 airports & shopping centers in 30 countries.Strategic alliances with Dreyers Grand Ice Cream, Kraft

Foods, Barnes & Noble booksellers, Jim Beam, United Airlines& Pepsi Co.Focusing on sustaining the phenomenol growth & maintainingmarket leadership.

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The Initial YearsRetail O ffering:

Starbucks offers more than a cup of coffee.Designs of the Starbucks varies and is aimed to suitthe local market.Spacious store Dont only drink Coffee, walk

around, buy coffee related equipment.

Keen attention of aroma and service in time.Coffee beans donated to charities.

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Human Resource Management

Follows Strict Principals based on organizationalculture.

New hires referred as partners, undergoes 2 4 hrstraining program and were treated with dignity.Motivates employees with health benefits &Stock options.Treat employees like true partners & customerslike Starts.Customers visits Starbucks 10 times a month.Loyalty or ? 7


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Location strategy

Expansion strategy sequential and is basedon conquering one area of a city or region at

a time.Locations targeted mainly in close

proximity and highly visible areas.

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Growth Strategy

Product Strategy

Introducing new products designed to capitalizeon the companys strong brand name.

- Blue note Blend.- Frappuccino.- Mazagran Mazagran.- Dreyers Grand Ice Cream.- Kraft & Super Markets.- Jim Beam.

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Distribution strategy

Establishment of alternate channels.Additional channels like Holland CruiseLines, United Airlines and Sheraton andWestin Hotels.Licensing & Joint Ventures agreement with2 800 stores in North America & in 15countries.

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Communication Strategy

Invest very less in advertising. O ur brand is at its best in the store saysBedbury.

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Discussion questionsWhat is Starbucks retail strategy? What is the target marketand how does it try to develop an advantage over itscompetition?Describe Starbucks retail mix: Location, merchandiseassortment, pricing, advertising and promotion, store designand visual merchandising, customer service and personalselling. How does its retail mix support its strategy.What factors in the environment provided the opportunity for Starbucks to develop a new successful retail chain? Whatdemand and supply conditions prevailed in the US coffeemarket when Howard Schultz purchased Starbucks in 1987?What insights did Schultz have that other players in themarket did not process.

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What were the Principal drivers behind Starbuckssuccess in the marketplace?What does the Starbucks

brand mean to customers? How have the growthopportunities that Starbucks has purchased affected thevalue of its brad name?What are the major challenges facing Starbucks as it

goes forward? Is the brand advantage sustainable goingforward? Can Starbucks defend its position against other speciality coffee retailers?

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Starbucks Case Mine

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