Brewing For Success : Starbucks Coffee

Since Starbucks entered the coffee retail business, the company has made many trade-off business decisions. The first major trade-off was made when Howard Schultz wanted to acquire present day Starbucks from three entrepreneurs Baldwin, Siegel and Bowker. Therefore, Schultz prior to the acquisition made the trade-off to open his own coffee bar in 1986 instead of staying at Starbucks as the manager of retail sales and marketing. A bold feat, Schultz was able to replicate success and was offered to buy Starbucks for $4 million. At the time of the acquisition, many investors, including the former Starbucks owners, would not expect that the American consumer would pay a premium for coffee products. Schultz, after calculating the opportunity cost, was convinced that Starbucks would become a large coffee chain not only in the United States but internationally too. Reflecting this approach, Schultz’s trade-off worked. Starbucks, according to our book has revenue exceeding $13 billion and nearly 200,000 employees. The company has also expanded to 40 countries with 17,000 stores (Hill et al., 2015).

starbucks Corp., an international coffee and coffeehouse chain based in Seattle, Washington, has expanded rapidly since its opening in 1971. These outrageous success was due to its well-developed strategy vision which lay out the company's strategic course in developing and strengthening its business. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006. The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. Starbucks strives to perfect the relationship with the working class by making the service as fast as possible because they believe that every customer has their own personal rate. One

People love to drink coffee. Coffee shops, independently owned or chains are every corner. Statistics show that people are taking more coffee every day. It is a very profitable business.

This assignment is based on the Starbucks case study; Trouble Brews at Starbucks written by Lauranne Buchanan and Carolyn Simmons (2009). The aim of this paper will be to discuss the the changing consumer experience, competitive landscape and external circumstances affecting marketing opportunities for Starbucks, while determining how Howard Schultz can provide Starbuck’s customers a greater long-term value.

Imaging if there was no more coffee in this world, how would you feel? Nowadays, coffee becomes an important part of people’s life. People who often work overtime, they drink coffee because caffeine can make you awake; people who have to wake up early in the morning, they drink coffee because instead of making breakfast, coffee is more convenient; people drink coffee during the free time, because it also tastes good.

Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?

The first "Starbucks Coffee, Tea and Spice" store was opened in 1971 in Pikes Place Market in Seattle by three academics; History teacher, English teacher and writer Zev Siegel, Jerry Baldwin and Gordon Bowker respectively. Apparently the name Starbucks came from Moby Dick, an American classic novel about the whaling industry in the nineteenth century, by Herman Melville. Instead of selling the drink that they are famous for today, Sarbucks initially only sold coffee making equipment and coffee beans. The rather brilliant idea and decision to sell drinks rather than just machines and beans was brought up by Howard Schultz who was then the Director of Retail Operations for the company after 10 years of operation. However, his idea wasn't in favour of the company entrepreneur as he wasn't successful in convincing them about the "crazy" idea. Hence in 1986, he started a chain of coffee bars which he called II Giornale as he went his own way. Just over a year after that, Siegel and the other two sold Starbucks to Howard Schultz who then renamed his coffee bar chain to Starbucks and swiftly started expanding. The Coffeehouse chain started spreading across the United States of America after conqueting Seattle and then internationally. Tokyo, Japan was the first destination outside North America that Starbucks had ventured internationally (Coffee.org, 2014).

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

• • • • • • • Case Summary Company Background The Starbucks Value Proposition Delivering on Service Caffeinating the World Starbucks’ Market Research: Trouble Brewing? Rediscovering the Starbucks Customer

Starbucks Company story began in 1971 with a single store in Seattle 's pike Place Market. Starbucks named after mate in Herman Melville 's Moby Dick and their logo is also by the sea, featuring a twin-tailed siren from Greek mythology. Their mission is to inspire and nature the human spirit - one person, one cup and more neighbourhood. Now Starbucks Corporation is the largest coffee house company in the world, with over 17000 stores in more than fifty countries, which they serve 50 million customers every week. That 's why i choose Starbucks because first i love their coffee and second i was curious to learn, see and examine how can this company can be sustainably with 17000 stores all over the world.

Starbucks provide a large in store seating with free wi fi and a take-out service which only a few retail shops offer. The main target customers for Starbucks are office workers, with enough income, whom are able to afford the high prices of their products (Gaudio, 2003). The company has worked hard to establish itself as the brand leader with its branding as the most frequently drank coffee and noticeable brand logo. Introduction of promotions like the Starbucks Card, allows a more convenient way for a person to
pay for
your
drinks
and
earn
rewards
for
your purchase (Starbucks Coffee Company, 2011).
Furthermore, in‐store
promotions
accompanied
by
new
products and
amenities like free internet use are all strategies that Starbucks use to maintain their position in the market (Vasudha, 2011).

This essay discuss about how Starbucks utilizes its marketing mix in order to gain market share. Starbucks, which has been in the coffeehouse industry for 41 years, face higher competition than before. Even so, Starbucks is able to not only survive through this, but they are able to be “one of the most valuable global brands” (Theodore 2002). In its maturity stage, they are capable of expanding their consumer base despite the fact of increasing competition.

The CEO (Chief Executive Officer), Howard Schultz pointed that the main reason from the decline of “Starbucks Experience” was that the number of Starbucks shops increased sharply from only 1,000 to 13,000 within ten years. Other people considered their brand has been commercialized, and the customers hadn’t had enough enthusiasms to appreciate every moment of their coffee any longer. He suggested that Starbucks should re-find its origin. Nevertheless, his advice apparently was opposite to the

When the economic downturn caused the coffeehouse industry to implode, Starbucks was not equipped to survive in a world where caffeine aficionados could no longer afford to drop five dollars on a cup of java. Despite the odds, Starbucks has refined their business model and has adapted to

This case assignment discusses the history of Starbuck’s accomplishments as they entered the American coffee culture heritage. In 1983, The chairman and CEO Howard Schultz traveled to Italy and had a dream to carry the Italy coffeehouse ritual back to the United States. Schultz was focused on creating an environment meeting company that makes good coffee but also be a social experiment. Starbucks today opened more than 19,000 stores functioning in 62 countries. Starbucks has numerous rewards that globalization has offered and they have significantly benefited from it, while in the coffee industry. Starbucks has a wide-range in marketing strategies to benefit the customers. During the different obstacles that Starbucks has encountered, they must stay reliable in quality and uphold to adjust to different customer values.