Case Study of Starbucks

Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.

Founded in 1985, Starbucks is one of the largest coffeehouse companies in the world with over 16,000 stores in 50 countries. This report evaluates major internal and external factors affecting Starbucks using various analytical techniques. Based on the Starbucks brand in UK, it identifies suitable marketing strategies for Starbucks to expand its business in the UK market within the next two years. In line with the chosen marketing strategies, recommendations for the marketing mix are discussed.

When Howard Schultz launched Starbucks, its main targets were the competitors and the customers. Schultz’s brand aimed at gaining dominance in the coffee industry in addition creating a Italian coffee shop feel in the United States (Buchanan & Simmons, 2009). The strategy of Starbucks was based on new products, listening to customers wants and ensure future expansion (Buchanan & Simmons, 2009). In creating convenience for customers, Starbucks created stores almost on top of eachother. They hinged on the idea that, they did not want to lose out on a sale if a line was too long. This action, of placing stores in heavy populated areas, basing need on projected growth of an area caused some decline in sales during economic trouble with the economy. The 2007 recession, failure of subprime mortgages, increased competition from McDonald 's McCafe brand, and Dunkin Doughnuts all led to a decline in sales for Starbucks in the fourth quarter of 2007 (Buchanan & Simmons, 2009). To attempt to regain market share and recover after the

This writing will focus on the analysis on the attributes of Starbucks’ products and marketing, and identify the opportunities and threats facing the Starbucks Australia. The second part of the analysis also draws attention to the changes in social economy, competitors’ move and the main trends in the hot drink

This consistency has never been more apparent in its marketing strategies. Starbucks has followed its proven successful formula as it enters different markets. This formula can be characterized as follows :

Starbucks’ shares have grown more than 1500% over the past decade. Financially, it has been an oak tree in an ever changing economy with customers that have ever changing demands. However, there has been increased concern for the financial viability of the coffee shop a recently announced plan to close down over 600 stores that were said to be underperforming domestically. That means that more than 1,000 jobs will be eliminated. As scary as that is on the local front to top management, the executive staff feels that it is the only way to recover from it’s shocking $108.7M loss for the 2nd quarter this fiscal year.

Back to the mid 2008, starbucks announced that they were closing 75% of its store in Australia (Patterson, Scott & Uncles, 2010). It was a huge and unexpected closure to this big coffee company, lots of media and Australian rated Starbucks as “failure” in Australia. But situation was totally different from Asia market, Starbucks reached their great success in Asia. As the world’s largest coffee company, Starbucks now faces lots of judgment because of the store’s closure in Australia. Taking a lot factors into account, as a loyal customer, I bielieve that despite its failures, Starbucks is a successful company.

Cognition gives the companies information on how consumers respond to different marketing stimuli they face for the products used. It has to do with customer’s thinking and how do they behave toward a particular product. To be more specific and also reading the book “cognition refers to the mental structures and processes involved in thinking, understanding, and interpreting stimuli and events.” (Peter & Olson, pg. 21)

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.

Starbucks started in 1971 and by creating a cozy third place to customers beyond home and work and offering a slightly higher price yet fine quality coffee, within 25 years, it had opened just over 1000 stores. In order to maintain its leadership position, Starbucks had continued pursuing growth opportunities by selling Starbucks products through mass distribution channels and expanding its retail footprint. Along with the rapid expansion and success, Starbucks has encountered financial downturn in 2008, and the rise of competitors from both high price independent coffee shops, smaller coffee chains that resembled pre-expansion Starbucks model, to low price fast food restaurants chain McDonald’s and Dunkin’s Donuts has deteriorate the

When Starbucks decided to enter the Australian market place it experienced many challenges as it did

Finally, Starbucks can use the fact that Australia is a country with a huge number of ethnicities and Australian love to its country to its advantage. By partnering up with local producers, that would create a unique product line for each of those ethnicities, Starbucks could offer a meal-coffee combination that all customers would adore. It would show that Starbucks doesn’t care about global domination, but about each and every customer, like its mission states.

Starbucks has started its first international expansion since 1988. After successfully expanded in Canada and Japan, it started to shift its focus into Australia and China. (Virgin 2016) Although Starbucks entered these two markets almost at the same time, China in 1999 and Australia in 2000, it used two completely different strategies which directly leads to two completely different outcomes. Starbucks gets to open hundreds more great stores in China thanks to its appropriate localization strategy that allows it to change its marketing strategies to fit the local culture. However, in Australia, it has to shut down about three-quarter of its 84 stores in mid 2008 because it stuck to the standardization strategy of marketing the same products in the same way in a completely different market. (Patterson, Scott & Uncles 2010)

Starbucks dates back from 1971 and is based in Seattle, Washington. The company was founded by Gordon Bowker, Jerry Baldwin and Zev Siegl and it

Following its success in the United States, Starbucks ventured overseas and quickly became a globalization icon. With its rapid globalization strategy, Starbucks expanded from about 5000 stores to an estimated 15,000 stores in 2000 (Groth, 2011). By mid-2000s, Starbucks’ supply chain faced many issues, resulting with challenges of having to fulfill expansion strategies yet minimizing escalating operation expenses. By 2008, Starbucks’ stocks fell by 42% (Schultz, 2011). The rapid expansion took a toll on the sales growth and stretched the limits of the existing supply chain, which then rippled down to erode the customer-valued ‘Starbucks experience’ (Gibbons, 2011).