Channel Strategy: Starbucks

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Evaluate 7.1
Short Paper: Channel Strategy—Starbucks Corporation
Kathleen Litman
INT 640—Multinational Marketing Strategies

Professor Michelle McKeogh

February 26, 2012

Overview—Starbucks Corporation
According to Starbucks’ 2011 Annual Report, the company is the premier roaster, marketer and retailer of specialty coffee in the world, with over 17,000 stores in more than 55 countries, as of fiscal year 2011.
2011 was an important year for the company in that it celebrated its 40th anniversary (it was founded in 1971 in Seattle, with its first store in the historic Pike’s Place Fish Market) and also enjoyed one of its best years ever in terms of financial performance, with global revenues reaching $11.7 billion, an 11%
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This included seeking partners with similar values and corporate cultures, those with significant experience in the restaurant industry, plus sufficient financial resources to help saturate the market through “clustering stores” (a key Starbucks strategy). Partners were expected to make a long-term commitment, along with having a keen knowledge of the local real estate market to locate and secure prime locations in high traffic, high visibility areas, another strategy that Starbuck employs with all its stores. The company notes in its 2011 Annual Report that licensees provide “improved, and at times, the only, access to desirable retail space”. For its licensee partners, Starbucks selects prominent local retailers with in-depth market knowledge and access, and requires employees working in these locations to follow the company’s detailed store operating procedures and undergo training classes similar to employees in company-operated stores.

How does the company’s channel design relate to the country in which the company is doing business? Does it make sense?
When it sought to enter the Japanese market in 1996, Starbucks entered into a 50/50 partnership with SAZABY, a prominent, upscale Japanese retailer and restaurateur, that shared its commitment to providing customers with a highly trained,
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