Essay on Starbucks Case 1

Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks

(3a): What trade-offs has Starbucks made? What different activity choices has it made from its rivals?

As Starbucks' strategic vision evolved over the years, so did its strategy. Starbucks current strategy in comparison to its original competitive strategy are: to continue the focus on growth; to establish a leadership with company owned stores in key markets such as USA, Japan, Australia, and UK; to pre-emptively enter and aggressively grow in all targeted markets; to leverage the brand into new product categories and channels; to continue operations improvement; to growth through innovation; to develop and maintain leadership talent; and to maintain their values, culture, and guiding principles. The key elements of Starbucks current strategy is to expand Starbucks globally, and to further develop its internet business. The strategy has changed over time as the business has grown exceptionally well in North America, and now they want to take that success over sea.

What marketing recommendations would you make to Starbucks in Turkey to help them sustain and/or improve sales growth, and remain competitive as they look towards the future?

2) Garthwiate, Craig; Busse, Meghan; Brown, Jennifer; Merkley, Greg “Starbucks: A Story of Growth” Harvard Business Publishing, July 2012.

How is Starbucks attempting to re-create its uniqueness? Do you think it will be successful? Why or Why not?

McDonald’s, in addition to several other fast food vendors like Burger King, Dunkin’ Donuts, Panera Bread and independent coffee houses remain Starbuck’s toughest competition (Adamy). McDonald’s began introducing its espresso beverage products in 2001, and offers its product at a price between two and three dollars to compete with Starbucks between three and four dollars a cup coffee (Adamy). Similarly, Dunkin’ Donuts has recently implemented a plan to expand nationally (Adamy). On average, Dunkin’ Donuts coffee products cost approximately 20 percent less than Starbucks’ (Ball and Leung). In response, Starbucks has announced recent

Since January 2008, Starbucks has taken steps to address the deterioration in the US retail environment revitalize its global support structure. These steps have been designed to structure the company’s business for long-term profitable growth. Because of the continued weak economy and decreased customer traffic, as well as the cost associated with the store closures and other actions in its transformation strategy, the company’s fiscal 2008 results were impacted negatively in the following ways:

As a well-established coffee retailer and over 35 years of success, Starbucks is at the maturity stage in the product life cycle. It is in this stage that Starbucks needs to shift gears and focus on marketing program modifications by increasing the number of customers and customer visits (Kotler, 2009, pg. 185). While improving service will attract first-time customers and retain current ones, further marketing modifications will need to be made if it wants to continue to grow. More advertising, distribution, sales promotions, and personal selling are a few of the ways to modify the marketing program.

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.

Starbucks is a successful premium coffee retailer. Its target market sets as well-educated, white- color patrons between the ages of 25 and 44. There are three components of the brand, live coffee, service, and atmosphere. However, its brand image is losing while they focus on retail expansion.

Starbucks strategy at the beginning was based upon creating a symbolic-expressive value trough a social meaning concept of offering the American community meeting places; this positioned its original products and made associations to identify consumers with self-expression providing personal, social and sociocultural meaning.

The next exhibits show payroll structure and income volume per location in 2002 and product mix for North American company-operated stores. Exhibit 6 shows US retail coffee market predictions till 2005 years. It clearly shows changing in Americans’ coffee drinking style into specialty coffee. It is very important for Starbucks because company’s main market is specialty coffee. Next of the exhibits, shows positive customer snapshot scores for North America stores. Those snapshots suggest further company’s success. The only issue we can find is the product quality. According to the exhibit product quality went down during 3rd quarter of 2002.

Starbuck’s strategy focused on three components; high-quality coffee, intimate service, and ambient atmosphere. Starbucks worked closely with growers in Africa, South and Central America, and Asia-Pacific regions to insure the quality of its product. Starbucks called all employees' "partners" and worked hard to train them with the skills necessary to best serve the customer. The atmosphere at Starbucks was crafted after the European-style espresso bar. The company goal was to create ambience through the Starbucks "experience" and by making the area comfortable, yet upscale.

Starbucks needs to evaluate the best in it is production and services. It also needs to look at it is assets compared to the competitors and if they are worthy their capability.