Starbucks Case Study

1455 Words Oct 28th, 2007 6 Pages
Introduction

Since its ' 1992 IPO, Starbucks has continually focused on growth. Initially, the growth was targeted to enable Starbucks to achieve their goal of becoming the leading North American retailer of specialty coffee. The early success they achieved resulted in Starbucks expanding their original goal to that of becoming the most recognized and respected coffee brand in the world.

By way of example, this case study focuses on a request by McDonalds to serve Starbucks coffee at its ' restaurants in order to discuss the marketing strategy and the underlying competitive premise that Starbucks has adopted to achieve both of their goals. The study also describes the role the internet potentially can play in developing Starbucks
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In 1996, 86 percent of specialty coffee consumed at home was purchased from the grocery channel while specialty stores accounted for 19 percent. It was forecasted that by 1999, the model would change significantly, with 54 percent of the specialty coffee for homes being purchased from specialty stores.

The retail stores were the fundamental growth vehicle for Starbucks. Investment in the specialty stores and wholesale operations allowed for revenue growth and increased name recognition. The mail order (Encore) side of the business was used to boost sales and to widen consumer product exposure. All of these activities served to establish the brand of a quality domestic retailer of specialty coffee. To become the most recognized and respected global coffee brand would require Starbucks to leverage their size and brand.

Brand Extensions

Starbucks entered into partnerships with Dreyers ' Ice cream and PepsiCo to develop and deliver brand extensions. The contribution to 1999 revenues was estimated to be $15 million on total retail revenues of $501 million. The extensions were intended to deliver a new customer base and to reinforce the premium quality image.

Global markets

Starbucks intentionally chose to be first to enter the global markets in order to reduce encountering competition. The first global market targeted was the Pacific Rim. Starbucks forecast that sales would grow from $9 million US annually in

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