Starbucks, Customer & Competitive, Analysis (Us Home Market)

Starbucks is a “premier roaster, marketer and retailer of specialty coffee” (Marketline 2012). This company is globally recognized because of their vast amount of stores, consisting of more than 17,000 retail stores in over 55 countries. Most retail stores are in highly populated areas, like “downtown and suburban centers, office buildings, university campuses and in select rural and off-highway locations” (Marketline 2012).

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.

Starbucks Corporation, generally known, as Starbucks Coffee is the leading retailer and a brand of world’s forte coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim, wherever in this world where premium quality coffee is in demand. Starbucks is the largest coffeehouse company in the world ahead of UK rival Costa Coffee, with 20737 stores in 63 countries and territories, including 11910 in the United States, 1496 in China, 1442 in Canada, 1052 in Japan and 772 in the United Kingdom. The first Starbucks was open in 1970. The name was inspired from Herman Melville’s Moby Dick, a definitive American novel regarding the 19th century whaling industry. The nautical name matches seamlessly for a store that imports the world’s finest coffees to the cold thirsty people of Seattle. In May 1998, Starbucks have finally successfully entered the European market through its acquirement of 65 Coffee Company stores initially originated from Seattle in the UK. Both companies shared a common culture, focusing on a great commitment to customized coffee, similar company values and a mutual respect.

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

Starbucks will be the first come in your mind when you want to have a cup of coffee. Don’t you feel curious about why is Starbucks so successful? This report explains how Starbucks take advantage in consumer purchase decision making process, how does Starbucks attract customer, how does Starbucks segment its market and new trends in society affect purchasing process.

The story of Starbucks transformation from a small independent coffee shop tucked away in a corner of Seattle’s Pike Place Market to a cultural phenomenon spanning the globe is legendary. A number of factors have been attributed to the success - one being a keen understanding of its patrons. There are multiple methods used to obtain customer information and the value derived therein. Customer lifetime value is one.

Starbucks has put heavy concentration on product innovation, new product launches and branding strategies and as a result, the company has lost sight of the customer’s wants and needs. Ultimately, Starbucks is not properly or correctly measuring customer satisfaction. They are basing these scores on characteristics affecting the product, and not precisely measuring the quality of their services. As Exhibit 10 from the case study shows, Starbucks’ customers ranked a clean and convenient store as the most important attributes of creating customer satisfaction. As marketing research is beginning to reveal, this should not be the only focus. Starbucks needs to shift their priorities and rank fast service, customer experience, and atmosphere as most important, as new studies suggest.

Starbucks is undoubtedly an international brand. The history of coffee traces back to Ethiopia, Africa, India, Arabia, and Europe, and has been traded abroad since the 11th century. Understanding the demand and widespread market for coffee, Starbucks has triumphantly capitalized both the domestic market, and the varied international markets as well. Possessing about 6,500 retail sites worldwide, Starbucks’ net is spread across thirty countries and has been found as one of the most recognized brands all over the globe in equality to McDonalds and Toyota. This organization’s ability to build an international brand has been unprecedented- particularly since it represents a specialty

Customers: The demographics of a usual Starbucks consumer have altered extremely in the new years. In the Starbucks case documents innovative consumers of Starbucks are younger, a smaller amount knowledgeable, low pay, less frequent visited to the coffeehouse and had very dissimilar insights. The general outlook of Starbucks is very short on 25% by novel consumers while the consistent consumers stood in 44%.Although numerous features subjective customer satisfaction, generally service and quickness of service were recognized as the greatest significant; a rapid glimpse at Starbucks 's fresh customer satisfaction reveals that consumers did in

Starbucks roasts high-quality coffee beans to make espresso drinks and sells coffee products through multiple retail channels. The company has over 24,000 stores in 70 countries. Starbucks target market is affluent adults ages 18-40. This market segment makes up 49% of the company’s sales. In addition to targeting a specific market, the company employs a differentiation strategy. Along with the high-quality coffee, the company offers an experience within their stores which justifies higher products. Some aspects of this “coffee experience” include free Wi-Fi, friendly baristas, fast service, and comfortable seating. Also, the company relies on new product development as a strategic choice. This includes adding alcoholic beverages and food to its coffee shop. All of this is done with the idea of making the higher priced product worth it for the consumer.

1.Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion.

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.

Exhibit 8 shows customer retention information. We can find from this data, that established customers and new customers are quite different in respect of education, income and attitudes toward Starbucks. According to the exhibit, customers who first visited Starbucks five years ago have higher degree of education and higher income level. Beside that, new Starbucks customers do not see it as a brand of high value, while established customers believe Starbucks to be brand they trust (50%), offering high quality product (51%). Next exhibit suggests, who customers visiting Starbucks stores often, are more satisfied, than customers who buy coffee from the company average four visits per month.

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).

Starbucks first opened its doors in Seattle’s Pike Place Market with the name being coined from that of Moby Dick’s first mate (Schultz & Yang 1999). It has spread its shops across North America, all over Europe, the Middle East, Latin America as well as the Pacific Rim with an estimated 35 million customer weekly (Michelli, 2008). With tremendous growth from a small time coffee shop, the company has matured to an international icon that today it is one of the world’s leading retailer, roaster and brand specialty coffee (Story, 1971). The company offers whole bean coffees, espresso beverages, and confectionery and bakery items.