Starbucks Problem Solution

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Executive Summary

Starbucks is the leading retailer and roaster for brand specialty coffee in the world. It has over 7,500 stores located worldwide. As Starbucks continues to expand, it will encounter all sorts of new product markets, with new and demanding customers for unique and appealing products. Starbucks has begun by introducing an extension of the Frappuccino line targeted to the non-coffee drinker. Entering this new market, Starbucks faces many challenges from having to compete to retain brand recognition of its primary products, yet increase awareness of its new product line. Our analysis and research of the market have resulted in keys findings as follows:

• The new Frappuccino blended beverages, also known as the
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This success is due to the combination of high quality drinks and friendly environment with good music, comfortable chairs, and good services. This creates the “Starbucks experience” which customers can relate to that lead to brand loyalty. In addition, Starbucks needs to deal with customers’ cultural preferences in all its worldwide locations to maintain customers’ loyalty. (See Figure 2) Also see Figure 3 for influences on the consumer purchase decision process.
To ensure further market growth and be competitive, Starbucks is developing new products for non-coffee drinkers. Starbucks provides its current customers and attracts new customers not only with quality products but also with varieties flavors that customers’ desire (See Figure 3). Starbucks’ two largest competitors are Dunkin’ Donuts and Krispy Kreme, both are national chains. These companies use aggressive price-cutting, up to 20%, for their drinks.5 Other competitors are small local coffeehouses, and other coffee brands like Tully’s and Pete’s Coffee. Their direct competitors for the new product line are Orange Julius, Jamba Juice, fast food chains such as McDonald’s and Burger King, and other small coffee alternative providers.
Starbucks recently teamed up with Bank One to offer the Starbucks Card Duetto Visa.7 This is a stored-value card and traditional credit card. Starbucks has also introduced a T-Mobile Hotspot service which allows the
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