Starbucks strategy

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Introduction

The first Starbucks store was set up in 1971 by three individuals who had a common liking for coffee and exotic teas- Jerry Baldwin, History teacher Zev Seigel and writer Gordon Bowker. The store was named Starbucks Coffee, Tea and Spice in the tourist’s Pikes Place Market in Seattle. However, later the name was changed to Starbucks Coffee Company. The logo was designed to be a two tailed mermaid encircled by the store’s name. The name was inspired from the coffee loving character in Herman Melville’s Moby Dick
The store was a success with excellent sales records and thus several Starbucks stores mushroomed in several parts of the US. Howard Schultz later joined the company as a marketing executive and then
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The balance between ‘localization’ that Starbucks tested in China to suit the life style of the locals and the aspirational brand that one associates with it is something that can be studied and adapted to fit the Indian context. This customization to reflect the local culture of the neighborhood is a very appealing idea but needs to be analyzed as far as its long term sustainability is concerned.
We have also tried to understand what kind of competition do other coffee store outlets like Café Coffee Day and Barista that have been here longer pose to Starbucks. The hiked prices is something Starbucks can pull off because of the ambience it offers to its customers but whether it will be enough to keep them interested for long is questionable.

Methodology

The methodology that can be adopted is that of decision trees with listing the various alternatives, their payoffs and then making a decision on the basis of the choice with the best payoff.

Drivers of Growth and rationale behind Expansionist Strategy

1. Retail Expansion

The ambitious growth strategy was adopted by Starbucks in 2002 which was a time when the coffee drinking culture in the US was gaining popularity. The people drinking specialty coffee was identified to be a profitable segment to focus attention on. It was also identified that majority of people drank coffee not at home but outside, in offices, restaurants and coffee shops. There

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