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Summary
Starbucks
Corporation,
doing
business
as Starbucks
Coffee,
is
an
American
global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is the
largest coffeehouse company in the world, with 23,187 stores in 64 countries. Starbucks has
gone from a small local coffee start-up in the 1970s to the largest coffeehouse company in the
world. It has revitalized the coffee industry in last two decades. The key factor behind this
success of this company was the passion about the coffeehouse experience. As of august 2007,
Starbuck, the largest coffeehouse in the world had 6,566 company operated and 3,729 licensed
stores in the united states, and had 1,613 company-operated stores and 2488 joint venture and
licensed stores outside the united states. The CEO of Starbucks Howard Schultz first realized the
importance to become passionate about the coffeehouse experience along with the companys
passion about coffee. He saw in Italy that in the espresso bars .the employees of those
coffeehouses were able to connect with their customers because they know their customers
personally. Customers were coming to those coffee shops and were making connections with
other people. The key four strategic pillars for expressing the Starbucks brand are,
The coffee, which is the main source of its credibility to the consumers
Some of the finest products that are associated with the coffee experience
Community involvement.
Starbucks offers a lot of products to its customers. Such as customized CD music collection,
sandwiches, gums and chocolates are offered to the customers. In many stores it also offer
wireless internet access. Starbuck gets its lucrative product offering ideas through extensive
marketing research. A lot of products and services are direct result of suggestions from patrons
or local employees.
Starbuck keeps a strong connection with its customers, and maintains a local charm and feel in
its stores. The connection with its customers helps the company to gather more information
about new markets. The local connection with customers and the consequent brand building
have allowed Starbuck to expand its business in other areas. Starbucks has been very much
successful in achieving its objectives. In past few years, It has been aggressively expanding its
business in newer markets. The different growth behavior of Starbucks in different countries is
attributable to its different stages of development in the United States and different parts of the
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SWOT Analysis
Strengths:
Starbucks is No. 1 specialty coffee retailer of - in terms of market share and market
capitalization. (1997, 4596.6 million and sales growth 20.9%)
Strong brand image associated with high quality coffee and excellent customer service The Starbucks Experience.
Extensive store network, 8,500 shops are owned by Starbucks directly. The company
franchises and licenses 6,500 shops. It has developed excellent skills in franchise
management.
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Due to its specialism in all things coffee - it achieves high buying volumes - scale
economies and utilizes international sourcing, some from fair trade suppliers.
Weaknesses:
Starbucks is seen as an American Global, possible perception that big American chains
are trampling on national cultures, Starbucks was trampling on Chinese culture.
Reputation with pressure groups. Criticized for not using more Free trade products.
Opportunities:
Significant opportunities exist, especially outside domestic US market for joint ventures.
Starbucks could overcome planning restrictions, reduce costs through co-locating at
supermarket chains, pubs & restaurants.
Product range diversification into greater food ranges and non-food items. The company
has experimented with warm sandwich lines, and I-tunes (music link). Also, sold music
CDs and linked with clubs (e.g. book clubs) etc.
Licensing its name (e.g. ambient coffee through supermarkets) could provide new
streams of revenue.
Through CRM and database marketing it could target its high net worth customers and
build greater loyalty with customer base. The introduction of loyalty schemes such as
Starbucks Card, free re-fills and technology (free downloads of music) provide a
competitive edge to its value proposition.
Become more of a socially responsible brand. Better public relations activity, introducing
more fair trade products, better distribution of profits to farmers and ethical sourcing
practices
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Threats:
Possible saturation in the coffee, caf market. In the US, 600 underperforming companyowned stores were closed. Consolidation on the high street, growing competition from
national brands and new entrants, aggressive marketing (price wars, promotions),
putting pressure on profit margins. Companies seek cost savings and new way to
differentiate to retain customers.
Several activist groups maintain websites criticizing the companys fair-trade policies,
labour relations, and environmental impact.
Recession or downturn in the economy affects consumer spending, with less disposable
income to spend. Consumers defect to lower price venues and competitors.
Raw material cost rising - Starbucks is exposed to rises in the cost of coffee, labour and
dairy products, and adverse changes in exchange rates.
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Cleanliness: Customers like to sit down at a clean table. Dirty tables upon arrival are a big
mistake. Coffee shops should be nit and clean. First impressions are very important and
customers study coffee shop whilst waiting in the queue. The displays, coffee machines, fruit
machines and counter should all be clean. At all times!
Friendly staff: A visit to a coffee shop is a treat. Friendly staff in coffee shops is usually the
ones that are enjoying their jobs. No matter how developed our customers palates, knowledge
and vocabulary of tasting, or experience with fine coffee, retailers should be cognizant of
meeting customers on their terms. Friendliness should not be faked; it should come from the
heart.
Atmosphere of Coffee shop: A good atmosphere is the result of the right music, friendly
staff, the correct temperature, warm colors, cleanliness and many more.
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After identifying the customers needs from coffee houses, Starbucks included lots of facilities so
that customers view the Starbucks coffeehouse experience very positively. They also view this
experience as enjoyable. They view Starbuck as a friend who has respect for the customers local
culture and who provides exactly the things customers needs. Some of the things that the
customers get in the Starbucks coffeehouses are,
Warm and welcoming environment makes them to feel good and makes the company a
part of community.
Some of the finest product that is associated with their coffee experience. Customer takes
this change positively.
The company makes themselves a part of the community and consumers are like to be a
part of that.
The people were interested in ice-star bucks and blended star bucks & Starbucks gave
them this flavors.
Wireless & Internet access also make a positive impact for Starbucks.
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Can take suggestions from its local employees in different regions, countries.
Can collect syndicated information from syndicated research firms about the general
expectations of customers from every kind of coffee shops.
This method is useful to obtain detailed information about personal feelings, perceptions
and opinions
one-to-one situation
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