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Starbucks Case Study

Tejasvi, Sanjeev, Kaneej, Anand Gowda,
Keerthan & Jyoti Prakash
 utline

Coffee market

Starbucks Coffee Company- Background

Retailing.

Human Resource Management.

Location Strategy.

Product Strategy.

Distribution Strategy.

Communication Strategy.

Discussion. á
Coffee market- a glimpse

¢ The practice of commercializing Coffee began in AD 1000

with Arab traders brought the coffee tree from Ethiopia to
Middle East.
¢ From Arab Countries it spread to Europe
in 1500s. popularized as meeting places
in Europe & France

¢ In 1940, Coffee Processors like Nestle

(Hills Bros Brand), Kraft General Foods
(Maxwell House), Procter & Gamble (Foglers) developed
¢ Slight shift of Coffee users to soft drinks in 1980s.
¢ Increasing profit by- decreasing image advertising,
increasing use of robusta beans, converting 16 ounce to 13
ounce a can, coupons & in-store promotion. 3
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 Present Context

Leading retailer of specialty coffee beverages & beans related

food & merchandise.

Annual sales in á005 were $5.3 billion wit a profit of $ 39á

million.

wns & operates more then 5á00 retail stores & has licensed
an additional á800 airports & shopping centers in 30 countries.

Strategic alliances with Dreyer¶s Grand Ice Cream, Kraft

Foods, Barnes & Noble booksellers, Jim Beam, United Airlines
& Pepsi Co.

Focusing on sustaining the phenomenol growth & maintaining

market leadership.
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 The Initial Years
Retail ffering:

Starbucks offers more than a cup of coffee.

Designs of the Starbucks varies and is aimed to suit

the local market.

Spacious store ± Don¶t only drink Coffee, walk

around, buy coffee related equipment.

Keen attention of aroma and service in time.

Coffee beans donated to charities.

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 Human Resource Management

Follows Strict Principals based on organizational

culture.

New hires referred as partners, undergoes á4 hrs

training program and were treated with dignity.

Motivates employees with health benefits &

Stock options.

Treat employees like true partners & customers

like Starts.

Customers visits Starbucks 10 times a month.

Loyalty or «? 7
 Location strategy

Expansion strategy sequential and is based

on conquering one area of a city or region at
a time.

Locations targeted mainly in close

proximity and highly visible areas.

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 Growth Strategy
Product Strategy

Introducing new products designed to capitalize

on the company¶s strong brand name.
- Blue note Blend.
- Frappuccino.
- Mazagran Mazagran.
- Dreyer¶s Grand Ice Cream.
- Kraft & Super Markets.
- Jim Beam.
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 Distribution strategy

Establishment of alternate channels.

Additional channels like Holland Cruise

Lines, United Airlines and Sheraton and
Westin Hotels.

Licensing & Joint Ventures agreement with

á800 stores in North America & in 15
countries.

4/á6/á011 10
 Communication Strategy

Invest very less in advertising.

³ ur brand is at its best in the store´ says

Bedbury.

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 Discussion questions

What is Starbucks retail strategy? What is the target market

and how does it try to develop an advantage over its
competition?

Describe Starbucks retail mix: Location, merchandise

assortment, pricing, advertising and promotion, store design
and visual merchandising, customer service and personal
selling. How does its retail mix support its strategy.

What factors in the environment provided the opportunity for

Starbucks to develop a new successful retail chain? What
demand and supply conditions prevailed in the US coffee
market when Howard Schultz purchased Starbucks in 1987?
What insights did Schultz have that other players in the
market did not process.
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What were the Principal drivers behind Starbucks¶
success in the marketplace?What does the Starbucks
brand mean to customers? How have the growth
opportunities that Starbucks has purchased affected the
value of its brad name?

What are the major challenges facing Starbucks as it

goes forward? Is the brand advantage sustainable going
forward? Can Starbucks defend its position against other
speciality coffee retailers?

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