STARBUCKS

Managing A High Growth Brand

• Submitted By:
• Dolly Rana
 Background of Company
• Founded by Jerry Baldwin, Gordon Bowker, & Zev
Siegel in 1971, in Seattle.
• Early name was Starbucks Coffee Tea and Spice
• Sold only whole-bean coffee and coffee brewing
machine
• Howard Schultz became CEO and renamed it as
Starbucks.
• Re-image from only selling beans to be a coffeehouse
Brand

• Was inspired by Starbuck,

Classic American Novel
“Moby Dick”.

• Logo included a mermaid

in woodcutting style.
 Image
• Premium coffee beans
• Brewing techniques
• Store design
• Italian elegance and American informality
• Artwork and Music
Transforming from a coffee retailer
into a café business.
• Advantages
 It increased quality control
 Captured the business of Seattle's business
community.
 Incorporating a coffee service aspect into the
business differentiated from its coffee service retail
competitor.
 Mission statement
• “Establish Starbucks
as the
premier purveyor of
the finest
coffee in the world
while
maintaining our
uncompromising
principles as
we grow.”
 Geographical market expansion
• Chicago, Los Angeles, San Francisco, New York.
• In 1996 launched Japan's first store in Tokyo's Ginza
business district.
• Starbuck also employed a ‘hub’ market strategy.
 Joint ventures and partnership
• Host Marriott partnership.
• United Airline partnership.
• Other retail service partnership.
- Nordstrom , ITT/Sheraton, Westin, Holland America
cruiseline, Barnes & Noble and Albertson’s (retail
food –drug chain).
• Pepsi and Dryer’s joint venture.
• Kraft and supermarket sales.
• Other partnership
Brand Equity

• Unique Experience
• Affordable Luxury
• A place for casual
social interaction-
Third Place
• Priority to quality –
See, touch, hear,
Smell & taste
• Providing high level
customer Services
 Value
• Quality-1st preference
• Premium European coffee experience to USA
• Value simplicity over technology
• Investing in innovation
• Employees as partners and the most
• important assets
 Key Success Factors

• Delighting Customers – Word-of-Mouth.

• Believe in Building loyalty – in store experience – not
in advertising.
• Spent more money on training than marketing.
• Building the stores in by region & specific location.
• Retail Stores all over the world – Asia pacific region,
Europe, Middle east Africa, Americas.
• Stores in high traffic, high visibility location
 Keys for Success
• “Perfect Cup of Coffee” – Starbucks history has shown that they place a
huge emphasis on product quality. Their coffee, even if priced slightly
more expensive than expected, is notorious for satisfying customers with
its rich, delicious taste and aroma.

• “Third Place” – From the very beginning, the Starbucks marketing strategy
has focused on creating the “third place” for everyone to go to between
home and work. Creating this unique and relaxing “experience” and
“atmosphere” for people has been very important for the company as
they have realized that this is one of the strongest concepts attached to
the company, to which customers have been strongly attracted.
 Expansion Strategy
• Increase the Market Share by
opening additional stores &
by opening new retail stores
in new market.
• Key role of Flavor Lock Bags
• All stores would be owed &
operated by company instead
of pursuing a franchise
model.
 Brand Strategy
• Offering the highest quality of coffee in the world.
• Worked directly with growers in various countries to
purchase green coffee beans.
• Oversaw the roasting process and controlled
distribution to retail stores around the globe.
• Personalizing customer service, making the customer
experience personal.
• Creating a romantic atmosphere is also part of the
brand strategy.
Strong International Expansion
• Little market experience in
Europe and Latin America
• Markets:
– Asia-Pacific
– Europe, Middle East,
Africa
– Latin America
• Different cultural features
Expansion Opportunities
• Coffee consumption is rise in
the U.S. drastically.
• largest growth is among
drinkers of specialty coffee.
• An estimated, one-third of
the U.S. coffee consumption
takes place outside of the
home.
 Competitors
• Main competitor- Dunkin’Donuts
• Other competitors
McDonald
Burger King
Carl’s Jr.
Dairy queen
Barista
Café Coffee Day
Qwiky’s
 Ventures into new areas
• Introduced its full-fledged restaurant in Seattle under
the name of café Starbucks in 1998.
• Joe magazine the result of a partnership with
time,inc,was a major innovation launched in 1999.
 Starbucks Missteps
• In 1998,Starbucks began to develop an internet
strategy as another tool to increase sales and
strengthen its brand image.

• Profits for the current fiscal year 1999 would be 10

percent below expectations due in part to the
expensive internet start-up(4$ million),higher labor
costs, and a slow-starting Frappuccino supermarket
launched.
• Fail bid of William-Sonoma.
• Drop in share price of
28 percent in one day.
• In response to the
negative reaction,
Starbucks revised its
web strategy.
 Competition – Fights Back
• Strengthening core product coffee – Introduce new
flavors like Chocolate Brownie, Orange mocha chip,
Strawberries, Crème & low calorie drinks.
• Started offerings lunch items.
• Card Duetto Visa
• T-mobile
 Aggressive expansion
• Starbucks got “back to basic” and focused on new
market.
• Operated stores in many countries like Japan,
Singapore , Taiwan ,Philippines , Thailand,
Malaysia ,New Zealand, China, Switzerland, Austria,
Spain, Germany, Greece, Argentina, Peru , Brazil,
Turkey , México ,Jordan ,India ,the Bahamas.
 Expansion into non traditional areas
• Purchased alternative music retailer hear music in
1999 for 8$ million.
• Invested cautiously in the digital music field.
• Co produced the late ray Charles ‘Genius Loves
Company” with Concord records.
• Agreements with Jim beam brand to develop,
manufacturer, and market a Starbuck-branded
coffee liqueur.
• In 2006 Starbucks entered the film business.
Challenges for Starbucks & Solution

Challenges Solution
• Small Markets like • High Population &
India, china changing Life style
• Threats from • New Flavors & other
Competitors Lunch items
• Threats from • Joint Venture with
Domestic Competitors Domestic Competitors
 Barriers
• International Starbucks stores were not profitable
• Consumer needs and wants in various cultures
• Consumer response of marketing mix
• Different stage of brand life cycle
• Legal environment
• Administrative procedures
 Conclusion
• Main strategy to open the own retail stores all over
the world at rapid pace.
• Focus more on Customers.
• It needs to stay focused on the customer to ensure
continued success and ward off constant threats.
• It needs to capitalize on opportunities like expanding
internationally and creating additional revenue
streams.