Starbucks Case Study

1
Starbucks Case Study

• John Baab, Charly Costigan,
• Tyler Kleckner, Ashley Kreuer,
• Ellen Park, Ashley Wooding

2
Outline
3
Background and History

• Gerald Baldwin, Gordon Bowker, and Ziev Siegl
  opened a small coffee shop in Seattles Pike
  Place Market in 1971
• Howard Schultz Joined the Starbucks marketing
  team
• Traveled to Italy and became interested in the
  espresso bars and tried to bring it to America
• Founders sold the company to Shultz
• Began to open new stores and had 140 stores by
  1992
• Decided to take the company public and succeeded
  by opening more stores
• Shultz continued to take the position as chairman
  and chief global strategist and hired CEO Orin
  Smith in 2002

4
Mission/Vision of Starbucks

• To satisfy customers and to create a third
  place environment
• Three components to branding strategy the
  coffee itself, service, and atmosphere

5
Overview as of 2002

• 5,886 stores(4574 National, 1312 International)
• Customers(20 million total, 570 per week per
  store)
• Net Income of 215 million
• Customer Demographic (Traditional vs. New)
• Menu (Average price of drink 3.85, 30 drinks,
  and 23 whole bean coffee blends)
• Partners 360 total labor hours and an average
  pay rate of 9.00 per hour
• Partnerships (Pepsi Bottling Co., Kraft Foods,
  and Dreyers Ice cream)

6
Starbucks Share of Specialty Coffee Market 42
(estimate) 13 Total Market Share
7

• Starbucks Share of Specialty Coffee Market 50
  (estimate) 20.5 Total Market Share

8
Strengths

• Well developed and established brand strategy
  live coffee
• Locations
• Product Mix
• Partners
• Customization of Drinks

9
Weaknesses

• Customization of Drinks
• Caused tension between product quality and
  customer focus
• Increased menu size
• Lacked a strategic marketing group
• Very little image product differentiation

10
Opportunities

• Increase Customer Satisfaction
• Customer Quota
• Increase the number of stores
• Domestically/Internationally
• Create New Products Services

11
Threats

• Competition
• Donut Bagel Chains
• Small scale specialty coffee chains

12
Problem

• Key Problem Maintaining a customer focused brand
  image while continuing expansion
• Customer Satisfaction
• Lost sight of the consumer
• Lost connection between customers and growing
  business
• Service gap

13
Existing Plan

• Investment Plan
• 40 million annually
• Add 20 labor hours a week
• Maintain 3 minute service time goal
• Increase customer satisfaction
• Goal All stores achieve 20,000 increase in
  weekly sales

14
Reinvigorating a Customer Focused Image

• New Incentives for customer
• Ideas Drink of the day, membership cards, serve
  at your seat
• Incentives for Partners
• Adding 20 hours during peak hours to maintain 3
  minute time
• More authority to regional retail managers
• Install a rolling menu policy

15
Maintaining Expansion

• Moving into new domestic and international
  markets
• Not saturating existing markets
• Instead move into untapped domestic markets and
  increase through put at current stores through
  added hours
• Advantages Will appear more customer focused
  locally, faster

16
Recap

• customer service
• inovations
• brand image
• Marketing plan
• Expansion
• Domestic
• International

17
(No Transcript)