Starbucks Marketing Plan

Katie Tewell Bethany Odom Kelly Snider

December 12, 2006

Executive Summary
What was once a small coffee shop opened by Gerald Baldwin, Gordon Bowker, and Ziev Siegl in 1971, Starbucks Coffee Company has grown into the number one specialty coffee retailer. With over 10,000 coffee shops in more than 30 countries, of which 4,200 are licensed and franchised and 6,000 are owned, the companys main objective is to establish Starbucks as the most recognized and respected brand in the world, (Moon). Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve a long-term goal once set by current chairman Howard Schultz: The idea was to create a chain of coffeehouses that would become Americas third place. At the time, most Americans had two places in their lives home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves. I envisioned a place that would be separate from home or work, a place that would mean different things to different people, (Moon). By working toward this goal, Starbucks wants to open new stores in both new and existing markets, expand their product development process, and cater to customers needs to eventually improve their financial position and dominate market share.

Market Summary
Target Markets o In the early stages of development for Starbucks, Schultz identified their target market as affluent, well-educated, white-collar patrons (skewed female) between the ages of 25 and 44, (Moon). o Over time, market research teams have recognized the new target market as younger, less well-educated, and in a lower income bracket than their more established customers, (Moon). o Nonetheless, the original target market has not disappeared, but has expanded into the demographic of the store location. For example, southern California stores cater to a growing number of Hispanic customers. Market Demographics o Geographics (Moon)

Data from 2002 showed that in the Southeast there was only one store for every 110,000 people. Whereas in the Pacific Northwest, there was one store for every 20,000 people. Hence, the company was far from reaching existing markets. International plans showed Starbucks was operating in over 300 company-owned stores in the United Kingdom, Australia, and Thailand. Also, 900 licensed stores were operating in Asia, Europe, the Middle East, Africa, and Latin America.

o Demographics Young, affluent, tech-savvy customers (Hoovers) A 1999 estimate showed that 70% of customers were internet users, and today the estimate has exceeded 90% (Hoovers). Moms with strollers (Hoovers) People combining work and a coffee break (Hoovers) The most frequent customers average 18 visits per month, whereas the typical customer visits five times per month (Moon). Average age for an established customer was 40, new customers was 36 (Moon). Customers that started visiting Starbucks in 2002 were 45% female, 55% male (Moon).

Market Needs o Starbucks wants to create an experience for their customers that combine their on-the-go schedule, as well as a place to relax. Senior vice president of administration in North America Christine Day explains that, people come here for the coffee, but ambience is what makes them want to stay, (Moon). o Selection Starbucks menu contains brewed coffee, espresso traditions and favorites, cold beverages, coffee alternatives, frappuccinos, and the sale of whole beans.

o Accessibility

Starbucks operates over 10,000 retail stores. Most of the 4,200 franchised stores are located in shopping malls and airports. Starbucks coffee brands are also marketed through grocery stores in the form of beans and even ice cream flavors.

o Customer Service Starbucks employees are referred to as partners. As of 2002, Starbucks employed 60,000 partners worldwide, 50,000 of those in the United States. From the beginning when Howard Schultz took over Starbucks, he believed, Partner satisfaction leads to customer satisfaction, (Moon).

o Competitive Pricing For North American stores in the 2002 fiscal year, the average price of an order was $3.85. The drinks come in three sizes: tall, grande, and venti (Italian for small, medium, and large). The least expensive price for a tall drink is $1.40 for brewed Coffee of the Day. The most expensive price for a venti is $4.15 for frappuccino. Whole beans are sold in half and whole pound bags ranging from $5.20 to $15.95 (Moon). Starbucks brand coffee sold in grocery stores are similar to these prices found in the cafes.

Market Trends (Moon) o Total U.S. Retail Coffee Market (both in-home and out-of-home consumption):
2002E - $21.5 billion Starbucks Share of Specialty Coffee Market 42% (estimate)

2005E - $22 billion Starbucks Share of Specialty Coffee Market 50% (estimate)

Specialty Coffee 27% Tradition al Coffee 73%

Specialt y Coffee 31%

Traditio nal Coffee 69%

o Estimates for the U.S. retail coffee market in 2002 include: In-the-home consumption was an estimated $3.2 billion business. Starbucks was estimated to have a 4% share. Specialty coffee was an estimated $5 billion business in the foodservice channel. Starbucks was estimated to have a 5% share.

Market Forecast (Moon) o Over the next few years, an estimate for the U.S. retail coffee market expects specialty coffee to have a compound annual growth rate (CAGR) between 9%-10%. o Starbucks was also estimated in 2002 to grow at a CAGR of about 20% top-line revenue growth. o As of 2002, coffee consumption had risen with more than half of the population (about 109 million people) drinking coffee everyday, and an additional 52 million drinking coffee on occasion.

Market Growth o Reports show in 2002, the number of specialty coffee drinkers has become the markets biggest growth. o An estimated one-third of all U.S. coffee consumption takes place outside of the home and in places such as offices, restaurants, and coffee shops (Moon).

SWOT Analysis
Strengths o The company is good at taking advantage of opportunities. o Starbucks is very profitable and has a strong financial base, therefore allowing the company to undertake new business ventures. Revenue increased to $5294.2 million in 2004, a 29.9% increase from 2003 (DataMonitor) Profits increased to $610 million in 2004, a 43.7% increase from 2003. Net earnings increased 46% (SWOT).

o The company is internationally recognized and has a global presence. Their reputation is one of fine products and services.

Almost 9,000 cafes in almost 40 countries (SWOT) Widespread brand recognition, which in turn becomes brand preference, and ideally eventually brand loyalty Strong customer base

o Respected employer Values its workforce Voted onto Fortunes Top 100 Companies to Work For (2005)

o Strong ethical values and mission statement o Disciplined innovator Understands the Adapt-or-Die theory of marketing Has the ability to roll out new products relatively quickly, which translates into a considerable competitive advantage

o Clusters company units Expands business with the continuing growth of the coffee market, especially in areas where the company is already well established, and groups stores in an area, therefore able to dominate the region Leads to considerable financial reward without suffering from cannibalism (DataMonitor) Focus on opening stores that have convenient access for pedestrians and drivers Helps the company capture an increasing share of the coffee market

Weaknesses

o Reliance on beverage innovation Vulnerable to the possibility that their innovation may falter over time

Company growth is mostly driven by beverage innovation. If U.S. store growth decreases, stock is lowered in value. Diminishing return from beverage innovation would have an adverse effect (DataMonitor).

o More than 75% of the companys stores are in the USA (DataMonitor). May need to look for an assortment of countries in which to open more shops in order to spread business risk 85% of revenue is from its domestic US market (DataMonitor). Has high international brand recognition and should look to generate a greater proportion of revenue from outside the USA Would suffer greatly if U.S. stores underperformed because of economic conditions or increased levels of competition

o Dependent on the retail of coffee, which could make them slow to diversify into other divisions if the need should arise o Employee efficiency is poor. Lower revenue per employee ($71,544fiscal 2004) compared to the industry average ($110,841) (DataMonitor) Lower income per employee ($5,294) compared to the industry average ($9,500) (DataMonitor)

o Lower Return on Equity than peers Companys 5 year average ROE (13.65%) have been lower than the industry average (15.09%) (DataMonitor). Need to effectively manage its finances to ensure that returns are at par of higher than industry average

o Problems in some international operations Problems of expansion: A number of openings are failing to be successful. Japanese operations: The company has experienced some same-store sluggishness.

Closures of stores in Israel and Tel Aviv: Hurts growth prospects in the region

Opportunities o In 2004, created a CD-burning service where customers can create their own music CD o Opportunities for revenue growth by expanding its global operations New markets for coffee are beginning to emerge; for example, in India and the Pacific Rim (SWOT). Targeting 15,000 international stores in the next few years Expansion potential questionable in Brazil, India, and Russia China could be one of the largest markets, and therefore the company will focus on Beijing and Shanghai. o Large urban population o Rising economy o Increase in coffee consumption o Co-branding with other manufacturers of food and drinks and brandfranchising to manufacturers of other goods and services Creates loyalty for Starbucks brand Recently signed agreement with Jim Beam Brands to develop and market a Starbucks-branded coffee liqueur drink (DataMonitor), which has strong revenue potential because: Liqueurs represent $4-5 billion opportunity (DataMonitor). Liqueurs with coffee represent a considerable segment of the liqueur market. There is a significant overlap between consumers of liqueurs and consumers loyal to the Starbucks brand (DataMonitor).

o Growth in coffee markets: Starbucks has a market share of over 40% of the special coffee market (DataMonitor). Therefore growth in this category would

result in considerable opportunities for further growth and expansion in the near future. Threats o Coffee may not stay in favor with customers, and another type of beverage or leisure activity could replace it. o Rises in the costs of dairy products could affect the companys margins. o Competition Competitive coffee shops Copy cat brands Restaurants Street carts Competition could enter the market at any time. The U.S. specialty coffee market continues to grow, and an increasing number of firms are looking to enter. At any time, a company with greater financial, marketing, and operating resources could enter the market and compete directly with Starbucks.

o Volatile nature of the coffee market Multiple factors, including weather, political, and economic conditions for example, can potentially negatively affect the companys business. Green coffee prices may be affected due to agreements establishing export quotas or restricting global coffee supplies.

o Slowing U.S. retail sales Domestic retail accounts for about 75% of the companys revenue growth and an even greater proportion of profit growth (DataMonitor). If current U.S. store growth continues, saturation levels within the North American division may be reached within five years. Before reaching this point, US retail sales growth will slow significantly (DataMonitor).

Competition o Competition comes in several forms: Independent/Local coffee shops Social and inclusive Diverse and intellectual Artsy and funky, typically cozy and very welcoming Liberal and free-spirited Lingering encouraged Particularly appealing to younger coffee house customers Wide variety of beverages/food Appeals to the non-traditional crowd Franchise/Large Companies o Generally well-recognized names (McDonalds, Krispy Kreme, Dunkin Donuts, etc.) o More convenient and accessible o Easy access in and out o Appeals to the more mainstream coffee drinkers

Services (Company) o Starbucks purchases roasts of the highest quality of whole bean coffees. o Fresh and rich brewed Italian espresso o Offers pastries and other appetizing confections o Sells coffee-related accessories (mugs, coffee makers, cups, espresso, etc.) o Expanded sales into supermarkets of whole bean coffee

o Introduction the widely popular drink, Frappuccino, to the public o Strives for satisfied customers and a welcoming environment o Works to have highest standards of excellence in way of business o Offers newspapers and other reading material, popular music, and Internet access (provided by T-Mobile) Keys to Success (Company) o Rapidly expand retail operations o Growth in its specialty sales and other operations o Selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products o Continue to be widely available and welcoming o Maintain reputation for having specialty and gourmet coffee o Make customers feel welcome with friendly service Critical Issues (Moon) o Must increase customer satisfaction through improvements to service o Friendlier and more attentive staff o Faster and more efficient service o Increase in personal treatment (remember customers name and order) o More knowledgeable staff o Better overall service o Offer better prices/incentive programs Free cups after x number of visits Reduction of price Offer promotions, sales to increase customer satisfaction

o OTHER Offer better quality and variety of products Improve atmosphere (friendly, welcoming) Reaching out to community through involvement and awareness More stores and convenient locations

o Other critical issues Starbucks is criticized for and must be aware of are: Clustering Driving out independents Loss of diversity Its policy toward farming communities in developing countries Fair trade Many of these issues are vital for Starbucks to improve their customers satisfaction (Simmons).

Critical Issues

Increase Customer Satisfaction through Improvements to Service Offer Better Prices/Incentive Programs OTHER

28%

34%

21% 31%
Undecided/Already Satisfied

Slice 5

Marketing Strategy

Starbucks Mission Statement (Company) Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. The following six guiding principles will help us measure the appropriateness of our decisions: o Provide a great work environment and treat each other with respect and dignity. o Embrace diversity as an essential component in the way we do business. o Apply the highest standards of excellence to the purchasing, roasting, and delivery of our fresh coffee o Develop enthusiastically satisfied customers all of the time. o Contribute positively to our communities and our environment. o Recognize that profitability is essential to our future success.

Environmental Mission Statement (Company) Starbucks is committed to a role of environmental leadership in all facets of our business. We fulfill this mission by a commitment to: o Understanding of environmental issues and sharing information with our partners. o Developing innovative and flexible solutions to bring about change. o Striving to buy, sell, and use environmentally friendly products. o Recognizing that fiscal responsibility is essential to our environmental future. o Instilling environmental responsibility as a corporate value. o Measuring and monitoring our progress for each project. o Encouraging all partners to share in our mission.

Other points of importance to Starbucks: o Building customer loyalty around cappuccinos, lattes, and other fancy beverages, (Overholt). o Want to create a sense of community o Want to create a memorable experience for a customer that inspires the customer to return often, as well as to tell a friend o Striving to become the most recognized and respected brand in the world o Putting people before products (Company) o What a Starbucks store should be: An authentic coffee experience that conveyed the artistry of espresso making, a place to think and imagine, a spot where people could gather and talk over a great cup of coffee, a comforting refuge that provided a sense of community, a third place for people to congregate beyond work or the home, a place that welcomed people and rewarded them for coming, and a layout that could accommodate both fast service and quiet moments (Thompson).

Marketing Objectives (Moon) o To create a Starbucks experience that makes people come for the coffee, stay for the ambience and environment, and return for the connection o To build an image separate from smaller coffee chains o To clearly communicate the values and commitments of the Starbucks business to their customers, instead of only growth plans publicized in the media Financial Objectives (Moon) o Have each store reach a $20,000 weekly sales level o Open new stores with lower store-opening costs (about $315,000 per store on average). Target Marketing (Moon)

o Based on a sample of Starbucks 2002 customer base, the attitudes toward the brand were:
NEW CUSTOMERS (FIRST VISIT THIS YEAR) 34% 30% 15% 8% 44% 31% 20% 26% 25% EXISTING CUSTOMERS (FIRST VISIT 5+ YEARS AGO) 51% 50% 40% 32% 60% 45% 31% 41% 44%

High-quality brand Brand I trust For someone like me Worth paying more for Known for specialty coffee Known as the coffee expert Best-tasting coffee Highest-quality coffee Overall opinion of Starbucks

o The chart shows that the new customers have a poorer attitude toward Starbucks in every category than the existing customers. o The new customer type that needs attention is: 45% female, 55% male Average age of 36 37% have a college degree Average income is $65,000 Drink an average of 15 cups of coffee per week

Store Expansion Strategy (Thompson) o Target areas with favorable demographic profiles, as well as areas that can be serviced and supported by the companys operations infrastructure. For each targeted area, select a large city to serve as a focal point. Goal of each focal city: Open 20 or more stores in that city in the first two years. Once stores cover the city, open additional stores in smaller, surrounding areas in the region.

With this plan, the company had only closed 2 of the 1,500 sites it had opened between 1992 and 1997.

o Stores must be custom-designed. The company does not buy freestanding structures, and therefore each store is a different shape and size. Most stores range in size from 1,000 to 1,500 square feet.

o Most stores are located in high-trafficked, high-visibility areas, such as: Office buildings Downtown and suburban retail centers Airport terminals University campuses Busy neighborhood shopping areas convenient to pedestrian traffic

o International expansion (Moon) As of 2004, the company operated over 300 company-owned stores in the United Kingdom, Australia, and Thailand, as well as 900 licensed stores in Asia, Europe, the Middle East, Africa, and Latin America. Goal: Have 15,000 international stores

o Other things to consider: Positioning o Store Ambience Goal: To make customers want to linger Social AppealOffer a sense of community, a place where people can come together Physical layout Seating areas to encourage lounging Kiosks Drive-through windows

Appear upscale yet inviting

Aromas Smoking is banned in all stores Employees are asked to refrain from wearing perfumes or colognes, and prepared foods are kept covered so customers would only smell coffee aromas.

Sounds Play soothing CDs that are also for sale Often offer live music

o Customer Service The company sees a direct link between customer satisfaction and customer loyalty. The company believes that employee satisfaction leads to customer satisfaction (Moon). Voted onto Fortunes Top 100 Places to Work Employee satisfaction remains consistently around 80-90%. Turnover rate is 70%, one of the lowest in the industry Focuses on manager stability in order to decrease employee turnover, but also to help recognize regular customers and provide personalized services

Employees are trained to connect with customers and focus on customer intimacy. Greet customers with a smile. Enthusiastically welcome customers into the store. Establish eye contact. Try to remember customers names and orders if they are frequent customers.

Just Say Yes policy, in order to keep the customer happy, which may go beyond store rules Example: Always compensate dissatisfied customers with a Starbucks coupon entitling them to a free drink Example: Give a customer a free refill if he/she spills their drink.

o AdvertisingThe company spends very little on advertising and depends on word-of-mouth promotion. o Involvement in the Community Contributing positively to surrounding communities is one of Starbucks guiding principles in the companys mission statement. Howard Schultz had the plan to build a company with soul (Student). Starbucks has been the largest corporate contributor in North America to CARE, a worldwide relief and development organization to help Third World countries where Starbucks purchases its coffee supplies. The company has an Environmental Committee that looks for ways to reduce, reuse, and recycle waste, as well as contribute to local community environmental efforts. The company donated almost $200,000 to literacy improvement efforts (Student). Starbucks has many community building programs to contribute positively to the communities where our partners (employees) and customers live, work, and play (Corporate). As part of Starbucks ongoing commitment to share the comfort of coffee during times of crisis, the company continues to demonstrate our support of the men and women serving in the U.S. military overseas (Company). The Starbucks Foundation (Company) Established in 1997 by Howard Schultz

Inspired by Schultzs childhood experiences and those of other inner city children Dedicated to creating hope, discovery, and opportunity in the communities of Starbucks

Marketing Mix Marketing Research o Schultz wanted to use research in order for Starbucks to challenge the status quo, be more innovative and take bigger risks. o Examples of questions he asked were (Moon): What could Starbucks do to make its stores an even more elegant third place that welcomed, rewarded, and surprised customers? What new products and new experiences could the company provide that would uniquely belong to or be associated with Starbucks? What could coffee be besides being hot or liquid? How could Starbucks reach people who were not coffee drinkers? What strategic paths should Starbucks pursue to achieve its objective of becoming the most recognized and respected brand of coffee in the world?

o At the retail stores, a pamphlet is available for customers to share their thoughts about their Starbucks experience. *See Exhibit 1 o Starbucks uses Customer Snapshots, similar to mystery shoppers, to evaluate partner performance in the retail stores (Moon). The four basic service evaluations include: Service Did the register partner verbally greet the customer? Did the partners make eye contact with the customer? Say thank you?

Cleanliness Was the store clean? The counters? The tables? The restrooms?

Product Quality Was the order filled accurately? Was the temperature of the drink within range? Was the beverage properly presented?

Speed of Service How long did the customer have to wait? The companys goal was to serve a customer within three minutes, from back-of-the-line to drink-in-hand.

2001-2003 Customer Snapshot Scores (North American Stores):

Financials Recent Financial Information o Attached is a graph from www.starbucks.com, showing historical revenues dating back to the 1995 fiscal year up to the 2006 fiscal year. *See Exhibit 2

Starbucks Corporation
Annual Income Statements
amounts in millions of US dollars (except per share amounts) Gross Profit 3,764.1 3,102.8 2,389.6 Operating Income 780.6 608.2 424.7 Total Net Income 494.5 390.6 268.4 Diluted EPS (Net Income) 0.61 0.47 0.34

Year Sept. '05 Sept. '04 Sept. '03

Revenue 6,369.3 5,294.3 4,075.5

Quarterly Income Statements

amounts in millions of US dollars (except per share amounts) Gross Profit 1,158.8 1,124.9 1,156.0 980.3 952.0 Operating Income 214.6 201.9 279.9 196.4 199.6 Total Net Income 145.5 127.3 174.2 123.6 125.6 Diluted EPS (Net Income) 0.18 0.16 0.22 0.16 0.16

Year June '06 Mar. '06 Dec. '05 Sept. '05 June '05

Revenue 1,963.7 1,885.8 1,934.1 1,659.2 1,601.8

source: Hoover's, Inc. 2006. D&B Company. 4 Dec. 2006 <http://hoovers.com>.

Starbucks Corporation
Annual Balance Sheet
amounts in millions of US dollars (except per share amounts) Sept. '05 Assets Current Assets Sept. '04 Sept. '03

Cash Net Receivables Inventories Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Liabilities and Shareholders' Equity Liabilities Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities Shareholders' Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (mil.)

307.0 261.6 546.3 94.4 1,209.3 1,842.0 462.7 3,514.1

653.0 203.9 422.7 71.3 1,350.9 1,551.4 488.2 3,390.6

350.0 175.9 342.9 55.2 924.0 1,384.9 420.8 2,729.8

774.2 277.8 175.1 1,227.0 2.9 193.6 1,423.4

624.2 0.7 121.4 746.3 3.6 166.4 916.3

534.5 0.7 73.5 608.7 4.3 34.3 647.3

-2,090.6 2,090.6 767.4

-2,474.2 2,474.2 397.4

-2,082.4 2,082.4 396.5

source: Hoover's, Inc. 2006. D&B Company. 4 Dec. 2006 <http://hoovers.com>.

Starbucks Corporation
Annual Cash Flow Statement
amounts in millions of US dollars (except per share amounts) Sept. '05 923.6 (221.3) (673.8) 28.8 Sept. '04 820.2 (658.5) (66.5) 98.2 Sept. '03 566.5 (499.3) 30.8 101.2

Net Operating Cash Flow Net Investing Cash Flow Net Financing Cash Flow Net Change in Cash

Depreciation & Amortization Capital Expenditures Cash Dividends Paid

377.3 (644.0) --

325.6 (412.5) --

256.3 (365.3) --

source: Hoover's, Inc. 2006. D&B Company. 4 Dec. 2006 <http://hoovers.com>.

Starbucks Corporation
Earnings Estimates
Period Q1 Q2 Q3 Q4 P/E Ratio: 5-Year Growth Rate: Period Ends Dec. '06 Mar. '07 Jun. '07 Sept. '07 39.79 26.55 Mean EPS 0.26 0.19 0.22 0.22 # of Estimates 17 16 16 16 Year Ago Actual 0.17 0.18 0.16 0.22

source: Hoover's, Inc. 2006. D&B Company. 4 Dec. 2006 <http://hoovers.com>.

Starbucks Corporation
Comparison To Industry & Market
Valuation Price/Sales Ratio Price/Earnings Ratio Company 1,963.7 1,885.8 Industry1 1,158.8 1,124.9 Market2 214.6 201.9

Price/Book Ratio Price/Cash Flow Ratio

1 2

1,934.1 1,659.2

1,156.0 980.3

279.9 196.4

Industry: Eating and Drinking Places Market: Public companies trading on the NYSE, AMEX, and NASDAQ

Top Competitors
Starbucks Annual Sales Employees Market Cap ($ mil.) 6,369 115,000 27,047 Diedrich Coffee 59.5 -17.9 Dunkin 517.0 953 0.0 New World Restaurants 389.1 7830 0.0

source: Hoover's, Inc. 2006. D&B Company. 4 Dec. 2006 <http://hoovers.com>.

Controls Problems and Solutions (Moon) o In 2002, our fellow associates, including Christine Day, recognized that customer service needed to be improved upon, and one idea to conquer this problem was to invest $40 million annually in 4,500 stores. o By adding almost $9,000 to each store, this would allow an additional 20 hours of labor per week. o Day said, The idea is to improve speed-of-service and thereby increase customer satisfaction. o According to a survey of customers, 65% believed fast service was a key attribute to their satisfaction.

o In the past when we thought of adding more labor hours to our retail stores, we decided against it due to the struggling economy, especially since labor was already our biggest expense. o Another option instead of increasing labor hours is to increase the efficiency of the partners that we currently employ. We removed the nonvalue-added tasks, simplified the production process, and manipulated the store layout to take better advantage of store space. o Additionally, we installed an automatic espresso machine that was faster, reduced waste, and improved consistency while still fulfilling our customers needs. We want to continually implement the use of these machines in more of our stores. o Furthermore, we want to add more drive-thru lanes to our stores. In doing so, we can still serve our customers who want a taste of Starbucks on-thego. Marketing Organizations o Although we have been considered one of the worlds most effective marketing organizations, we lack a strategic marketing group (Moon). o Instead, we have smaller divisions (Moon): Market research group gathered and analyzed market data Category group developed new products and managed the menu Marketing group developed quarterly promotional plans

o However, we need to find a way to get these divisions to collaborate so information about market and customer trends is not overlooked like it has

been in the past and we can make better decisions about driving our business in the future. o In 1995, a Stores of the Future project team was formed (Student). Their goal was to come up with the next generation of Starbucks stores to be debuted in 1996. Schultz communicated with the team and envisioned the retail stores to look and feel like, an authentic coffee experience that conveyed the artistry of espresso making, a place to think and imagine, a spot where people could gather and talk over a great cup of coffee, a comforting refuge that provided a sense of community, a third place for people to congregate beyond work or the home, a place that welcomed people and rewarded them for coming, and a layout that could accommodate both fast service and quiet moments. The team researched the art and literature of coffee throughout the ages, studied coffee-growing and coffee-making techniques, and looked at how our retail stores have already evolved in terms of design, logos, colors, and mood. The team decided upon four store layout designs: A store for each stage of coffee making: growing, roasting, brewing, and aroma. Each store had its own color combinations, lighting scheme, and component materials. Also, the stores adapted to the environment, whether the store was downtown or on a college campus, for example.

Contingency Planning Time Implementation

References "Company, The." Starbucks. 2006. 4 Dec. 2006 <www.starbucks.com>.

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