Starbucks

INDUKAKA IPCOWALA INSTITUTE OF MANAGEMENT

STRATEGIC MANAGEMENT

SHWETANG PANCHAL
09MBA22
Background
 In 1971 Gerald Baldwin, Gordon Bowker and Ziev Siegl
opened a small coffee house in Seattle’s Pike Place
market specialized selling aracbica beans to a niche of
coffee connoisseurs
 In 1982, Shultz joined the marketing team and a few
years later the owners sold him the company.
 The stores sold whole beans and the finest coffee with a
target market of affluent, well-educated, white collar
consumers between the ages 25 and 44.
 By 1992, Starbucks had opened 140 stores in the
Northwest and Chicago.
 The same year Starbucks went public despite all of Shultz
skeptics
Background
 Starbucks, originally based in Seattle, was established in 1971
and today with more than 6,500 retail locations in North
America, Latin America, Europe, the Middle East and the
Pacific Rim.
 Starbucks Coffee Company established itself as the dominant
and most aggressive retailer in the coffee house segment.
 The company has transformed a simple beverage into a
lifestyle accessory with as much elegance as the latest fashion.
 It offers whole bean coffees, espresso beverages,
confectionery and bakery items and equipment in its retail
stores
Starbucks Business & Brand
Strategy
 Two main business strategies: License and Joint Venture.
 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 an inviting upscale atmosphere is also part of the
brand strategy.
Starbucks Corporate Strategy
 Maximize market penetration
 Provide a relaxing, attractive social atmosphere
 Offer high-quality products
 Create a great working environment
 Achieve profitability
 Keep on to accelerate expansion and presence in
global world

The Frappuccinos
Competitive strategies
 Focused differentiation
 Serve niche buyers than rivals
 Resource and capabilities to serve an
attractive needs
Global Marketing Strategy

 Retailing formula is same throughout the

whole world
 Product offerings are modified to suit local
tastes
 The advertising strategies are more local and
differentiated rather than standardized
 Company Snapshot and Competition

 The retail strategy has been to put a coffee shop on every

corner and to make fresh-brewed coffee by selling only the
highest-quality products and charging a premium price
Competition

Competition Small-scale specialty Independent specialty Donut and bagel chains

coffee chains coffee shops

Differential 1. U.S. region-based 1. Wide range of 1. Established chains

Strategy 2. Store environment food & beverage 2. Coffee represents 50% of sales
3. Roast to 2. Satellite television
order 3. Offers flavored coffee/ non-coffee
3. Computers & Internet
alternatives
Examples Caribou Coffee; Peet's Polly's Gourmet Coffee; Dunkin Donuts;
Coffee & Tea; Java Mitchell's Coffee Krispy Kreme
Centrale House
Expansion Opportunities
 Coffee consumption is on the rise in the United States.
 Half of the U.S. population now drinks coffee every day, and
more than a fourth of the population drinks coffee on occasion.
 The market’s largest growth is among drinkers of specialty
coffee.
 An estimated, one-third of the U.S. coffee consumption takes
place outside of the home.
Product & Service Innovations
 Product Innovations strategy
 New products are launched on a regular basis.
 A new hot beverage is introduced every holiday season.
 The latest success in innovation is the introduction of the coffee and non-
coffee based Frappuccino line.
 The bottled version of the beverage has become a $400 million
franchise, in large part due to its appeal to the non-coffee drinkers.
 Service Innovations strategy
 Starbucks started to launch a stored-value (SVC) card from November
2001.
 The prepaid card can be used in any company-operated store in North
America. (also used as a Gift Card)
 After less than a year, Starbucks realized $160 million in sales through
card activations and reloads.
 The latest service innovation is T-Mobile’s high speed internet offered
at a monthly fee in selected Starbucks locations.
THANK YOU