Starbucks  SWOT  Analysis    

Strengths   •  Well-­‐established  and  growing  brand  recognition   •  Product  and  brand  consistency   •  Eco-­‐friendly  practices,  for  Starbucks  is  concerned  with  conserving  energy,  water,                controlling  climate  change  and  recycling   •  Participates  in  community  service  (both  employees  and  customers)   •  Active  participant  of  Create  Jobs  for  USA,  STARBUCKS  (RED),  Starbucks        Foundation  and  Ethos  Water  Fund   •  Wide  variety  of  product  offerings   •  Offers  free  Wi-­‐Fi  in  stores  and  a  comfortable  space  for  its  customers   •  Staff  (employee  benefits,  staff  represents  the  brand)   •  Innovative/Progressive   •  Strong  brand  image  associated  with  quality  coffee  and  excellent  customer  service   (“The  Starbucks  Experience”)   •  Ethical  values/Ethical  mission  statement   •  Rewards  and  recognition   •  Possesses  a  potential  for  new  and  innovative  store  operations   •  Has  retained  a  level  of  sound  financial  performance/profitable   •  An  international  brand  wit  more  than  5,500  stores  in  over  50  countries1     Weaknesses   •  Needs  more  of  a  wide  spread  customer  base   •  Prices  continually  rising,  thus  risking  the  loss  of  customers   •  Increasing  number  of  competitors   •  Size  of  stores:  stores  can  become  crowded  at  times   •  Political/religious  support  (may  not  reflect  with  those  of  its  customers)   •  Limited  products  at  different  locations   •  Organization  has  strong  presence  in  the  U.S.  with  more  than  ¾  of  their  cafes        located  in  the  home  market/lack  of  international  presence   •  Reputation  with  pressure  groups;  criticized  for  not  using  free  trade  products   •  Prices  high  as  opposed  to  rivals  such  as  Dunkin’  Donuts  and  McDonald’s   •  Product  recalls,  which  occur  rather  frequently   •  Rapid  decline  of  satisfactory  customer  service,  as  observed  from  comments  on            MyStarbucksIdea.com   •  Leaders  are  too  cross  functional  in  their  management   •  Not  available  to  all  target  segments  due  to  higher  prices   •  Not  enough  Drive-­‐Thru  services   •  Starbucks’  locations  are  scarce  in  suburban  areas                                                                                                                   1  Starbucks.com.  Starbucks  corporation.  2011.  Feb  10,  2012  <http://www.starbucks.com/>.     1  

•  Not  enough  bilingual  employees   •  Lack  of  coupons,  deals  and  promotions2     Opportunities   •  More  products  can  emerge  while  adapting  to  other  markets   •  Creating  a  coffee  house  experience  in  global  target  markets   •  Can  focus  on  emerging  economies   •  Opportunity  of  third  house  experience   •  Opportunity  for  strategic  growth  initiatives   •  Holds  the  ability  to  be  influenced  by  the  opinions,  thought  and  concerns  its   customers  have  on  MyStarbucksIdea.com   •  Can  increase  its  knowledge  in  new  technological  advances  to  use  in  stores   (espresso  makers/to-­‐go  cups)   •  With  continued  domestic  expansion,  it  can  reach  domination  of  its  segment   •  More  promotions/coupons/discounts3     Threats   •  Relies  on  international  trade  for  its  coffee  beans  (Arabia,  South  America,  etc.)   •  Must  comply  with  international  governments  for  production  and  distribution   •  Very  competitive  environment  with  leaders  in  the  restaurant/food  business   •  Cultural  values  and  routines  may  interfere/not  adapt  with  the  “coffee  house”        experience   •  Has  become  a  luxury  brand;  thus,  it  is  a  brand  that  can  be  consumed  by  every              consumer  on  a  daily  basis   •  Issues  of  negative  publicity  against  the  brand  due  to  fair  trade  conflict  with  coffee        bean  farmers  in  Africa   •  A  younger  domestic  market  is  being  alienated  from  the  Starbucks  brand  due  to        cost   •  Recession  or  downturn  in  the  economy  affects  consumer  spending   •  Several  activist  groups  maintain  websites  criticizing  the  company’s  fair  trade        policies,  labor  relations  and  environmental  impact.4    

Starbucks  Brand/Product  Information  
 

                                                                                                                2  "MBA Tutorials » Starbucks SWOT Analysis." MBA Tutorials » MBA Tutorials – Accounting,
Economics,Finance, Management, Marketing,Strategic Management,human Resource Management,branding. MBA Tutorials. Web. 16 Feb. 2012. <http://www.mbatutorials.com/marketing/swot-analysis-marketing/310-starbucks-swot-analysis.html>.   3  "Starbucks S.W.O.T." Business & Company Resource Center. Business & Company Resource Center. Web. 16 Feb. 2012. <http://galenet.galegroup.com.emils.lib.colum.edu/servlet/BCRC?vrsn=unknown>.   4  "Starbucks Swot Analysis." Scribd. Scribd. Web. 16 Feb. 2012. <http://www.scribd.com/doc/3972739/Starbucks-Swot-Analysis>.  

 

2  

 Approximately  78%  of  its  store  volume  is  found  in  beverages  (coffee.   Starbucks  currently  has  over  15.  and   progressively  doing  so  on  an  international  level.  Flavored.  Cappuccino)   • Frappuccino  (Vanilla.com/en/e-book/111348/coffee-shop-industry-a-strategic-analysis>.  where  he  was  inspired  by  the  coffee  bars.   Lastly.grin.  Its  first  store  was  established  in  1971  in   Seattle.  Starbucks   headquarters  are  located  in  Seattle.  Iced.  Earl  Grey.  smoothies.   teas.  he  became  motivated  to   become  an  influential  part  of  the  company.S.  Caramel.com." Grin.  Medium  Roast.  President  and  Chief  Executive  Officer  of  the  brand.  Its  sales  also  mostly  come  from  beverages.  Apple  Juice.  Full  Leaf.  Peppermint  Hot   Chocolate)   • Iced  Coffee  (With  or  without  milk)   • Espresso  Beverages  (Lattes.A Strategic Analysis.  Flavored  Steamed  Milk)   • Tazo  Drinks  (Awake.6     Starbucks  Products     • Coffee  (Blonde  Roast.  White  Hot  Chocolate.  pastries.  with  most  of  them  being  in  the   U.  2012  <http://www.  Feb  10.  Strawberry. <http://www.  coffee   utensils  (mugs.  Doubleshot  Espresso.500  stores  in  more  than  50  countries.  Frappuccino)   • Chocolate  Beverages  (Hot  Chocolate.Describe  the  Brand/Product  Line     Starbuck’s  has  grown  to  be  known  as  the  number  one  coffee  store  nationwide.  Chai  Tea.  The  sale  of  coffee  beans  averages  to  about  15%  and  food  16%.  2011.  holders.  salads.  specifically  coffee   beverages.  Its  expertise  is  coffee.  Mocha.  Black  Shaken.  lattes).   6  "Coffee Shop Industry .  After  his  trip  to   Italy  in  1983.  Green   • Tea.  wraps)  and  5%  whole  beans  (pre-­‐ packed  in  different  sizes).  Seasonal)   • Bottled  Drinks  (Doubleshot  Energy.  non-­‐caffeine  beverages.  8%  of  its  sales  are  from  coffee  utensils  and  hardware  (coffee  grinders.  Mochas.   storage  containers).  Tazo)   • Kid’s  Drinks  (Caramel  Apple  Spice.  cups)  and  even  music  albums. Web.  Products  include   foods.  Dark  Roast.com/>.  Macchiatos.  He  wanted  to  bring  back  to  Starbucks  the   romantic  and  comfortable  feel  he  experienced  at  the  Italian  coffee  bars  and  ultimately   create  a  ‘third  house’  experience. Katz Graduate School of Business.  Washington.  Washington.     3   .  Refresh.  It  became  owned  by  Howard  Schultz  in  1987  with  the  help  of  local   investors.  Zen)                                                                                                                   5  Starbucks.  filters.     Schultz  is  currently  the  Chairman.  Starbucks  corporation.  at  61%.  Java.  Calm.  Passion.starbucks.  Vanilla.5     Starbucks  owns  around  17.500  of  it  stores  worldwide.  12%  food  (sandwiches. 2012.  paninis.  Schultz  was  captivated  by  his  first  Starbucks  visit  in  1981. 16 Feb.  and  also  carries   a  variety  of  products  to  satisfy  the  various  needs  of  each  customer.  individual  coffee  bean  packages.  Peppermint.

com/>.  Equipment  Gift  Sets)   Drinkware  (Cups  and  Mugs.  Mini  Cupcake)   Bistro  Boxes  (Cheese  and  Fruit.   engineering.  Starbucks  corporation.  Tuna  Salad)   Breakfast  (Sandwiches.  Pepermint.  Chicken  and  Humus.  Feb  10.  Pound  Cake.  Oatmeal)   Salads  (Deluxe  Fruit  Blend)   Sandwiches.  Hats)   Starbucks  Card  (Gift  Card.  Reload.   Accessories.  Java  Chip  Frapp.  Croissants.  Fritters.  Cold  Beverage.  and   inventory  management  of  Starbucks  stores  worldwide.  2012  <http://www.  Whoopie  Pie.  Paninis  and  Wraps   Ice  Cream  (Caramel  Macchiato.  Pre-­‐pay.  Strawberry)   Baked  Goods  (Muffins.  Bread.  Espresso  Machines.  Buns)   Petites  Dessert  (Cake  Pop.  Manage.                                                                                                                   7  Starbucks.  Peach  Raspberry.  procurement.  Vanilla  Bean)   Yogurt  Parfaits  (Greek  Yogurt  Honey.  Coffee  Makers.  Brownies.  Sweet  Square.  Doughnuts.  Grinders.  Winter  Drinkware)   Syrups  and  Sauces  (Caramel.7     Manufacturer/Marketer     Peter  D.  Starbucks  takes  all  the  right  steps  to  deliver  this  experience   to  its  customers.  Gibbons  joined  the  Starbucks  team  as  the  Senior  Vice  President  of  Global   Manufacturing  Operations  in  2007.  Chicken  Wraps.       4   .  Salumi  and  Cheese.   Peppermint  Mocha.  Wraps.  Mocha  Frapp.com.  Sesame  Noodles.  Hazelnut.   Coffee  Cake.  From  the  variety  of  coffee  products  to   the  ambience  in  each  store.  Loafs.  Bars.  Gibbons  works  to  maintain  and   enhance  the  ultimate  experience  that  Starbucks  believes  in  and  makes  sure  that  it   continues  to  participate  in  environmentally  safe  procedures  and  local  community   volunteering.  His  duties  are  to  operate  and  control  the  manufacturing.   Teapots  and  Teakettles.)   Hot  Cocoa  Individual  Pre-­‐Packaged  Mixes   Music  and  Books  (Tracks  that  are  played  in  store)   Apparel  (Hoodies.  Scones.  Strawberry  and   Blueberry)   Equipment  (Coffee  Presses.  distribution.  Gingerbread.  and  is  now  Executive  Vice  President  of  Global   Supply  Chain  Operations.  community.  employees  and  shareholders.  etc.starbucks.  Rewards)     Starbucks’  products  are  enveloped  in  Starbucks’  ultimate  goal  of  creating  the  coffee   house  experience  or  “The  Starbucks  Experience”.  Strawberries  and  Crème.  Orange  Mango.  Cheese   Danish.  Cookies.• • • • • • • • • • • • • • • • • • • • Smoothies  (Chocolate.  Bagels.  2011.  Protein-­‐   based  Bites.  transportation.  Coffee.  strategic  planning.  T-­‐shirts.  Tumblers  and  Travel  Mugs.

 As  the  summer  begins  to  end.supplychainquarterly.  Asia  and  Latin  America. 16 Feb.  The  decline  stage  of   the  Frappuccino  beverage  will  hit  during  late  fall  and  early  to  mid  spring.  Starbucks  also  has  24  co-­‐manufacturers  in  the   U. 16 Feb. Web.  the  Starbucks  product  life  cycle  of  a   summer  drink  like  the  Frappuccino  starts  its  introduction  stage  in  early  to  mid-­‐spring.  The  demand                                                                                                                   8  "Starbucks Newsroom: Executive Vice President.  and  Europe.  Two  are  company-­‐owned. James A.  Pennsylvania.  It  also  owns  one  tea  processing  plant  in   Portland.S.  as   consumers  opt  for  cold  beverages  in  the  hot  weather.  Its  approximate  product  deliveries  are  2.  the  Frappuccino  hits  its  growth  stage  from  the  beginning  to  late  summer.S.  or   Europe.  The   unroasted.  For  example.  The  product  life  cycle  for  Starbucks  proves  to  be  different. Web.  South   Carolina.9     Stage  of  the  Product  Life  Cycle  for  the   Brand/Product  Line   Starbucks’  product  life  cycle  follows  a  similar  structure  as  the  general  product  life  cycle   process." CSCMP's Supply Chain Quarterly – Supply Chain Analysis.com/article_display.7  million  units   per  year.cfm?article_id=162>." Starbucks Newsroom: Home.  the   product  reaches  the  maturity  stage  within  the  product  life  cycle.  five  in  Canada  and  three  in  Europe.com/topics/Procurement/scq201004starbucks/>.   9  Cooke. 2012.   Then.  The  roasted  coffee  beans  are   then  taken  here  for  distribution.  and  third-­‐party   logistic  companies  manage  the  remaining  three. Global Supply Chain Operations. Insight & More.  These  distribution  centers  distribute   not  only  coffee.  Washington  and  Netherlands.8     Supply  Chain  Management     The  supply  chain  management  for  Starbucks  begins  with  the  importation  of  its   coffee  beans  from  Latin  America. <http://news.  and  are  then  taken  to  six  storage  sites  where  they  are  roasted.  seven  in  Asia/Pacific.  Oregon  and  in  the  U.  Africa  and  Asia  to  the  U..  Canada.starbucks.  but  other  Starbucks  products  as  well.  and  these  stages  may   occur  over  various  lengths  of  time. 2012.     5   .  or  “green”.  Apart  from   distribution  centers.S.S.   Starbucks  has  five  company-­‐owned  roasting  plants  in  Nevada.  for  certain   Starbucks  products  may  go  through  each  stage  at  differently.S. "From Bean to Cup: How Starbucks Transformed Its Supply Chain – Procurement – CSCMP's Supply Chain Quarterly. CSCMP.  Products  are  then  distributed  by   truck  from  these  central  distribution  centers.  Starbucks  has   five  regional  distribution  centers  in  the  U.  Europe.S.  coffee  beans  are  transported  in  ocean  containers  to  the  U.  to   their  local  Starbucks  stores.  Starbucks  distribution  centers  are  also  located  in   Europe  and  Asia. <http://www.  all  which  are  owned  by  third-­‐party  logistic  companies. Starbucks.  Starbucks  also  holds  48  central  distribution  centers  worldwide:  33   in  the  U.  Third-­‐party   logistics  companies  own  forty-­‐seven  of  these  centers.  or  from  the  larger  distribution  centers.

2012.  attributed  partially  to  an  8  percent  decline  in  revenue  from  stores  that                                                                                                                   10  Starbucks.0  MM   $  9411.com.4  MM   $  9774.starbucks.  Starbucks  announced  a  77  percent  net   income  drop. Web.colum.lib." Business & Company Resource Center.5  MM         The  sharp  decline  in  revenue  during  the  2009  fiscal  year  has  been  attributed  to  the   United  States’  recession. 16 Feb.10     Total  Annual  Sales  Volume         The  total  annual  sales  volume  for  the  Starbucks  Corporation  is  standardized  in  millions   of  USD.  Starbucks  was  one  of  the  initial  corporations  to  recognize  the   recession  and  its  potential  negative.  thus  allowing  them  to  improve  within  the  areas  of  brewing  coffee  and  customer   service.6  MM   $  10383.  during  the   specific  time  period.         In  the  second  quarter  of  the  2009  fiscal  year.  and  in   January  2009.     11  "Starbucks Financials.6  MM   $  2196.4  MM   $  3086.11         Fiscal  Year   Total  Revenue   Gross  Profit     2011   $  11700.edu/reuters/FinancialReport/FinancialReports.  2011.com/>.  2012   <http://www.  The  corporation’s  fiscal  year  ends  in  October.   Thus.  and  the  consumption  of  hot  beverages  during  the  cold  winter   times  rises.  Starbucks  saw  it  best  to  concentrate  their  efforts  upon  a  fewer  number  of   stores.5  MM   Fiscal  Year   2011   2010   2009   2008   2007   $  2697.  closed  507  of  its  retail  stores  in  the  United  States  and  64  retail  stores   abroad.emils.  and  rediscovering  the  coffee-­‐house  art  of  pouring  espresso.6  MM   $  1992.  the  company  halted  plans  for  further  global  expansion  in  July  2008.jsp?COUN TRY=US>.  long-­‐term  effects  to  total  revenue  and  gross  profit.galegroup.for  the  product  falls.com. <http://invreports.  as  well  as  the  overall  weak  global  economy.  Feb  10.                 Gross  Profit  Margin   26%   25%   21%   19%   23%     6   . Business & Company Resource Center.4  MM   $  2024.0  MM   2010   2009   2008   2007   $  10707.  Starbucks  corporation.

 or  purchased  in-­‐home  coffee  brewers   and  espresso  machines.  The  product  sales   volume  differs  from  store  to  store.starbucks.  focused  on   Starbucks’  ability  to  offer  value  without  compromising  quality. 2012.html>.  16%  food  items.  which  had  begun  selling  specialty  coffee  beverages   during  the  time  period  as  well.     7   . 16 Feb.  they  have  also  delivered   increased  service  speed." Starbucks Newsroom: Home. <http://news. Laurie J.  Starbucks  has  long  been  characterized  as  a  corporation  to  appeals   to  affluent  professionals.   Our  store  partners  have  embraced  the  cost  disciples  and  efficiency  initiatives  that  are   enabling  us  to  expand  our  operating  margin.  Further  research  found  that  5  percent  of  that   drop  could  be  attributed  to  customers  cutting  back  on  transactions  and  the  amount   they  spent  per  visit.  Troy  Alstead. Starbucks.  and  8%  coffee-­‐related  products  and  equipment.cfm?article_id=249>.  In  the  press  release  surrounding  the   announcement  of  the  results.12     Within  the  fiscal  third  quarter  of  2009.  15%   whole-­‐bean  coffees.com/article_display. World News & Multimedia.  or  a  piece  of  coffee  cake  for  $3.   explained  the  reasons  for  Starbucks’  financial  improvement:  “Excellent  execution   throughout  our  organization  contributed  significantly  to  our  performance  this  quarter.  The  8  percent  decline  of  store  sales  in  the  second  quarter  had   risen  to  5  percent.  and  lowered  the  cost  of   more  basic  specialty  coffee  beverages.  the  Starbucks  Corporation  (NASDAQ:  SBUX)   reported  stronger  results.  commonly  depending  on  the  size  and  location  of   each  individual  outlet.  while  the  lower  end  of  the  market  is  catered  to  by   competitors  such  as  McDonald’s. Web.  In  doing  this.95.  many  former  Starbucks  consumers  had  begun  visiting  foodservice   industry  giants  Dunkin  ’Donuts  and  McDonald’s.nytimes.com.  The  company  also   simultaneously  planned  a  multi-­‐million  dollar  advertising  campaign.   13  "Starbucks Newsroom: Starbucks Posts Strong Third Quarter Fiscal 2009 Results.                                                                                                                   12  Flynn.  In  the  search  for  a  more  economical  way  to  find  their   morning  coffee  fix.  Executive  Vice  President  and  CFO. Web.”13   had  been  operational  for  at  least  a  year.  customer  satisfaction. <http://www.  a  cup   of  ‘Perfect  Oatmeal’.com/2009/04/30/business/30sbux.  Larger  locations  carry  a  greater  variety  of  whole  coffee  beans. 2012.4  billion  was  only  2  M  lower  than   the  reported  results  in  the  third  quarter  of  2008.   Through  the  recession  and  decline  in  gross  profit  margin.  Customers  were  given   the  option  to  purchase  a  cup  of  coffee  and  one  of  Starbucks’  ‘Artisan  Sandwiches’.  Starbucks  saw  an  opportunity   to  improve  revenue:  the  introduction  of  a  breakfast  value  meal.  measurably  improved  customer  service.NYTimes. The New York Times." The New York Times Breaking News. 16 Feb.  and  the  reported  net  revenue  of  $2. "Starbucks Reports 77% Earnings Decline .      Sales  Volume  by  Key  Distribution     Starbucks’  retail  sales  mix  is  approximately  61%  coffee  beverages. 2012. 16 Feb.   and  an  overall  enhanced  Starbucks  Experience.

emils.com/en/e-book/111348/coffee-shop-industry-a-strategic-analysis>.  storage  containers.colum. <http://www.  coffee-­‐making  equipment.  and  other  accessories.50   Krispy  Kreme   4.20                                                                                                                     14  "Coffee Shop Industry .  and  a  small  variety  of  whole-­‐bean  coffees. Katz Graduate School of Business.  coffee  grinders. 16 Feb.  0  MM   Share  of  $  Sales   61%   16%   15%   8%       Market  Share  and  Rank       Top  Beverage/Snack  Restaurant  Firms.   filters.  dollars)   $  Sales   $  7137.   15  "Starbucks   8   ." Business & Company Resource Center.edu/reuters/FinancialReport/FinancialReports." Grin.90   Jamba  Juice   3.  Smaller  stores  retail  location  sales  are   typically  limited  to  coffee  beverages.lib.A Strategic Analysis.jsp?COUN TRY=US>.grin.  2008     Market  shares  are  shown  in  percent. <http://invreports.com. Web. 2012.10   Doughnuts   Baskin-­‐Robbins   3.14      $  Sales  Volume  and  Share  of  Total  $  Sales  for  Key   Items  within  the  Product  Line  (2011)15             Product  Line   Coffee  Beverages   Food  Items   Whole-­‐Bean  Coffees   Products/Equipment   (in  millions  of  U. Web.             %   Starbucks  Coffee   54.10   Dunkin'  Donuts   34.1  MM   $  936.galegroup. 2012.1  MM   $  1755.   Financials.  teas. Business & Company Resource Center.  coffee  mugs.S.2  MM   $  1872. 16 Feb.gourmet  food  items.

 2009     Companies  are  ranked  by  units.07       9   .000  Burger  King  stores.00   Peet's  Coffee   192.38   Starbucks   8.             $   McDonald's   31.  2009     Firms  are  ranked  by  sales  in  billions  of  dollars.00   Coffee  Beanery   131.00   Burger  King   9.00   Seattle's  Best   160.00   Coffee  Bean  and  Tea  Leaf   750.21   Jack  in  the  Box   3.Largest  Coffee  Shops  Worldwide.90   Sonic   3.  Seattle's  Best  is  a  subsidiary  of  Starbucks  and  is  present   in  400  Borders  Books  and  soon  in  more  than  7.34   Taco  Bell   6.00     Top  Quick-­‐Service  Restaurant  Chains.00   Tim  Horton's   160.00   KFC   4.00   Subway   10.           u   Starbucks   11.83   Arby's   3.22   Chick-­‐fil-­‐A   3.00   Tully's   100.00   Wendy's   8.00   Caribou  Coffee   511.80   Dunkin'  Donuts   5.000.70   Pizza  Hut   5.

30   9.S  coffee.emils.   Internationally.70   4. Business & Company Resource Center.50   17.  but  an  internationally  recognized  brand  as   well.  2010.20   0.  Inc.70   4.  The  Starbucks  brand  has  positioned  itself  in  the  national  market  as  the   head  of  the  U.edu/servlet/BCRC?vrsn=unknown>.  the  Starbucks  brand  has  expanded  exponentially. 16 Feb.50   0.  Starbucks   is  now  the  largest  coffee  house  in  the  world  with  locations  in  55  countries.  or  the  business   that  individuals  visit  most  commonly  between  the  home  and  the  workplace.         ($  mil.20   1.42       Massimo  Zanetti  Beverage  USA   87.95     16     Current  Brand  Positioning     Starbucks  has  developed  a  concept  in  branding  and  positioning  that  no   other  coffee  brand  has  done:  the  concept  of  "Third  Place".  Inc.lib.10   56.     Global  positioning  is  strong  in  the  Starbucks  brand.66       Private  label   237. <http://galenet." Business & Company Resource Center.com.892.69       Kraft  Foods  Inc.79       Starbucks  Coffee  Co.   898.  2010     Companies  are  ranked  based  on  sales  at  supermarkets.72       Eight  O'Clock  Coffee  Co.S.)   Share           $   %       J.31       Peet's  Coffee  and  Tea  Inc.colum.   66.70   1. 2012.20   1.  500  coffee  houses  in  the  U.galegroup.   33.19       Rowland  Coffee  Roasters   45. Web.Top  Coffee  Makers.                                                                                                                   16  "Starbucks Market Share.  This  idea  has  been   developed  by  creating  a  unique  and  relaxing  atmosphere.   35.  Smucker  Co.69       Community  Coffee  Co.  with  more  than  12.   224.   60.   The  "Third  Place"  has  become  very  effective  and  became  one  of  the   strongest  concepts  developed  by  the  company.68       Other   2.  drug  stores  and  mass   merchandisers  (excluding  Wal-­‐Mart)  for  the  52  weeks  ended  August  8.  as  well  as  the   offering  of  high  quality  products.40   0.  and  is  not  only  become   a  nationally  recognized  brand.M.   497.     10   .90       New  England  Tea  and  Coffee  Co.

 clean.200  in  Canada.html>       11   .  The   Seattle  Times  Company.nwsource.       Current  Brand  Marketing  Strategies   In  order  for  any  marketing  efforts  to  succeed.  and  54  in   Russia.  “Starbucks  takes  unique  approach  to  marketing”.  and  evokes  confidence.  Starbucks  was  first  to  offer  free  Wi-­‐Fi  within   its  stores)                                                                                                                   17  Allison.  2006.”  The  Starbucks  logo  has   changed  three  different  times  over  its  forty  years  in  business.  Oct  12.  as  put  by  Starbucks  chairman  and  CEO.  Feb  8.  The  newest  Starbucks  logo  has  dropped  its   name.  Howard   Shultz.  In  2011.com/html/businesstechnology/2003300353_events12.17     Starbucks  marketing  efforts  have  focused  on  local  rather  than  nationwide  marketing.  Melissa.  2012   <http://seattletimes.  700  in  the  United  Kingdom.  “  Shultz  explained.  it  is  important  to  have  a  logo  that   encompasses  the  brand’s  business  identity.  “At  its  core.  Last  year.  it  is  the  exact  same  essence  of  the  Starbucks   experience  and  allows  to  customers  to  think  beyond  coffee.  Starbucks  celebrated  its   40th  anniversary.  Starbucks  evolved  the  design  of  the  logo:  “It  embraces  and  respects  the   Starbucks  heritage  and  at  the  same  time.  the  brand  has  become  “the  worlds  leading   purveyor  of  the  highest  quality  coffee”.  it  is  simple.including  over  1.   Starbucks  is  as  aware  of  the  local  community.   Starbucks  positions  each  store  individually  according  to  the  specific  location  they  are  in.  Over  the  past  40  years.  Seattle  Times.  thus  making  each  retail  location  specific   and  unique  to  each  neighborhood  they  are  located  in.  each  marking  a  historical   achievement  for  the  brand.       Starbucks  Marketing  Strategic  Ideas     o “Perfect  cup  of  coffee”  -­‐  placing  emphasis  on  product  quality   o “Third  Place”  -­‐  focusing  on  creating  the  “third  place”  for  everyone  to  go   between  home  and  work   o “Customer  satisfaction”  -­‐  it  is  important  for  customers  experience  the   uniqueness  of  the  coffee  experience   o “Creating  a  Starbucks  community”  -­‐  creating  a  community  around  the   brand.  locally  and  globally   o “Smart  partnerships”  -­‐  a  way  to  grow  business  is  to  partner  smart   o “Innovations”  -­‐  creative  and  innovative  ideas  to  add  to  their  product  line   and  services  (for  example.  it  evolves  and  feels  more  suitable  for  the   future.

4  million.  letting  the  high  quality  of   their  products  speak  for  themselves.  TNS  Media  Intelligence  figures  put  Starbucks  spending  at  just  $26   million  in  measured  media  throughout  2008.  “Starbucks  Hits  No.  down  from  $293.nwsource.  has  over  3.  McDonald's.  “Starbucks  takes  unique  approach  to  marketing”.  up  from   $872.”  AdAge.  Competitors  such  as  Dunkin'  Donuts   have  also  stayed  in  the  mix  with  aggressive  value-­‐menu  advertising.  2011.  The   Seattle  Times  Company.  talks  about  Starbucks  becoming   the  3rd  largest  fast  food  chain.   Starbucks.4   million  in  2009.  Maureen.20     Current  and  Historical  Creative  Executions                                                                                                                   18  Allison.  Feb  10.8  million  in  2010.  2006.000.  Burger  King.  estimated  at  $100  million.  written  by  Maureen  Morrison  in  2011.  perennially  the  top  restaurant  chain  in  U.  Twitter  and   Foursquare.  2012   <http://seattletimes.o “Brand  Marketing"  -­‐  word  of  mouth  focus.  Maureen.000.  Crain  Communications.  in  May.  down  from  $308  million  in   2009  and  $327  million  in  2008.  By   comparison.  on  the  other  hand.com/results?   endeca=1&searchprop=AdAgeAll&return=endeca&search_offset=0&search_order_b   y=score&search_phrase=starbucks+ad+budget>   20  Morrison.  Crain  Communications.882.  2012  <http://adage.  Feb  8.  measured  media  spending  in  2010.  Starbucks  has  utilized  social  media  and  has  thus  determined  the   best  way  to  reach  their  customer  base  is  through  these  plug-­‐ins:  Facebook.  Seattle  Times.  2012  <http://adage.19     Starbucks  is  very  strategic  in  their  use  of  social  media.html>   19  Morrison.  “Starbucks  Hits  No.   “McDonald's  launched  its  McCafé  ad  push.665.  Feb  10.000  fans  on   their  Facebook  Fan  Page.com/results?   endeca=1&searchprop=AdAgeAll&return=endeca&search_offset=0&search_order_b   y=score&search_phrase=starbucks+ad+budget>     12   .  2011.  Wendy's  in  2010  spent  $283.  and  the  Starbucks  Frappuccino  page   more  than  1.  3  Despite  Limited  Ad  Spending.   sales.  3  Despite  Limited  Ad  Spending.S.  Oct  12.  This  strategy  is  relayed  within  a   social  media  Advertising  Age  article:  McDonald's  US  has  just  over  1.  shelled  out   about  $301  million  on  domestic  measured  media  in  2010.18     Current  Brand  Advertising  Budget/Budget   Allocation     An  article  written  by  Emily  Bryson  on  AdAge  explained  how  much  McDonald’s  has   helped  to  launch  the  awareness  of  coffee  consumptions  through  their  advertisements.com/html/businesstechnology/2003300353_events12.   May  02.S.”  AdAge.”  A  more  recent   AdAge  article.307.  pulling  back  its  outlay  over  the  years.  while  Dunkin’  Donuts  has  approximately  829.8  million  on  U.  Melissa.000  fans.  spent  about  $887.   May  02.

  This  statistic  was  followed  by  consumers  who  are  35  to  44  (37.  Feb  10.   For  example.  14  and  15.   Social  media  has  proven  to  be  a  major  advertising  avenue  for  Starbucks.     Category  Brand/Consumption  Patterns     It  has  been  found  that  60%  of  Americans  have  scaled  back  on  specialty  coffee   purchases  in  the  past  six  months  due  to  the  overwhelming  state  of  the  economy.  Consumers  are  either  single  or  married.  Those   who  have  scaled  back  the  most  since  the  beginning  of  the  year.  2011.  according  to  the  online   survey  of  500  Americans  conducted  between  Jan.”  AdAge.5%)  years  of  age.  with  this  number  steadily   increasing  every  year.  or  areas  where  populations  of   middle  to  upper  class  individuals  are  dense.com/results?   endeca=1&searchprop=AdAgeAll&return=endeca&search_offset=0&search_order_b   y=score&search_phrase=starbucks+ad+budget>                                                                                                                   21  Morrison.  2012  <http://adage.  Maureen.  There  are  two  recent  viral  campaigns  that  Starbucks  launched  for  the   holiday  season  and  Valentine’s  Day:  they  both  combine  a  unique  Starbucks  experience   with  modern  day  technology.  There  is  an  option  to  also   send  a  personalized  valentine  with  a  Starbucks  Card  eGift.  and   finally  by  those  aged  25  to  34  (33.  In  both  campaigns.  In  the  present  day.  Local   advertising  has  also  proven  to  be  a  major  advertising  avenue  and  has  been  much  more   successful  for  Starbucks  than  mass  national  campaigns.  thus  the  company’s  marketing  focus  on  social  media.  are  consumers  45  to  54.     13   .  the  Starbucks  Cup  Magic  app  for  Valentine’s  Day  incorporates  the  latest   in  augmented  reality  technology  to  offer  an  animated  visual  experience.  Crain  Communications.  The  average  consumers  are  middle  to  upper  class  business   associates  and  college  students.  As  might  be  expected.21     Target  Audience                           Starbucks  has  25  million  visitors  in  its  stores  each  week.  Customers  can   download  the  app  by  scanning  a  picture  on  their  Starbucks  cup  to  create  their  own   personalized  augmented  reality  valentine  to  send  to  others.  Most  Starbucks  retail   stores  are  located  in  big  cities  and  shopping  malls.  “Starbucks  Hits  No.  and  have  a   tendency  for  a  greater  amount  of  disposable  income.  Starbucks  determined  that  most   of  its  targeted  customers  consider  themselves  relatively  technology  savvy  via  the   computer.  the  customer  scans  the  picture  on  the   cup  and  in  turn  can  receive  personalized  messages  and  information  about  the  brand.  3  Despite  Limited  Ad  Spending.3%).  viral   marketing  allows  advertising  dollars  to  more  specifically  target  individuals  rather  than   the  masses.  those  who  had  trimmed   the  expense  the  most  were  in  the  lower  of  the  survey's  income  brackets  (48.6%  earned   May  02.

 Starbucks  also  meets  the  needs   of  not  only  in-­‐store  consumers.  At  the  same  time.Advertising Age.Advertising Age. 16 Feb.   "Beware  of  Cheaper  Coffee.  It  Comes  with  a  Price". 2012.  and  instead  utilizes   newspapers  and  websites  for  increasing  brand  awareness.     On  Apr. Web." Advertising Agency & Marketing Industry News .  It's   Starbucks.  the  latter  presumably   included  college  students).com/results?endeca=1>.  such  as  social  media. 2012. 31 Jan.  while   other  variations  are  introduced  on  an  occasional  basis.  and  33.com/results?endeca=1>.  with  Schultz  asking  Starbucks  baristas  what  they  think  of  the  other  print  ads  in   the  new  ad  campaign.22     Media  Consumption     Starbucks  has  historically  avoided  television  advertisements.Advertising Age.000."  and  kicked  off  a  coffee-­‐focused  newspaper  ad  campaign  in  papers  including   The  New  York  Times  (NYT).  It  is   vitally  important  that  more  popular  coffee  products  are  available  to  consumers. <http://adage." Advertising Agency & Marketing Industry News . Web." Advertising Agency & Marketing Industry News . 31 Jan. <http://adage.000.     14   .  In  addition  to  meeting  those  beverage   needs  of  consumers.   24  "Ad Age.between  $20.  but  in-­‐home  coffee  consumers  as  well  by  offering   brewing  equipment  and  coffee  accessories.  30  the  company  unveiled  a  new  slogan.  Changes  in  the  social  and  economic   structure  of  the  country  are  resulting  in  higher  levels  of  disposable  income  and  a   greater  interest  in  Starbuck  products  and  merchandise.  reads  one  ad  that  ran  on  the  back   page  of  the  Times'  Sunday  Business  section.  other  coffee   shops  are  trying  to  tap  in  on  the  fad  created  by  Starbucks. Ad Age.com/results?endeca=1>.  Starbucks   was  successful  in  this  lack  of  mass  television  advertisements  due  to  various  strategic   marketing  tactics. 2012."  The  Seattle-­‐based  chain  also  maintains  a  Facebook  page  and   various  other  social  media  outlets. 2012. 16 Feb.   23  "Ad Age.23     Psychographic  Information       Consumers  want  to  be  able  to  taste  many  types  of  high  quality  coffee  variations.  The  campaign  also  includes  a  YouTube   video. Web.  warning  against  down-­‐market  imitators  like  McDonald's. Ad Age.6%  earned  below  $20.  sometimes  there  is  the  need  to  have  an  assortment  of  small  foods   that  are  quick  to  consume  and  easy  to  carry.  "It's  Not  Just  Coffee.  it  has  rarely  been  advertised  on  television. 16 Feb. 2012.000  and  $39. 2012.  As  Starbucks  grew  into  one   of  the  world's  best-­‐known  brands. <http://adage. 31 Jan.  like  one  that  reads  "This  Is  What  Coffee  Tastes  Like  When  You   Pour  Your  Heart  into  It.24                                                                                                                   22  "Ad Age. Ad Age.

16 Feb.html>. Web.000  stores  with  combined   annual  revenue  of  about  $11  billion.  where  coffee  drinkers  average  3.     15   .  The  coffee  shop   industry  is  highly  concentrated  at  the  top  and  fragmented  towards  the  bottom. <http://www.  as  its  number  of  outlets   continues  to  increase  on  a  yearly  basis  worldwide.  largely  driven  by  the  winter  holiday  season.  according  to  the   National  Coffee  Association  (NCA).  Per  capita  consumption  is  highest  in  the   Midwestern  United  States.  However.       In  terms  of  market  growth  rate.  Coffee  Bean.  Sales  are  generally  seasonal.com/business/management/thompson/11e/case/starbucks-2.  In  addition.  Caribou.7  cups  a  day. McGraw-Hill Companies.  such  as  grocery  stores  and  restaurants.  affluent.       Coffee  consumption  is  highest  in  the  Northeastern  portion  of  the  United  States.  with  an  overall  70%  increase  in  the  number  of  coffee  shops  between  2000   and  2005.mhhe.25       Category  Life  Cycle  Stage  and  Information  on  Key   Competitors     The  life  cycle  stage  of  specialty  coffee  beverages  is  within  the  growth  stage  of  the   category  life  cycle.                                                                                                                       25  "Starbucks Case Study.     Starbucks  is  the  single  largest  contributor  to  this  increase.  and  Diedrich  (Gloria  Jean’s).  where   over  60  percent  of  the  population  consumed  coffee  daily  in  2005.  Dunkin’   Donuts." Starbucks Case Study.Category/Competition     Size  of  the  Category  and  Segments  including  a  5-­‐ Year  Growth  History     The  coffee  shop  industry  in  the  United  States  includes  20.  compared  to  its   explosive  growth  in  the  1990’s.   poor  weather  can  affect  sales  by  decreasing  store  traffic.  Major  companies  include  Starbucks.   Specialty  coffee  appeals  to  a  diverse  adult  demographic.  Larger  companies  may  also  sell  coffee  beans  wholesale  to  commercial   customers.  with  a   peak  during  the  fourth  quarter.  Since  the  market  has  slowed  from  record  highs  in  the   1990’s.  including  college  students  and   young  adults.  The  typical   and  most  committed  coffee  drinkers  are  25-­‐45  years  old. 2012.   meaning  that  the  top  50  companies  have  over  70  percent  of  the  industry’s  sales.  educated  adults.  the  coffee  shop  industry  expansion  is  slowed.  Tea  Leaf.  companies  are  looking  to  expand  overseas  through  licensing  agreements.  the  coffee  shop  industry  grew  over  40%  between  2000   and  2005.

 gourmet   food  items.  Starbucks  and  Concord  Music  Group   announced  on  March  12th  of  this  year  the  formation  of  a  new  record  label  “Hear  Music”   which  will  distribute  recordings  at  Starbucks  locations.  along  with  food  items  (16%).   but  is  looking  to  take  over  the  afternoon  segment  as  well  through  the  launch  of   specialty  coffee  beverages  in  March  of  2007.  The   company  does  not  compete  on  price.  Starbucks  works  to  create  a  connection  with   every  single  one  of  their  customers.  Furthermore.35.  In   2006.000  coffee  shops  in  more   than  35  countries.500  of  its  shops.  Starbucks  owns   about  17.S.  Starbuck’s  overall  goal  is  to  establish  its  brand  as   one  of  the  most  recognized  and  respected  ones  in  the  world.  coffee  beans.Starbucks     Starbucks.  and  holds  the  belief  that  the  major  reason   for  the  billion  cups  they  sell  annually  is  due  to  their  brewing  temperature  of  195-­‐205°F.  Last  fall.   while  licensees  and  franchisees  operate  the  remaining  outlets.  and  coffee-­‐related  products  and  equipment  (8%).  teas.   Starbucks  announced  its  plans  to  offer  hot  breakfast  sandwiches  in  an  appeal  to  fans  of   the  Egg  McMuffin  and  establish  them  also  in  the  breakfast  and  afternoon  snack   segment.  and  to  selectively  pursue  other  opportunities  to  leverage  the  brand  through   the  introduction  of  new  products  and  the  development  of  new  channels  of  distribution.  has  over  13.  Starbucks  retail  locations  offer  specialty  coffee  beverages.     McDonald’s     McDonald's  is  the  leading  global  foodservice  retailer  with  more  than  30.  The  company  is  currently  the  market  leader  in  the  breakfast  segment.  This  partnership  is  another  step   in  Starbucks’  entertainment  strategy  that  links  to  the  company’s  focus  on  atmosphere   and  image.  The  launch  has  allowed   McDonald's  to  compete  with  major  coffee  house  retailers  such  as  Starbucks  and   Caribou  Coffee.  Therefore  the  enterprise   plans  to  continue  the  rapid  expansion  of  its  retail  locations.  The  move  towards  a  premium  roast  is   consistent  with  McDonald's  overall  strategic  shift  to  begin  offering  more  'upscale  food'.  the  world’s  number  one  coffee  retailer.   whole-­‐bean  coffees  (15%).   In  continuance  with  its  history  of  partnerships.  addressing  McDonald’s  attempts  to  lure  customers  away.   The  average  cost  of  a  cup  of  coffee  at  a  McDonald's  retail  location  is  $1.  but  rather  on  the  complete  experience  customers   receive  while  visiting  the  coffee  shop.  the  company  reached  a  record  high  of  $21.).  serving  nearly  50  million  people  in  over  than  119  countries  each  day.  which  are  located  in  about  10  countries  (mostly  in  the  U.  Recent   strategic  changes  within  McDonald’s  include  the  improvement  of  the  quality  of  its   coffee  through  the  launch  of  a  premium  roast  in  March  of  2006.6  billion  in  revenues.  grow  its  specialty   operations.  and  a  variety  of  coffee  accessories.000  local   restaurants.  McDonald’s  is  looking  into  “day-­‐parts”  penetration  as  a   growth  strategy.  McDonald's  has   become  a  major  player  in  the  coffee  market.  A  majority  of  Starbucks   retail  sales  account  for  specialty  coffee  beverages  (61%).     16   .

though  the  pricing  strategy  for  espresso-­‐based  drinks  still  falls  below  Starbucks'  prices.  the  company  boasted  revenues  of  approximately  $4.7   billion.  license  agreement.).  Dunkin'  Donuts  has   recently  installed  espresso  machines  which  are  capable  of  brewing  coffee  in   approximately  44  seconds.  coffee   competitors  are  increasingly  threatened  by  McDonald's  recent  ability  to  increase  its   level  of  service  and  improve  its  stores  through  the  slowing  down  of  expansion  and   reallocation  of  funds.     Dunkin’  Donuts     Dunkin’  Donuts  is  the  world’s  largest  coffee  and  baked  goods  chain.65  per  cup.  The  company  is   continues  to  open  700-­‐1000  additional  retail  locations  annually.   and  club  stores.  The  current  goals  of  the  brand  to  target  this  particular  market  are  to   focus  on  improving  customer  service  and  cross  shop  consistency  in  service.  with  416  outlets  (2005)  in  18  states  and  the  District  of  Columbia.  cheaper.  including  grocery  stores.  Dunkin’  Donuts  is  currently  pursuing  the  following   key  strategies:  multi-­‐branding  concept  development.  and  more  user-­‐friendly  alternative  to  coffee   houses  like  Starbucks.000  shops  worldwide  (5.  Dunkin’  Donuts  has   forged  a  strong  identity  as  a  coffee  destination.  or  joint  venture.  especially  among  a  consumer  of  a  younger   demographic.   product  innovations.S.  with  more  than  7.  In   order  to  grow  its  presence  within  the  coffee  market.  who  explore  the   art  of  handcrafted  beverages  and  upscale  customer  service.  CEO  Jon  Luther  sees  an  opportunity  for  the  company  within   the  specialty  beverage  market.  who  enjoys  specialty  coffee  beverages.  retailers.  The  company  sells  about  500  million  cups  of   coffee  a  year.  serving  over  3   million  customers  a  day.  mass  merchandisers.  and  operates  its  retail  locations  in  a  franchise   format.  it  is  the  second  largest  specialty  coffee  company  in  the   U.  a  goal  that   might  prove  to  be  rather  challenging  due  to  the  company's  franchise  structure.  for  approximately  $1.  In  an  effort  to  market  itself  as  time  effective.  yet  is  unable  to  afford  brands   such  as  Starbucks.  either  through  operating  agreement.  Approximately  57%  of  the  chain's  sales   are  found  in  the  sale  of  beverages.  Dunkin'  Donuts'  current  advertising  strategy  works  to  emphasize  the   company's  ability  to  be  a  faster.  accelerated  brand  development.300  in  the  U.  Dunkin'  Donuts  plans  to  widen  its   specialty  coffee  beverage  options.  Today.  Minnesota.   Though  McDonald's  has  a  pricing  advantage.  specialty  drinks  are  served  from  push-­‐ button  machines.  company     17   .  improved  operational   effectiveness  and  talent  acquisition.  and  continues  to  grow  its   food/beverage  offerings  incrementally.  However.  with  its  headquarters  currently  located  in   Minneapolis.  unlike  retailers  such  as  Starbucks  or  Caribou  Coffee.  In  2005.     Caribou  Coffee     Caribou  Coffee  was  founded  in  1993.S.  thus  launching  Dunkin'  Donuts   packaged  coffee  beans  at  U.  Dunkin’  brand  vitalization.S.  In  2006.  A  portion  of  this  effort  included  signing  an   agreement  with  Procter  &  Gamble  in  March  of  2007.

 as  opposed  to  the  sleek.  With  the  selection  of  coffee  beans  improving  elsewhere.  Caribou  Coffee  has  successfully  competed  against  Starbucks  in  a  number  of  U.  McDonald's   meat  and  chicken  comes  from  USDA-­‐inspected  suppliers  in  the  U.A Strategic Analysis.  industry  experts  have  questioned  whether  or  not  the  company’s  focus   on  the  art  of  the  in-­‐store  experience  rather  than  its  product  portfolio  will  allow  for  long-­‐ term  success.". 16 Feb.  Caribou's  point  of  brand  strength  is  found  in  the  quality  and  freshness  of  their   products.  and  Border's  Books.  Blockbuster  Video.   18   .S.  Caribou  coffee  products  are  packaged  immediately  after  roasting.   sandwiches.  Caribou  Coffee  is  currently  looking  to  expand  internationally.  leather  chairs. Katz Graduate School of Business.  Additional  strategic  approaches  include  the  development  of  strategic   partnerships  with  retailers  such  as  Eatzi's.revenue  was  found  to  be  approximately  $198  million.   McDonald's  has  become  very  popular  by  the  variety  of  food  selection  they  offer.  The  company  continues  to   sell  its  coffee  as  well  in  higher-­‐end  grocery  stores.com/en/e-book/111348/coffee-shop-industry-a-strategic-analysis>.  salads.  and  fireplaces.  It  has  been   predicted  that  the  specialty  coffee  beverage  consumer’s  view  on  the  price-­‐value   equation  will  change  in  the  future.  or  building  stores  specifically  next  to   Bruegger's  Bagels.26     Brand/Product  Names     Today.S.  and  is  served  exclusively  on  Frontier   and  Maxjet  airlines.  McDonald's  is  the  world's  leading  global  food  service  retailer  with  more  than   33.   specifically  with  its  sights  set  on  initial  expansion  in  the  Middle  East.grin.  featuring  mountain-­‐lodge-­‐style  decor  with  exposed  beam   ceilings.   states.  desserts  and  beverages.  and  are   sold  no  more  than  21  days  after  roasting  or  no  more  than  seven  days  after  opening  the   package. Web.  but  developing  market  for  American-­‐branded  coffee   houses. <http://www.  snacks.  the  coffee  shop  industry  has  become   increasingly  competitive.   ___     Though  it  has  been  recognized  that  no  specialty  coffee  retailer  has  approached   Starbucks  in  terms  of  its  success  on  a  global  scale.  with  a  small                                                                                                                   26  "Coffee Shop Industry .  as  well   as  the  fast  service  they  provide.000  locations  serving  nearly  68  million  customers  in  119  countries  each  day.  urban  design  of   Starbucks  retail  locations.  breakfast.  While  many  affluent  American  consumers  remain  to  favor   Starbucks  coffee.  Stay  awake   for  it.  An  additional  point  of  brand  strength  might  be  found  in  Caribou's  unique   roast  of  coffee  in  a  warmer  store  atmosphere.  McDonald's  food  menu  consists  of  burgers.  Caribou's  retail  locations  have  a   distinct  design  scheme.  With  a  motto  relaying  "Life  is  short.. 2012.  chicken.  for  the  company   believes  that  this  area  has  a  small.  it  is  unclear  how   many  customers  will  continue  to  purchase  specialty  coffee  beverages  at  premium   prices  if  Starbucks’  terms  of  in-­‐store  experience  become  no  longer  unique." Grin.

html >. 2012.  lattes.  Lopez  Foods  (beef  patties). <http://adage. 18 Feb. 18 Feb." Home :: McDonalds.  Guatemala.mcdonalds.com.   Keystone  Foods  (chicken). Web.  one  can  choose  between  several  gourmet  coffee   choices:  cappuccinos.  and  iced  and  hot  mochas. 2012. 2012. "McDonald’s Second-Quarter Profit Gains 15% as McCafe Beverages Boost Sales Bloomberg. Web. Web.79  B   12.  and   Costa  Rica. Leslie.percentage  of  their  beef  imported  from  USDA-­‐  inspected  suppliers  in  Australia  and   New  Zealand.29  McDonald’s  utilizes   Omnicom  Group  (DDB  Worldwide). Hillary.01  B   $  24.85%     -­‐3." All Things Food and Diet .fatsecret.Business & Financial News. 29  "Meet Our Suppliers :: McDonalds.  Their  Premium  Roast  coffee  beans  are  grown  in  Brazil  and  the  mountains  of   Colombia. Breaking News Headlines.com/news/2011-07-22/mcdonald-s-second-quarter-profitgains-15-as-mccafe-beverages-boost-sales.  At  McDonald's.bloomberg.  Publicis  Groupe’s  Leo  Burnett  Worldwide  for  their   marketing  tactics.com. <http://www.  and  100  Circle  Farms  (potatoes). Calories and Nutritional Information. Advertising Agency.  and  Costa  Rica.28     Manufacturer/Marketer     McDonald’s  manufacturers  include  Gavina  Gourmet  Coffee. Web.30     Annual  Sales  Volume  for  McDonald’s   Sales  by  Volume  (in   billions)   $  27.html>. Bloomberg.   28   19   . 2012. 1 Feb. McDonald's.23%   N/A               Fiscal  Year   2011   2010   2009   2008   2007   Growth  Rate  in  Percent                                                                                                                   "McDonald's Products. <http://www.  Guatemala.18%   5. 27   Patton.74  B   $  23.com/calories-nutrition/mcdonalds>." Bloomberg .31%   3.com/us/en/food/food_quality/see_what_we_are_made_of/meet_our_suppliers.   30  Chura. 1 Feb.07  B   $  22. 27     McDonald's  recent  espresso  line  makes  up  about  15  percent  of  McDonald's  revenue.   McCafe  has  been  successful  due  to  their  low  cost  on  espresso  beverages  compared  to   other  espresso  shops. "McDonald's Pulls Further Away from Mass Marketing. 22 July 2011.52  B   $22.  Their  McCafe  specialty  coffee   beans  are  imported  from  Brazil  and  from  the  mountains  of  Sumatra. <http://www.com/article/news/mcdonald-s-pulls-mass-marketing/40403/>.FatSecret." Advertising Age.

707.  revenue  ($  millions)  and  Rank.2 Feb.4 229 The chart above is the Ranking within Fortune 500 companies (2010). 16 Feb.lib.marketwatch.6   1   Yum  Brands   $  11. Web.  The   Chart  above  also  show  the  percent  change  from  previous  year  in  percentages. The chart shows company.6 111 Yum Brands $ 11.     Ranking within Fortune 500 Companies (2010) Company Revenue ($Millions) Rank McDonald's $ 24." Business & Company Resource Center.343.52     2010   1.jsp?COUN TRY=US>.com>   20   .   *  The  2000-­‐2010  annual  growth  rate  percent  was  26.galegroup. revenue($millions) and ranking within Fortune 500 companies (2010).43     2009   0.0     2006   0.     The  chart  shows  years  2007-­‐2011. <http://invreports.074.71     2007   0.707. 31     Share  of  Market  and  Rank     Earning/share         McDonald's  earning/share  with  percent  change   Year   Percent  change  from  previous   year   16.0 214 Starbucks $ 10.4   22.  The  Chart   shows  the  companies. 2012.     Food  service  Industry  Category  Rank  (2010)   Company   Revenue  ($Millions)   Rank   McDonald's   $  24.     32  MarketWatch.4   3     The  chart  show  above  is  the  Food  service  Industry  Category  Rank  (2010).colum. 2012<http://www.87   2008   0.edu/reuters/FinancialReport/FinancialReports.24     The  chart  shown  above  is  McDonald's  earning/share  in  dollars  for  years  2006-­‐2010.emils.com.0.074.9   26. MarketWatch Inc. Business & Company Resource Center.The  chart  above  shows  McDonald's  sale  by  volume  in  billions  of  dollars.32                                                                                                                 31  "McDonald’s Financials.  The  chart  shows  the  growth  rate  in   percent.343.0   2   Starbucks   $  10.5   -­‐50. 2012.6   20.

 Crain  Communications.  3  Despite  Limited  Ad  Spending.  teenagers.  Both.  who  are   considered  heavy  users.   Dunkin’  Donuts  and  McCafé  are  looking  for  the  same  demographic  when  it  comes  to   customers.  Race  demographics  includes  all  races   and  ethnicities.  16-­‐24  are  considered  to  be  single  and  heavy  users.  is  typically  brand   loyal.   24  and  older  are  considered  to  be  single  or  married.  housewives.  cappuccino  and  latte.  Feb  10.  and  is  seeking  experience  rather  than  a  ‘better  deal’.     McDonald’s  Marketing  Strategy     The  McDonald’s  McCafé  is  a  specialty  coffee  product  with  a  different  target  market.  The  Starbucks  consumer  is  considered  one  of  affluence.  2012  <http://adage.     Current  Creative  Strategy     The  McDonald’s  McCafe  was  launched  upon  the  promotional  tool  of  “Free  Coffee   Mondays”.  yet  one  that  still  retains  product  quality.   Demographics     McDonald's  age  group  demographics  include  6-­‐12  year  olds.  which  include  both  male   and  female.  as  well  as  gender  demographics.  The  other  campaign  is  targeted  for   the  middle  class  working  American  that  is  seeking  a  quality  cup  of  coffee  at  a  reduced   price.  entrepreneurs.  McDonald’s  promotes  their  McCafe  beverages  as  a  lower  priced   coffee  beverage.  These  two  competitors  encompass  the  majority  of  the  market   segment  for  specialty  coffee  beverages.  Social  groups  demographics  include  students.  McDonald’s  is  not  only  trying  to  get  the  attention  of  Starbucks  followers.  but  also   Dunkin  Donut  followers.   McDonald’s  demographic  information  regarding  location  includes  both   national  and  international  locations.  “Starbucks  Hits  No.  2011.  businessmen  and   women.33                                                                                                                                                                                                                                                                                                                                               33  Morrison.  and  small  children.  which  was  a  prime  promotion  for  a  working  class  target  market.  and  are  light  to  medium   users.”  AdAge.  Maureen.   May  02.  The  particular  target  market  for   McDonald’s  specialty  coffee  beverages  includes  working  individuals  of  a  low  to  middle   socioeconomic  class.  as   compared  to  Starbucks  specialty  coffee  beverages.com/results?   endeca=1&searchprop=AdAgeAll&return=endeca&search_offset=0&search_order_b   y=score&search_phrase=starbucks+ad+budget>     21   .  There  are  two  strategies   created  for  the  launch  of  McCafé:  one  targeted  to  leisurely  consumption  of  gourmet   coffee  drinks  such  as  mocha.  These  are  very  similar  to  Starbuck’s   ads  because  they  are  looking  to  join  that  category.

35   Allocation  of  Advertising  Dollars           Consumer  Purchasing/Consumption  Patterns   McCafe  drinks  are  sold  at  a  very  low  and  affordable  price. Connie Gao. <http://adage."   37 Coleman. Daryl.3%  since  2002). | AdAge Encyclopedia of Advertising . 2012.37                                                                                                                   34  "McDonald's Corp.  and  instead  moved  to  create  an   advertising  strategy  that  uses  multidimensional  and  multilayered  media.  Starbucks  have  less  of  a  consumer  consumption  pattern  due  to  their  low   variety  of  breakfast  meals  and  high  prices.  and  thus  allowing  them  a   large  amount  of  reoccurring  customers.  Many  people  drink  coffee  with  a   breakfast  meal.  believing   that  no  single  ad  tells  the  entire  story  of  a  business.  They  have  less  frequent  repeat  customers   because  it  is  viewed  as  a  small  luxury  to  get  a  beverage  than  a  necessity.4%  since  2002).  As  well.  and  it  is  thus  an  effective  consumption  pattern  at  McDonald's.  With  faster  service  and   lower  prices. Web."   22   . Connie Gao.  McDonald’s  began  pulling  away  from  the  idea  of  ‘mass  marketing’.com/article/adage-encyclopedia/mcdonald-s-corp/98769/>.  Adding  an   extra  $2-­‐$3  for  a  cup  of  coffee  makes  them  less  hesitant.m.36   Target  Audience/Psychographic  Profiles     McDonald’s  targets  lower  to  middle  class  working  individuals.  U. 2012. "McDonald's: Breaching the Luxury Coffee Market.In  2003.34     In  2004.1  billion  (up  11. and Heejae Kim.37  billion  (an  increase  of  2.Advertising Age.  On  the   other  hand. Hillary. "McDonald's: Breaching the Luxury Coffee Market.S. "McDonald's Pulls Further Away from Mass Marketing.  many  individuals  buy  their  coffee  with   their  breakfast  that  they  get  at  McDonald's.   35  Chura.   according  to  TNS  Media  Intelligence/CMR.  and   worldwide  sales  were  $17. 18 Feb. and Heejae Kim.  with   advertising  spending  amounting  to  $1.  sales  were  up  $6  billion  (up  11.Advertising Age.  After  the   implementation  of  this  idea.  McDonald's  has  an  advantage  over  the  slower  service  and  higher  prices  of   Starbucks.  McDonald's  offers  breakfast   from  early  sunrise  to  approximately  10:30  a.4%  since  2002).  They  know  that  many  people  drink  coffee  daily  and  having  low  prices  on   their  espresso  products  allows  people  who  are  price  conscience  people  to  afford  them. Advertising Agency.  leading  to  increase  revenue. Daryl. Advertising Agency.   According  to  Advertising  Age. 18 Feb.  McDonald’s  was  the  16th  largest  national  advertiser  in  the  United  States. Web.   36 Coleman. <http://adage." Advertising Age.  McDonald’s  spent  $577  million  in  measured  media  in  2003." Advertising Agency & Marketing Industry News .com/article/news/mcdonald-s-pulls-mass-marketing/40403/>.

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