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University of Social Sciences & Humanities Department of English Linguistics & Literature British & American Pop Culture

Course Instructor: Tran Thi Le Dung, MA NAME : TRAN THI THU HANG STUDENT ID : 0857010077

Midterm case study

Starbucks Mission

To inspire and nurture the human spiritone person, one cup, and one neighborhood at a time .

HCM , May 3rd , 2012

TABLE OF CONTENT
I.

INTRODUCTION BODY
1. Representation of Starbucks .

Page

History of Starbucks 3 II. 3

2. Production of Starbucks
a. Product line. 5 b. Business method 5 c. Employment

3. Consumption a. Target markets 7


b. Channels of distribution. 8 4. Opposition 9

III.

CONCLUSION 9 REFERENCE .. 9

IV.

I.

INTRODUCTION

Starbucks Corporation is an international coffee company and coffeehouse chain -based in Seattle, Washington. Starbucks is one of the largest coffeehouse companies in the world. The first Starbucks opened in Seattle, Washington, on March 30, 1971 by three partners: English teacher Jerry Baldwin, history teacher Zev Sieg , and writer Gordon Bowker. The early name was: Starbucks coffee Tea & Spice and it originally sold only wholebean coffee and coffee brewing machine. By the early 80s, a man by the name of Howard Shultz, a drip coffee maker salesman, came on board as the Director of Marketing for the Starbuck organization and renamed from Starbucks coffee Tea & Spice to Starbucks re-image from only selling coffee beans to be a coffeehouse. In Seattle, he had advised the members of Starbucks to sell coffee and espresso drinks because of his experience traveling in Milan, Italy. Through Shultz experience, he observed that the cafe businesses in Italy were served as a meeting place and became a central part of the societal fabric. He sought to bring this experience back home and developed it with the Starbucks brand. In the 1990's, Starbucks began opening a new store every workday, a pace that continued into the 2000's. Schultz began his global conquest with a Starbucks in every country, on every corner. Starbucks 90s till now has more than 15 thousand retail outlets worldwide. It has been now expanding its business into food, ice-cream, tea II. 1. a. BODY Representation Sophisticated lifestyle

Because of the fact that Starbucks is a center for intellectuals, students and particularly urban professionals and its more expensive than most other coffees in the US, emotionally, Starbucks provides the feeling of luxury. What they build with the environment, the couches, the lounge music, the coffee mugs, the smells, the people. All of them contribute to the feeling of sophistication as it makes customers feel they belong to the upper class and b. Social engagement 3

Starbucks is a tremendous success because it capitalized on a concept that hadnt existed before the coffeehouse as a gathering place. It is not just a place to get a cup of coffee, but it has become a center for socializing and intellectual discussion, particularly among students and young urban professionals. c. Globalization Starbucks, which is the largest coffeehouse company in the world, with 15,012 stores in 44 countries, is an icon of globalization. Striving to become the global coffee brand, Starbucks has tripled its revenues over the past 5 years to some US$8-billion (in 2006). Growth has been paced by new store openings around the world. In 2001 the company had 3,200 retail locations in America and about 400 outlets in 17 other nations. Today Starbucks has about 12,000 stores, almost 4,000 of which are in 36 countries outside the U.S. Starbucks also globalize from country to country. They had expanded their business in many countries including Singapore, Japan, New York, Germany, South Korea and many more. This is a form of transport whereby they move around the Earth. Between the coffee beans, the milk, the sugar and the paper cup, Starbucks coffee is a global hub that connects some of the poorest countries in the world with some of the wealthiest. Starbucks is considered a greedy corporation seeking to spread American culture and dominance in the world and monopolize the coffeehouse market in the US. d. Community involvement Howard Schultz's effort to "build a company with soul" included a broad-based program of corporate responsibility mainly through the Starbucks Foundation ,which was set up in 1997. Starbucks is the largest corporate contributor in North America to CARE, a worldwide relief and development organization that sponsors health, education, and humanitarian aid programs in most of the Third World countries where Starbucks purchases its coffee supplies. In addition, Starbucks stores participate regularly in local charitable projects, donating drinks, books, etc e. Environmental involvement
Starbucks has reputation for supporting environmental awareness and fair trade programs help promote a sustainable social, ecological, and economic model for the production and trade of coffee. Here are the environmental Mission Statement of the Company:

Starbucks is committed to a role of environmental leadership in all facets of our business We fulfill this mission by a commitment to: 4

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(employees) to share our mission. f. Self-expression: In Starbucks, customers have to serve themselves cream, milk, sugar and so on and the creativity which is signaled by the presence of large murals featuring art or poetry or by individual paintings available for sale. In other words, Starbucks allows people to express themselves through consuming their service. The presence of other sale or display items like designer mugs, dishes even books or CDs emphasizes that Starbucks is not just about a cup of coffee but an act of self-expression. 2. Production a. Product line Starbucks stores offer a choice of decaffeinated coffee beverages, and a broad selection of Italian-style espresso drinks (a concentrated beverage brewed by forcing a small amount of nearly boiling water under pressure through finely ground coffee beans). In addition, customers could choose from a wide selection of fresh-roasted whole-bean coffee (which could be ground on the premises and carried home in distinctive packages). Larger stores carry a greater variety of whole coffee beans, gourmet food items, teas, coffee mugs, coffee grinders, coffee-making equipment, filters, storage containers, and other accessories. Smaller stores and kiosks typically sold a full line of coffee beverages, a limited selection of whole-bean coffees, and a few hardware items ( CDs..) b. Business method Offer high quality products: Starbucks coffee made with the highest-quality, ethically sourced 100% Arabica beans. The magic is in the all-natural process that Starbucks has spent years perfecting. It microgrinds the coffee in a way that preserves all of their essential oils and flavor. No other coffee company takes this step, and it makes all the difference. 5

Starbucks offers a range of beverage and food options that cater to our customers individual preferences. To assist customers in their selections, Starbucks provides nutrition information for our beverages and some fresh food items on our website at Starbucks.com. The nutrition information presented for beverages is based on the standard preparation for the size of beverage selected. Calories can be reduced in some beverages by requesting nonfat milk or eliminating the whipped cream. Have a good employee treatment policy: Starbucks doesnt just listen to its customers however; it also listens to and appreciates its employees. Starbucks employees are referred to as Partners. Starbucks was the first company in America to give comprehensive health benefits and stock options to every single employee, including the over 65% that were part-time at the time. In addition to providing employees with a great benefit plan, Starbucks also offers its employees comprehensive training that enables the organization to promote its products through its employees. Use Word of mouth strategy: What makes this Starbucks strategy all the more amazing is the fact that the company spends less than 1% of its annual revenues on advertising, versus the typical 10% of most other retailers. Instead, the Starbucks strategy relies on word of mouth advertising. They believe that by creating an intimate and welcoming environment in their stores, as well as providing a great cup of coffee, patrons will not only keep coming back for more, but will tell all their friends and family about it too. Create Starbucks Experience: Store design and atmosphere all contributed to the Starbucks Experience. Almost all Starbucks stores were corporately owned and controlled. Starbucks prided itself on the Starbucks Experience, going beyond coffee to provide a unique experience for its customers. As Howard Schulz, the CEO of Starbucks said: You get more than coffee when you visit Starbucks. You get great people, first-rate music, a comfortable and upbeat meeting place, and sound advice on brewing excellent coffee at home. At home youre part of a family. At work youre part of a company. And somewhere in between is a place where you can sit back and be yourself. Thats what a Starbucks

store is to many of its customers a kind of third place where they can escape, reflect, read, chat or listen. Retail stores combine aroma, lighting, music and dcor to deliver a unique atmosphere. To try to keep the coffee aromas in the stores pure, Starbucks bans smoking and asks employees to avoid wearing strong perfumes. Prepared foods must be kept covered so customers would smell coffee only. Colorful banners and posters are used to keep the look of Starbucks stores fresh and in keeping with seasons and holidays. Company designers come up with artwork for commuter mugs and T-shirts in different cities in keeping with each city's personality (for example, peach-shaped coffee mugs for Atlanta, pictures of Paul Revere for Boston and the Statue of Liberty for New York). c. Employment: Starbucks spent more on employee training than on advertising its product. Every partner/barista (employee) hired for a retail job in a Starbucks store received at least 24 hours training in the first two to four weeks. The training included classes on coffee history, drink preparation, coffee knowledge (four hours), customer service (four hours), and retail skills, plus a four-hour workshop called "Brewing the Perfect Cup." 2. Consumption a. Who are the target markets for Starbucks? Starbucks has a very diverse target market. The segments will vary based on the different products that Starbucks offers, but generally speaking, their targets can be described as follows : Coffee drinkers, ranging from people who drink simple but premium quality coffee to people who like the various specialty beverages developed by Starbucks. Age ranging from 18 to 60 People living in urban areas, especially large cities University students and faculty members People working in professional, managerial and executive positions People with relatively higher incomes because Starbucks products are more expensive than other coffee shops b. Channels of distribution: Retail store licensing agreements: Starbucks receives license fees and royalties and sells coffee and related products for resale in the licensed locations. Employees working in the 7

licensed locations must follow Starbucks detailed store-operating procedures and attend training classes similar to those given to Starbucks store managers and employees Grocery channel licensing agreements: In 1998, Starbucks entered into a long-term licensing agreement with Kraft Foods, Inc. to accelerate the growth of the Starbucks brand into the grocery channel in the United States. Kraft manages all distribution, marketing, advertising and promotions for Starbucks whole bean and ground coffee in grocery, warehouse club and mass merchandise stores Wholesale accounts: Starbucks also sells whole bean and ground coffees to several types of wholesale accounts, including office coffee distributors and institutional foodservice management companies that service business, industry, education and healthcare accounts, and hotels, airlines and restaurants Joint ventures: Stores outside of North America, UK, Thailand and Australia operated through a number of joint venture and licensing arrangements with prominent retailers The North American Coffee Partnership, a joint venture with the Pepsi-Cola Company, a division of PepsiCo, Inc. , was formed in 1994 to develop and distribute ready-to-drink coffee-based products. By the end of fiscal 2000, the joint venture was distributing bottled Frappuccino coffee drink to approximately 250,000 supermarkets, convenience and drug stores and other locations throughout the United States and Canada. In 1996 , Starbucks formed a joint venture with Dreyer's Grand Ice Cream, Inc. to develop and distribute Starbucks premium coffee ice creams. By the end of 2000, the joint venture was distributing a variety of ice cream and novelty products to over 21,000 supermarkets throughout the United States. Direct-to-consumer marketing channels: fresh Starbucks coffee and coffee-related products conveniently available via mail order and on-line. Starbucks publishes and distributes a mail order catalog that offers its coffees, certain food items and select coffeemaking equipment and accessories, and the Company maintains a web site at www.starbucks.com with an on-line store that allows customers to browse for and purchase coffee, gifts and other items via the Internet. Starbucks believes that its direct-to-consumer operations support its retail store expansion into new markets and reinforce brand recognition in existing markets 4. Opposition: The distinctive Starbucks roast reminds many people of bitter, burnt coffee. 8

And because Starbucks is selling more than coffee (and more than CDs and highbrow coffee gadgets), the company has been the target of those who condemn the chain: "Its not about coffee. Its about status. Its about the corporate takeovers, the loss of the small town feeling, industrializing, standardizing, and conformity III. CONCLUSION Starbucks is the premier roaster and retailer of specialty coffee in the world and has become a truly global brand. Starbucks has reputation for the finest coffee in the world and the legendary customer service. Millions of people all over the world walk into Starbucks every day for their cup of coffee, but it is more than the overpriced coffee that brings people in day after day to the Starbucks stores across the world. Starbucks offers an upbeat environment and friendly and helpful staff to assist customers in any question or problem they might have with the coffee or service. People buy Starbucks for what it represents and the status symbol that comes along with it. Although various business models exist, the principles and structure of Starbucks is a good model to follow, due to its national and global success.

REFERENCES:
www.Starbucks.com http://we-lovestarbucks.blogspot.com/ http://en.wikipedia.org/wiki/Starbucks http://www.termpaperwarehouse.com/History-Of-Starbucks/64497 http://greenlifestylemagazine.net/issue-5/impact-of-starbucks.php - Lauren Roby, Starbucks as an International Business, New York: Liberty University, 2011 - Starbucks Set to Invade Coffee-Loving Continent, Seattle Times, October 4, 2000 - Katie Tewell, Bethany Odom, and Kelly Snider, Starbucks Marketing Plan, December 12, 2006 - Re-evaluating my hate for Starbucks, Authentic Replica (28 Sep 2004) [Online] Available: http://fullbleed.net/authenticreplica/archives/001224.html - Summary of Starbucks Corp, Yahoo Finance (4 Feb 2004) [Online] 9

Available: http://biz.yahoo.com/e/040204/sbux10-q.html - http://saveourstarbucks.com/Thoughts/UnderstandingStarbucks.aspx

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