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Starbucks Coffee: BA 4700 Marketing Management L.P. Chew
Starbucks Coffee: BA 4700 Marketing Management L.P. Chew
BA 4700
MARKETING MANAGEMENT
L.P. CHEW
Starbucks: beginnings
• In 1971, Jerry Baldwin, Zev Siegel, and Gordon Bowker
opened the first store in Seattle.
• Inspired and mentored by Alfred Peet.
• First store opened in Pikes Place, a touristy area in Seattle.
• Customers were encouraged to learn how to grind the beans
and make their own freshly brewed coffee at home.
• The store did not offer fresh-brewed coffee sold by the cup
like today, they sold beans and coffee makers.
• The store was an immediate success, with sales exceeding
expectations.
Howard Schultz
• business man from New York visited Starbucks in 1981.
• Pursued a job at Starbucks, and finally after much
deliberations he was offered a job in September of 1982.
• Schultz had a vision for Starbucks:
1. Wanted to expand the company
2. Visited Italy and loved the concept of the Italian Bar
• Starbucks owner did not have the same vision for
Starbucks
• Schultz left Starbucks to open Il Giornale, a coffee bar
based on what he saw in Italy.
Starbucks
• In 1987, Schultz bought Starbucks and
turned the company operations around.
• By October 1987, Starbucks expanded
outside the pacific northwest into Chicago.
• In 1993, the company went public.
• Schultz wanted Starbucks to be a great
place to work so he did everything in his
power to do that.
– Great pay
– Great benefit plan
– Stock Purchase Plan for employees
Starbucks Today:
Mission Statement
“Establish Starbucks as the premier
purveyor of the finest coffee in the world
while maintaining our uncompromising
principles while we grow.”
Executive Officers
• chairman
• Howard Schultz • president and chief executive officer
• Jim Donald • president, Starbucks Coffee International
• Martin Coles • president, Starbucks Coffee U.S.
• Jim Alling • evp, general counsel and secretary
• Paula Boggs • evp, chief financial officer, chief administrative
• officer
Michael Casey • evp, Supply Chain and Coffee Operations
• Dorothy Kim • evp, Partner Resources
• David Pace • svp, Finance
• Troy Alstead • svp and managing director, United Kingdom
• Cliff Burrows • svp, chief information officer
• Brian Crynes • svp, and president, Asia Pacific
• • svp, Category Management
Christine Day
• svp, Partner Resources, Starbucks Coffee
• Michelle Gass International
• Tony George • svp, North America Partner Resources
• Margie Giuntini • svp, and president, Europe, Middle East, Africa
• svp, Coffee and Global Procurement
• svp, and president, Latin America
• Julio Gutiérrez • svp, Global Communications
• Willard (Dub) Hay • svp, Emerging Businesses
• Buck Hendrix
• Wanda Herndon
• Gregg Johnson
What decisions must be made?
1. What could Starbucks do to make its stores even more
elegant, that welcomed, rewarded, and surprised
customers?
2. What new products and new experiences could
Starbucks provide that would uniquely belong to or be
associated with Starbucks?
3. How could Starbucks reach people who were not coffee
drinkers?
4. What new or different strategic paths should Starbucks
pursue to achieve its objective of becoming the most
recognized and respected brand in the world?
Why is the decision important?
• Decision is extremely important because if
Starbucks doesn’t constantly continue to
innovate, create, and sustain a unique
atmosphere where people enjoy buying
coffee, other companies will enter the
industry and provide an inferior service and
people will go there.
What are potential consequences?
• Another company enters the market and
overthrows Starbucks from its number one
place.
• People become even more health-conscious
and decrease the frequency of their
caffeine-ated drinks.
• Regular coffee as oppose to gourmet coffee
will attract more consumers.
Corporate Level Situation
Analysis
Corporate Mission and Objectives
• Provide a great work environment and treat each other with
respect and dignity.
• Embrace diversity as an essential component in the way we
do business.
• Apply the highest standards of excellence to the purchasing,
roasting , and fresh delivery of our coffee
• Develop enthusiastically satisfied customers all of the time.
• Contribute positively to our communities and our
environment.
• Recognize that profitability is essential to our future success.
Resources and Competencies
• The cornerstone value of Starbucks is “to build a
company with soul”
• Never stop pursuing the perfect cup of coffee
buying the best beans and roasting them to
perfection.
• Consistently pleasing customer service, provided
by knowledgeable and enthusiastic employees
who know the companies products, pay attention
to detail when preparing drinks, and communicate
the company’s passion for coffee.
Environmental Problems and
Opportunities
Demographic
• Starbucks appeals to an educated, upscale consumer.
• In an average week 22 million patronized Starbucks stores
in North America.
• Loyal customers patronized a Starbucks store 15 to 20 a
month, spending perhaps $50 - $75 monthly.
• Industry experts expect the gourmet coffee market in the
United States to be saturated by 2005. However, the
international coffee market is wide open with the U.S.,
Germany and Japan consuming the most coffee.
Corporate Social Responsibility
8,000,000.00
7,000,000.00
6,000,000.00
5,000,000.00
4,000,000.00
3,000,000.00
2,000,000.00
1,000,000.00
0.00
2003 2004 2005 2006
Sales (dollars in 000s)
• How?
– Further training periods for the « barristas ».
– Increase the quality standard of the products
(beans, milk)
– More advertising on these competencies.
How to improve Starbucks image
even better?
• A more diversified strategy: