Team Member Name:

Yap Hui Min

1 B3 20141039

Law Meng Yee

1 B3 20141066

Heng Wan Chein

1 B3 20141076

Chai Hui Ying

1 B3 20141069

Foo Siong Chun

1 B3 20141059

Chong Gen Yuan

1 B3 20141031

Subject: Fundamental of Marketing

Assignment: Starbucks Business

Lecturer: Miss Sharon

Table of Content
Components
Executive Summary
Company Analysis
Market Analysis
Competitor Analysis
Marketing Elements
Implementation and Control Plan
Conclusion
Format (Reference, Writing)
Appendix

Pages
1-3
4-9
10-13
14-17
17-18
19-21
22
23-26
27-30

Executive Summary
Starbucks Coffee Company is North America's leading roaster and retailer of specialty
coffees. Headquartered in Seattle, Washington, Starbucks has 931 retail stores and 75 major
airport locations. The companys objective is to continue its growth as the most respected
coffee franchise while providing the best coffee in the world. Starbucks, now considered a
global company, has managed to open over 5100 coffeehouses in 47 countries and projects to
have as many as 5800 coffeehouses by fiscal year end in 2009. Their international saga
began in 1996 with the first expansion being taking place in Tokyo. 1 (Starbucks Coffee
Executive Summary, 2015)
Starbucks main focus has been on its employees. Employees are one of the most important
resources to Starbucks. Starbucks understands that their employees are the driving factor and
most important resource of the company. Starbucks provides each employee with a starting
wage above minimum wage standards as well as a quality health care and benefits packages.
They firmly believe that the welfare of their people, environment and community are linked
to their success as a company. (Starbucks Coffee Executive Summary, 2015)
The Company hard to offer an environmentally safe product, as it believes that the welfare of
people, plant and product are linked. Starbucks prides itself on being a "good citizen" locally
and in the various coffee producing countries. They make significant contributions to local
charities that focus on children, the environment, the homeless, and AIDS research/support.
These principles provide an established and proven work environment for every staff member
throughout every retail store owned or operated by Starbucks. 2 (Executive Summary of
Starbucks, 2015)

1 http://www.echeat.com/free-essay/Starbucks-Coffee-Executive-Summary28401.aspx
2 http://www.antiessays.com/free-essays/Executive-Summary-Of-Starbucks34963.html

Company Background and Objectives

Company Background Introduction
Starbucks opened its first location in Seattles pike place market in 1971, selling quality
ground beans in an open-air market. It was started more or less as a hobby for three good
friend, strong on idea but not very profit-oriented entrepreneurs. Eleven years later, Howard
Schultz jointed in Starbucks. Starbucks began providing coffee to fine restaurant and espresso
bar in Seattle. In 1983, Schultz convinced the founders of Starbucks to test the coffee bar
concept in new location- Seattle. This successful experiment called I1 Giornale, offering
brewed coffee and espresso beverages. In the 1990s, Starbuck started rapid expansion
throughout the United States. They expanded their headquarters in Seattle, and started
opening new stores in major cities nationwide. They also made effort to expand beyond the
continental U.S, opening location in Hawaii, Great Britain, Japan and South East Asia. They
continued to be aggressive in the domestic market when the strategic known as a Starbucks
on every corner was developed. Starbucks has spent very little on advertising, depending on
word-of-mouth promotion. The shop offered a variety of premium coffee drinks, food and
Starbucks brand merchandise. The strategic notion was the coffeehouse would be destination
points, where people could get away from their homes and offices to meet with friends,
coffee drink, read or do homework. Starbuck was the first business to jump on the Wi-Fi
bangwagon, teaming up with Hewlett-Packard and Deutsche Telecoms T Mobile unit to offer
high-speed internet across its location. Starbuck and HP unveiled their Hear Music Service
that allowed Starbuckss customer to download songs and create custom music CDs in the
shop. The company offered loyal patrons its Starbucks card which allowed customers to
prepay up to $500 on a store card. The company also leveraged its popularity to extend its
brand beyond coffee to a host home goods and lifestyle products. Starbuck also marketed its
coffee through grocery stores and licensed its brand for other food and beverage product. 3
(Company Background and History, 2015)

2
3 http://meangreen.hubpages.com/hub/A-Strategic-Analysis-of-StarbucksCompany-Background-and-History

Objectives

Is to grow by making employees feel valued

Starbucks approach the employee with good compensation and comprehensive benefits
package. This is because the owner must consider about the employees welfare. The
company beliefs that sharing the companys success with the people who made happen will
help them think and acts like an owner of the company. It will make the employees more
work hard to earn the profit to company. 4 (Starbucks Case Study, 2005)

Is to recognize that every dollar earned passes through employees hands

Starbucks will always appreciate the employee as the revenue which is increasing every year
is by the efficient and hardworking employees. It may increase the trust between the
employees and owner. This drastic increase in profit is not recognized without the support of
the employees who attracts the customers to a long term relationships with the coffeehouse. It
certifies the ability of employees and the owner more rely on employees. (Starbucks Case
Study, 2005)

Use the pays, benefits and opportunities for personal development to help gain employee
loyalty and become difficult to imitate.

Paying scale and fringe benefit package allowed it to attract motivated people with above
average skills and good work habits and also to make the employee to be loyal with
Starbucks. (Starbucks Case Study, 2005)

3
4 https://www.scribd.com/doc/48355880/6/Objectives-of-Starbucks

Company Analysis
-

History and Culture

The history of Starbucks starts back in 1971 when the first store opened in Seattle,
Washington. Jerry Baldwin, Zev Siegl and Gordon Bowker got the idea from Alfred
Peet (of Peet's Coffee fame). The store initially sold just coffee beans and coffee
making equipment rather than the drinks they have become so famous. After about 10
years, Howard Schultz was hired as Director of Retail Operations and came to the
conclusion that they should be selling drinks rather than just beans and machines. He
couldn't convince the owners, so he went his own way to start the Schultzs Il
Giornale chain of coffee bars in 1986. 5(History of Starbuck, 2005)
At Starbucks, the company strives to create a culture that values and respect diversity
and inclusion. They expect to be a leader in diversity and inclusion, from our partners
in the field to our senior leadership teams. 6(Diversity and inclusion, 2005)
Starbucks employees are called baristas. During a customer visit to Starbucks that
he/she noticed the baristas effectively communicating with one another to ensure
customers receive the beverage they ordered. It starts with the barista at the cash
register who takes the customer order and writes their name on the correct sized. Once
the beverage is made, the barista calls out the name on the cup and gives the customer
their finished beverage. 7(Starbucks organizational culture, 2005)
They also create a great environment for the customers. For example, they will play
some music to make customers feel relax and forget the stress. The customers will
feel that is a coffee time and just have the coffee, no more job and stress. There is a
place that can meet over the coffee and create community. It also is a place that
opportunity to gather their friend and increase their friendship. They provide a work
environment and treat each other with respect. When some people do not know where
can finish their work and could find a good place, they will think Starbucks is a
suitable place. Their quality of coffee also would not make the customer suspicion.

5 http://www.coffee.org/history-of-starbucks
6 http://www.starbucks.com/responsibility/community/diversity-and-inclusion
7
https://sites.google.com/site/cultureofcoffeeant3150project/description/organizati
onal-culture

4
-Business Strategy
1. Right market segmentation. The company has stayed with the upper-scale of the
coffee market, competing on comfort rather than convenience, which is the case with
its closest competitors. The Starbucks put the emphasis on the customers. If the
business was started, the customer is the power of influence in the business. So, the
customers response is a more important issue and their feedback also will help the
owners to improve themselves. 8 (Starbucks and McDonalds winning strategy,
Starbucks, 2005)
2. Execution. The company continues to focus on its original product bundle that
includes good coffee, quality service, and a nice environment to hang around. Even a
product of company is the best in world, but the attitude of employees also will affect
the company. Nowadays, the attitude will determine everything in our society. A good
coffee and quality of service as well as a nice environment more attract the office
workers and those want to release the pressure. (Starbucks and McDonalds winning
strategy, Starbucks, 2005)
3. A superb leadership. Company founder Howard Schultz, who continues to come up
with innovative products to expand the companys product portfolio, leads Starbucks.
A good cooperates between superior and employees also important in a company. But
first, the relationship between the superior and employees must good. Then, the
superior will build the teamwork gradually. (Starbucks and McDonalds winning
strategy, Starbucks, 2005)
4. China expansion. As is the case with the Japanese, Chinese people live as extended
families in small houses. This means that there is a strong demand for Starbucks as a
third place. Last year, Starbucks opened 500 new stores in China, bringing the total
to 1500. The target market of Starbucks usually is city. This is because the salary of
city people more easily to cover the expenses. (Starbucks and McDonalds winning
strategy, Starbucks, 2005)

5
8 http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-andmcdonalds-winning-strategy/

- Resource and Current Customers

1. Human resources of Starbucks.
For companys success employees are vital. They are public face of company and
their hands passes through every single dollar of sales. Howard Schultz thinks
that employees can break or make a company. If an employee has a positive
interaction with customer, definitely customer will be come back. Its important
for Starbucks to hire and recruit the right person, train well, motivate and retain
them. Therefore, the company should give satisfying jobs, appropriate work
schedules, a positive work environment and fair compensation and benefits. To
gain competitive advantage these activities are essential of Starbuckss strategy to
deploy human resources. 9(Starbucks Coffee Human Resource Management
Essay, Human Resource Management, 2005)
2. Financial resources of Starbucks.
For Starbucks, their current assets include everything from cash, accounts
receivable, inventories and more. Starbucks liabilities are separated into the two
common categories of current liabilities and long-term liabilities. These liabilities
include accounts payable, accrued taxes, insurance reserves and more. Two of the
main goals of effective management of working capital are maintaining a balance
of inventories, accounts receivable, cash, and other forms of revenue to provide
profitability and making sure that a company can remain operational after paying
off current assets. These are the two goals that Starbucks most likely focuses on
when it comes to the effective management of working capital. 10(Starbucks,
Financial Resources, 2005)
3. Current Customers
Starbucks primary target market is men and women aged 25 to 40. Starbucks
appeal to this consumer age group through hip, contemporary design that is
consistent in its advertising and decor, and working to keep its products current as
status symbols. This target audience grows at a rate of 3 percent annually. 11 (Who
Is Starbucks' Target Audience, Adult, 2005)
Young adults aged 18 to 24, total 40 percent of Starbucks sales. Starbucks
positions itself as a place college students can hang out, study, write term papers
and meet people. The young adult audience grows 4.6 percent each year.
Starbucks appeals to this consumer directly through introducing technology as

9 http://www.ukessays.com/essays/management/starbucks-coffee-humanresource-management-management-essay.php
10 https://sites.google.com/a/email.vccs.edu/starbucksportfolio/financialresources
11 http://smallbusiness.chron.com/starbucks-target-audience-10553.html

soon as it come available, focusing on social networking and actively cultivating a

cool image. (Who Is Starbucks' Target Audience, Young adult, 2005.)
6
Kids and teens are also a large part of Starbucks target audience. Together,
customers age 13 to 17 accounts for just 2 percent of Starbucks sales, but most
items for kids are purchased by the parents. Kids go there with their parents; both
mother and child leave with cup in hand. Teens meanwhile use Starbucks as a
place to hang out with friends or study. Starbucks may not cater directly to kids
but it does make its products kid-friendly, offering special child sizes for instance.
( Who Is Starbucks' Target Audience, Kids and Teens, 2005)

Marketing Communication
With competitive coffee stores in the city and around the world, Starbucks doesn't
feel the need to participate in any kind of competition. Their focus is the
"Starbucks Experience" and most of it is their good deeds or new product. 12
(Integrated Marketing Communications, 2005)
They do not carry a slogan but their logo is unique and very well known to the
public. They may not sell the cheapest coffee but they deliver great taste and
quality, good service, and more. Starbucks has the widest selection of coffee;
allowing customers to customize their drinks.
(Integrated Marketing
Communications, 2005)
Conveniently they also provide rewards cards letting customers take advantage of
perks in the store along with email notifications with discounts. Not only do they
reward their loyal customers but they also engage with new and loyal customers.
(Integrated Marketing Communications, 2005)
Nowadays, students are drawn to spend time in Starbucks; they are the most
targeted customers for Starbucks followed by moms, and business people.
Starbucks appeals to students because of the convenient locations, the
environment, Wi-Fi-serve, adequate light, good music, comfortable sofas and
variety of beverages and food. (Integrated Marketing Communications, 2005)

12 http://starbucksmktg5.blogspot.com/2012/12/ch-16-integratedmarketing.html

7
Channel of Distribution and Pricing
1. Channels of distribution
Starbucks uses multiple channels (hybrid) of distribution for its products. This
means the company utilizes more than one distribution design. Firstly Starbucks
sells its products through a direct retail system in company-owned stores. They
import and process coffee and then sell it under their own brand name in their own
stores. However, Starbucks also sells its products in supermarkets and shopping
centers. Additionally Starbucks has distribution agreements with office coffee
suppliers, hotels, and airlines. 13(Starbucks Distribution Channel, 2005)

Company Strengths and Weakness

Strengths

Weakness

-Starbucks is the leader in the coffee -Product pricing more expensive

market
-Operating in 40 countries worldwide

-High operating cost

-Customer service is excellent

-Lack of internal focus and too much focus

on expansion

-High brand equity

-Closed 900 stores since 2008

-Good relationships with suppliers

-Starbucks have less control over stores

outside the U.S.

(Strengths and weaknesses)14

13 http://thecoffeeteam.blogspot.com/2012/02/starbucks-distributionchannel.html
14 http://sva.isotope221.com/images/strategy/Starbucks-SWOT.pdf

Financial report of Starbucks

Their revenue grow since 2002 has been excellent with 15.0% annual increase while their net
income growth has been better at 20.5% per year. This has led to their net profit margin
increasing over time from 6.5% to 10.4% over the last 10 year. 15 (Starbucks (SBUX)
Dividend Stock Analysis, 2015)

15 http://www.passive-income-pursuit.com/2013/09/starbucks-sbux-dividendstock-analysis.html?m=1

Market Analysis
Grow strategy
Starbucks is an internationally coffee and coffeehouse chain based in Seattle, Washington,
USA. Starbucks is the largest coffeehouse company in the world, with 16120 stores in 49
countries. Starbucks sells drip brewed coffee, expresso-brand hot drinks, other hot and cold
drinks, snacks and items such as mugs and coffee beans. Starbucks products/ market
expansion grid- that is a tool for identifying company growth opportunities through marker
penetration, market development, product development or diversification. Market penetration
is increasing sales for current products to current market segments without changing
products. For examples, starbucks were open new stores (11000 stores in USA). More
concentrate in advertising. And improve product quality and offer variety of coffee. Market
development is developing new market segment for current company products. Starbucks
were review new demographic markets such as senior and ethnic customers and expand to
another cities, international market. Products development is offering modified or new
products to current market segments. Starbucks offer food during lunch and dinner, jointed
with PepsiCo for bottled Frappuccino drink and jointed with Breyers for Starbucks ice
cream. Starbucks also on supermarket aisles. Diversification is growth through starting up or
acquiring business outside the companys current products and markets. For examples, two
new restaurant concept of Starbucks is caf Starbucks and circadian, hear music brand of
compilation CDs. Starbucks also experience in casual clothing. 16 (Product/Market Expansion
Grid, 2015)
Market share
The strategic goal of the Starbucks is to increase the market share of the non-coffee drinker;
they are starting construct an integrated marketing program by introducing an extension of a
product line targeted to this segment. This method can ensure the market growth. Starbucks
has repositioned one of its current products, the Frappuccino line, this product has been
extended to include 3 new flavours; Double Chocolate Chip Crme, Vanilla Bean Crme, and
Strawberries & Crme, introduced throughout the summer months. 17 (Starbucks New Market
Entrance, 2015)
The Starbucks Company has 11,000 stores in America alone, where it sells 8.2 million cups
of coffee daily. It plans to expand to 20,000 stores worldwide by the end of 2014, with China
slated to become its second largest market. Starbucks has an approximate 33 percent share of
the U.S. market and a 1 percent share of the global market.18 (Starbucks market share
globally and in the United States. 2015)
16 http://whatmarketingis.blogspot.com/2011/08/productmarket-expansiongrid.html?m=1
17 http://www.123helpme.com/starbucks-new-market-entrance--view.asp?
id=167390

The coffee giant is branching out into the tea market as well and is committed to attaining.
Profitability in Europe as it deepens its connection with customers around the globe through
mobile payment platforms and social and digital media.

10
Internal and external environment of Starbucks
SWOT-Internal environment of Starbucks
Starbucks is the specialty coffee and it is the no.1 brand coffee house chain in the world.
Starbucks always provide the best quality of coffee bean or beverages. Starbucks in all over
the world have operating 21366 coffeehouse in the 63 countries. 19 (SWOT analysis of
Starbucks, 2015)
Strengths
I. Complete financial records
Starbucks profit margin has been rising from 11% to 14% in 2014. The company also create
higher records compare with other competitor such as Mc Donalds. Starbucks have been
defeat its nearest competitors with 24.54% return on investment and 29.16% return on equity.
(SWOT analysis of Starbucks, 2015)
II. The largest coffeehouse chain in the world
The company operates around 21,366 coffeehouses in 63 countries, making it the largest
coffeehouse chain in the world. (SWOT analysis of Starbucks, 2015)

Weakness
I. Coffee beans price is the major effect over firms profits.
Starbucks profit margin and its coffee price are mostly dependent on prices of coffee beans,
which is a product and cannot be controlled by Starbucks. It is because the weather
conditions will affect the quality of coffee beans and other factors. Then, Starbucks cannot
estimate the price of its coffee and company profit margin. (SWOT analysis of Starbucks,
2015)
II. Product pricing
Starbucks always provide the best coffee and customer needs and wants but that results in
high price of its product. Example, Starbucks compare with Mc Caf premium coffee it was
lower price, can refuel more time and was better evaluated. (SWOT analysis of Starbucks,
2015)
18 http://www.ask.com/business-finance/starbucks-market-share-globally-unitedstates-b8643fb1fed1a9a0
19 http://www.strategicmanagementinsight.com/swot-analyses/starbucks-swotanalysis.html

Opportunity
I. Increase product offerings
Starbucks could expand the number of coffeehouses that also can offer wine, beer or create
new product due to it can attack new customer groups and increase the profit of company.
(SWOT analysis of Starbucks, 2015)

11
II. Expansion of retail operations
Starbucks can try to sell some of its products through other retailers does not only manage
coffeehouses and franchises. The company can make such partnership or suggestion to sell its
coffee. The firm can cooperate with JUSCO or other supermarkets due to it can increase
profitability and get more customer. (SWOT analysis of Starbucks, 2015)

Threats
I. Rising prices of coffee beans and dairy products
The chain strongly depends on the coffee beans and dairy products prices, which Starbucks
cannot control or can hardly estimate due to the factors. (SWOT analysis of Starbucks, 2015)
II. Increased competition from local cafes and specialization of other coffeehouse chains.
Local cafes can supply much lower price and more suitable menu for its customer. Most
customer more prefer to local cafes that is more evaluated. However, the local cafes cannot
guarantee the quality of coffee beans. In both situations, Starbucks experiences forceful
competition and loses market share. (SWOT analysis of Starbucks, 2015)

External environment factor

External environment that is include political-legal, economic, social-culture, technological
and environmental factors about a company. These are the explaining of the factors:

I. Political-legal factor
Political-legal factor are related with general and industry of specific rules and regulation that
may affect the profit margin and long-term growth of Starbucks. Starbucks introduction of
the rules and regulations by health authorities about caffeine production and consumption.
Due to let the customer ease to drink. Starbucks make the close of international relationship
between Starbucks and other countries such as African because that harvest coffee beans for
the company. Starbucks political-legal factors also impacting the political stability in local

and global markets and the licensing regulations related to the industry. Furthermore, some
action by the company may cause negative legal consequence for the company. 20 (Starbucks
PESTEL Analysis, 2015)

12

II. Economic factors

Economic factors that impacting Starbucks in global markets include international markets,
taxation level and local economic environment within each market Starbucks operates.
Economic factors also effect on the buying power of consumers when the global financial and
economic crisis of 2007-2009 have resulted in significant economic challenges for the
company. (Starbucks PESTEL Analysis, 2015)

III. Social-culture factors

Social-culture factors that such as changing work patterns, changes in lifestyles of population
and changing the value among the population. Coffee drinking culture has been around each
countries and currently university students and workers are the major coffee consumers. With
the busy routine of life, coffee shops flourish as a convenient choice for all. Starbucks
purpose are make customer having a coffee as having a good day.21 (PESTLE ANALYSIS,
2015)

IV. Technological factors

Technological factors may affect Starbucks operate through innovations in coffee preparation
processes. Starbucks competitors gaining competitive benefits through the innovations
technological in various business and these innovations creating a barriers for Starbucks. 22
(Starbucks PESTEL Analysis, 2015)

V. Environmental factors
Environmental factors significant another source of substantial challenges for Starbucks
company. The other effects are environmental rules and regulations. Environmental tragedies
20 http://research-methodology.net/starbucks-pestel-analysis/
21 http://www.ukessays.com/essays/marketing/internal-and-external-factors-affectingstarbucks-marketing-essay.php

22 http://research-methodology.net/starbucks-pestel-analysis/

in countries producing coffee beans. Moreover, global warming and other environmental
issues related in a global direction. (Starbucks PESTEL Analysis, 2015)

13
Competitor Analysis
The major competitors of Starbucks is McDonalds.
McDonald's is the world's leading global food service shop with over 36,000 locations
serving around 69 million customers in over 100 countries each day. More than 80% of
McDonald's restaurants worldwide are owned and worked by independent local business men
and women. McDonald's brand mission is to be their customers' favourite place and way to
eat and drink. Creating a culture of friendliness and belonging, where everyone is welcome. 23
(McDonalds is Global and in Your Hometown. 2015)
McDonalds worldwide operations are aligned around a global strategy called the Plan to
Win, which center on an excellent customer experience People, Products, Place, Price and
Promotion. They are committed to continuously improving their operations and increasing
their customers' experience. (McDonalds is Global and in Your Hometown. 2015)
The main target customer for McDonald's includes parents with young children, business
customers, and teenagers. Possibly the most obvious marketing for McDonald's is its'
marketing towards children and the parents of young children. 24(McDonalds Corporation:
Case Study. 2015)

Mc Donald's value proposition introduced by their founder, Ray Kroc, many years ago
McDonald's stands for "friendliness, cleanliness, consistency, and convenience."

McDonalds Caf marketers have great insight about offering real value McDonalds provide
high quality products, such as burgers, drinks, muffins, and more, which are safe and reliable
that it does what it is supposed to do, but not only does the quality of the products matter, the
good value for money affects the business. For the example, when u buy food at lunch time u
will be offer discount.25 (Products. 2015)

23 http://www.aboutmcdonalds.com/mcd/investors/company_profile.html

24 http://www.123helpme.com/mcdonalds-case-study-view.asp?id=166353

14

The strength of McDonalds is Companys brand is the most recognized brand in fast food
business and is valued at $40 billion. McDonalds is also famous by the Ronald McDonald
clown. McDonalds offers only most popular brands in its restaurants, such as: Coca Cola,
Dannon Yogurt, Heinz ketchup and others. Therefore, McDonalds can focus more on
perfecting its serving system and marketing drives. The business successfully targets very
young children through offering playgrounds, toys with its meals and advertisements.
McDonalds is severely criticized for offering unhealthy food to its customers, inspiring
fatness and strong marketing focus on very young children.Although McDonalds efforts to
introduce healthier choices in its menu, the menu is largely formed of unhealthy meals and
drinks. Such menu offering prompts protests by organizations that fight fatness and hence,
decreases McDonalds popularity. Mac Job is a low paid and a low skilled job, which is often
seen negatively by its employees.26 (SWOT analysis of McDonalds.2015)

This results in lower performance and high employee income, which increases training costs
and add to total costs of McDonalds. McDonalds is no longer able to significantly
differentiate itself from other fast food chains and chooses to contest by price rather than by
additional features. (SWOT analysis of McDonalds.2015)

Starbucks is the largest coffee house company in the world. Starbucks is started in 1971 in
Seattle in Washington US. Starbucks is leading shop, roaster and brand of specialty coffee in
the world. Starbucks available 20,891 stores in 62 countries. Starbucks serve brewed coffee,
expresso-based hot drinks, snacks, mugs and coffee beans. The missions of Starbucks is
acting with courage, challenging the status quo and finding new ways to grow their company
and each other. Being present, connecting with transparency, dignity and respect. 27(Our
mission. 2015)
25 http://www.123helpme.com/customer-service-at-mcdonalds-view.asp?
id=164480
26 http://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swotanalysis.html
27 http://www.starbucks.com/about-us/company-information/mission-statement

Starbucks rode the baby boomer trend in the 1990s, the growth ranks of mid-age
professionals that created the need for a third place, an affordable luxury where people
could share and enjoy a cup of coffee with friends and colleagues, away from work and
home. The chain has introduced itself into the American city landscape more quickly and
craftily than any retail company in history, and has forever changed the way Western
companies market themselves to consumers, with a four-fold strategy is The company has
stayed with the upper-scale of the coffee market, competing on comfort rather than
convenience, which is the case with its closest competitors, McDonalds. The company
continues to focus on its original product bundle that includes good coffee, quality service,
and a nice environment to hang around.

15
Company founder Howard Schultz, who continues to come up with innovative products to
expand the companys product portfolio, leads Starbucks. As is the case with the Japanese,
Chinese people live as extended families in small houses. This means that there is a strong
demand for Starbucks as a third place. 28(Starbucks and McDonald's Winning Strategy.
2015)
Starbucks primary target market is men and women aged 25 to 40. They account for 49
percent of its total business. Young adults, aged 18 to 24, total 40 percent of Starbucks sales.
Together, customers age 13 to 17 account for just 2 percent of Starbucks sales, but most
items for kids are purchased by the parents.29(Who Is Starbucks' Target Audience?. 2015)

The value proposition of Starbucks focused on a brand strategy that was included of three
components. The brand strategy was best captured by the phrase live coffee. This phrase
reflected the importance of keeping the national coffee culture alive. From a marketing view,
this meant creating an experience that people would want to incorporate into their everyday
lives. The first component was simply the coffee. Starbucks offered the highest-quality coffee
in the world and controlled much of the supply chain as possible to help cover that. The
second brand component was service, or what was also referred to as customer closeness.
This included simple things such as remembering someones name or drink order. The third
brand component was atmosphere. Starbucks stated that people came for the coffee but
stayed for the atmosphere. Therefore it was important to provide a comfortable atmosphere
that allowed a sense of community.30(Tag Archives: Starbucks Value Proposition. 2015)

28 http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-andmcdonalds-winning-strategy/
29 http://smallbusiness.chron.com/starbucks-target-audience-10553.html
30 https://joneeplayingthepoint.wordpress.com/tag/starbucks-value-proposition/

Starbucks benefit is provide to enjoy free drink and food rewards, youll need to earn Stars.
Get one Star when you pay with your registered Starbucks Card or the mobile app at a
participating store or from specially marked Starbucks products where you buy foodstuffs. 31
(More than great drinks. Great rewards. 2015)

The strength of Starbucks is the experience it delivers to its customers with perfectly mixed
coffee, premium music, friendly staff and warm atmosphere, which results in unique
customer service. Starbucks has a strong brand reputation related with quality coffee and
excellent customer service. Its brand is the most valuable brand in coffeehouse section and is
valued at $4 billion. The company offers its employees extensive range of benefits and a pay
rate higher than offered by competitors. The weakness of Starbucks is Starbucks profitability
and its coffee price are largely dependent on prices of coffee beans, which is a product and
cannot be controlled by Starbucks. Starbucks offers great coffee and customer experience but
that results in high price of its products.
16
The corporate continuously receives negative publicity over its poor efforts of becoming
greener company, tax evasions and poor treatment of some suppliers. 32 (SWOT analysis of
Starbucks. 2015)

Marketing Elements
Starbucks' success comes directly from their great use of product, price, place and promotion.
Starbucks illustrates the importance of the marketing-mix. They have developed products to
meet customer needs, and then distributed them to the places with the highest demand. Also,
they have promoted their products effectively, allowing them to gain more customers. As a
result, they priced their products effectively by using their brand name and image to their
advantage.

Product - Starbucks have their own purpose that is to give the customer more than just a cup
of coffee. They wanted it be a life experience, an experience that customers would like to
continue and make it one of their routine functions. Each coffee can bring the happiness and
enjoy it for every day. 33(Marketing mix analysis for Starbucks Coffee, 2015)
31 http://www.starbucks.com/card/rewards
32 http://www.strategicmanagementinsight.com/swot-analyses/starbucks-swotanalysis.html
33 http://www.ukessays.com/essays/marketing/marketing-mix-analysis-forstarbucks-coffee-marketing-essay.php

Starbucks always ensure the ingredients and quality control of the food and beverages to
satisfy customer needs and wants. In Starbucks web they have its product-mix expanded from
8 main categories of drinks types and 7 food categories to keep up with the momentum.
(Marketing mix analysis for Starbucks Coffee, 2015)
Starbucks is coffee range that include expresso and drip brewed coffee including whole beans
coffee. It also several beverages include hot and cold drinks. Furthermore, Starbucks have
their own branded food such as cake and sandwiches. 34 (Starbucks Marketing Mix, 2015)

Price - The price of the beverages Starbucks is regulated according to the customer respond.
The main selling of Starbucks is coffee, it sold according as difference sizes that are smaller
or bigger. The customer can chose according to their budget. For having one drink, customer
have to pay above RM10-20. However, the price is determine to the quality and value of the
product. 35(Marketing mix analysis for Starbucks Coffee, 2015)

17
Starbucks always use the best quality of coffee bean, dairy and raw material to satisfy
consumer needs and wants. Starbucks train their staff to ensure they are effective and
efficient. It is because the employees can create the comfortable environment for consumer to
enjoy the coffee. That also the value of each Starbucks that consumer paid.

The high pricing of Starbucks that show the positioning supported their products to gain and
maintain the image attached to its brands. (Marketing mix analysis for Starbucks Coffee,
2015)

Place - The beverages and other products of Starbucks are sold directly to the customer by the
company through its retail stores. In February 2008 the company owned more than 15,000
stores all over the world. In the USA Starbucks can be found in 50 states with 7,087 company
operated stores and 4,081 licensed stores. Internationally Starbucks has stores in 43 countries
outside the USA, including Canada, the UK, Germany and France. It has 1,796 company
operated stores and 2,792 joint ventures and licensed stores. Starbucks can also be found in
many popular grocery chains in theme parks, university campuses and hospitals. In April
2008, 45 licensed stores where closed in the USA and the company plans to close even more
in the future to maintain their image for good customer care and friendly employers.
(Marketing mix analysis for Starbucks coffee, 2015)

34 http://www.marketingteacher.com/starbucks-marketing-mix/
35 http://www.ukessays.com/essays/marketing/marketing-mix-analysis-forstarbucks-coffee-marketing-essay.php

Promotion - Starbucks does not do a lot promotion; it has avoided TV advertisements. Also
no Starbucks advertisements in newspapers, magazines or on the radio can be found.
The main way of promotion is point of sale promotion; the company does internal
advertisements within their stores only by using posters, flyers and new product signage. This
only reaches customers who are already aware of Starbucks and visit the stores already.
Starbucks does only promote new products and tries to make their customers aware of these,
but it does not try to attract new customers. (Marketing mix analysis for Starbucks coffee,
2015)

18

Implementation and Control Plan

Implementation
Starbucks coffee has closely examined the four Ps and implemented them to become the
largest coffee restaurant in the world. They strive to meet or exceed customers expectation
and take customers feedback seriously. 36 (Real world examples of the marketing-mix, 2015)

Product
Starbucks is best known for one product, extremely good coffee. This is their core product
and they have refine their business model to give customer the best cup of coffee. If a
customer is not 100% satisfied Starbucks will give the customers a new cup at no additional
charge. One of the most interesting trends with Starbucks is they are now allowing customer
log on to their web site or use mobile phone application to build custom drinks and bring in
the recipe to have barista prepare the drink. (Real world examples of the marketing-mix,
2015)

36 http://www.examiner.com/article/real-world-examples-of-the-marketing-mix

Price
Starbuck has achieved the highest price point for coffee in the restaurant industry. They are
conveying a since superior product to the consumer by giving the customer a consistent high
quality beverage. Starbuck has countered this by trying to appeal to customer who previously
would not consider spending $3.75 for a basic coffee drink by introducing their new$ coffee
item. (Real world examples of the marketing-mix, 2015)

Place
Starbucks has strategically located its retail location (place) to achieve maximum daily visits
from consumers and to engrain into consumers that if they want coffee that Starbucks is
where they would want to purchases it. Several ways that they have achieved this is by
opening a college campus throughout the country, through licensing agreements with Barnes
and Noble so they instantly developed over 700 new locations without having to spend
money on development costs and they are willing to pay top dollar for irreplaceable real
estate. Starbucks mobile application will tell consumer where the closest Starbucks is. (Real
world examples of the marketing-mix, 2015)

19

Promotion
Starbuck is an expert at promoting their product and services. The company is striving to
make Starbucks the third place that consumers go when they are not at home or at the office
thus creating a unique and relaxing atmosphere for people. It is very important for
company as they realized this is one of the strongest concepts attached to the company.
Starbucks has sought technology to promote their brand by building their own mobile phone
application. It is interesting that Starbucks chose mobile phone development as a tactical
marketing strategic. So, Starbucks can push information to consumers rather than spending
money on commercials. (Real world examples of the marketing-mix, 2015)

CONTROL PLAN
NowadaysStarbucks Coffee has become a giant global company. For exampleStarbucks
has acquired an amazing supply chain that spans across almost nineteen countries. Each
company must be able to form a successful marketing strategy and must be able implement
their plan and control marketing mix effectively. Marketing control is the process of
monitoring the proposed plans as they proceed and adjusting where necessary. Control also
involves measurement, evaluation, and monitoring. Resources are rare and costly so it is
important to control marketing plans. Control involves setting standards. The marketing

manager will than compare actual progress against the standards. Corrective action if happen
and then taken.
For the product to be a premium product in the coffee trade, they aim at high standards,
introduction of innovative products and providing excellent service combined with
unforgettable experience. Its product-mix expanded from 8 main categories of drinks types
and 7 food categories to keep up with the momentum and to satisfy more customer needs.
They have been constantly introducing new products, such as four new VIA flavoured
coffees and trying to attract tea drinkers by introducing Tazo Tea. Identifying customer
specific needs they introduce non-fat milk to their products. They have seasonal offerings
such as strawberry, cream Frappuccino in the summer and gingerbread latte in Christmas .
Going little beyond, they also offers Starbucks coffee and cappuccino makers for customer
who wish to purchase them . To ensure brand richness, besides bringing the best ingredients
and quality control, they assure that all companys employees are constantly involved and
aware of its overall mission and objectives. 37(Marketing mix analysis for Starbucks Coffee,
2015)
For the price usually price and quality determines the value of the product. Starbucks
always tried to deliver high value to the consumers by buying quality beans, assuring that
their staff got effective and efficient training, and mostly, creating an environment to enjoy
coffee. For this, Starbuckss customer had to pay more and it was expensive .To keep the
competitive edge, the company also began to offer $1 bottomless cup of coffee, which can be
refilled any number of times and 50 cents less than any other Starbucks products .
20
As the Starbucks news site sates, the company is also trying to implement other value added
services like, introducing $3.95 "breakfast pairings," which includes breakfast items along
with a coffee. This is to target the price conscious customers. (Marketing mix analysis for
Starbucks Coffee, 2015)
The marketing mix of the place. Mostly Starbucks is in to direct supply channel like producer
to consumer. With their line of vision such practice is important and it helps to keep a
personal relationship with the customer. In US, particularly Starbucks can be found in any
neighbourhood where there is a potential high traffic for its stores especially with Coffee
bar concepts. Outlets can be found in various large chains. Their primary goal is to locate
them in highly appreciable locations and opened them in clusters. It was the ideal place for
the individuals who are on the go, who enjoy music or even looking for a break in a busy
lifestyle .By opening "stealth outlets" street names instead of Starbucks, they attempt to
carry out their "localize" projects further . Along with the growing demand, they were able
to manage the increased traffic and to keep their competitive edge. Starbucks invested heavily
on training their staffs to ensuring and aiming high on customer satisfaction. (Marketing mix
analysis for Starbucks Coffee, 2015)
The promotion of the Starbucks, their main strategy was not to spend money largely on
advertising. In 2007 only 16.6 million compared to McDonalds 727.7 Million . Instead,
they used the extra cash on acquiring the best spots. Before opening a new store, they
37 http://www.ukessays.com/essays/marketing/marketing-mix-analysis-forstarbucks-coffee-marketing-essay.php

organize big community events highlighting each locations personality. Further such
information was imprinted on mugs and t-shirts as promotion activities .They also established
smart partnerships with already known local representatives who would act as local
ambassadors to promote their brand .They introduced Starbucks Cards; aiming their valued
customers to promote its products. While buying a gift card, the customer is not only shows
brand loyalty, but it also provides free advertising, attracting new customer. Expanding their
product mix, they ensure that they are appealing to a diverse customer base. Starbucks also
contributes to non-profit organizations as a way to improve brand image and awareness in
local communities. (Marketing mix analysis for Starbucks Coffee, 2015)

21

Conclusion
The assignment that concludes that Starbucks Company has been become a very successful
and it got an excellent brand name identity and reputation in the coffee industry area. The
companys reputation has been established in many years ago by its Starbucks Experiment.
Starbucks operates in a business environment which requires excellent brand identity and
reputation to create trust from customer and satisfy their needs and wants. 38(Starbucks coffee
company conclusion, 2015)
The challenge now is continue to grow and increase the market share due to Starbucks needs
to be conscious of unavoidable factors in both internal and external environment which if not
observed closed, can have serve implications on the business. 39 (Starbucks Case Analysis,
2015)
Moreover, the company want to maintaining the excellent result, it has to maintain its
innovation skills and continue create new products, to attack new customer and increasing
38 http://www.ukessays.co.uk/essays/strategic-management/starbucks-coffeecompany.php
39 http://www.123helpme.com/starbucks-case-analysis-view.asp?id=167392

sales. In addition, Starbucks innovative ideas and persistent slow-growth it has help the
company gained a competitive advantages. (Starbucks Case Analysis, 2015)

22

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26

Appendix
McDonalds targets Starbucks crowd with pumpkin lattes
Bloomberg Sep 26, 2013, 05.54AM IST

CHICAGO: McDonald's Corp is adding pumpkin-spice lattes to lure the Starbucks crowd and
boost traffic. McDonald's, the world's largest restaurant chain, has been introducing pricier
items such as chicken wings, McWraps and steak breakfast sandwiches to maintain
profitability in the face of higher labour, occupancy and operating costs.
At the same time, the company is expanding its value menu to draw bargain- seeking diners.
"They're trying to further refine the so-called barbell" strategy of selling low-priced, value
items along with more expensive fare, John Gordon, principal at San Diego-based Pacific
Management Consulting Group and adviser to restaurant franchisees, said in an interview.
They are trying to sell the higher-price food because "they need the margin". The McCafe
pumpkin latte a mix of espresso, milk and flavored syrup come in three sizes and are
available with whole or non-fat milk, the Oak Brook, Illinoisbased company said.
A 16-ounce latte with whole milk has 340 calories and costs $2.89. A regular coffee is $1.
The lattes are being introduced this month and will sell through mid-November.
The shares rose 0.5% to $97.78 at the close in New York. McDonald's has advanced 11% this
year, while the Standard & Poor's 500 Restaurants Index has gained 19%. Starbucks has
added 43%.
Starbucks Corp has sold 200 million pumpkin spice lattes in the nine years since it introduced
them, saidAlisa Martinez, a company spokeswoman.
The drink has the same number of calories as McDonald's offering and a 16-ounce one sells
for $4.55, on average. The Seattle-based company, which has about 11,200 US cafes, also
sells salted-caramel mochas, hazelnut lattes and is introducing new bakery items nationwide.
McDonald's may be able to steal some Starbucks customers because Americans are focused
on finding deals now and pumpkin has become such a popular flavour during the fall season
in the US, Gordon said. "Everybody is doing pumpkin this fall," Gordon said.40

40 http://articles.economictimes.indiatimes.com/2013-0926/news/42427050_1_lattes-mccafe-largest-restaurant-chain

27
Coffee chain Starbucks expanding aggressively in India
Rasul Bailay, ET Bureau Apr 14, 2014, 05.34PM IST
NEW DELHI: The world's largest coffee chain Starbucks Coffee Co. is expanding
aggressively in India even as its competitors, including global rivals such as Costa Coffee and
Gloria Jean's Coffees, are having a tough time in the country's cafe market.
Tata Starbucks Ltd, a 50:50 joint venture between the US coffee chain and Tata Global
Beverages, added seven stores in the last one-and-half months alone, four in New Delhi, two
Bangalore and one in Pune, taking the total number of stores in the country to 43 at present.
Tata Starbucks alliance opened only one store in India in February and three in January.
Tata Starbucks, which entered India in October 2012, said at the time of the launch that it
plans to invest $80 million to begin with to roll out dozens of Starbucks branded cafes in
India.
Starbucks is eyeing a big slice of India's $300 million cafe chains market that's growing
annually by 20% and is currently dominated by the local chain Cafe Coffee Day that operates
more than 1,000 outlets nationwide.
Starbucks' expansion is coming at a time when India's cafe business is in the doldrums.
Dubai-based Landmark Group is seeking to terminate its seven-year-old franchisee
agreement with Australia's Gloria Jean's Coffees amid heavy losses due to high rentals and
competition from rivals, a person aware of the development said.
Another global rival, UK's Costa Coffee, may end its exclusive franchise agreement with
New Delhi-based Devyani International as the Indian firm is not ready to cough up more
capital into a business that is yet to turn profitable after nine years of operations.
Also, Lavazza Spa has been looking for a buyer for Barista, the country's oldest coffee chain
that the Italian group acquired in 2007.
Industry watchers say that the business is becoming difficult to turn profitable even after
years of operations.
Coffee through bars is a sit-in concept in India where consumers generally hang around such
outlets for hours compared to the global phenomenon of grabbing coffee on the go from
generally tiny outlets and kiosks.
Industry experts say that coffee chains in India must maintain elaborate and plush outlets and not kiosks - to give Indian consumers what they are looking from a coffee chain even if
the proposition turns out to be very expensive, which is making it difficult for many
companies to stay in the business and hard to scale up.

But Starbucks is doing just that. The world's largest coffee chain is positioning itself as an
aspirational brand in this largely tea-drinking nation, and is going over the top with its stores,
some of the plushest it's opened anywhere in the world.41
28
Starbucks strengthens technology brew with executive shift
January 29, 2014|Lisa Baertlein | Reuters
LOS ANGELES (Reuters) - Starbucks Corp Chief Executive Officer Howard Schultz on
Wednesday said he was promoting Chief Financial Officer Troy Alstead to the new position
of chief operating officer, allowing Schultz to focus on keeping the coffee shop chain ahead
of the curve in retail technology including mobile payments.
Alstead will assume oversight of the company's day-to-day operations. Scott Maw, senior
vice president of corporate finance, will succeed Alstead as CFO.
Starbucks, already a leader in mobile payments, gift cards, loyalty programs and digital
marketing, for years has been finding ways to strengthen results by linking its cafe business
and product sales through grocery stores and other retailers.
Schultz said such efforts helped the Seattle-based company outshine other U.S. retailers
during the 2013 holiday season, when shopper visits to overall brick-and-mortar stores
dropped and online sales increased.
Starbucks' traffic rose 4 percent during the quarter that included the holiday season. The chain
also saw a record $1.4 billion loaded onto gift cards during that quarter.
The CEO expects the company's latest move to further strengthen Starbucks' business.
It is an opportunity for Starbucks "to create new channels of revenue and profit outside four
walls of stores ... amid a seismic shift" in the way consumers are shopping, Schultz who is
also chairman, told Reuters in a telephone interview.
Schultz, who will be working closely with executives including Chief Digital Officer Adam
Brotman and Chief Strategy Officer Matt Ryan, declined to give specifics on the company's
plans.
"This is not about succession planning and this is not about me in any planning to or even
thinking about leaving the company," he said.
Starbucks is an investor in mobile payments provider Square. When asked if Starbucks would
buy Square, which counts the coffee company among its users, Schultz said Starbucks has no
near-term acquisition plans.
He did say that future efforts would include the use of "Starbucks currency in other retailers
outside Starbucks."

41 http://articles.economictimes.indiatimes.com/2014-0414/news/49126396_1_costa-coffee-cafe-coffee-day-coffee-chain

Starbucks already allows registered Starbucks card users to earn "stars," or points, when they
buy coffee at a participating grocery store. Those stars can then be redeemed at a Starbucks
cafe.
Starbucks has mobile payment applications in eight countries
Including the United States and Canada. It offers Starbucks cards in 28 countries.
29
The company reaps 70 percent of its total revenue from its U.S.-dominated Americas
business, which includes sales from 11,500 U.S. cafes.
Its forecast for this fiscal year includes opening 1,500 new units around the globe - including
600 in the U.S.-dominated Americas region.
Shares in Starbucks inched up 0.2 percent to $71.70 in after-hours trade.
(Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio)42

FOR STARTERS.
Starbuck Wars
November 13, 1994|By Jeff Lyon.
"A coffee plantation is a thing that gets hold of you and does not let you go," wrote Isak
Dinesen ("Out of Africa") of the Kenyan coffee farm that bankrupted her. Dinesen's mistake
was to grow coffee, not brew it, and be born 70 years too soon for the Great American Coffee
Rush of the 1990s.
"Out of Seattle," one would write today, for that damp jewel of a city spawned the gourmet
coffee boom, having given us Starbucks, purveyor of all things short, tall and grande, and
now Diane Jacobsen, of Espresso Pacifico, who has declared war on that great chain of beans.
With two stores versus Starbucks' 300, Jacobsen seems no threat, but she has an edge on
other upstarts. She learned coffee from Starbucks itself as its chief store designer from 198991. "One day I figured, if I can do this for others, why not myself?" says the Palatine native
who moved to Seattle after high school. Accordingly, she and her family opened in Winnetka
in late '92, following last May with No. 2 on Chicago's Delaware Place.
"Starbucks paved the way for everyone else, but we want to give people something different
and let them choose," says Jacobsen, who has four more shops planned for '95. Espresso
Pacifico features earth tones, original art, Miles Davis music, free refills and a premium on
letting people "veg out" for hours.
But a good coffee war should be fought with coffee. Jacobsen counters Starbuck's smoky
brew, which she says a customer once likened to "sucking on a match," with beans from
42 http://articles.chicagotribune.com/2014-01-29/business/sns-rt-us-starbucksmanagement-20140129_1_chief-financial-officer-troy-starbucks-mobile-payments

Seattle's Best Coffee, Starbuck's chief Seattle competitor. Like Starbucks, the beans are
premium Arabics but are roasted two minutes less for more delicate taste. Meanwhile, her
espresso drinks feature two shots, not one; her cappuccinos have less foam. So why does a
39-year-old architect tug the cape of an industry giant? "It is kind of stupid, isn't it," Jacobsen
says with a giggle.43
30

43 http://articles.chicagotribune.com/1994-11-13/features/9411130101_1_freerefills-starbucks-coffee-war