Jo-ann Bahian

2nd year- BSBA Marketing Management Block A

STARBUCKS

I.Background of the case

Since its early days in the 1980s, Starbucks has been the leading retailer of specialty
coffee and beans and related food and merchandise. Its most recent annual revenues were $9.8
billion from 8,832 company-owned stores and 7,803 licensed stores in airports and shopping
centers in the United States and in 50 countries across the world. World wide, the company
employs 142,000 people. Designed to provide a community gathering place and social
experience as well as a premium cup of coffee or hot or cold beverage, the brand intentionally
mimics the cafés of Italy. Starbucks also markets its products mix with other brand names within
its portfolio of companies, which include Teavana, Tazo, Seattle’s Best Coffee, Starbucks VIA,
Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks had total revenue
of $14.89 billion as of September 29th , 2013.Starbucks was nearly synonymous with premium
coffee beverages and seemed to be on an unstoppable growth until Howard Schultz, the company's
founder, chairperson, and CEO, left his daily leadership role to become owner of the Seattle
Supersonics. Schultz soon realized his move was a mistake for both himself and Starbucks. Store
traffic was falling for the first time in U.S. stores, and competition from premium brands and
mass-market coffee vendors gnawed at Starbucks' market share. In addition, the economy had
soured. Starbucks primarily operates and competes in the retail coffee and snacks store industry.
This industry experienced a major slowdown in 2009 due to the economic crisis and changing
consumer tastes, with the industry revenue in the US declining 6.6% to $25.9 billion. Before this,
the industry had a decade of growth consistent. Due to the economic slump, consumers spent less
on luxuries like eating out, choosing to purchase low-price items instead of high-priced coffee
drinks due to shrinking budgets. The core competence of Starbucks has been its ability to
effectively leverage their cornerstone product differentiation strategies by offering a premium
product mix of high quality beverages and snacks. another competence is its human resource
management's valuesbased approach for building very strong internal and external relationships
with suppliers, which drives the successful deployment of its business strategy of organic
expansion into international markets, horizontal integration through smart acquisitions and
alliances that maintains their long-term strategic objective being the most recognized and
respected brands in the world.

II. Statement of the problem

 How could starbucks reach people who are not coffee drinkers?
 Potential to lose loyal customers in the near future due to the increased of number
unsatisfied customers.
 Starbucks failed to meet the customer satisfaction and expectations.
  Baristas are presented with scenarios describing customers complaining about beans that
were ground incorrectly.

III. Situation Analysis (SWOT Analysis)

 Strenghts
 Brand name recognition
 No.1 brand coffee in the wholeword.
 Largest coffee store chain in the world
 Good relationship with supplier
 Strong market position
 Customer base loyalty
 Use of Technology and mobile outlets
 Diverse product mix

 Weaknesses
 Offer products with high prices
 Generalized standards for most products
 Starbucks doesn’t own the most unique products in the market
 There is no uniqeness in each store.
 Poor quality control.

 Opportunities
 Increasing Product mix and offerings
 Starbucks has advanced technologies
 New distribution channels
 Expansion in developing markets
 Adopt price differentiation

 Threats
 Increased competion wirh big outlets like Mcdonalds and Dunkin Donut.
 Products can be imitated by both new and old rivals.
  Change in customer tastes and lifestyle choices .

IV. Alternative courses of action

 By ensuring the customers, it gives them a quality of the beverage in taste,temperature

and appearance.

V. Problem Solution

Many customers are complaining about the beans that were ground incorrectly. The
company must change the baristas to automatic spresso machine. Starbucks must expand their
product menu and must also offer products for those people who are not coffee or tea drinkers.
They must also create a lowe-calorie menu for consumers. They must not set prices that are too
high. They must also give discounts especially students and offer new loyalty cards to achieve
the customer’s loyalty and can maintain a good relationship with their customers. Starbucks is a
very renowned in cofee brand so they must maintain their product taste for every time.

VI.Conclusion and recommendation.

Starbucks success is achieve through a few factors : Outstanding quality of coffee

brewed,fast growth of new stores all around the world and Brand name recognition. It has a well
established product line ,customer experience and supply chain. Nowadays, it is not only one of
the fastest growing company but also an outstanding business. As the time goes by, customers
taste and preferences are constantly changing. As consumer tastes and lifestyle shift towards
more snacks and beverages options, Starbucks should add its menu’s and expand to give more
healthy product offerings in its mix. Starbucks invest small amount in advertising. It would be
recommended that Starbucks make significant investments in advertising because competion in
the market is increasing. In conclusion ,they must do an analysis on their loyal customers and
their protential customers to retain and build the customer’s loyalty in order to avoid loss in the
company and can keep their brand image good.