7/16/2011

Starbucks Case Study

John Baab, Charly Costigan, Tyler Kleckner, Ashley Kreuer, Ellen Park, Ashley Wooding

Outline

7/16/2011

Background and History



Gerald Baldwin, Gordon Bowker, and Ziev Siegl opened a small coffee shop in Seattles Pike Place Market in 1971 Howard Schultz Joined the Starbucks marketing team Traveled to Italy and became interested in the espresso bars and tried to bring it to America Founders sold the company to Shultz Began to open new stores and had 140 stores by 1992 Decided to take the company public and succeeded by opening more stores Shultz continued to take the position as chairman and chief global strategist and hired CEO Orin Smith in 2002

 

  

7/16/2011

Mission/Vision of Starbucks
 To satisfy customers and to create a third

place environment  Three components to branding strategy : the coffee itself, service, and atmosphere

7/16/2011

Overview as of 2002
 5,886 stores(4574 National, 1312 International)  Customers(20 million total, 570 per week per

store)  Net Income of 215 million $  Customer Demographic (Traditional vs. New)  Menu (Average price of drink $3.85, 30 drinks, and 23 whole bean coffee blends)  Partners 360 total labor hours and an average pay rate of $9.00 per hour  Partnerships (Pepsi Bottling Co., Kraft Foods, and Dreyers Ice cream)
7/16/2011 5

2002E - $21.5 Billion (total sales)

Specialty Coffee, 31% Specialty Coffee Traditional Coffee Traditional Coffee, 69%

Starbucks Share of Specialty Coffee Market 42% (estimate) 13% Total Market Share
7/16/2011 6

2005E - $22 B

on

Specialty Coffee, 41% Traditional Coffee, 59%

Specialty Coffee Traditional Coffee

 Starbucks Share of Specialty Coffee Market 50% (estimate)

20.5% Total Market Share

7/16/2011 7

Strengths
 Well developed and established brand

strategy: live coffee  Locations  Product Mix  Partners  Customization of Drinks

7/16/2011

Weaknesses
 Customization of Drinks Caused tension between product quality and customer focus Increased menu size  Lacked a strategic marketing group  Very little image & product differentiation

7/16/2011

Opportunities
 Increase Customer Satisfaction
Customer Quota

 Increase the number of stores

Domestically/Internationally

 Create New Products & Services

7/16/2011

10

Threats

Competition
Donut & Bagel Chains Small scale specialty coffee chains

7/16/2011

11

Problem
 Key Problem: Maintaining a customer

focused brand image while continuing expansion  Customer Satisfaction

Lost sight of the consumer Lost connection between customers and growing business Service gap
7/16/2011 12

Existing Plan
 Investment Plan $40 million annually Add 20 labor hours a week Maintain 3 minute service time goal
Increase customer satisfaction

 Goal: All stores achieve $20,000 increase

in weekly sales
7/16/2011 13

Reinvigorating a Customer Focused Image

 New Incentives for customer Ideas: Drink of the day, membership cards, serve at your seat  Incentives for Partners Adding 20 hours during peak hours to maintain 3 minute time More authority to regional retail managers Install a rolling menu policy
7/16/2011 14

Maintaining Expansion
 Moving into new domestic and international

markets  Not saturating existing markets

Instead: move into untapped domestic markets and increase through put at current stores through added hours Advantages: Will appear more customer focused locally, faster
7/16/2011 15

Recap
customer service inovations brand image Marketing plan Expansion Domestic International

7/16/2011

16

7/16/2011

17