starbucks

BSc (IM) 6th

semester Authors: Masoom Anwar Latif

&

Jonas Lundgaard Poulsen

Supervisor: Margit Nsofor

Bachelor Thesis

A taste of the twin-tailed mermaid

- A research of Starbucks’ possibilities to penetrate the market in Aarhus

Aarhus School of Business

Department of Marketing and Statistics

Spring 2010

Masoom Anwar Latif & Jonas Lundgaard Poulsen


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Abstract

Starbucks is an American coffeehouse that opened its first store in 1971in Seattle. Ever since then it

has expanded and become a well known brand on the global market with its presence in 44

countries and with more than 16.000 stores. Despite the company‟s global expansion, there are only

two Starbucks coffeehouses in Denmark, which are both located in Copenhagen Airport.

The market leader in the Danish café business is Baresso with 32 coffeehouses and a concept very

similar to Starbucks‟. Since Danes are familiar with the coffeehouse concept and Denmark is

amongst the countries with the highest consumption of coffee per year, we decided to find out how

Starbucks can penetrate the market in Aarhus. The report starts with an internal analysis of

Starbucks where we analyse its overall marketing mix and what the 7 Ps consist of. Furthermore, a

value chain analysis and an analysis of Starbucks‟ financial situation are conducted.

Next the external environment is studied by analysing the market by the means of a PESTEL-

analysis, a competitive analysis based on Porter‟s five forces and finally a SWOT-matrix in which

the most important parameters are summed up. The analyses showed that the financial crisis has had

an impact on the purchasing power. Furthermore, the restaurant business has been hampered by the

anti-smoking law. The positive aspect is that the majority of the population in Aarhus is aged 20-30,

and that Baresso‟s customer base is about 20-45 years. However, the competition situation revealed

that there are many substitute products on the market, and that the direct competitor is Baresso.

In order to find a target group, we used the five lifestyle segments proposed by Bach (2008).

Through in-depth interviews and a questionnaire we found the characteristics of the segments and

their willingness to visit Starbucks. The analysis resulted in the choice of “The Active” and “The

Young and Confident” as the optimal target groups. Based on them and the of us suggested

positioning of Starbucks in Aarhus, the recommended marketing mix was put together: a narrow

product assortment but a wide range within those few product categories. A high service level and

high-quality products are the main elements in the marketing mix.

Based on our analysis of the market and of Starbucks, the current positioning of Baresso, and the

knowledge gained from our research, we conclude that it is possible for Starbucks to penetrate the

market in Aarhus.


Table of contents

1. INTRODUCTION – MASOOM AND JONAS ...................................................................................................... 1

1.1 RESEARCH GAP .................................................................................................................................................. 2

1.2 PROBLEM ........................................................................................................................................................... 2

1.3 PROBLEM STATEMENT ....................................................................................................................................... 3

1.4 DELIMITATION ................................................................................................................................................... 3

1.4.1 Market and Product Definition ..................................................................................................................... 3

1.5 METHOD AND THEORY ...................................................................................................................................... 5

1.5.1 Method .......................................................................................................................................................... 5

1.5.2 Theory ........................................................................................................................................................... 6

1.5.3 Structure ....................................................................................................................................................... 7

2. INTERNAL ANALYSIS ....................................................................................................................................... 8

2.1 PRESENTATION OF STARBUCKS - JONAS .................................................................................................................... 8

2.1.1 History .............................................................................................................................................................. 8

2.1.2 Ownership Structure ......................................................................................................................................... 8

2.1.3 Organisational Structure .................................................................................................................................. 8

2.1.4 Mission .............................................................................................................................................................. 8

2.1.5 Starbucks’ Financial Situation .......................................................................................................................... 9

2.2 STARBUCKS‟ MARKETING MIX - MASOOM ............................................................................................................. 11

2.2.1 Product ............................................................................................................................................................ 11

2.2.2 Price ................................................................................................................................................................ 13

2.2.3 Promotion ....................................................................................................................................................... 13

2.2.4 Place ............................................................................................................................................................... 15

2.2.5 People ............................................................................................................................................................. 15

2.2.6 Physical Evidence ........................................................................................................................................... 15

2.2.7 Process ............................................................................................................................................................ 16

2.3 STARBUCKS‟ VALUE CHAIN - JONAS ....................................................................................................................... 16

3. EXTERNAL ANALYSIS .....................................................................................................................................20

3.1 PESTEL - JONAS .................................................................................................................................................... 20

3.1.1 Political ........................................................................................................................................................... 20

3.1.2 Economic......................................................................................................................................................... 21

3.1.3 Socio-cultural .................................................................................................................................................. 22

3.1.4 Technological .................................................................................................................................................. 23

3.1.5 Environmental ................................................................................................................................................. 24

3.1.6 Legal ............................................................................................................................................................... 25

3.1.7 Summation....................................................................................................................................................... 25

3.2 COMPETITIVE ANALYSIS ......................................................................................................................................... 26

3.2.1 The Market in Aarhus - Masoom .................................................................................................................... 26 3.2.1.1 Baresso‟s Financial Situation - Jonas .........................................................................................................................27

3.2.2 Entering a New Market - Masoom .................................................................................................................. 29

3.2.3 Coffee and Substitutes ..................................................................................................................................... 31

3.2.4 Suppliers ......................................................................................................................................................... 32

3.2.5 Customers ....................................................................................................................................................... 34 3.2.5.1 Segmentation - Jonas ..................................................................................................................................................36

3.2.6 Summation - Masoom ..................................................................................................................................... 37


3.3 SWOT - MASOOM ................................................................................................................................................... 38

4. ANALYSIS OF DATA - JONAS ..........................................................................................................................41

4.1 CHOICE OF THEORY ................................................................................................................................................. 41

4.1.1 Purpose of Questionnaire ............................................................................................................................... 41

4.1.2 Choosing a Method ......................................................................................................................................... 41

4.1.3 In-Depth Interviews ......................................................................................................................................... 42

4.1.4 Design of Questionnaire ................................................................................................................................. 42

4.1.5 Sampling ......................................................................................................................................................... 44

4.1.6 Testing Questionnaire ..................................................................................................................................... 44

4.2 ANALYSIS OF DATA ................................................................................................................................................. 45

4.2.1 Distribution of the Five Lifestyle Segments ..................................................................................................... 45

4.2.2 The Frequency of the Lifestyle Segments’ Visits to Coffeehouses and Cafés .................................................. 46

4.2.3 The Primary Reason for the Lifestyle Segments’ Choice of Coffeehouse/Café ............................................... 46

4.2.4 The Lifestyle Segments and Starbucks ............................................................................................................ 47

4.2.5 Demographics of the Lifestyle Segments ......................................................................................................... 47

4.3 DISCUSSION OF ANALYSIS – IN RETROSPECT .......................................................................................................... 49

5. RECOMMENDATION ........................................................................................................................................50

5.1 CHOICE OF TARGET GROUP - MASOOM ................................................................................................................... 50

5.1.1 Description of Target Group(s) ...................................................................................................................... 50

5.2 COMPETITIVE GENERIC STRATEGY - JONAS ............................................................................................................ 51

5.3 POSITIONING – PERCEPTUAL MAP - JONAS.............................................................................................................. 52

5.4 RECOMMENDED MARKETING MIX .......................................................................................................................... 55

5.4.1 Product - Masoom .......................................................................................................................................... 55

5.4.2 Price ................................................................................................................................................................ 57

5.4.3 Place ............................................................................................................................................................... 57

5.4.4 Promotion ....................................................................................................................................................... 58

5.4.5 People - Jonas ................................................................................................................................................ 59

5.4.6 Process ............................................................................................................................................................ 60

5.4.7 Physical Evidence ........................................................................................................................................... 60

5.4.8 Evaluation of Marketing Mix .......................................................................................................................... 61

6. CONCLUSION – MASOOM AND JONAS ..........................................................................................................63

7. BIBLIOGRAPHY ................................................................................................................................................65

Masoom Anwar Latif & Jonas Lundgaard Poulsen 1

1. Introduction

"We have no patent on anything we do and anything we do can be copied by anyone else. But you

can't copy the heart and the soul and the conscience of the company."

- Howard Schultz, Starbucks chairman and CEO1

Starbucks was started as a hometown coffee roaster back in 1971 in Seattle, Washington by three

friends Jerry Baldwin, Zev Siegel and Gordon Bowker. Their main interest was to sell high quality

beans and coffee equipment. In 1982 the current owner of Starbucks Howard Schultz joined

Starbucks as director of retails and marketing manager (Starbucks.com1). In 1983 Schultz went to

Italy and fell in love with the coffeehouse concept and proposed the idea to the owners, but they did

not like it. The same year Schultz opened the coffee shop Il Giornale2 and the three owners bought

Peet‟s3. In 1987 the owners of Starbucks decided to focus on Peet‟s and sold Starbucks to Schultz.

He converted Il Giornale to Starbucks coffeehouses and started expanding. By the end of 1987,

there were 17 Starbucks coffee shop in the US (Fellner, 2008, p. 26).

The name Starbuck stems from a character in the story about Moby Dick, and the logo is a twin-

tailed mermaid – known as Siren in the Greek mythology (Dinesh.com).

In 1996 Starbucks opened its first stores abroad which were located in Japan and Singapore. In

1997 the company opened in the Philippines, and by the end of that fiscal year, Starbucks had a

total of 1412 stores. In 1998 Starbucks acquired Seattle Coffee Company in the UK with more than

60 stores. The idea of acquiring Seattle Coffee Company was to use it as a springboard to enter the

rest of the European market. But that move did not happen immediately, as the company was

cautious and wanted to build “[...] on the success of Seattle Coffee in the UK before crossing the

English Channel” (Seattletimes.com). In 2002 Starbucks opened stores in Germany, Spain and

Greece amongst others and since then it has opened a store in almost every major city. By the end

of 2009, there were 16,706 stores. By a consistent moving into new markets, Starbucks is building

on their brand and is able to sell the Starbucks experience.

1 About.com

2 An Italian styled coffee shop, that later became a part of Starbucks

3 A coffee and teahouse with roughly 200 shops in six states with the majority in California


Before Starbucks came into being, Americans used to drink coffee at home or at work since the

coffeehouse culture in America did not exist. Starbucks has changed that and has created a “third

place” between home and work where people can hang out, listen to music, go online and obviously

drink coffee (Fellner, 2008, p. 22). What started as a hometown coffee roaster back in 1971 has

turned into the world‟s trendiest coffee brand.

1.1 Research Gap

If the web is browsed, thousands of papers on Starbucks turn up analysing it as the worldwide

company it is. No one, however, has done the effort to investigate why Starbucks is not represented

in Denmark or Aarhus to be exact. George Ritzer (2008) argues in his book, The McDonaldization

of Society, that Starbucks will have a hard time succeeding in countries with an already existing

high-quality coffee culture (Ritzer, 2008, p. 217). Therefore, this paper aims to contribute to a

profound understanding of whether there actually is room for Starbucks on the coffee market in

Aarhus.

1.2 Problem

In almost every larger city in the western world, a Starbucks coffeehouse can be found. In Berlin

there are 20 in London more than 200 (Starbucks.com2). In Denmark there are two4. No matter

where you enter one, you always know what you get. The atmosphere is the same, the service is the

same, and the products are the same.

As mentioned above, Starbucks consists of more than 16,000 coffeehouses in 44 countries, where

approximately half is company operated and the other half is licensed stores and joint ventures

(Starbucks.com3). On the Danish market for coffeehouses, there is one large player – Baresso – who

has 32 coffeehouses across Denmark, including the ones in co-operation with Kvickly-Xtra

(Baresso.dk1). Therefore, the coffeehouse concept is not an unknown phenomenon for most Danes.

Given Starbucks‟ status as a global brand, Danes who have been abroad are at least to some extent

familiar with it. This is also how we have become acquainted with the Starbucks coffee and culture.

The popularity of Starbucks amongst Danes is increasing, and there are various groups on Facebook

that demand Starbucks to Denmark and Aarhus. This is what made us wonder why Starbucks

cannot be found in Denmark.

4 Both located in Copenhagen Airport (CPH)


1.3 Problem Statement

Since Starbucks is not represented in Denmark, and Danes already are familiar with the coffeehouse

concept qua Baresso and other small specialised coffeehouses, our research question is:

How should Starbucks penetrate the market in Aarhus?

1.4 Delimitation

Around the world, coffeehouses are primarily seen near the city centre in the larger cities.

Therefore, due to the fact that Aarhus is the second largest city in Denmark, with a population in the

municipality of more than 300,000 (Aarhuskommune.dk), and because it fulfils the characteristics

of a city i.e. industry, high-rise blocks, passages, parks, a row of shopping streets etc. our thesis will

only focus on the market in Aarhus.

Furthermore, a reason for choosing Aarhus is that we consider the Danes‟ coffee preferences to be

the same in the cities like Copenhagen, Aarhus, Odense and Aalborg. A study conducted in 2009,

by Aarup and Nielsen, FDB Analyse, did not reveal any geographical difference in the percentage

of coffee drinkers in Denmark. The study claims that 74% of all Danes drink coffee. Furthermore,

they claim that 94% of the Danes aged 55 or above and 54% of the Danes aged 35 and younger

drinks coffee, and again there are no geographical differences (Aarup & Nielsen, 2009, p. 2). Based

on these findings it is likely that the coffee drinking habits in the cities are the same regardless of

location. Therefore, our focus will be on the market in Aarhus.

Since there are no differences, the findings of this thesis can be used as a guiding principle in other

cities in Denmark i.e. Copenhagen, Aalborg, and Odense. Though, the competitive situations in

those markets have not been examined, and therefore our findings cannot be used as a step-by-step

solution to penetrate the market, but, as mentioned before, as a guiding principle.

1.4.1 Market and Product Definition

Markets change on a daily basis. What is the market today might not be the market tomorrow.

Companies that have not got a well defined market face the risk of both lost expansion possibilities

as well as going out of business (Berg-marketing.dk1). Therefore, the market that Starbucks has to

operate on is defined as the Business-To-Consumer market (B2C), because what companies in this

industry sell is end products. The definition of Starbucks‟ market could sound something like

anybody who drinks coffee, since the vast majority of Starbucks‟ sales mix still comes from selling

beverages, whereas food and other various Starbucks accessories only compile to one-fourth


(Annual report, 2009, p. 12). What furthermore speaks for this is what we have experienced when

being abroad. There is not just one group represented in the coffeehouses – it is the young as well as

the elderly.

The core product that Starbucks provides is coffee. In Denmark this is not a new phenomenon. This

is seen in the light that Starbucks‟ core product – coffee – is offered in almost every restaurant,

petrol station, café etc. However, what Starbucks delivers is more than just a cup of coffee. It is a

coffee experience. The company‟s concept and its mission to deliver quality coffee and an

environment to enjoy it in, was totally new in Denmark until Baresso opened its first coffeehouse

around the millennium. Baresso is somewhat similar to Starbucks i.e. that its offerings are the same

as Starbucks‟ – quality coffee and a third place. This means that Starbucks‟ actual product is the

intangible processes provided to the customer along with the coffee.

This preliminary definition means that there is only one direct competitor in Aarhus that offers the

same to their customers as Starbucks i.e. Baresso.

The consumers that focus will be on are everyone who drinks coffee and is fond the idea of a third

place between work/school/etc. and home, where they can relax and choose between several

beverages and snacks to enjoy.

From a geographical perspective, that means Starbucks shall focus on people from Aarhus and the

surrounding suburbs. This is due to the fact that a lot of the people that work and go to school in

Aarhus live in suburbs and have to commute. Therefore, they have to be included as well. The

reason why this delimitation only aims at people from Aarhus and the suburbs is that the farther

away from Aarhus we come, the less people will go to a coffeehouse on a daily basis prior or after

work/school/etc.

As mentioned earlier, markets change, and due to that fact that the market definition is not

calculable, we therefore have to choose between several options, which often is determined by

where we find the greatest market potential (Berg-marketing.dk2)

To sum this up, Starbucks will enter a market where there is one large competitor with a similar

concept. The market is Aarhus and the suburbs, and the potential customers are everyone who

drinks coffee and could be drawn to the idea of a “third place”. This means that Starbucks

constantly has to improve strategies, target group(s), and marketing mix to ensure continued steady

stream of customers.


1.5 Method and Theory

This section will be used to clarify what information/data we need, how we are going to get it, and

what we will use it for. Since we are dealing with the largest chain of coffeehouses worldwide and

because every coffeehouse follows the given concept, the focus of our data gathering will lie on the

elements in the concepts that we can influence.

Regarding theories, we will focus on those that can tell us about the market potential and the

competitive situation – the external analysis. Furthermore, an internal analysis will be used to get an

understanding of how Starbucks works inside.

1.5.1 Method

In our quest to find out if there is a market potential for Starbucks in Aarhus, we will have to

distinguish between the information that is easily attainable and information that we will have to

collect first hand. A lot of our knowledge about Starbucks and Baresso is based on our own

empirical research i.e. the knowledge we have obtained from our visits to Starbucks and Baresso,

respectively.

Our thesis will mainly be built on qualitative data qua our own qualitative research and our expert

and in-depth interviews. The methodological approach will be actor‟s approach, where the world is

understood via its social parts. This method will primarily be used due to the fact that we want to

find out whether or not there is a market for Starbucks in Aarhus. To answer that question we will

have to look into what type of consumers coffee drinkers are and what makes them purchase a

specific coffee at a given location. This can help us identify a possible target group.

To help us understand coffee drinkers‟ choices in-depth interviews will be conducted.

We will also conduct an expert interview with the head barista in Baresso, Frederiksgade, Aarhus.

Our purpose with that interview is to retrieve information about Baresso i.e. its customers‟ favoured

products, personnel etc. That is information we cannot uncover qua our own empirical research or

from secondary material.

Furthermore, the choice of an expert interview with Baresso is due to the fact that it has a, if not

similar, then almost the same concept as Starbucks. And given Baresso‟s size it is a parameter to be

considered.

Additionally, an analysis of Starbucks‟ and Baresso‟s financial statements, respectively, will be

conducted in order to show if there is an economical incentive to operate on the coffeehouse


market. Moreover, Baresso‟s financial statement will help us show what is the case in Denmark i.e.

if Denmark is attractive financially speaking.

We will also conduct a survey based on a questionnaire i.e. a quantitative data gathering based on

the analytical approach. This instrument will help us gather a lot of data relatively cheap and non-

time consuming. To us time is of importance, and that is also why we have chosen not to conduct

several qualitative interviews instead.

The questionnaire will be based on Bach‟s (2008) findings in his report on Danish coffee habits and

on what we have learned from our in-depth interviews. Bach (2008) found five lifestyle segments:

The Old, The Passive, The Active, The Young and Family Oriented, and The Young and Confident,

who all have been described according to demographics, lifestyle, and view on coffee (Appendix

53). The reason why we have chosen to base our questionnaire on Bach‟s (2008) findings is that his

report is based on a lot more respondents than we could ever gather, and because his segments are

all based on his coffee habit study, not just segmented with the usual general models. Furthermore,

it is likely that our findings will correspond to his segments i.e. that the answers we have collected

from our respondents are likely to fit with his descriptions of the lifestyle segments.

However, the questionnaire is not qualified for a quantitative analysis, since our respondents will

not be randomly chosen, since we distribute it via StudSurvey, which requires the email addresses

of all respondents, and we therefore have to provide them. This means that we will use our findings

qualitatively instead, by means of the actors approach i.e. that our focus will be on actors, the

respondents, and what we can learn from them, rather than conducting statistical tests from the

answers. This also means that we constantly have to determine whether or not we are doing the

right thing, in the sense that if we fail in one step, we will have to start over again.

1.5.2 Theory

To gain knowledge about the Danish market, and the market in Aarhus in particular, we will start

out by conducting a PESTEL-analysis which will enable us to tell something about the political,

economic, social, technical, environmental, and legislative factors that will have an influence on the

market attractiveness. We consider both the environmental and legislative part of the analysis

important, and therefore the reason for choosing PESTEL over PEST.

The PESTEL framework analyses the macro-economic environmental factors that pressure a

company within a given market. These factors can be categorised as opportunities or threats. These

opportunities and threats we can use to determine the implications for the company, and to give a


picture of a possible future and the company‟s strategic route forward. Afterwards an analysis of

the competitive situation, based on Porter‟s five forces, will be conducted in order to assess the

degree of competition in the industry, i.e. how attractive the market is to enter for Starbucks. Within

the analysis of the competitive environment Assael‟s (2004) consumer behaviour theory will be

used to determine what kind of purchase coffee buying is. Furthermore, an analysis of Baresso‟s

economical situation is conducted in order to say something about the profitability in the market for

the market leader.

A value chain analysis will be used to analyse where value actually is added to Starbucks‟ product,

and thereby also to see where possible improvements should be. Finally, a SWOT-matrix will be

used to sum up the findings from both the external and internal analyses.

Porter‟s generic strategies are used to gain a competitive advantage based on the previous

investigations. Since the generic strategy is an overall strategy that is followed by every single

franchised and licensed store, it is not something that we can change – only recommend. The idea is

not to find out which generic strategy Starbucks is pursuing, but what strategy would be wise to

follow, based on our analyses. Based on that, our own knowledge, and the market situation we will

recommend Starbucks what to do by the means of the marketing mix for Aarhus.

1.5.3 Structure

This thesis consists of seven chapters in total. Chapter one is the introduction in which the

problem, the research gap, the problem statement, the delimitation, and the method and theory are

defined. The second chapter is an internal analysis. First Starbucks is presented, then Starbucks‟

marketing mix, its value chain, and its economic situation is dealt with. In chapter three the

external environment is studied. First we conduct a PESTEL-analysis and second we look at the

competitive situation in the market. Finally, both analyses are summed up in a SWOT matrix.

Chapter four is an analysis of our primary data. We start are out by justifying our choice of data

collection method. Then we analyse our data in preparation for selecting a target group. The fifth

chapter is our recommendation to Starbucks. It consists of a choice of generic strategy, a choice of

target group(s), a choice of position, and finally the recommended marketing mix. Chapter six is a

conclusion in which our findings are presented. Finally, chapter seven is a bibliography.


2. Internal analysis

2.1 Presentation of Starbucks

2.1.1 History

Since 1982 Howard Schultz has been synonymous with Starbucks. He is the one who has made

Starbucks what it is today. After coming home from a trip to Milano, Italy, in 1983 he realised that

the potential for a similar coffeehouse culture exists in Seattle (Starbucks.com4). Since then,

Starbucks has grown into the largest player on the coffee market and it is represented in more than

50 countries (Starbucks.com5).

Originally Starbucks started as a retailer in 1971, only selling roasted and whole beans, tea and

spices in a single store. Since Schultz‟ arrival Starbucks has developed into selling more than

coffee, and now 36% of the revenue is generated by primarily food, whole bean coffee and others

i.e. royalties, licensing revenues, accessories, and equipment (Annual Report, 2009, p. 82).

2.1.2 Ownership Structure

Starbucks has 530,707,244 shares with

a total value of $13,119,083,072. The

three largest investors are FMR LLC,

Capital World Investors, and Price T

Rowe Associates INC – illustrated in

figure 1 – all from the USA, with a total

owner percentage of 30%

(Nasdaq.com).

2.1.3 Organisational Structure

Starbucks has a relatively flat and non-rigid structure, with Howard Schultz as CEO and chairman

of the board. Below Schultz are 14 vice presidents who control one business area each. Under them

are 23areas and that is it (theofficialboard.com).

2.1.4 Mission

In the annual report (2009) Howard Schultz said that: “Improvements in the U.S. business will

allow us to pursue disciplined new store growth internationally.” (Annual report, 2009, p. 4). To do

15%

8%

7%

70%

Top-3 owners of Starbucks shares

FMR LLC

Capital World Investors

Price T Rowe Associates INC

Others

Figure 1


that Starbucks has created a mission statement and some underlying principles that it follows every

day (Starbucks.com6):

“Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood

at a time.”

The company‟s mission is the overall guideline, where the six principles are how it is are going to

fulfil its mission statement. Starbucks focuses on its coffee, partners (employees), customers, stores,

neighbourhood, and shareholders.

But one of the company‟s hobbyhorses is the environment. Therefore, Starbucks has also developed

an environmental mission statement saying that it is committed to a role of environmental

leadership in all facets of business.

2.1.5 Starbucks’ Financial Situation

The financial analysis is only a part of a company description – though an essential part. Therefore,

we have chosen to calculate the most common key performance indicators (KPIs). Furthermore,

index calculations have been made in order to underline how Starbucks has performed since 2004

and to determine whether or not the company has been affected by the financial crisis.

Table 1

2004 2005 2006 2007 2008 2009

Total Net Revenue $ 5.294.247 $ 6.369.300 $ 7.786.942 $ 9.411.500 $ 10.383.000 $ 9.774.600

EBIT $ 606.587 $ 780.615 $ 893.952 $ 1.053.945 $ 503.900 $ 562.000

Net Earnings $ 388.880 $ 494.370 $ 564.259 $ 672.600 $ 315.500 $ 390.800

EBIT-Margin 11% 12% 11% 11% 5% 6%

ROE 17% 22% 26% 30% 13% 14%

ROA 11% 14% 13% 13% 6% 7%

Equity Ratio 73% 59% 50% 43% 44% 55%

Index:

Total Net Revenue 100 120 147 178 196 185

EBIT 100 129 147 174 83 93

Net Earnings 100 127 145 173 81 100

EBIT-Margin 100 107 100 98 42 50

ROE 100 127 153 175 78 83

ROA 100 123 111 110 48 61

Equity Ratio 100 82 69 59 60 75

Starbucks‟ financial statements: 2004-2009. A ratio analysis is conducted on the chosen statement ratios. All $-numbers

are in thousands.

The first KPI that is interesting to look at is the return on assets (ROA). The ROA is part of both

profit and capital. It will tell us that if the company is headed in an unfavourable direction i.e.

lowered ROA could mean that the company is not able to adjust its capital to its assets.


For Starbucks‟ part this means that from 2004 and up to 2007 their ROA has been somewhat

constant around 11-12%, meaning that the average return per $1 invested is 11-12 cents. This is also

seen in the index calculations, where ROA first increases to index 123, and then drops to 110-111,

and then in 2008 it is reduced by more than half.

What this shows is that Starbucks‟ return on assets has been very much affected by the financial

crisis, but the company still manages to create a positive return for the investors, i.e. Starbucks is

still profitable for the investors.

The EBIT-margin is a result of EBIT divided by the turnover. It says to what degree an increase in

turnover has been a success, i.e. that an increase in turnover does not necessarily lead to additional

profit. So by looking at EBIT versus the EBIT-margin we will gain some knowledge about

Starbucks‟ earning capacity.

From 2004 to 2007, Starbucks‟

EBIT-margin was somewhat

steady around 11-12% or index

100 with little fluctuation. In

2008 there is a distinct decrease

of more than 50%, like it was the

case with ROA. If we look at

figure 2 we can see that the

EBIT-margin has not increased

like EBIT throughout the good

years. This tells us is that

Starbucks has not been that good at carrying interest especially bearing in mind that the company‟s

revenue almost doubled since 2004.

As mentioned earlier, there is a drastic decrease in both EBIT and EBIT-margin in 2008. The

greater part of that decrease is caused by the financial crisis and having to adjust to a lower demand.

In the financial statement from 2009, it can be seen that factors such as increase in operation

expenses including restructuring charges and increase in cost of sales being the main culprits

(Annual Report, 2009, p. 48). However, despite the huge decrease in EBIT and EBIT-margin in

2008 and the almost equally low result in 2009, it seems that there are better times in sight due to

the small increase from 2008-2009.

0%

2%

4%

6%

8%

10%

12%

14%

$-

$200.000

$400.000

$600.000

$800.000

$1.000.000

$1.200.000

2004 2005 2006 2007 2008 2009

The development of EBIT

EBIT EBIT-Margin

Figure 2 (All $-numbers are in thousands)


From 2004 Starbucks‟ solidity i.e. its equity ratio has decreased to about three-fourth. The equity

ratio tells us how much of the capital used to run our company is our own. The higher ratio the

better the company is situated in case of loss. Starbucks‟ equity ratio is still relatively high, but as is

the case with all other key ratios, it is affected by the financial crisis. An equity ratio of 55% is still

quite good.

Return on equity (ROE) did, like almost all other key ratios, increase from 2004-2007. In 2007

ROE had almost doubled since 2004. This says how much the investors (owners) have gained in

return. This is an important key ratio for potential investors, which lets them compare it to ROEs

from other companies. With a ROE on 14% in 2009, Starbucks is still quite attractive – without

having compared it with other companies than Baresso.

2.2 Starbucks’ Marketing Mix

The marketing mix is a tool that helps the companies achieve their objectives. The marketing mix

for a company consist of 4 P‟s: Product, Price, Promotion and Place, but when one is dealing with a

service company, which Starbucks is, then there are 3 additional P‟s that one needs to look into.

They are: People, Process and Physical Evidence. This marketing mix is a descriptive analysis of

how Starbucks is operating on the world market.

2.2.1 Product

Starbucks is the premium roaster and retailer of speciality coffee in the world, and the company is

committed to only selling coffee of high quality Arabica beans which are picked from around the

world. Starbucks offers a wide range of beverages which include brewed coffee, espresso hot,

espresso iced, Frappuccino blended coffee, tea, smoothies and beverages for kids such as juice and

milk (Starbucks.com7). Starbucks‟ selection of beverages is likely to differ from location to location

and not every drink is served in every Starbucks Coffeehouse, therefore, on Starbucks‟ homepage

one has the option to check which beverages are served in the nearest coffeehouse.

Starbucks sells its beverages in 4 different sizes, and is staying true to the Italian café culture. The

company has named the sizes in Italian, too. The smallest of the sizes is a called Short which is an 8

ounce cup, then there is Tall which is 12 ounces, Grande which is 16 ounces and Venti, which is

Italian for “twenty” and which amounts to 20 ounces (Ibid.)

Besides the beverages Starbucks also sells bags of roasted beans, which the company calls Whole

Bean Coffee. The wide range of beans are sold by the region they are collected from, such as Latin


America, Asia/Pacific, Africa/Arabia and Multi-region blend, and they range in their intensity from

mild, medium, and bold to extra bold (Starbucks.com8).

In September 2009, Starbucks launched its latest product in the US and Canada. It is Starbucks‟

own range of instant coffee, named Starbucks VIA® Ready Brew. The idea is to give Starbucks‟

customers the same coffee with the flavour and taste that they know from Starbucks‟ coffeehouse,

and now the Starbucks coffee can be enjoyed anywhere and anytime. The Instant coffee has been a

huge success in those markets and by March and April 2010 the new product has also been

launched in Japan and the UK. With this new product offering, Starbucks is trying to capture a

large piece of the global instant coffee market which accounts for 40% of the coffee sales,

translated into an annually $21 billion and growing market (Starbucks.com9).

Starbucks coffee is not limited only to Starbucks coffeehouses, but Starbucks coffee can also be

bought across 8500 Subway restaurants in the US. This year Starbucks has also announced that

Burger King will be selling Starbucks coffee in 7000 stores in the US (Business.dk1).

Starbucks has also engaged in selling ready-to-drink (RTD) beverages through retail stores, which

the company has named Starbucks Bottled Drinks (Starbucks.com10). Starbucks entered the RTD

market in 2006 and it was the first company to introduce RTD coffee in the US. Starbucks has since

then introduced many different types of RTD beverages including its most famous Frappuccino. In

2007 the sales of RTD beverage products accounted for $1 billion in sales in the US

(Beveragespectrum.com). By January 2010 it was announced that Starbucks would start selling its

RTD beverages in Europe as well, and it has chosen the Danish company Arla to produce, market,

and distribute RTD beverages to supermarkets and Starbucks coffeehouses across Europe

(Business.dk2).

In 1996 Starbucks also introduced its line of ice cream, where the ice cream flavours were inspired

by some of its most popular Starbucks beverages (Allbusiness.com). Currently Starbucks offers five

different flavours which come in pint size, cups or bars, and can be bought from either Starbucks

coffeehouses or convenience stores (Starbucksicecream.com).

Starbucks‟ coffeehouse concept is inspired by the Italian café culture, and therefore Starbucks also

has a range of food products which are sold in its coffeehouses as a supplement to its coffee. The

company has wide range of bakery products such as muffins and scones, and also serves fruit plates,

sandwiches, hot breakfast, salads and yoghurt parfaits (Starbucks.com11).


Customers also have the option to connect to wireless internet at Starbucks coffee stores, and if they

are regulars, they receive two hours a day of Wi-Fi for free. Customers can buy Starbucks Card

online at the company‟s homepage, and get to choose the design of the card and the amount on the

card, and if they register the card online they get a lot of benefits and discounts on Starbucks

products. Starbucks customers can also buy and download music via iTunes music store.

2.2.2 Price

Starbucks qualifies in selling coffee from the finest Arabica beans that are fair traded and bought

under the C.A.F.E. practices. Since the company does not buy coffee from the C market, as it does

not live up to the standard, Starbucks buys directly from the famers who can meet the quality

standards, and therefore Starbucks has always paid more than the C market prices (Fellner, 2008, p.

67). Because of the high prices that Starbucks pays for its coffee, and since its focus is on the

quality of the coffee, Starbucks charges a premium price from customers.

Starbucks sells its beverages in four sizes: short, tall, grande and venti. Starbucks does not have a

standard price and the price is likely to fluctuate from city to city. For instance a Starbucks Grande

Skim Latte costs $4.07 in a Starbucks store in the state of Colorado, and the same drink costs $3.55

in Connecticut (Thepurplepassport.com). Additionally, in 2010 Starbucks has raised the prices on

its more complex beverages i.e. a triple grande soya vanilla latte, which was $5.55, is now $6.25,

while the company has lowered the price on some of its most popular beverages (CSNews.com).

Starbucks offers several discounts to regulars, for instance, if you bring your own mug you can save

10 cents per cup, and you can get a refill brewed coffee for 50 cents while you are at the store, or

for free if you have a registered Starbucks Card (YouTube.com). The prices in Starbucks‟ stores in

the airport in Denmark range from DKK 22 for a tall tea, and DKK 58 as the most expensive for a

venti caramel/hazelnut hot chocolate (Appendix 50)

2.2.3 Promotion

Starbucks has built its brand without much help from traditional advertising, and the company relies

more on providing a great experience to customers and thereby creating word-to-mouth advertising.

Starbucks does not tell what it spends on advertising yearly, but it has become a well known fact

that Starbucks‟ advertising budget is miniscule compared to that of most corporations (Fellner,

2008, p. 42).

Starbucks featured on the 6th

place of the Top 10 Restaurant Chains, with a market share of 1.7%,

and there media spending was about $16.6 million. If Starbucks is compared to McDonalds, who is


on top of the list with 7.7% of the market share, it spends $727.7millions on the media

(Heinzmarketing.com).

Now that social networks on the internet are getting more and more popular, Starbucks really has

understood how to use it to its own benefit. The popularity of Facebook, Twitter and YouTube has

now become the tools for Starbucks to communicate with its customers. Starbucks uploads videos

of commercials and informational videos about coffee on Starbucks YouTube Channel, and through

Twitter and Facebook the company tries to have an open discussion where it gets to connect with

the audience (PRlog.org). In July 2008 Starbucks launched Mystarbucksidea.com as a forum for

consumers to make suggestions, ask questions and, in some cases, vent their frustration. This new

webpage has become a huge success and has many users who consistently provide their ideas for

Starbucks, and it has till this date received about 80,000 ideas, where 50 of them have been

implemented (Adage.com). Starbucks is very clear in its mind that: “[...] this was not built as a

marketing channel, but as a consumer-building environment” (Ibid.).

Another important part of Starbucks‟ promotion is the product placement in movies and TV-series.

Product placement takes place on three levels, one is where scenes are shot on a location in

Starbucks coffeehouses, another is where Starbucks cups are used as props by the characters in

movies and a third as set dressing in which a product appears as part of the background. Starbucks

does not use this to track sales related to a particular product placement, but as a tool to reinforce

the brand as a part of people‟s daily lives in a variety of different ways (Bizjournals.com).

Furthermore, Starbucks is also promoted when a celebrity is photographed coming out of a

Starbucks coffeehouse with a cup. This is not the kind of promotion Starbucks has anything to do

with, as the company does not use any celebrities to promote its products. But when a paparazzi

picture of celebrities is printed in tabloid magazines or on the internet, it helps the brand because

people see the big stars drinking the same as you. It creates a boho factor i.e. we may not live in the

same neighbourhood as those stars, wear the same clothes or drive the same car but we can drink

the same coffee (Fellner, 2008, p. 25).

Starbucks uses very little traditional advertising that we know of, and does not have a big budget for

it, but as John Moore, a former Starbucks marketing executive points out, it is focus on better

products and better customer experience that allows Starbucks to continue to grow in loyalty and

market share without the associated media costs (Heinzmarketing.com2).


2.2.4 Place

Starbucks coffee stores are normally located in the centre of the city, therefore customers will not

find a Starbucks in the suburbs. Starbucks has also been selling its bottled beverages, tea, coffee and

ice cream in convenience and grocery stores across the US.

2.2.5 People

Starbucks does not consider its employees as workers but as its partners. It calls the employees

partners and supervisors Expert Baristas and they are the face of Starbucks and they create: “[...] an

uplifting experience for our customers and make perfect drinks – one drink and one customer at a

time” (Starbucks.com12). Starbucks train its employees in the work and give them the option to join

the Starbucks Coffee Master programme, where Starbucks gives its partners an opportunity to learn

more about the world of coffee, and share their passion with customers and other partners. Those

who complete the master programme can be identified in the way that they would be wearing black

aprons (Starbuckscoffee.co.uk).

Starbucks is considered as one of the best, if not the best, employer in its class, and young people

prefer to work at Starbucks instead of McDonald or Pizza Hut. The slogan for its relationship with

its partner is: “We take care of the partners, the partners take care of the customer, and the

customers take care of the business” (Fellner, 2008, p. 111).

2.2.6 Physical Evidence

One of the core elements of Starbucks‟ business is that the company respects the culture and the

traditions of the country in which it does do business. That is the reason why Starbucks does not

have a standard architecture. Starbucks blends in with the environment and try to adapt its physical

store to the culture of the country that it operates in. Starbucks‟ store in Spain for instance has

terraces and in Japan they have more seats than normal (Forbes.com). Starbucks also writes its

name in the language of the country that it operates in, for instance in Dubai the “Starbucks Coffee”

is written in Arabic, in Russia it is written in Russian and so forth.

Starbucks is supposed to be a “third place” between home and work, therefore it creates a relaxed

atmosphere where people can hang out with friends or get some work done on their laptop. The

interior in the coffeehouse in Denmark is relaxed as well with sofa-like chairs, where you can sit for

hours and with dim light. The cold beverages that Starbucks serves are in plastic cups and hot

drinks are served in paper cups which give you the option to walk up and leave whenever you want.


But if you choose to drink your hot drinks at the coffeehouse, you have the option of having your

drink served in normal cups.

2.2.7 Process

The process of serving the customers has also been dubbed Starbuckszation, which is derived from

the concept of McDonaldization introduced by Ritzer (2008). When a customer enters a Starbucks

coffeehouse he or she orders his or her beverage from one of the baristas standing at the counter.

The barista takes the order and passes it on to another barista who prepares the drink and in the end

serves the drink to the customer. This process allows the barista to pay attention to only one drink at

a time, hence Starbucks slogan “one customer and one drink at a time”. Starbucks has taken this a

step further by introducing Clover brewing system, where a customer gets to make his cup just the

way he wants it. The customer chooses the coffee beans; they weigh and grind the beans in front of

the customer then Clover automatically brews at the ideal time and temperature, and the cup

contains the result of perfect beans, perfect roasting and precise brewing (Starbucks.com13).

2.3 Starbucks’ Value Chain

The value chain was proposed by Michael Porter in his book, Competitive Advantage (1980), and

consists of nine activities, where five are primary and four are support activities, which create value

and cost in a business (Kotler & Keller 2009, p. 75). In the end there is a “margin” which is the

added value perceived by the consumer. Since Starbucks is a service company, the last three

primary activities will somewhat melt into one. However, here they are attempted described as three

individual activities.

To analyse the added value from bean on a tree to coffee in a cup, it is important to examine each

step in the value delivery process. And what comes out of this process is an overview of where in

the value chain value is added to the product and where it is not. Figure 3 illustrates the value chain

of Starbucks‟ concept.


Figure 3

The primary activities are the ones that provide real value to the product i.e. the support activities

are the ones that make the primary activities work, so to speak.

First in the primary activities, we find the inbound logistics which covers suppliers. Starbucks is

known for its involvement in Conservation International, with whom the company in 2003 joined

hands. Together they designed the C.A.F.E. practice (Coffee and Farmer Equity) which ensures that

Starbucks only buys coffee from suppliers (farmers) that provide coffee that is grown and processed

in an environmentally responsible way (Conservation.org). The C.A.F.E. practise is part of

Starbucks‟ Shared Planet™ which is: “[...] our commitment to do business in ways that are good for

people and the planet.” (Starbucks.com14). Therefore, the suppliers Starbucks has chosen to

collaborate with must be seen as a valuable asset in the value chain. They are important requisites in

Starbucks‟ business foundation due to Starbucks‟ shift towards a more eco-friendly appearance.

However, even though the bean is a crucial part of coffee, they would be useless without the next

step, operations, in the value chain.

Earlier, coffee was made by hand i.e. that water was boiled, coffee grinded and poured through a

filter. Nowadays, most coffee, other than ordinary, is made by machines that provide the exact

amount of grinded coffee and the exact amount of water at the perfect temperature. Thereby, the


coffee machines add value to the product. The machines help cafés and coffeehouses always serve a

“perfect” cup of coffee.

The machines, however, require a person to use them. This is where the employees (partners, as

Starbucks has named them), the so-called baristas, come into the picture. At Starbucks, baristas

receive intensive training on each of the stations the job requires. First, all functions of the job have

to be learned by reading about them and afterwards by answering questions about them, and only

then they get to have hands-on experience (Teaandcoffee.net). Hence, it is somewhat the same

function as with the farmers. The baristas are important for the value chain to work, but do not

necessarily add value to the end product.

The next step in the value chain is marketing and sales. Here the product is handed over the counter.

This is where Starbucks adds value to its product. Starbucks‟ plan of action is the so-called

McDonaldization-way, as described by Ritzer (2008). According to him, there are four dimensions

in McDonaldization, which are: efficiency, calculability, predictability and control (Ritzer, 2008,

pp. 13-14). Those dimensions are, as the words impose, what consumers, workers and managers can

expect to get, and the reason why McDonald‟s has succeeded (Ritzer, 2008, p. 13).

The marketing and sales step in the value chain is affected by the three first dimensions described

by Ritzer (2008). Efficiency when Starbucks‟ baristas follow a predesigned process to keep a fast

pace. Calculability is when the quick delivery of coffee is equivalent to a good coffee i.e. that

customers feel that when they have been served fast, then they have made a good deal.

Predictability is when the same is offered everywhere i.e. the Starbucks coffee that customers buy

in Japan will be equivalent to the one bought in the UK. Therefore, this step adds value to the

product.

The last step in the primary activities in the value chain is where Starbucks adds the most value.

Here Starbucks has revised the McDonald‟s model, and fitted it more to itself. The fourth element

in Ritzer‟s (2008) model is the one where the most obvious change has happened. Starbucks has

moved away from mediocrity to higher standards. But what really adds value in this step is

Starbucks‟ idea of: “[...] coffeehouse as a way of life.” (Ritzer, 2008, p. 217). When you enter a

McDonald‟s, you expect to not fell welcome, but in Starbucks you are welcomed by its: “[...]

overstuffed armchairs and sofas and its convenient tables and chairs.” (Ritzer, 2008, p. 217).

Furthermore, there is WIFI allowing customers to use their laptops to logon to the internet, and


today‟s newspaper lies free to read. Hence, the fifth step is where the most value to Starbucks‟

concept is added.

Concurrent with the primary activities, the support activities work to make the primary activities

function. The first activity is the firm‟s infrastructure. It is important to maintain, because according

to Kotler and Keller (2009, p. 75) the firm‟s infrastructure covers legal and government affairs,

among others. Due to the fact that coffee is imported, it would be good always to keep abreast of

things.

Next important support activity is procurement. This is not important due to its abilities to buy at

low cost, but due to the high-quality coffee needed to live up to Starbucks‟ principles under the

mission statement, mentioned in the presentation of Starbucks.

Human resource management is probably the most important of all the support activities for

Starbucks. Starbucks has always had focus on its employees and, as mentioned earlier, calls them

partners, not employees. In 2005-2006 Starbucks actually spend more on health-care plans for the

employees – full-time as well as part-time – than on coffee (Businessweek.com1). Currently, 2010,

Starbucks is voted the 93rd

best company in the USA to work for, however, that is a rank they have

dropped to since they were ranked 29th

in 2006 (CNN.com).

The last support activity is R&D, and for Starbucks‟ part that means continuing to screen the market

for quality coffee machines and other technological improvements that could affect the company‟s

ability to make an even better cup of coffee.

Based on the value chain, it is likely that Starbucks differentiate itself downstream i.e. on their

offerings, not on its price.

It can further be argued that since we are dealing with a service providing company, a given

percentage of the customers are returning ones. This means that the last step in the primary

activities, service, actually also is the first.


3. External Analysis

3.1 PESTEL

The PESTEL analysis is an external analysis that tells us something about political, economical,

socio-cultural, technological, environmental, and legislative factors on the market that we want to

enter – in this case Denmark. The analysis takes place on the macroeconomic level and can help us

understand what opportunities there might be in the market. The PESTEL analysis relies on past

events and experiences, but the analysis can be used as a forecast of the future. The analysis is only

as good as the group preparing it, therefore it is important to have a few well thought out items that

are explored and justified with evidence rather than a long list (Lynch, 2009, p. 82).

The analysis will focus mostly on the areas that we find important for our business area, and

therefore have an impact on Starbucks‟ possibilities.

3.1.1 Political

The Doha Development Agenda, which is the ongoing trade negotiation round of the World Trade

Organization, was started in 2001. Here agriculture issues have become the most important and the

most controversial subject of discussion. The developing countries want the EU and the US to

reduce the import tariff and eliminate domestic subsidies. Eliminating domestic subsidies will not

mean anything to the coffee industry as the EU and the US do not produce coffee, but lowering the

import tariffs will mean that coffee producing countries could sell their coffee more easily to the

EU. The present excise duty that is put on coffee in the EU amounts to DKK/Kg 6.54 for roasted

coffee and DKK/Kg 14.17 for instant coffee and coffee powder plus a 25% Danish VAT

(Coffeetime.dk). This lowering will in turn mean that coffee will become much cheaper. But coffee

is an agricultural product, and the EU does not want to lower the tariffs since the majority of the EU

countries produce many agricultural products as well. EU countries would not be able to sell their

own products due to higher prices than the products imported. The current agreement has been

going on for the past 9 years and it does not look like they will get the problem solved any time

soon.

Another thing that could impact the willingness to open a Starbucks in Denmark is the relatively

high burden of corporation tax in Denmark. Compared to EU27 with 23.5% the Danish is 1½

percent point higher. The lowest in Europe are Bulgaria, Cyprus and Ireland with 10-12.5% – in

that order (Skm.dk). However, it could be argued that Starbucks would work around this issue like

for instance McDonald‟s has done. The large multinational corporations trade within the company


to allegedly inflated prices and thereby they move profit out of the countries with high corporate

taxation and into so-called tax havens – which in Europe would be the three countries mentioned

before (Tv2.dk).

Thirdly, in August 2007 Denmark introduced a law which prohibits smoking in public places, and

that includes places like cafés, bars, and restaurant. A report from last year showed that the smoking

prohibition law cost Danish cafés 382 million in lost income. The numbers show that the downturn

actually started right after the law was introduced and not because of the financial crisis. In 2008

and 2007 the yearly turnover for cafés, pubs, and discotheques decreased by 7.7% and 5.7%,

respectively. Before the law was introduced, the turnover for the cafés and pubs in 2006-2007 was

3.5% (d-r-c.dk). It was also revealed that the restaurant business has not been affected by the

smoking prohibition law. The law has an effect on smokers who normally smoke while they are

having a cup of coffee and they would not want to sit in a café for a long time, therefore it is

affecting the café business and may continue to affect it unless the law is dismissed.

3.1.2 Economic

The economic factors are of great importance, when a company wants to enter a foreign market.

Ever since the subprime crisis and later the worldwide financial crisis picked up, many companies

have been struggling financially. For Starbucks this led to the closure of 600 stores throughout the

fiscal year of 2008 and 2009, and 70% of the closed stores are ones that have opened since 2006

(Businessweek.com2).

One of the first things that will be

looked at is the interest rate – here in

figure 4 expressed by the discount

rate. The discount rate is the overall

rate that regulates the other monetary

policy rates. And when the discount

rate changes it almost always affects

consumers i.e. clients in banks. This

means that companies will have

lowered interest expenses on their

working capital, and therefore an

incentive to invest. Therefore, when a

0,00%0,50%1,00%1,50%2,00%2,50%3,00%3,50%4,00%4,50%

Development of DDR

Danish discount rateFigure 4


country‟s discount rate is relatively low, the government is trying to stimulate the economy to grow.

Because of the low interest rate, an important factor is the banks‟ willingness to issue loans, which

they are not as willing to now as prior to the crisis.

Another economic factor that is considered important when investigating a new market is the

inflation rate. In Denmark since year 2000 the inflation rate has fluctuated between 1.2% and 3.4%

with the lowest in 2004 and the highest in 2008 (Statistikbanken.dk1). GDP on the other hand has

increased somewhat more. From 2001 till 2008 there has been a nominal increase of 2.04-5.59%

with the lowest in 2003 and the peak in 2006 (Statistibanken.dk2). For new entrants that considered

entering before the financial crisis this meant that the population had become richer i.e. gained a

greater purchasing power. Though, in 2009 GDP decreased by almost 4.5%, and with continuing

inflation that means the opposite than before i.e. losing purchasing power. However, the Treasury‟s

Economic Forecasting Unit5believes that there are: “[...] prospects for a recovery in the Danish

economy, but from a very low starting point.” (Dors.dk1). What triggers this optimism is the

slowing down in the decline of Danish consumption and an improved consumer expectation for the

future. Furthermore, the increase on the stock market (C20) – about 70% in a year (Borsen.dk) –

boosts the optimism. And with positive growth rates in countries like Germany, our biggest trading

partner, the recovery signs are even clearer. Nevertheless, the economic advisers say: “[...] there

are several reasons to expect that the recovery will be slow, and that it will take years before

Danish production again reaches the pre-crisis level. An important reason [...] is that households

have suffered [...] wealth losses, due [...] to lower house prices.” (Dors.dk2).

3.1.3 Socio-cultural

The socio-cultural factor is almost as important as the economic. This is due to the fact that not only

economic issues affect demand. Things like age-distribution, growth rates, and trends are also

factors that should be considered. Therefore:

When looking at the socio-cultural aspects of a market, one of the first things that should be

considered is the population i.e. age-distribution and growth rate.

In Denmark there are two peaks in the age-distribution. One is people born in the years 1945-1950,

the so-called post-war children. And the second is people born in between 1965-1970, the “flower-

children”, from the baby-boom when parents were hippies. This age-distribution means that the

Danish population is aging, and soon there will be a lot less on the labour market. The post-war

5 Det Økonomiske Råds vismænd


children is about to retire, if they are not already enjoying their early retirement benefits6. And

within 15-20 years the largest group in the population, the baby-boomers, will start to retire.

Therefore, if the number of children born does not start to increase, there will be significantly less

on the labour market. And given the last 10 years of development there is nothing to suggest that an

increase is just around the corner. The number of children born lies steady around 32,000-34,000

(Statistikbanken.dk3).

For the companies in Denmark, or those who want to enter Denmark, it means that a smaller

workforce will enhance the companies‟ demand for labour. The enhanced demand for labour is

most likely to cause an increase in the cost of labour i.e. wages, bonuses etc. Therefore, it will

become harder for companies to earn a profit unless they increase prices on their products.

For the café/coffeehouse business the aging population will somewhat affect the market, since the

consumers often consist of students and working people with their day-to-day life in the city. If

there are significantly less of them, then the potential market will decrease almost proportional.

However, if Aarhus is considered alone, then the picture is a bit different. In Aarhus the population

peaks – almost doubles – in the age group 20-30 years compared with other age groups

(Statistikbanken.dk4). This fact, and the fact that the income level is significantly lower for this age

group, helps us determine Aarhus as a “study city” (Statistikbanken.dk5). This will to some extent

affect the purchasing power of students, and as mentioned earlier, lead to lower demand.

The last couple of years, a wave of health awareness has washed over Denmark. This means that

many Danes have become more aware of what they eat and drink. A recent study from the USA has

revealed that coffee is good for your heart, because coffee should lower the of risk heart diseases by

a substantial amount (Ekstrabladet.dk). And given that the Danes‟ status as the second most coffee

consuming country in the world (Kaffeinfo.dk), this could have a positive effect on the demand for

coffee. On the other hand, almost every week new studies see the light of day saying that coffee is

either good or bad for your health, and therefore this study in the end might not affect consumers‟

willingness to drink and purchase more coffee.

3.1.4 Technological

A cup of coffee includes two ingredients, water and coffee beans, but to make that into a great cup

of coffee you need the right kind of equipment. Experts say that water should be exactly at 200oF

(93.3 °C) for the best brew. To get the best flavour, the coffee must be held at no more than 185oF

6 Efterløn


(85 °C) (Food-management.com). Other than that, the volume of the water and the coffee dose all

play an important role in making a great cup of coffee, but this is something that most coffee

equipment cannot control.

In 2005 a Seattle-based coffee equipment company developed what they called a Clover coffee

maker. With Clover coffee maker the barista can customize a cup of coffee by tinkering with the

water temperature, water volume coffee dose and grind size to make the best cup of coffee. It was

introduced in 2006 and was sold to independent coffeehouses, but Starbucks bought the coffee

equipment company in 2008 and now controls Clover sales. Starbucks has only introduced this

machine in specific stores across the United States, and it has not reached Europe yet. The new

machine goes well with the Starbucks mission, which is to serve “one drink and one customer at a

time”, and during a coffee tasting coffee expert George Howell said that: “The new machine, the

clover, did the best job” (NYtimes.com1).

Therefore, today coffee brewing is not just boiling water, pouring through a filter with grinded

beans, and into a cup. No, it is a highly complicated process where water has to be at an exact

degree to maximise the flavour of the perfectly measured out beans. This means that coffee brewing

is becoming more and more automated in the cafés and coffeehouses, where coffee has to be sincere

– so to speak. This automated process can both be a hindrance and a benefit. The automated process

will help speed things up and always make the coffee perfect, yet there is no human touch to it and

it is not brewed in “the right spirit”.

A last thing that could affect the growth potential is the internet. Today it is possible book anything

from a table at a restaurant to flight tickets online. Furthermore, it is possible to pay online with

credit cards, cell phones and several other possibilities. This could have an effect on the

café/coffeehouse business. Since smart-phones7 have become so popular in the population online

shopping for coffee could be beneficial. If it was made possible to logon to e.g. Starbucks.com and

order and pay your coffee to-go, consumers could just stop by the coffeehouse and pick up their

orders, and skip a potential line.

3.1.5 Environmental

Global warming is a very hot potato these days. The increase in temperature is expected to melt the

North Pole and make the sea level rise, but it also has an impact on coffee plants. A study published

in 2009 revealed that the climate change has an impact on the distribution of the world‟s worst

7 Internet cell phones


coffee pest, a small insect called Coffee Borer Beetle. It develops successfully and increases most in

size at 20-30 °C (Coffeehabitat.com). As the temperature in coffee growing countries increase over

time it is going to become the optimum development temperature for the insects.

Another aspect that the global warming touches upon is the production of coffee. In the coffee

producing countries temperature has risen half a degree in the last 25 years. Compared to the 25

years prior to the last 25 years, we are talking about a five times increase. This has led to the

farmers having to move production further up the mountains, which has increased production costs.

Furthermore, weather has also changed, which has led to a drop in production of 30-35% in

Colombia – which is one of the world‟s largest exporters – last year. The production is expected to

drop a further 28% in nine Latin-American countries in the first quarter of this season

(Klimaupdate.dk).

These climate changes will affect the supply of coffee in the years to come. If demand is assumed to

be the same, or even increase, the café/coffeehouse business should expect higher cost prices, which

in the last end will affect the consumer.

3.1.6 Legal

An important factor to consider when looking at the legal aspect is labour law. In Denmark all

workers are entitled to join a trade union. These trade unions negotiate legal minimum wage, how

many hours the workers will have to work a week etc. with representatives from employer

organisations once a year. And in Denmark we have a relatively high minimum wage and a short

work week. This means that in recent years, many companies have moved their production out of

Denmark and into countries with lower wages and most likely longer work weeks. For the

café/coffeehouse sector this means that their products will have to be relatively high priced in order

to be profitable.

3.1.7 Summation

POLITICAL FACTORS (P) ECONOMIC FACTORS (E)

Low or no willingness to lower tariffs on

agricultural products

High corporation tax, however,

multinational corporations moves profit

out of Denmark

Low discount rate

Positive inflation

Decrease in GDP

The Forecasting Unit expects increase in

Danish economy


Anti-smoking law causes losses in café

business

SOCIO-CULTURAL FACTORS (S) TECHNOLOGICAL FACTORS (T)

Population is on average growing older,

with peaks around the baby-boomers and

post-war children

Aarhus deviates with a peak between 20-

30-year-olds

More focus on health means that studies

saying coffee is good for your health

could lead to greater demand

Brewing becomes more automated

Internet could become a valuable asset

for sales

ENVIRONMENTAL FACTORS (E) LEGAL FACTORS (L)

Global warming Labour law

At the time of writing, the PESTEL-analysis does not give any decisive evidence saying that it is a

good market to enter, quite the contrary. Among others, this is due to the financial crisis has not yet

completely left Denmark and the losses that the café business has had in connection with the anti-

smoking law.

3.2 Competitive Analysis

An analysis of the competitive environment of the firm is made in order to develop a competitive

advantage for the organisation and enable it to defeat its rival companies. To analyse the

competitive environment, we are going to use Porter‟s five forces model. Through this model the

forces that have an influence on the competition in the market is examined, and Porter has identified

five basic forces that can have an effect on the organisation: the extent of competitive rivalry,

determinant of the supplier power, threat of new entrants, determinants of buyer power and threat of

substitute power. The objective of such an analysis is to investigate how the organisation needs to

form its strategy in order to develop opportunities in its environment and protect itself from

competition and other threats (Lynch , 2009, p. 97).

3.2.1 The Market in Aarhus

In order to find out how the competition in the market in Aarhus is, the first thing that we should

look at is the rivalry among already existing coffeehouses in Aarhus. Additionally, we will have to

look at the definition of the market that we presented earlier and break it down into pieces. Kotler


and Keller (2009) argue that for a market to be unattractive there has to be: “[...] numerous, strong,

or aggressive competitors.” (Kotler & Keller, 2009, p. 334). The main competitor on the market –

and whose concept is very similar to that of Starbucks – is Baresso. Next there are small cafés who

are independently operated and have a small product offering. Then there are shops such as 7-

eleven, petrol stations, and other small kiosks who only sell regular to-go black coffee.

But the biggest coffeehouse on the market in Aarhus and on the Danish market overall is Baresso.

Baresso has three coffeehouses in Aarhus, one located close to Clemens Bro, a second one close to

the railway station, and a third in Frederiksgade. Baresso is the market leader in Aarhus and in

Denmark overall. This is due to the fact that Baresso is the only coffeehouse chain of a reasonable

size and with a well defined concept, as well as it has a wide range of products at various prices that

can appeal to every type of customer. Baresso has with its name and concept become a brand on the

Danish market, just like Starbucks. Because of that, the company can focus on quality and on giving

its customers the best experience. Through our interview with the head barista of Baresso in

Frederiksgade, we found out that Baresso consider itself to be the market leader, and according to

her: “Competition for us is not very strong, because we are such a big chain of coffeehouses. We

have not felt any kind of competition” (Appendix 41).

From her answers about competition in the market, and the continuing expansion of Baresso, it

seems as if the company has a strong hold in the market. Furthermore, it seems as if the rivalry is

likely to be strong between the smaller cafés. Baresso, however, is not affected by them because of

its sheer size and concept. Since Starbucks is also going to operate on the same market in Aarhus, it

is evident that its biggest competitor on the market is going to be Baresso and not the small cafés as

individuals but as a whole. The rivalry that is likely to exist when Starbucks enters the market could

be more about brands rather than about who serves the best coffee. This does not mean that we can

disregard the smaller cafés, as they could also pose a threat and they are competitors since they sell

the same products as that of Starbucks.

3.2.1.1 Baresso’s Financial Situation

The economic analysis of Baresso is a part of the analysis of the competitors in the market. It is

conducted to determine if there is an economical incentive to invest in the café/coffeehouse

business in Denmark.


Most of the common key performance indicators (KPIs) are calculated in order to give a clear

picture of what would be Starbucks‟ largest competitor in the market. One has to bear in mind that

Baresso is a relatively new company compared to almost 40-year-old Starbucks. And in connection

to establishing a company, there will be some non-recurrent expenditure and other establishing

costs that will have a negative effect on the financial statement in the company‟s first years of life.

Baresso‟s financial statements: 2004-2008. A ratio analysis is conducted on the chosen statement ratios. Table 2

Since Baresso was established in 1999 and the first coffeehouses opened in 2000, the company has

expanded heavily. This has led to continued expenses, and therefore a negative result. However, the

overall picture of the calculated KPIs is quite encouraging (Table 2).

The first interesting KPI is return on assets (ROA). ROA indicates that Baresso is heading in the

right direction i.e. that its negative

ROA has been lowered since 2004

turned positive in 2008 with a 2%

return. This positive return does,

offhand, indicate that Baresso has

not been affected by the financial

crisis – quite the contrary.

Another factor to comment on is

EBIT versus the EBIT-margin. It

will help us gain knowledge on

2004 2005 2006 2007 2008

Total Net Revenue kr 21.740.015 kr 31.035.000 kr 41.158.633 kr 56.977.332 kr 73.015.001

EBIT kr -4.352.391 kr -3.212.000 kr -2.745.808 kr -3.629.006 kr -1.602.857

Net Earnings kr -4.945.707 kr -3.882.000 kr -3.713.271 kr -5.689.713 kr 1.054.263

EBIT-Margin -20% -10% -7% -6% -2%

ROE -100% -81% -135% -1039% 34%

ROA -25% -21% -15% -12% 2%

Equity Ratio 25% 25% 4% 0% 13%

Index:

Total Net Revenue 100 143 189 262 336

EBIT 100 74 63 83 37

Net Earnings 100 78 75 115 21

EBIT-Margin 100 52 33 32 11

ROE 100 81 135 1037 34

ROA 100 82 58 46 9

Equity Ratio 100 97 14 2 50

-25%

-20%

-15%

-10%

-5%

0%

kr -5.000.000

kr -4.000.000

kr -3.000.000

kr -2.000.000

kr -1.000.000

kr -

2004 2005 2006 2007 2008

The development of EBIT

EBIT EBIT-MarginFigure 5


Baresso‟s earning capacity.

Since 2004, Baresso has worked with a negative EBIT and EBIT-margin. However, what figure 4

shows is that Baresso is constantly improving its EBIT and EBIT-margin, though with a minor

setback in 2007. This factor is also a clear indication that Baresso is swimming against the tide and

on its way to becoming profitable.

Since 2004, Baresso‟s solidity has decreased drastically – and in 2007 it actually hit 0. What this

means is that Baresso‟s equity has been used in that period of time. In 2008, inter alia, due to the

positive result there has been an increase in the equity ratio. This means that, even though the

solidity is only half of what it was in 2004, Baresso is still progressing. And bearing the financial

crisis in mind, Baresso is showing positive development.

Return on equity (ROE) shows what the owners have gained in return. Since 2004 there has not

been anything left for them – except for 2008. This KPI does, like the others, show the progress of

the company. However, compared to the discount rate in the PESTEL analysis, the owners had been

better off placing their money in the bank, except for in 2008. This negative ROE is something the

owners have to bear in mind, since it still is a relatively new company with costs to expansion.

A last thing that underlines Baresso‟s‟ progress is the revenue. Since 2004 the revenue has gone up

to a staggering index 336. This clearly indicates that customers are buying the comapny‟s products

and there has not been a drop in sales even though there has been a financial crisis. Furthermore,

these KPIs are supported by the head barista in Baresso, Frederiksgade, who said: “We have not

noticed the financial crisis, on the contrary, we are one of the companies who have had progress

despite the crisis.” (Appendix 41).

3.2.2 Entering a New Market

If Starbucks is going to enter the market in Aarhus, it will have to look at the entry barriers. In

Porter‟s terminology it is called the threat of new entrants and Kotler and Keller (2009) say that:

“The most attractive segment is one in which entry barriers are high and exit barriers are low.”

(Kotler & Keller, 2009, p. 334). Therefore, the higher the entry barriers are and the more

unattractive the business is from a financial point of view, the lower the threat would be for a new

competitor on the market and vice versa. The toughness of the entry barriers depends on how easy

or difficult it is to establish a café in Denmark. There could be many laws and regulations that have


to be fulfilled in order to start a business, or a large capital needed to invest. The more difficult it is

to start a business the less people will be interested in the prospect of opening a café or coffeehouse.

In Denmark a café is under the rules of The Danish Veterinary and Food Administration8, who is

responsible for the making of laws and control of the food and veterinary industry (Fvst.dk). Before

starting your business, you are required to have an authorisation or registration from the local food

administration and this is regardless of whether you are starting a brand new company or just taking

over an existing one. Along with the registration paper you are also supposed to send in the sketches

of the inventory plan and a description of the activities and food that you are planning to sell to the

consumer. There is a requirement that every shop that sells food should know the rules of tax,

working environment condition and the restaurateur should know the rules of fire safety and the

special rules for restaurant business, and the person has to take a test in these rules (Horesta.dk1).

Every company that has a sale of food products for more that DKK 50,000 a year also has to

register itself in a nourishment database, and you can only open your business after you have been

admitted, and you are not allowed to run a business without it (Virk.dk). Everyone who works in

the kitchen or prepares any kind of food should also know the basic hygienic rules, and the local

food administration authority will check up on the hygienic of the shop and will award a smiley

based on the results from the report, and that report has to be visible to customers (Horesta.dk2).

Other than the legal formalities that have to be fulfilled, a new business also needs to invest in the

form of equipment that will be used to produce the goods that it wants to sell. In the café and

restaurant business, a good location is very important, and during these tough times where

consumers have cut on their expenditures for cafés resulting in more and more cafés are getting out

of business, the location has become the most important thing in order to survive (Business.dk3).

The most attractive locations are likely to be in the city centre and therefore the rent is also likely to

be high. A new business on the market also has to invest in coffee equipment such as coffee and

espresso machine, furniture, staff and a whole lot of other things that are required in a café or

coffeehouse.

Overall, it is not that difficult for new competitors to enter the café business, although it might seem

that way when reading about the legal procedure that has to be fulfilled before opening a café. But

the fact is that every kind of new business that has to start from scratch, whether big or small, has to

go through the same legal system, so it is not something that only applies to the café business. The

8 Fødevarestyrelsen


financial investment that the café business needs is also not that big, other than what you need to

invest in the equipment and on the inventory. Running a café is perhaps not the most difficult job

either, in terms of the experience that you need. Coffee and other beverages are made by machines

these days, so the staffs does not have to be very experienced or professional, and anyone who is

able to operate a coffee machine and butter some sandwiches can open and run a café. The easiness

of the café business can also be measured by those mobile coffee scooters that have become

common in cities like Copenhagen and Aarhus. All they have is a scooter with an advanced coffee

and espresso machine, and they are able to sell coffee at a much cheaper price than any other café

that has physical location. Therefore, the threat of new entrants on the market is quite high, since it

is very easy to start a new café.

3.2.3 Coffee and Substitutes

Starbucks‟ product offering includes beverages and food. A way to evaluate the level and threat of

substitutes is to see if other coffeehouses and cafés can satisfy the customer needs that Starbucks is

likely to fulfil. Starbucks‟ food offering includes bakery products such as cakes and pastries, hot

breakfast, salads, sandwiches, ice cream and yoghurt (Appendix 45). Kotler and Keller (2009) say

that: “A segment is unattractive when there are actual or potential substitutes for the product.”

(Kotler & Keller, 2009, p. 335). Therefore, Starbucks‟ offerings are indeed fallen victims to

substitution – at least in theory. There is a substitute product of all Starbucks‟ products. Danish

bakeries and confectioneries have the substitutes for the cakes and pastries that are sold in

Starbucks. Starbucks‟ bakery products are more Americanized in the sense that they have more

muffins and doughnuts, while Danish bakeries focus more on traditional Danish pastry9 and cakes,

but also sell muffins and doughnuts. Starbucks‟ concept is to sell cakes and pastries as a

complementary product for your coffee, and in Scandinavia the traditional cafés are of the Viennese

type. The legitimacy of these classic cafés is grounded in their craftsmanship in confectionary and

pastries. Even though the baked products are at centre stage, coffee is an integrated part of the

serving and plays a key role (Kjeldgaard & Ostberg, 2007, 183). The Viennese type of café is

supplements to the bakery products and coffee that is sold at Starbucks.

Hot breakfasts are other food products sold at Starbucks, and a substitution product for that would

be in form of brunch that is served in smaller cafés along and around “Åen” in Aarhus. Denmark is

normally not a country where people eat hot breakfast, and breakfast normally consists of either

9 Wienerbrød


cereals or bread. Generally, the concept of hot food in Denmark is only at dinner time and lunch is

made of rye bread and sliced cold meat10

. However, some senior citizens have from their

upbringing had warm food at lunch and bread at dinner time.

Salads and sandwiches are also a part of Starbucks‟ menu, although the company currently does not

offer a wide range of sandwiches. On the market in Aarhus, there are many substitutes for Starbucks

sandwiches and salads. Dee Dee‟s sandwich shop in Aarhus qualifies in selling a wide range of

sandwiches and salads, and even muffins and cookies. Besides that, 7-eleven and DSB kiosks also

sell readymade sandwiches and salad plates, which will be regarded as a substitute for the Starbucks

sandwich.

Starbucks‟ drinks menu includes a wide range of brewed coffee, espresso, tea, chocolates, and

smoothies. Starbucks specialises in selling coffee that is made of quality Arabica beans and which

are labelled fair-trade. Supermarkets in Denmark such as Kvickly, Føtex and Bilka offer a wide

variety of other beverages such as beer, water, and soft drinks, and their assortments range in

quality and in price.

Therefore, substitutes for Starbucks‟ offerings are many, if we only focus on their products.

However, the concept of Starbucks as a third place where customers can relax e.g. after a long day

at work, read the newspaper, and log on to the internet is not easy to copy by substituting products.

Therefore, the image of Starbucks is very important, and the Starbucks brand that the company has

created throughout the years is something that it benefits from, and something that could become

the reason for people to opt Starbucks rather than a substitute product.

3.2.4 Suppliers

Coffee is the second most traded goods in the world after oil, and 80% of the coffee comes from the

Americas, the reminder from Southeast Asia and Africa. There are two kinds of coffee: Robusta and

Arabica which counts for 65% of the total coffee production. Arabica is the higher-caste coffee as it

has a better taste, and it grows mostly on small farms in Central America and also in parts of Africa

and Southeast Asia but in small amounts. Arabica is traded primarily at the New York Board of

Trade on the coffee, sugar and Cocoa Exchange; the coffee part is referred to as the “C market” or

the “New York C”. (Fellner, 2008, pp. 47-48). The price on the coffee beans is predicted by the

market analysts, who set a benchmark C market price for coffee for each period of time, and in

10

Pålæg


2006 the price per pound coffee was between $0.9395 and $1.3 (Ibid.). Starbucks buys almost no

coffee on the exchange market, as the company has set high standards for itself and does not believe

that the coffee traded in the exchange is of high quality. In order to get the best Arabica beans

Starbucks relies on buying directly from the farmers and suppliers from Latin America, Africa and

Asia. At the same time, Starbucks is also involved in only buying fair-trade coffee, and the

producers of coffee pay a five-cent per pound fee to support the certification process, but those who

meet the requirements are guaranteed a minimum price for the sale of their coffee, which is initially

$1.21 plus a social premium of five cent per pound (Fellner, 2008, p. 63).

Kotler and Keller (2009) say that: “Suppliers tend to be powerful when they are concentrated or

organised, when there are few substitutes, when the supplied product is an important input, when

the costs of switching suppliers are high, and when the suppliers can integrate downstream.”

(Kotler & Keller, 2009, p. 335). Due to the effects that climate changes are having on coffee

production, it is estimated that coffee production in nine Latin American countries will dip 28% in

the first three months of 2010‟s growing season, and at the same time the demand for coffee is

expected to rise from 132 million in 2009 to 134 million 60-kg bags (Fastcompany.com). This is

likely to increase the bargaining power of the supplier, who can demand a higher price since

demand will be higher than the supply. But over the years, Starbucks has changed the equation and

given less power to the suppliers resulting in more control of the market. In 2001 Starbucks

announced that it would be buying coffee under the C.A.F.E. practices, which is an incentive based

performance system that gives purchasing preference to coffee suppliers that provide green coffee

grown, processed and traded in an environmentally, socially and economically responsible way

(Fellner, 2008, p. 75).

Through the C.A.F.E. practice, Starbucks has become a global leader in buying ethical and

environmentally friendly coffee, and is only willing to buy from farmers who meet those demands.

In the industry where the supply of coffee is likely to decrease because of environmental changes,

suppliers are likely to have a lot more bargaining power. But through fair-trade and C.A.F.E.

practices Starbucks is able to control its suppliers, and since Starbucks is paying a premium price

for coffee compared to that traded on C market, more farmers and suppliers are willing to trade with

Starbucks, thereby minimizing the bargaining power suppliers could have had.


3.2.5 Customers

If Starbucks is going to operate on the market in Aarhus, it is important to determine who the end

customers are. In Starbucks‟ case it will be Business-to-Consumer, the so-called B2C. It can be

argued that Business-to-Business, B2B, to some extent can become a part of the target group, if

companies nearby the coffeehouse would order e.g. their morning coffee etc. However, in most

cases that would not be realistic, since the first cups brewed face the risk of getting cold before the

last ones are done, and the time it takes to deliver will further affect the temperature. Furthermore,

most companies would have a canteen, kitchen or coffee dispenser. Therefore, for it to be

interesting for Starbucks they all should order ice-coffee or the company should make some sort of

business agreement with Starbucks, e.g. saying that for a monthly amount of money the employees

can stop by and pick up coffee in the morning, in breaks or when they get off. This, however, would

most likely require the given company to be located close to Starbucks.

Since Starbucks‟ primary market is B2C, the bargaining power of the consumers is relatively high

in the sense that since customers have various options when choosing where to buy a cup of coffee,

Starbucks has to do something extraordinary to attract customers.

Before Starbucks came into being, in the USA, the coffee brands competed on price, which led to a

poor quality of the coffee, since cheaper price meant cheaper beans. Therefore, Starbucks

introduced high-quality Arabica beans instead of the mediocre robusta coffee (Ritzer, 2008, p. 214).

This high-quality coffee has always been the cornerstone in Starbucks‟ business philosophy, and

among others this should attract the consumers.

Therefore, it is important to look at the consumers‟ choice process in their decision to choose where

to drink coffee. There are four types of consumer choice processes based on the level of

involvement and decision making. Those four are: complex decision making, brand loyalty, inertia,

and limited decision making (Assael, 2004, p. 100). People can either have high involvement or low

involvement in their decision making.

Starbucks has been able to create a well known global brand and currently holds a place as 90th

on

the “Best Global Brand List” from 2009 (Interbrand.com). The Starbucks brand also has quite a

group of fans in Denmark, which is evident from the thousands of members on Facebook-groups

demanding Starbucks in Denmark. But when it comes to consumer choice process, the brand loyalty

exists under the high involvement in decision making. It is also said that when people buy brands, it

becomes a habit and forming beliefs and evaluating brands are not a necessary part of the choice


process. People are loyal to a brand and are not likely to change it even if they have a bad

experience. In Denmark, consumers would not be brand loyal to Starbucks, since Danish customers

have not been exposed to the brand long enough. People have only had a Starbucks experience on

their holidays abroad, and a few visits to a place are not likely to create a loyalty towards a brand.

On the other hand, Starbucks has been in America since 1971 and it has been the only coffeehouse

on the US market and has therefore been able to create an image that has reached the global

consumers through entertainment media. There is a certain amount of curiosity towards the brand

since Danes have gotten to know about it, and that makes them want to go to a Starbucks and find

out what it really is. This curiosity that they feel towards it would involve the customers in

repetitive buying of the same brand, and make a decision after the first few purchases. This type of

consumer behaviour is called inertia and is sometimes mistaken for being the same as brand loyalty

because of repetitive purchase, when actually no such loyalty exists (Assael, 2004, p. 101). This

type of consumer behaviour falls under the low involvement purchase category.

Starbucks‟ customers in Denmark are likely to fall under the inertia category, while the general

coffee house visit is likely to fall under the limited decision making process category. However,

since Baresso has entered the market with its Starbuckized concept, and according to our interview

with the head barista in Baresso, Frederiksgade, saying that the company has imprinted its concept

on its regulars (Appendix 41), it can be argued that brand loyalty to some extent is beginning to

form in the coffee business. Coffee buyers who frequently visit coffeehouses can change their

preferred choice of coffeehouse if there is a new place on the market that seems more exciting.

Coffee buying is a low involvement process and people are likely to try new places to drink coffee,

and then evaluate it based on initial trial. Since there are so many coffeehouses on the market in

Aarhus, people might feel obliged to try out new places just for the sake of it, and also because they

know that coffee is somehow going to be the same. This type of behaviour is called variety seeking

and is an important form of limited decision making (Assael, 2004, p. 101). People can still have

some preferences and a certain coffeehouse that they feel more connected to, but they are willing to

go to another place just to try out new things and not because of dissatisfaction. And this low

involvement decision making process is going to give customers a high bargaining power, since

they can go to any other coffeehouse on the market to drink coffee, and not having any form of

brand loyalty.


Customers‟ buying power in terms of coffee purchases is likely to be very high, because there are

many coffeehouses on the market in Aarhus. Since there are also many substitutes to Starbucks‟

beverages because prices are somewhat the same or less than Starbucks‟, it gives the customers a

very high bargaining power. The switching cost associated with coffee purchases is also low, since

customers can easily choose between the different coffeehouses because of the low involvement in

the decision making process.

3.2.5.1 Segmentation

Even though Starbucks is a global brand and located worldwide, the company cannot focus on the

market as a whole. According to Kotler and Keller (2009), retail stores such as Starbucks have

made programs: “[...] tailored to the needs and wants of local customer groups in trading areas,

neighbourhoods, even individual stores.” (Kotler & Keller, 2009, p. 250). Therefore, segmentation

is of greatest importance. Additionally, with an already somewhat similar and established

competitor, Baresso, it underlines the importance of segmentation further. The segmentation shall

function as a mean to create the best possible marketing mix i.e. our recommendation to Starbucks.

Since Starbucks, according to Kotler and Keller (2009), focuses on local marketing, we have chosen

to use “Market Research – Coffee habits11

”, composed by Bach (2008), Analyse Danmark, as basis

for our segmentation, if the analysis of the collected data makes us able to do it. Bach‟s (2008)

report is based on the wish to identify the coffee drinkers‟ attitudes, knowledge and preferences

(Bach, 2008, p. 3). This has, via a cluster analysis, led to the identification of five lifestyle

segments: “The aged” (TAG), “The passive” (TP), “The active” (TAC), “The young and family

oriented” (TYFO), and “The young and confident” (TYC) (Bach, 2008, pp. 70-74).

Bach‟s (2008) research does not focus on Starbucks or on the coffeehouse concept, but on the

Danes‟ attitudes towards coffee in general and therefore his research form the basis of our

segmentation. It is likely that the characteristics of the lifestyle segments e.g. will correspond with

the frequency of their café/coffeehouse visits. However, since, as mentioned above, the research is

on Danes‟ coffee habits in general, we cannot generalise our findings. Furthermore, the analysis is

based on all of Denmark, and therefore not levelled directly at Aarhus. This means that the lifestyle

segments we find are likely to be different from the ones found in Bach‟s (2008) research.

Nonetheless, we are of the opinion that Aarhus and the suburbs will be able to represent the Danes

and therefore it would also be reasonable to segment via Bach‟s (2008) findings.

11

Originaltitel: Markedsundersøgelse - Kaffevaner


Alternatively, we could have chosen to segment the market either via Gallup‟s Compass Segments

(Gallup.dk) or A.C. Nielsen‟s MINERVA (Nielsen.com). Those models are also based of lifestyles,

and therefore able to give us a possible target group. However, they are not focused on coffee as

Bach‟s (2008) segments, and therefore not the obvious choice, yet applicable.

Since Bach (2008) has proposed five lifestyle segments based on a research on attitudes towards

coffee, and the fact that we are not able to compose a research of similar size, we are best off

choosing his findings as a basis.

3.2.6 Summation

The purpose of the five forces analysis was to evaluate the attractiveness of the market. The rivalry

among existing firms is likely to be low. Even though there are many cafés on the market, Baresso

has been able to control most of it through the company‟s dedication to sell high-quality coffee, and

furthermore, Baresso‟s financials are constantly improving, which in 2008 for the first time led to a

profit.

Consumers on the market, on the other hand, have the option to choose between many substitute

products. Supermarkets selling bottled water, beer and other soft drinks should be considered direct

substitutes. Therefore, the threat of a substitute product is likely. Furthermore, since there are so

many similar types of products to choose from, it gives customers a high bargaining power as well.

Because buying coffee is a low involvement decision making process, people can easily choose and

switch between alternatives, which gives customers even more power. Though, this power has to be

understood correctly. Consumers cannot go into e.g. Baresso and haggle over the price, instead they

can choose another supplier, so to speak.

The threat of new entrants is also high, since coffeehouses do not require a big investment, and

since the mobile coffeehouses have become a part of city life, it just proves how easy and cheap it

really is to sell coffee. Suppliers on the other hand have very limited power, since Starbucks has

cleverly moved all the power to itself through the high standards that the company has set. Coffee

production is threatened due to climate changes, and because of the fact that Starbucks only buys

the best Arabica beans, it puts the supplier in the driver‟s seat. However, since Starbucks is paying

an extra amount of money for coffee that meets the company‟s requirements, it is actually farmers

who have come under pressure to keep producing quality beans. Otherwise they will have to sell it

on the C market for a much lower price. This, surprisingly, gives the supplier less power.


All things considered, the competitor analysis gives a static picture of a market that is not

unprofitable or with no gap to fill. And yes, Baresso has opened a coffeehouse concept very similar

to Starbucks‟, however, the similarity and the fact that Baresso is still growing physically as well as

economically indicates that the market for Americanized Italian coffeehouses as a third place

between work and home is not yet full.

3.3 SWOT

So far we have dealt with the external and internal analysis of Starbucks through PESTEL and the

competitive analysis based on Five Forces. The SWOT-analysis will be used to sum up what we

have learned so far about Starbucks. The SWOT-analysis clarifies the internal strengths and

weaknesses of the firm, and opportunities and threats that it faces externally. It provides a good

overview of whether a firm‟s business position is fundamentally healthy or unhealthy (Thompson &

Strickland, 2001, p. 117).

Strengths of a company are something it is good at doing and something that gives is the strategic

advantage over its competitor. Starbucks‟ strength lies in the fact that it is a very well known brand,

and it has been able to create it by thorough dedication from Howard Schultz who recognised the

potential of the coffeehouse culture in America. He was able to create and popularise “A third place

between home and work” in the US, and expanded the concept rapidly. Starbucks has also been able

to create a global success with its expansion into the international market, thereby spreading its

business risk. The most important aspect of Starbucks is its coffee, and as discovered in the

competitive analysis, Starbucks does not buy any coffee from the C market, as this does not live up

to their standards. Through Starbucks‟ C.A.F.E.-practices which the company is involved in,

Starbucks makes sure that only those farmers and suppliers who fulfil the requirements can sell

their beans to Starbucks, thereby creating a competitive advantage over its competitors by only

selling high quality coffee from ethically traded beans. The other important part of Starbucks‟

strength is its dedication to each cup of coffee made. Starbucks has invested in the state-of-the-art

coffee machine, Clover, which allows the customer to make a cup of coffee just the way he wants it

by choosing the right beans, temperature, and brewing time.

Starbucks‟ strength also lies in its constant involvement and new introduction into its product line.

With a wide range of product offerings in the coffeehouse to its bottled Frappuccino, instant coffee

and Starbucks ice cream in grocery stores, Starbucks has created a portfolio of products that no one

on the market has been able to match, thereby cementing the company‟s position as market leader.


Starbucks has also been able to create a good reputation amongst its customers, and through the

social media and its homepage MyStarbucksIdea.com Starbucks is able to communicate with

customers and involve them in making the “Starbucks experience” better. This is a rather new way

to promote oneself, and Starbucks who does not do much of traditional advertising has had huge

success with the social media.

A company can only be as good as the people working in it, therefore Starbucks take good care of

their employees, whom the company proudly calls its partners. As discovered in the value chain

analysis, Starbucks is listed as the 93rd

best company in the USA to work for, which is an

achievement, especially since none of their competitors are present on the list. By taking good care

of their partners, they make sure that they in return will take good care of the customers.

Starbucks has had a dream run and has only gone from strength to strength, and almost everything

the company has tried has turned into gold, and therefore, it is difficult to see what Starbucks‟

weaknesses really are. However, Starbucks has over the last few years underperformed

economically. As mentioned in the economic analysis Starbucks‟ EBIT-margin was reduced by

more than half, from 11% to 5% from 2007 to 2008 and ROA has also seen a drop from 13% to 6%

from 2007 to 2008. Some of it can of course be attributed to the financial crisis, but rest of it was

because of an increase in operation expenses and increase in cost of sales. Howard Schultz, who

took over the job as CEO in 2008 claimed that Starbucks‟ rapid growth had: “[...] led to the

watering down of the Starbucks experience” and that the company had: “[...] lost the focus on what

we once had, and that is the customer” (NYTimes.com2). Starbucks‟ weakness can be its

overconfidence in itself, i.e. that the company cannot do anything wrong, which made it forget the

most important part of its success, which is its customers.

The opportunities for Starbucks are also few since company has already done most of it and is

consistently trying to improve with the help from its customers through MyStarbucksIdea.com. But

one of the opportunities for Starbucks is to enter the Scandinavian market, where at the moment it is

only present at the airport in Copenhagen. Scandinavia does have a developed coffee culture and

therefore it seems only natural that Starbucks expands into the Scandinavian market.

Since Starbucks relies so much on its beverages, and because food and bakery products are also part

of the company‟s product line, there is a possibility that Starbucks can create its own trademarked

food products.


As discovered during the PESTEL analysis, the coffee industry is threatened by the climate changes

and the rise in temperature. Starbucks is likely to be most affected by it since the company only

buys the finest Arabica beans, and the rising temperature has an impact on the distribution of the

world‟s worst coffee pest, a small insect, which prefers the temperature that Arabica beans grow in.

Furthermore, the temperature has also reduced the production of coffee in all Latin American-

countries, which means that the prices for coffee are likely to increase. This is a threat to Starbucks

since the company already pays more than the market price for its coffee and Starbucks customers

also pay a premium price for the Starbucks coffee, and further increase in prices could result in loss

of customers.

Starbucks is also threatened by the many substitute products on the market, and there are many

coffeehouses that offer the same products as that of Starbucks. They might not have a wide range of

products or might not have the same quality level, but they can satisfy the basic need for coffee. On

the Danish market, Starbucks faces the threat from the anti-smoking law in public places, which has

already left its mark on the Danish café and restaurant business by an estimated lost income of 382

million.


4. Analysis of Data

4.1 Choice of Theory

4.1.1 Purpose of Questionnaire

The purpose of our questionnaire is to find out how the five life style segments, discovered in

Bach‟s (2008) report, behave on the market in Aarhus. Furthermore, we are interested in gaining

knowledge on how consumers in Aarhus act.

On the basis of Bach‟s (2008) segments, we will specify which segment Starbucks should target and

define the segment further. This will help structure the choice of strategy and design of marketing

mix in the end.

4.1.2 Choosing a Method

Since our research focuses on a specific market i.e. Aarhus, we have chosen to make use of a

questionnaire. In addition, we would like to have an as broad as possible section of the population

represented. This will not only increase validity of the results, but also make the final result more

realistic.

Furthermore, the characteristics that the survey will show of the five segments provided by Bach

(2008), will give the opportunity to choose the right parameters to focus on in the recommendation

part.

The questionnaire will also enable us to reach potential customers that we would not otherwise have

reached. This is a cost free way to collect data, however, we chose to offer the possible respondents

a chance to enter a draw for two gift vouchers in order to make it more attractive to answer.

Alternatively, we could have based our research on interviews only but that would have been too

demanding seen in the light of its return. We could have gained some deeper knowledge on some

specific areas but not a realistic picture of the general opinion of the public. Therefore, the choice of

questionnaire over interview is considered to be most efficient for this research.

We have chosen to reach our respondents via mail, which is somewhat a mixed blessing and it can

lead to sources of error. First of all, many elderly do not have access to the internet, which could

cause some problems. However, according to the head barista in Baresso, Frederiksgade, the

primary age-group visiting Baresso is aged 20-45 (Appendix 41). Furthermore, our questionnaire is

in English in order to enable the many foreigners in Aarhus to answer it. This, however, will cause

trouble again for the elderly, but also for young people up till high school level since their English


skills – in most cases – are not developed enough to understand it. Again, they are not part of our

preliminary target group, as seen in our own empirical evidence as well as what we learned from

our interviews.

What also could have an effect on our results is if the respondents randomly answer the

questionnaire. This we cannot control, since we are sitting on the other side of the screen.

Additionally, we are not able to see the respondents‟ body language when answering, and we

cannot answer possible questions if the respondent gets confused about a question.

Regarding the questions, one shortcoming is that we do not let the respondent elaborate on the

answers given. We provide a list of answers – in most cases – and then the respondent has to choose

the one that fits the most.

What works for us is that we do not have to spend time watching every respondent answer, and in

addition to that, when we do not watch the respondent answer it, it will minimise the risk of making

the respondent feel rushed upon. Another element that works is the complete anonymity which

should consolidate the honesty in the answers. However, this would almost certainly not have been

an issue if we did an interview instead, since our subject of research is not tabooed or in other ways

hard to talk about.

To sum this up, the best way to collect our data is through the questionnaire. This is due to the low

cost and the relatively large sample of data we are able to get hold of compared to interviews or

other types of data gathering. One of the drawbacks is of course that we to some extent force the

respondent to answer what we have selected as opportunities, but all things considered, the

questionnaire will still provide us with a picture of the general opinion.

4.1.3 In-Depth Interviews

We have chosen to conduct five in-depth interviews to the get a better understanding of the

respondents‟ views (Appendix 51), feelings and perspectives on their first experience with coffee,

coffeehouses and Starbucks. Based on their comments and our already gathered empirical evidence,

we have built up our questionnaire.

4.1.4 Design of Questionnaire

Our respondents are first off met with the administrative screening question: “Do you live in Aarhus

or the suburbs?”. If „no‟ is pressed, then the questionnaire will automatically end. If „yes‟ is pressed,

the next question that pops up is “What is your postal code?”. The reason why we have chosen both

to ask the respondents if they are from Aarhus and in what postal code they live is that this lets the


potential customers define the market themselves i.e. that if they feel they belong to Aarhus, they

must be included in the market as potential customers (Appendix 42). Furthermore, the screening

ensures us that we do not get answers from persons who do not belong to the potential market.

According to Blumberg et al. (2008), after the screening question the target questions and

classification should come (Blumberg et al., 2008, p. 531). Our questionnaire is designed

accordingly.

By developing the questionnaire in such way, we make the respondents feel that they are not

wasting their time, since they start answering relevant questions right away. The questions become

more relevant along the way, and ends with specific questions about Starbucks. The last few

questions are the “boring” ones – the classification questions – where we ask about gender, age,

educational level, and type of household. This will, as mentioned before, ensure us that the

respondents do not feel that their time being wasted given that they start out answering the

interesting questions right after the screening.

Another factor that plays an important role in gathering our data via a questionnaire is that it must

not be too time consuming. Therefore, we have strived to minimise the length of it and tried to

make it as simple and clear as possible in order to reduce the number of persons, who choose not to

answer due to it being too time consuming. Furthermore, we decided on only having one question

per page in the questionnaire. This can make it seem a bit longer, but it also makes it a whole lot

easier for the respondent to overview.

As mentioned above, we chose to make a draw for two gift vouchers to Amazon in order to ensure

as many respondents as possible. This, of course, has its negative sides to it, as respondents could

choose to answer randomly just to enter the draw. That is why we chose the vouchers to have a

value of only £10 each. This means that, if the winner of the draw wants to use the voucher, he or

she in most cases has to use money of their own to purchase something. This way we ensure most

of the respondents answer truthfully, since the voucher is only a small side benefit.

We will, as mentioned earlier, distribute our questionnaire via email. We have chosen to use email

addresses from our class and different courses that we have attended as our starting point.

Furthermore, we have used Facebook to reach our network in Aarhus. In both cases we have asked

the receivers of the mail to forward it to friends and family in Aarhus and the suburbs, in order to

ensure an as large as possible and as representative as possible sample size. Not only is a


questionnaire spread via email a cost effective method to gather data, but it is also time saving –

which for our part is of importance.

4.1.5 Sampling

We have, as mentioned earlier, distributed our questionnaire via email and Facebook, where we

have encouraged the recipient to forward the mail to friends and family. This is according to Flick

(2007) the so-called snowball sampling method. He says that a: “[...] route to selecting

interviewees is for the researcher to snowball from one case to the next. In using this strategy, often

friends of friends are chosen and thus you would look for persons from your own broader

environment.” (Flick, 2007, p. 118). However, Hildebrand, quoted in Flick, warns: “While it is

often assumed that access to the field would be facilitated by studying persons well known to the

researcher and accordingly finding cases from one’s own circle of acquaintances, exactly the

opposite is true: the stranger the field, the more easily may researchers appear as strangers, whom

the people in the study have something to tell which is new for the researcher.” (Ibid.).

Even though Hildebrand warns against snowballing, we still choose to do it this way. This is to, as

mentioned earlier, reach as many respondents as possible. Alternatively, we could have chosen to

spend days in the centre of Aarhus and stop strangers and ask them to answer our questionnaire.

Again, time is of importance, and therefore we have chosen a more time saving method.

Therefore, we have sent the questionnaire to our classmates and network in Aarhus via Facebook.

Our goal was to reach 100 qualified respondents, and at the time of writing we have reached 103

who passed the screening question. This is an acceptable number, however, we could have wished

for more to answer and more to forward the email to get a more realistic picture.

The way we have selected to distribute our questionnaire is of course not the most appropriate way

to do it. This is due to the fact that the sampling is not totally random selected, and our data will

therefore have some flaws to it i.e. that in our network the vast majority is about our age and on our

educational level etc. With this in mind, our data does not qualify for a quantitative analysis, and

therefore we have chosen to only use it as qualitative material in our quest to determine if there is a

market for Starbucks in Aarhus.

4.1.6 Testing Questionnaire

To detect any flaws in our questionnaire before distributing it, we chose three persons who had not

seen it before. We asked them to answer the questionnaire – independent of each other – and

afterwards comment on it. Meanwhile, we studied their expressions and timed them to see what the


average time was to finish. We wanted to use the average time, when we had to distribute the

questionnaire, because: “Please answer our 3-5 minutes questionnaire” will gather more

respondents than: “Please answer our short questionnaire”. This is due to the fact that „short‟ is a

relative term, and therefore „short‟ is determined by the researcher and not the respondent. And if

we write: “3-5 minutes”, the respondent knows how much time he or she can expect to spend

answering the questionnaire.

The trial of the questionnaire did not reveal any major flaws except from minor spelling mistakes,

and on the basis of that, we sent out the questionnaire.

4.2 Analysis of Data

The main purpose of our questionnaire is to gather data for the recommendation of a marketing mix

in Aarhus. Furthermore, the purpose is to see how the five lifestyle segments, based on their view

on coffee, answer the questions, and thereby narrow down the target group.

4.2.1 Distribution of the Five Lifestyle Segments

The five lifestyle segments proposed by Bach (2008) are, as mentioned in the segmentation

paragraph: “The aged” (TAG), “The passive” (TP), “The active” (TAC), “The young and family

oriented” (TYFO), and “The young and confident” (TYC). In our questionnaire, the respondents

are asked to choose what lifestyle fits them the most, based on their coffee habits (Appendix 40,

figure 1). This has led to the two segments, TAC and TYC, as the most conspicuous, with 23% and

31% of the coffee drinkers, respectively. Based on the age-distribution in Aarhus, with a peak

around 20-30, this corresponds well with the description of the two groups. TAC are mostly males

aged 18-49 and typically residents in larger cities. TYC are mostly young women resident in the

capital and larger cities. What they both have in common is that they often go to cafés (Bach, 2008,

pp. 72-74). What this indicates is that our focus should be on those two lifestyle segments, with a

representation of 54% of the respondents.

We are aware that the question where the respondents have to choose between the lifestyle

segments is not explained in detail, however, it is likely that the respondents are still able to

understand the characteristics, and thereby determine which segment they belong to. Furthermore,

as mentioned before, the two lifestyle segments consist of mostly young males and females, and

therefore the answers provided by the respondents correspond well to both the age-distribution in

Aarhus and to the respondents we initially sent the questionnaire to. Though, we have to be aware

that there could be a difference in what the respondent has answered and how he/she actually acts.


4.2.2 The Frequency of the Lifestyle Segments’ Visits to Coffeehouses and Cafés

This part of the analysis will focus on how often the five lifestyle segments visit cafés and

coffeehouses. Though, we are aware that our data can be flawed due to the low number of

respondents, and our findings cannot be considered as valid. However, to some extent it can be used

to say something about the tendencies – though nothing conclusive.

The five lifestyle segments that go to cafés and coffeehouses with the frequency “daily” to “1-3

times a month” give a total of 53 respondents (Appendix 40, figure 2 and 3). Of them, almost three

fifths belong to the two groups TAC and TYC. This corresponds well with Bach‟s (2008)

characteristics of the two groups, saying that they often go to cafés. Though, we have to bear in

mind that TAG is represented with 5 respondents in the two frequencies “Daily” and “Almost

daily”, and therefore, due to the relatively high frequency of visits to cafés and coffeehouses, this

lifestyle segment could be a potential target group. However, according to Bach (2008), TAG has a

tendency to be resident in smaller towns and more than half of the segment is aged 50+, and

furthermore, seldom go to cafés (Bach, 2008, p. 70). Therefore, based on Bach‟s (2008) description

of the segment, TAG does not look that attractive after all.

4.2.3 The Primary Reason for the Lifestyle Segments’ Choice of Coffeehouse/Café

With two thirds of all answers, the primary factor for the five lifestyle segments‟ choice of

coffeehouse is clearly the social gathering. A second element that is considered relevant by the

respondents is the atmosphere, with almost 20% of the answers (Appendix 40, figure 4 and 5). The

answers are based on the question “What is the primary reason that makes you go to a

café/coffeehouse”. These answers correspond well with Starbucks‟ idea of being a “third place” for

its customers i.e. Starbucks aims to provide a cosy atmosphere where people can come together and

enjoy a cup of coffee.

A cross tabulation shows that both lifestyle segments TAC and TYC‟s primary reason is the social

gathering, though it has to be noticed that TAC‟s secondary reason is quality and not atmosphere.

With that in mind, TAC can still be considered a possible target group, since Starbucks, other than a

third place, offers quality coffee. Furthermore, according to Bach (2008) more than one fifth of

TAC always purchases organic or environmentally friendly products which underline them as a

potential target group due to Starbucks‟ engagement in the C.A.F.E. practices among others.


4.2.4 The Lifestyle Segments and Starbucks

To get an understanding of whether or not the consumers in Aarhus actually are interested in

visiting a Starbucks coffeehouse, they were asked: “Would you go to Starbucks, if one opened in

Aarhus?”. 85% of all the respondents answered „yes‟, and of those a cross tabulation, with the

lifestyle segments, shows that it actually is TAC and TYC that is represented with most „nays‟. This

is, however, expected, since the two segments are the largest, and therefore they are likely to also

have the greatest representation of „nays‟ (Appendix 40, figure 6, 7 and 8).

Therefore, what the cross tabulation says is that all segments – even including the non-coffee

drinkers – would go to Starbucks, however, with 44% of the non-coffee drinkers as the segment

with the most no votes. TAG, TP, TAC, TYFO, and TYC have a no-percentage of 0%, 0%, 19%,

13% and 15%, respectively (Ibid.). And therefore nothing indicates that we should deselect any of

the segments. Though, as mentioned several times before, we have to be aware that the analysis is

only based on 103 respondents, and the questionnaire was distributed in an academically incorrect

way, and the data will therefore be somewhat flawed. However, we should be able to use the data to

discover possible tendencies that could affect our recommendation chapter.

4.2.5 Demographics of the Lifestyle Segments

This paragraph will help us determine the characteristics of our respondents. We have made cross

tabulations of how the respondents view themselves as coffee drinkers and their demographic data.

With this in hand, we will be able to narrow down our target group further, and thereby optimise

our marketing mix.

The first demographic aspect that we will look at is the gender of the respondents. We have 41%

males and 59% females. Therefore, we have to be aware that women outnumber the men. A cross

tabulation reveals that TAC consists of almost 50/50 males and females, where TYC consists of

almost 75% females (Appendix 40, figure 10 and 11). Since the women in our questionnaire

outnumber the men, the gender distribution in the lifestyle segments is likely to tend toward most

women. Compared to Bach‟s (2008) findings, TAC has a slight majority of men, where TYC has an

overrepresentation of women (Bach, 2008, pp. 72-74). Therefore, our respondents have answered

almost like Bach (2008) describes the lifestyle segments, despite the lack of explanation of the

segments in the questionnaire, other than their coffee habits. What makes TAC consist of almost

50/50 men and women can be led back to the overrepresentation of women as respondents.


The second demographic aspect that we will look at is the age of our respondents. 82% are aged 21-

25, and 11% are aged 26-30. The remaining 7% are distributed between the other age-groups

(Appendix 40, figure 12). We knew that the age-distribution would tend to be somewhat distributed

like this, because our sample is not randomly selected, but to some extent chosen by us, and the fact

that the age-distribution in Aarhus peaks around the same age-groups.

The cross tabulation of the lifestyle segments and the age-distribution does not reveal anything that

we would not already have guessed, because the majority of the respondents belongs to the age-

groups 21-25 and 26-30 (Appendix 40, figure 13).

Compared to the two most interesting segments in Bach‟s (2008) report, TAC and TYC, we can see

that they consist mostly of males aged 18-49 and young women, respectively (Bach, 2008, pp. 72-

74). The age-distribution of the respondents in TAC is somewhat to the low side compared to the

national average from Bach‟s (2008) report, however, that again underlines the fact that our

respondents were not randomly selected and that the age-distribution in Aarhus is very different

from the national average.

Bach (2008) does not describe the educational level of the segments in his report, however, we have

chosen to ask our respondents to tell theirs. This is in order to create a better marketing mix in the

recommendation.

A cross tabulation of the segments and their educational level reveals that 91% of the respondents

are on – or have finished – a medium-range or long higher education, and that only 11% of TAC

and TYC, respectively, are on an upper secondary education (Appendix 40, figure 14 and 15).

Again we have to be aware that the respondents are not randomly selected, and that the

questionnaire was sent to friends approximately the same age as us, requesting them to send it to

their friends and family in Aarhus and the suburbs, which can lead to flaws in the data collected.

Finally, we asked our respondents to state their households. Again Bach (2008) does not mention

anything about that in his characteristic of the segments. However, we believe that it is an important

factor to consider, regarding our marketing mix, since we also in the questionnaire ask the

respondents with whom they mostly go to cafés, and therefore will be able to say something about

interior as well as promotion.

Of our respondents, 57% are single and 37% are in a relationship. The last 6% are either in a family

with children or „other‟. The cross tabulation of the segments and the households shows that TAC

consists of 53% singles and 42% in a relationship. The last 5% is in family with children. TYC is


represented with 74% singles and 17% in a relationship. The last 9% are represented as „other‟. The

three other segments plus the non-coffee drinkers are almost 50/50 between couples and singles

(Appendix 40, figure 16 and 17). In this paragraph, as well as the ones above, the flaws from not

randomly selecting our respondents will affect the result, due to the fact that most of our friends and

class mates are either single or in a relationship i.e. a household of one or two.

4.3 Discussion of Analysis – In Retrospect

Looking back on our questionnaire and the answers provided by our respondents, there is a thing we

could have done differently to underline the validity of our choice of the five lifestyle segments as

the means of segmentation.

What we could have done to strengthen our idea of Danes‟ attitudes towards coffee as being the

same as their attitudes towards coffeehouses, was to ask the question: “How would you characterise

yourself as a café/coffeehouse visitor?” and compare it to the answers provided in: “How do you

characterise yourself as a coffee drinker?”. If the respondents‟ answers had correlated, we would

have been able to substantiate our argument. However, we still would not be able to prove anything

statistically, but only use the answers qualitatively.

Worst case scenario, however, this could also have led to us having to reject our idea of Danish

coffee drinkers‟ characteristics as being the same as coffeehouse guests‟, since different answers in

the two questions would mean that Bach‟s (2008) segments would be unfit for use.


5. Recommendation

5.1 Choice of Target Group

Bach‟s (2008) report proposed five lifestyle segments. From those five “The Active” (TAC) and

“The Young and Confident” (TYC) were characterised as those segments who most frequently goes

to cafés. They are constituted of young males and females aged 18-49 living in the cities (Bach

2008, p. 72-74). In our analysis the same two groups stood out once again as those who most

frequently visit cafés and coffeehouses. Since those two groups were the most prominent in our

data, with a share of 81% and 85% respectively, which would go to Starbucks if such one existed in

Aarhus, the data suggests that the group(s) to be targeted should be TAC and TYC. The population

in Aarhus reinforces this idea, since the age-distribution in Aarhus peaks approximately between

20-30 years (Appendix 52, figure 2).

5.1.1 Description of Target Group(s)

Through our research we have found out that the distribution of gender in the segment “The active”

is equal between men and women, and most of them are between the ages of 21-25, while there is

also a little percentage of population between 26-30 years. Almost everyone has either finished or is

currently enrolled in a medium-range or long-range higher education, and more than half of the

population from the segment is single, and rest of them are in relationship where a small percentage

of 5% also have children.

The segment does live up its name of being active, as about 70% go to coffeehouses at a range of

between daily to 1-3 times a month, and most of them go to coffeehouses with their partners, and

social gathering is the primary reason for their decision about going to a café. Price is an important

factor for their choice of café, but other factor such as placement, interior, service level and the

quality of the coffee is more important to them, and the majority of the segment is willing to pay

between DKK 21-25 for an ordinary cup of black coffee. 85% of the segment would go to

Starbucks if it opened in Aarhus, and the majority of them would prefer to drink a caffè latte.

The segment “The young and active” has an over distribution of women in the segment with almost

75% and most of them are at the age of between 21-25 years. This segment does share many

similarities with the TAC group, as almost all of them have either finished or is currently enrolled in

medium-range or long-range education. Majority of this segment is single while rest of them are in

a relationship.


The young and active are different when it comes to the frequency of visits to coffeehouses, as none

of them goes to café‟s daily or almost daily, but most of the respondents go to coffeehouses 1-3

times a month, followed by the second highest percentage for the segment of 35% who go to

coffeehouses 1-3 times a week. Their primary reason for going to a coffeehouse, as with the TAC

group, is social gathering, and majority of them go with their partners. Price is an important factor

for this group in their decision about going to a coffeehouse, but just as the TAC, majority of the

respondents are willing to pay between DKK 21-25. Out of other factors they consider a large

selection, high quality products and the placement of the coffeehouse as very important when they

have to go to a café. For this segment the bi-products such as sandwiches and cakes that you can

buy also plays an important part, whereas the other segment did not consider this factor as being

important. Unsurprisingly most of the people from this segment would go to Starbucks if it opened

in Aarhus, but unlike the other segment, they are more of an adventurist and are willing to try

different kinds of coffee drinks such as coffee, cappuccino, caffé latte and Frappuccino. This

corresponds well with the characteristics of the group by Bach, that they find new types of coffee

existing.

Both the segments are from the city of Aarhus, where the majority of them are resident within the

postal code of 8000. This does not come as a surprise since we had defined our market as Aarhus

and had only distributed our questionnaire amongst people in Aarhus.

5.2 Competitive Generic Strategy

According to Thompson and Strickland (2001), when details in competitive strategies are stripped

away they can be boiled down to: “[…] whether a company’s market target is broad or narrow and

whether it is pursuing a competitive advantage linked to low costs or product differentiation.”

(Thompson & Strickland, 2001, p. 150). Therefore, the competitive strategy, based on Porter‟s

generic strategies, is important for Starbucks, in order to achieve a competitive advantage.

According to the value chain, Starbucks‟ forces lies within its concept as being a “third place” and

its high quality and environmentally friendly and fair traded coffee. Therefore, Starbucks‟ focus is

on the experience that the customers get when they enter a Starbucks coffeehouse, and not just on a

good cup of coffee.

As mentioned in the target group chapter, we are dealing with two target groups who are considered

as one due to the similarities within them. With that in mind, this also means that we are only

focusing on a part of the market, and not the market as a whole. Therefore, according to Thompson


and Strickland (2001), we are dealing with a relatively narrow buyer segment, since we choose to

disregard the three other segments plus the non-coffee drinkers. Furthermore, the fact that Starbucks

buys coffee at a premium price and further charges a relatively high price for its products indicates

that Starbucks definitely does not follow a low-cost strategy, but on the contrary a differentiated

strategy.

As a result of that, Starbucks‟ competitive strategy should, according to Thompson and Strickland

(2001), be a focused differentiation strategy, since it is: “[…] concentrating on a narrow buyer

segment and outcompeting rivals by offering niche members customized attributes that meet their

tastes and requirements better than rivals’ products.” (Thompson & Strickland, 2001, p. 150).

5.3 Positioning – Perceptual Map

A perceptual map is a visual way to display consumers‟ perception about a product or a brand along

various dimensions. It is a quantitative portrayal of market situations and is normally used to see

how customers perceive different products (Kotler & Keller, 2009, p. 621). We have placed Baresso

and Starbucks in our perceptual map, figure 6, where Baresso already exists, and how Starbucks is

likely to be placed. The map is based on own empirical evidence, secondary material, and our data

collected. Therefore, this is not based on a detailed quantitative study, but it is based on our own

understanding and best judgement about the café/coffeehouse business.

On the vertical axis of the

map, we have the high and

low quality dimension, which

stands for how consumers

perceive the quality of the

products. Normally, people

believe that there is a

correlation between high

price and high quality, and

research of the last five

decades has also suggested

the same. In 1989 a study found that consumers generally believed that higher prices

signal higher quality even though the actual relationship between price and quality

was typically not strong. Furthermore, consumers were poorly calibrated, that is to have a poor

Figure 6


understanding of exactly which product categories exhibited the strongest association between

quality and price (Boyle & Lathrop, 2008, p. 58). The study showed that respondents thought of

non durable goods as having a price-quality correlation which did not apply for durable goods. The

latest study has shown that consumers today still perceive a modest correspondence between price

and quality, but more for the durable goods than for non durables. Today people are better

calibrated for durables goods than for non-durables, which is the reverse of the results from 1989

(Boyle & Lathrop, 2008, p. 62).

The study did not include all product categories so it can be said to be of no relevance to us since it

did not have a category for coffee or other drinks, but coffee belongs to non-durable goods, and if

we go by the findings of the study people today are not likely to think that paying a high price for a

coffee is related to getting a high quality coffee. So the saying “you get what you pay for” is not

likely to hold true anymore, at least not for non-durable goods. This shift in people‟s perception

about price-quality is due to the constant improvement of information technology, where you now

have access to unlimited information via the internet. Consumers can easily check out if the price

that is demanded for a product corresponds to a certain level of quality that they think is acceptable,

if it does not live up to their expectations, they will look for another product on the market.

Therefore, when it comes to non-durable goods consumers today are looking for information and

other indicators rather than price to determine the quality of non-durable goods. It is suggested that

marketers of non-durable goods should be prepared to provide relevant ethical information and

reliable indicators to enable consumers to make educated, informed product choices on parameters

other than price alone (Boyle & Lathrop, 2008, p. 63).

Starbucks is engaged in many practices that can justify the high price that the company charges for

its products. First and foremost Starbucks is involved in only buying and selling fair-trade coffee,

but it is also involved in C.A.F.E-practices, where it only buys coffee from suppliers that provide

green coffee grown, processed and traded in an environmentally, socially and economically

responsible way (Fellner, 2008, p. 75). Through its Starbucks Shared Planet™ concept the company

is committed to minimising its environmental footprint, tackling climate change and by being

involved in its local community where Starbucks‟ partners and customers are involved in volunteer

community service (Starbucks.com15). All these practices that Starbucks is involved in are keenly

pointed out to the consumers by Starbucks, and thereby letting them know that the company is

doing more than just selling coffee. By promoting the company as being a responsible player in the


coffee industry Starbucks is to some extent justifying the high prices, and these are some of the

actions needed to ensure that customers will perceive the high prices as high quality.

Starbucks also charges a relatively high price for its beverages compared to its competitors on the

market. Starbucks and Baresso charge the same amount for the traditional simple coffee, tea and

espresso e.g. Starbucks charges DKK 22 for a cup of coffee, which is the same as Baresso, but all

other products are priced higher in Starbucks than in Baresso. (Baresso.dk2 & Appendix 50).

Therefore, the map actually reveals Starbucks as being in the same strategic group as Baresso –

which could be named Americanized coffeehouses. Therefore, Starbucks is located in the upper

right corner.

Baresso, on the other hand, also ensures its customers that it only buys the finest Arabica beans, and

the company‟s coffee is also fair-traded, but Baresso is not involved in many other charitable events

like Starbucks is, which could be due to its smaller corporate size. Another thing is that Baresso‟s

concept is somewhat similar to Starbucks‟, and people tend to have less trust in “copied” versions,

and more trust in the “original”. Therefore people are likely to perceive Baresso as being less

qualified on the quality level, hence why we have placed Baresso to the left and under Starbucks on

the perceptual map since Baresso‟s price level is also a bit lower.

Compared to another strategic group, the cafés, Starbucks is somewhat equally priced to that,

however, quality is likely to be lower. The cafés are somewhat similar around Åen, Latinerkvarteret

etc, where the primary focus is on the food. This will place the cafés around the horizontal axis,

towards the same prices as the Americanized coffeehouses.

A third strategic group in the perceptual map are the service stations i.e. Q8, Statoil, Shell (7-

eleven). Their primary focus is on selling petrol, but they also sell coffee and baked goods. The

service stations‟ price level is relatively low. Their focus is neither on selling a high priced coffee

nor on selling high quality coffee, but to make sure that they can provide customers with all kinds

of products that they could desire while on the go. Service stations are not places where people

would go just to have a cup of coffee or to hang with friends or family, but they are to meet the

basic needs of the customer‟s i.e. having a cup of coffee without paying much attention to the

quality of it. Therefore people are likely to perceive the quality of the coffee to be relatively low.

Though Statoil and Q8 do claim to sell coffee brewed from the finest Arabica beans, though, their

prices are likely to create doubt in the minds of people, especially when Baresso and Starbucks

charge such a high price for coffee which is brewed from “similar” beans (Q8.dk). Therefore, the


perception of the quality of coffee from service stations is low in people‟s minds, hence the position

for service stations in the bottom left. It could be argued, however, that based on their quality they

should be placed higher, but as mentioned earlier, service stations are likely to be perceived as

having a much lower quality and their coffee has been in the coffee pot all day.

The fourth, and last group, are the American fast food chains (McDonalds & Burger King). It could

be argued that they should be in the same strategic group as cafés, since they basically are cafés,

however, the speciality of these cafés does not lie in selling the best coffee, but they try to qualify

themselves as cafés whose prime focus is on fast food – which in a perfect world is to-go. What

characterises them is that they do not have a wide range of products, and they only sell the basic

coffees at relatively low prices compared to Starbucks and Baresso. The quality of the coffee is

likely to be perceived low as well, since people will be aware that these cafés do not market

themselves as selling high quality coffee. A (very) small consumer survey performed by Rabatten,

Danmarks Radio, with five blindfolded consumers, revealed that people prefer the high priced

coffee from Baresso compared to 7-eleven and Burger King who sell coffee priced DKK 19 and

DKK 12, respectively (DR.dk). Therefore, on the quality level these cafés are also likely to score

low, hence they can be placed to the left on the low price axis and just below the middle on the

quality axis.

5.4 Recommended Marketing Mix

Based on our findings in the internal and external analyses and the analysis of our data gathered, we

will submit our recommendation of a marketing mix to Starbucks, which will focus on meeting the

needs and wants of the target group(s).

5.4.1 Product

Coffee and other beverages are Starbucks‟ core products and since there are many competitors on

the market who offer the same, we have to make sure that we stay true to the Starbucks concept of

creating a “third place”.

In our questionnaire when we asked the respondents which type of beverage they prefer,

approximately 66% answered coffee, while 22% prefers hot chocolate, and a very little percentage

prefers tea (Appendix 40, figure 18). To those who answered coffee, our next question was which

type they prefer. To that question almost 37% answered caffé latte, 25% prefers black coffee, and

15% of respondents prefer cappuccino and ice-coffee/Frappuccino, respectively (Appendix 40,


figure 20). Since our focus is on the two segments “The Active” (TAC) and “The Young and

Confident” (TYC), it is important to see what beverages they prefer, in order to decide what

selection best meet their demands. Looking into the data of these segments it shows that 95% of

TAC prefers coffee, and the rest prefers hot chocolate (Appendix 40, figure 19). Out of those 95%

who prefer coffee, about 29% prefer black coffee and 53% prefer caffé latte, and the rest prefers

either cappuccino or espresso (Appendix 40, figure 21). TYC also has a high rate that prefers coffee

(87%), and out of those there are 25% in the categories caffé latte, cappuccino, and ice-coffee,

respectively, and 13% prefer the normal black coffee (Appendix 40, figure 19 and 21).

The analysis shows that both segments have a high percentage of people who prefer caffé latte, and

this corresponds well with the answer from our interview with the head barista in Baresso,

Frederiksgade, who said that “there is no doubt that the most sold beverage is caffé latte”

(Appendix 41).

Keeping the preferences of our target group in mind our product assortment has to be small, since

there are not many people who want other than the most popular coffee drinks, hence we are not

going to offer any smoothies, beverages for kids or Starbucks‟ bottled drinks. Even though there

were not many people who prefer tea either, it is still an essential part of a coffeehouse and

therefore it should be included in the product category. So the final product categories are espresso

beverages, coffee, hot chocolate, tea and the Frappuccino beverages. Though, it is important that the

product selection has a wide range of flavours, giving customers the option to find the beverage that

best suits their taste. This means that Starbucks should have a narrow, but somewhat deep selection

of the most popular beverages.

Our questionnaire also revealed that the bi-products, such as sandwiches, cakes, and snacks, are not

that important for people when they choose to go to a coffeehouse. 58% of the respondents from

TAC and 57% from TYC do not consider bi-products to be important when they go to a

coffeehouse, hence, the food menu has to be very minimal. However, we can still not completely

rule it out, since there are people who do want something to eat while they are drinking coffee

(Appendix 40, figure 22 and 23). The food products that should be included in our assortment are

bakery, inspired by the traditional Danish pastries such as “wienerbrød”, and other bakery products

and sandwiches, thus we will not sell hot breakfast, fruits or salads in the coffeehouse.

Inspired by Baresso‟s menu and Starbucks‟ menu in the airport in Copenhagen, we have formed our


own menu for Starbucks in Aarhus which meets the demands of the customers (Appendix 46 and

47).

5.4.2 Price

Starbucks‟ price level is relatively high, and since the company only sells coffee from fair traded

Arabica beans and is involved in the C.A.F.E.-practices it charges a premium price for its products.

Prices are generally also high in Denmark, where a person on average spends DKK 50.91on a visit

to a café (business.dk4). Strategically there are various pricing strategies to choose from, and it

depends on where a company wants to position its market offering, and what its objective is. The

five major objectives are survival, maximum current profit, maximum market share, maximum

market skimming and product-quality leadership (Kotler & Keller, 2008, p. 623). Starbucks has

always strived to offer the best quality coffee to its customer, and we also positioned Starbucks as a

high-price and high-quality brand on the perceptual map. Therefore, product-quality leadership is

the most suitable strategy.

In order to find out what we should charge for a cup of coffee, we have looked into how much our

target groups are willing to pay for an ordinary cup of black coffee. In the questionnaire we asked

how much people would be willing to pay for a cup of regular black coffee, and 26% from TAC are

willing to pay between DKK 16-20, and 37% are willing to pay between DKK 21-25. TYCs are

more generous when it comes to the amount they are willing to pay, as 39% answered DKK 16-20

and 43% answered 21-25 (Appendix 40, figure 24). Starbucks in the airport in Copenhagen and

Baresso both charge DKK 22 for a cup of freshly brewed coffee, hence it corresponds well with

what the majority of the people from the segments are willing to pay. Coffee is not the only

beverage that Starbucks sells. Other special coffees such as caffé latte and Frappuccino normally

cost around the double of a cup of black coffee. Therefore, the price level for other beverages is

going to be determined by looking at the prices of Baresso and that of Starbucks in Denmark. Since

Starbucks is a well known global brand, and the positioning of Starbucks is as high-price and high-

quality, Starbucks should charge a premium price for the products. The recommended prices for the

drinks menu are based on the prices from Starbucks in Copenhagen airport.

5.4.3 Place

The location of the coffeehouse is perhaps the most important aspect of the marketing mix, since a

coffeehouse which is centrally located can attract many customers. We asked the respondents where

they think Starbucks should be located in Aarhus. The four options they could choose between


were: around the railway station (incl. Bruuns Galleri), along Ryesgade and Søndergade (Strøget),

along “Åen” or „other‟. 56% from TAC and 35% from TYC suggested that it should be located on

Strøget, while 25% and 35% from TAC and TYC, respectively, suggested “Åen” as the best

location for Starbucks (Appendix 40, figure 25).

Before deciding on the location of the coffeehouse in Aarhus, it is also important to see how the

market is at those locations. A Baresso, Burger King and 7-eleven are already located near the

railway station, which means that there is already a tough competition, thus it is not an attractive

location for Starbucks. “Åen” is another option but since there are already many other

cafés/coffeehouses and two Baresso‟s nearby as well, it is not a desirable location either. Along

Ryesgade and Søndergade i.e. “Strøget” seems to be the only attractive location for Starbucks and

since it is a shopping street and often crowded, it would be the most desirable place for Starbucks in

Aarhus – as a first.

Therefore, based on the current market and the preferences of our target groups it is clear that the

best location for Starbucks is along Ryesgade and Søndergade, better known as Strøget.

5.4.4 Promotion

We learned from Starbucks‟ marketing mix, chapter two, that the company does not do much

advertising and its advertising budget is very small compared to other corporations. But in this case,

it is important that we reach out to our target market and make them aware of Starbucks‟ existence

in Aarhus.

It is the first time that Starbucks will open in Denmark, if we disregard Copenhagen airport, and

therefore we have to advertise and not be hesitant to use a lot of money on traditional advertising.

There are various ways to communicate with your target audience, and at first we can promote

Starbucks through local newspapers such as JP Aarhus, Århus Onsdag etc. and let them write a

review of Starbucks‟ coffeehouse in Aarhus. Though, we have to be aware that the reviews in

newspapers are subjective opinions and can be negative. Therefore, we should be prepared to

handle whatever negative press coverage we may possibly receive.

Our target audience is mostly relatively young people, which in Aarhus mean a lot of students.

Every university has its own newspaper or magazine which is released for students and Aarhus

School of Business has a monthly magazine, Commercial, where there is a possibility to publish a

print ad on the back of the magazine informing our target audience of Starbucks‟ existence in


Aarhus. The print ad can be simple with a logo in the middle of the page, and on top of the logo it

could be written “Nu også i Århus”, and Starbucks‟ address could be underneath the logo

(Appendix 48).

Another way to capture our target audience is to put the same ad, as the ones printed in magazines,

on the bus stops. Our target group is young people, hence many students, and since many young

people in Denmark ride busses when they commute to school, they will notice the big posters and

thus become aware of Starbucks.

Starbucks has had huge success with its homepage mystarbucksidea.com, where customers, as the

name suggests, post their ideas that could be implemented in Starbucks‟ stores. Consequently there

can also be a homepage “minstarbucksside.dk” where Starbucks customers from Aarhus can post

their ideas, and the good ones could be implemented in the store. Through this site you can learn

about people‟s preferences as well as their likes and dislikes about the current products, hence

enabling Starbucks to consistently improve its marketing mix.

The advertising for Starbucks does not have to be a continued process, and after a few months when

the message about Starbucks in Aarhus has been spread to everyone in our target group, the

traditional adverting for Starbucks can stop, thus only rely on word-of-mouth marketing.

5.4.5 People

In a Starbucks coffeehouse, the employees (partners) play an important role. Starbucks view its

employees as its public image, so to speak. Therefore, Starbucks believes that taking good care of

its employees will result in them taking good care of the customers.

Furthermore, the baristas are required to have a good knowledge of coffee and coffee brewing, in

order to serve a perfect cup of coffee every time.

Besides that, our respondents have answered that the appearance of the staff is important. TAC and

TYC believe that appearance is important to very important. Therefore, not only the professional

skills are important, but also how the employees look, act, and service the customers (Appendix 40,

figure 26 and 27).

Therefore, Starbucks has to continue its concept of having devoted employees with the willingness

and ability to create a “third place” for the customer and make them feel so welcome that they will

return.


5.4.6 Process

As described earlier, Starbucks follows the so-called McDonaldization principal. It means that a

process is divided into smaller tasks i.e. like an assembly line. This way, Starbucks makes sure that

its products sold are made fast and efficient.

The majority of our respondents feel that a high service level is important to very important, and our

target group(s) feel the same (Appendix 40, figure 28 and 29). Therefore, it is important that

Starbucks continues down this path in order to enable the company to attract customers in Aarhus.

Therefore, when a customer enters a Starbucks coffeehouse, there are three steps to go through.

First the costumer looks at – if it is not decided beforehand – what coffee and/or snacks to buy,

secondly the consumer is ordering and paying, and lastly he or she gets the order delivered. This

way of working is meant for peak periods during the day, whereas for instance in the forenoon

when there are not so many customers, one or two barista(s) could take care of all processes, and

the rest could prepare for the afternoon influx and clean the coffeehouse.

As a result of that, we need to be aware that there are enough employees at work at the same time in

order to make the “assembly line” flow in peak periods and still have enough other work to do the

rest of the day. This could be solved by recruiting and training e.g. students as part-time employees

to work prior to or after classes. This way, Starbucks would have a flexible workforce that is able to

step in during the peak periods.

5.4.7 Physical Evidence

The physical evidence is essential for a service company‟s marketing mix, i.e. that the interior and

exterior should correspond to how the consumer perceives the company.

As mentioned earlier, Starbucks tries to blend into a community with façades like the rest of the

townscape. This means that the only thing that shows the potential customers that this is a Starbucks

coffeehouse is the characteristic logo. However, when customers enter the coffeehouse, they are

always met with the same sofas, armchairs, and employees wearing the same green or black aprons

etc.

The majority of the respondents have answered that the interior i.e. the decor is important to very

important. This is also the case with the majority of TAC and TYC (Appendix 40, figure 30 and

31). Therefore, the coffeehouse decor has to consist of the same cosy sofas and armchairs as

mentioned before. The coffeehouse shall ooze of a relaxed environment, where customers can sit

back and enjoy their fast delivered cup of coffee and snack with a newspaper or a book. Therefore,


Starbucks should not focus on being modern i.e. trying to implement a more minimalistic look, but

rather keep its decor as it is seen in the rest of the world. This means that the chairs and tables

should be located in groups along with the armchairs and sofas.

The physical environment is what makes Starbucks the coffeehouse and not a coffeehouse.

Therefore, it is essential that Starbucks uses the same decor inside as in the rest of the world. Like

Ritzer (2008) argues, what Starbucks has added to the McDonaldization model is the welcoming

environment. This means that when potential customers who have been abroad and gotten familiar

with the Starbucks concept come to Aarhus and see a Starbucks, they know what to can expect – a

high quality coffee and a welcoming environment. Therefore, it is important not to change the decor

inside the coffeehouse, since it could lead to customers not being willing to come back.

Furthermore, Starbucks‟ homepage represents physical evidence. However, Starbucks should

translate the homepage into Danish, like all other global corporations working in Denmark have

done. Therefore, the Danish Starbucks-site should be .dk and not .com.

5.4.8 Evaluation of Marketing Mix

According to Jobber (2007), an effective marketing mix consists of four hallmarks: it matches

customer needs, it is well blended, it matches corporate resources, and it creates a competitive

advantage (Jobber, 2007, p. 22). Therefore, based on Jobber‟s hallmarks, we will evaluate the

effectiveness of the marketing mix recommended to Starbucks, and thereby determine if the mix

matches the company.

To match customer needs, we have, via Assael‟s (2004) consumer behaviour theory, analysed what

type of purchase coffee buying is. Furthermore, qua our analysis of the respondents, leading to two

segments to target, we have determined what needs Starbucks has to fulfil in order have a

successful marketing mix in Aarhus. Therefore, it must be said that our customised marketing mix

fully matches the needs of the customers – the active and the young and confident.

A well blended marketing mix is of the essence, when a company is trying to enter a market.

According to Jobber (2007): “If a product gives superior benefits to customers, price, which may

send cues to customers regarding quality, should reflect those extra benefits. All of the promotional

mix should be designed with the objective of communicating a consistent message to the target

audience about these benefits, and the distribution decisions should be consistent with the overall

strategic position of the product in the marketplace.” (Jobber, 2007, p. 23). Therefore, if Starbucks


has to succeed in Aarhus, it is not an option to promote the product(s) as being the best coffee

money can buy, but then at the same time at the lowest price. All parameters have to follow the

same path, so to speak. Therefore, in Starbucks‟ case, the parameters should be directed towards

high quality and high price in order to position the company as it is in the perceptual map. In the

recommendation all seven parameters point towards a relaxed environment where customers can

enjoy a quality coffee and read the news paper or logon to the wireless internet with their laptops.

To make the marketing mix match corporate resource, an important aspect to consider, according to

Jobber (2007), is the company‟s financial resources, since they can constrain them (Jobber, 2007, p.

23). Therefore, based on the economic analysis of Starbucks, an economic constraint does not seem

likely, since the downturn has been turned into growth – though not as much as prior to the

financial crisis. A second constraint could be the internal competencies e.g. a too ambitious

marketing mix for the personnel to implement. However, due to Starbucks‟ many years in the

business, and the fact that Starbucks is the global market leader, qualified personnel on the

corporate level exists and expert knowledge is attainable. Furthermore, the fact that the concept has

proven so successful means that the recommendation matches corporate resources.

Based on the value chain analysis of Starbucks, several areas that add value to the concept were

revealed. It is not only the high quality coffee that adds value and thereby creates a competitive

advantage, but also the environment in the coffeehouse i.e. everything from the fast delivery of the

beverages and snacks to the characteristic welcoming sofas and armchairs. This means that

Starbucks‟ competitive advantage lies within more than one of the parameters, and therefore a

Starbucks coffeehouse in Aarhus would be considered as a strong competitor to the already

established actors in the market.

However, as mentioned in chapter 1.4.1, the market and product definition, markets change on a

daily basis, and therefore Starbucks has to be aware that what the market is today may not be the

same tomorrow. Therefore, our recommendation is a static picture of how the situation is now and

what should be done about it. A change in the market tomorrow could lead to a completely different

recommendation i.e. another target group, competitive strategy, positioning, and/or marketing mix.


6. Conclusion

The project started with our personal interest in Starbucks, which we have become familiar with

during trips to foreign countries. This made us wonder why Starbucks is not present on the Danish

market, other than the two in Copenhagen Airport – which does not really qualify as Denmark.

With those thoughts in mind, we sat out to find out if there is market potential for Starbucks in

Aarhus, and if so, then how can the company penetrate the market. There is no clear-cut result,

however, some part of the analyses shows a great potential for Starbucks in Aarhus, while others

present a more unattractive picture of the market.

The analyses of the external environment have led to different results i.e. the economic part of the

PESTEL-analysis showed that the population have lost a great deal of their purchasing power,

triggered by the financial crisis and the growing inflation rate. The socio-cultural part revealed that

the bulk of the inhabitants of Aarhus are aged 20-30. Baresso‟s vast majority of customers are aged

20-45, and therefore, the age-distribution peak represents the major part of Baresso‟s customers.

The PESTEL-analysis also indicates that Denmark still is not free from the financial crisis and

things such as the labour law and the anti-smoking law can and will have an effect on the

attractiveness of the market. The competitive analysis reveals a market filled with substitute

products, though, only one direct competitor – Baresso. Therefore, for Starbucks to move in

elevated circles, the concept has to be razor-sharp.

The strengths and weaknesses of Starbucks were mapped via a marketing mix and a value chain.

The marketing mix uncovered that Starbucks has a wide selection of beverages and snacks, and that

the company charges relatively high prices for its products. Furthermore, it was clear that one of the

real strengths within the company is the way that the employees work – which, according to Ritzer

(2008), is the Starbuckized version of McDonaldization.

We used the value chain to find out where in the process value is added to Starbucks‟ products. It

was clear that the choice of high-quality beans and the best machine on the market to make the

coffee is not where the most value is added. However, the last three primary activities i.e. the

employees, their way of working, and Starbucks‟ concept as being a third place, are where the

customers receive the most added value. This means that these are the factors that would be

advantageous to focus on in Aarhus, since it is here most value is added.

Our in-depth interviews formed the basis of our questionnaire and ensured us that we asked the

necessary questions. Our aim was to identify the five segments proposed by Bach (2008), their


characteristics, and their willingness to visit Starbucks. We soon learned that the characteristics

proposed by Bach (2008) all but correspond to how the respondents characterise themselves, and it

therefore enables us to choose and customise a target group within those segments. Moreover, since

his research is based on Danes‟ coffee habits and is not just a common segmentation tool, it again

underlines the reasonableness of choosing the five lifestyle segments.

Every analysis and assessment so far has formed the basis of our recommendation to Starbucks. The

recommendation will serve as a guideline to how Starbucks should penetrate the market in Aarhus.

However, the recommendation is a static picture of how the market is now, and as mentioned in the

market definition, markets change and therefore the market today might not be the same tomorrow.

Based on our analyses of the market, Starbucks, and our data, we found the two segments “The

Active” and “The Young and Confident” to be the ones who should be targeted. However, we have

to keep in mind the fact that our questionnaire does not consist of a representative segment of the

population, due to the way it was distributed. Therefore, it is likely that our results would have been

somewhat different, if data was collected properly i.e. randomly chosen respondents, for instance.

Therefore, based on Starbucks‟ competencies, where the company adds value to its concept and the

target groups‟ preferences, it was clear that the obvious choice of a competitive generic strategy is

the focused differentiation strategy.

As a result of the recommended generic strategy, Starbucks would have to position itself in the

consumers‟ consciousness as a provider of high-priced and high-quality products.

The marketing mix recommended to Starbucks focuses on providing a narrow product assortment

but a wide range within the few product categories, especially caffé latte as this is the beverage that

the vast majority of the segments would buy.

Therefore, due to the economic prosperity of Baresso, the analysis of the market and of Starbucks,

the result of our analysis is, to our best conviction, that it is possible for Starbucks to, with a well-

blended marketing mix, penetrate the market in Aarhus.


7. Bibliography

Analyses and Annual reports:

Aarup, Lars & Nielsen, Erhard (2009). Kaffe. FDB Analyse, Albertslund. Located March 19th

2010

on: http://www.kaffeinfo.dk/Includes/GetBinary.aspx?FileID=2419

Bach, Sebastian (2008). Markedsundersøgelser – kaffevaner. Dansk Analyse, København. Located

March 20th

2010 on:

http://danskkaffenetvaerk.dk/images/stories/Filer/rapportkaffeundersoegelseseptember2008.pdf

Starbucks Corporation (2009). Fiscal 2009 Annual Report. Starbucks Corporation, Seattle,

Washington. Located March 10th

2010 on:

http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsAnnual

Books:

Assael, Henry (2004). Consumer Behavior: A Strategic Approach. 1st Edition. United States of

America: Houghton Mifflin Company.

Blumberg, B. et al. (2008). Business Research Methods. 2nd

Edition. The United Kingdom:

McGraw-Hill Education.

Fellner, Kim (2008). Wrestling with Starbucks: conscience, capital, cappuccino. 1st Edition. United

States of America: Rutgers University Press.

Flick, Uwe (2007). An introduction to qualitative research. 3rd

Edition. Great Britain: SAGE

Publications Limited.

Kotler, P. and Keller, K. L. (2009). Marketing Management. 13th

Edition. United States of America:

Prentice Hall.

Lynch, Richard (2009). Strategic Management. 5th

Edition. Italy: Pearson Education Limited.

Ritzer, George (2008). The McDonaldization of Society 5. 1st Edition. United States of America:

Pine Forge Press.

Thompson, Jr. A. A. and Strickland III, A. J. (2001). Crafting and Executing Strategy – Text and

Readings. 12th

Edition. United States of America: McGraw-Hill Education.

http://www.kaffeinfo.dk/Includes/GetBinary.aspx?FileID=2419

http://danskkaffenetvaerk.dk/images/stories/Filer/rapportkaffeundersoegelseseptember2008.pdf

http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsAnnual


Journals:

Boyle, Peter J & Lathrop, E. Scott (2009). Are consumers’ perceptions of price-quality

relationships well calibrated? In: International Journal of Consumer Studies, Vol. 33, No. 1, pp. 58-

63.

Kjeldberg, D. & Ostberg, J. (2007). Coffee Grounds and the Global Cup: Glocal Consumer Culture

in Scandinavia. In: Consumption, Markets and Culture, Vol. 10, No. 2, pp. 175-187.

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Aarhuskommune.dk

Statistiske informationer. Located on March 12th

.

http://www.aarhuskommune.dk/~/media/Dokumenter/Borgmesterens-Afdeling/Statistik-og-

Ledelsesinformation/Befolkning/Familier/Familier-og-husstande-1--jan--2010.ashx

About.com

Starbucks CEO Howard Schultz: Quotations About Building a World Class Brand. Located on

March 3rd

.

http://retailindustry.about.com/od/frontlinemanagement/a/starbucksceohowardschulzquotes.htm

Adage.com

Starbucks Gets Its Business Brewing Again With Social Media. Located on March 5th

.

http://adage.com/digitalalist10/article?article_id=142202

Allbusiness.com

Starbucks Expands Its Line of Superpremium Ice CreamOfferings With Six New Flavors and

Debuts. Located on March 3rd

.

http://www.allbusiness.com/food-beverage/food-industry-dairy-dairy-products/6642690-1.html

Baresso.dk (1) Find nærmeste kaffebar. Located on February 23

rd.

http://www.baresso.dk/Kaffebarer.aspx

(2) Sortiment. Located on March 10th

.

http://baresso.dk/Sortiment.aspx

Beveragespectrum.com How RTD Innovation Keeps The Bucks Flowing. Located on March 3

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http://www.beveragespectrum.com/issue/InnovationJan-Feb2008/starbucks

Berg-marketing.dk (1) Markedsdefinition. Located on March 1

st.

http://www.berg-marketing.dk/markedsdefinition.htm

(2) Ibid.

http://www.aarhuskommune.dk/~/media/Dokumenter/Borgmesterens-Afdeling/Statistik-og-Ledelsesinformation/Befolkning/Familier/Familier-og-husstande-1--jan--2010.ashx

http://www.aarhuskommune.dk/~/media/Dokumenter/Borgmesterens-Afdeling/Statistik-og-Ledelsesinformation/Befolkning/Familier/Familier-og-husstande-1--jan--2010.ashx

http://retailindustry.about.com/od/frontlinemanagement/a/starbucksceohowardschulzquotes.htm

http://adage.com/digitalalist10/article?article_id=142202

http://www.allbusiness.com/food-beverage/food-industry-dairy-dairy-products/6642690-1.html

http://www.baresso.dk/Kaffebarer.aspx

http://baresso.dk/Sortiment.aspx

http://www.beveragespectrum.com/issue/InnovationJan-Feb2008/starbucks

http://www.berg-marketing.dk/markedsdefinition.htm


Bizjournals.com

Picture this: Product placement involves protecting the brand as much as advertising it. Located on

March 4th

.

http://www.bizjournals.com/seattle/stories/2003/03/17/focus1.html

Borsen.dk OMX Copenhagen 20 index. Located on April 4

th.

http://trader.borsen.dk/borsendk/site/miniweb/indexpop.page?magic=(cc%20(detail%20(diagram%

20(sole%20(tsid%2020953)))))

Business.dk

(1) Burger King arm i arm med Starbucks. Located on March 2nd

.

http://www.business.dk/detail/burger-king-arm-i-arm-med-starbucks

(2) Arla i milliardaftale med Starbucks. Located on March 2nd

.

http://www.business.dk/foedevarer/arla-i-milliardaftale-med-starbucks

(3) Danske cafeer lukker på stribe. Located on April 18th

.

http://www.business.dk/detail/danske-cafeer-lukker-paa-stribe

(4) Ibid.

Businessweek.com

(1) A Full-Bodied Talk with Mr. Starbucks. Located on April 14th

.

http://www.businessweek.com/magazine/content/04_47/b3909098.htm

(2) Starbucks to Close 600 Stores – Will It Be Enough? Located on March 15th

.

http://www.businessweek.com/the_thread/brandnewday/archives/2008/07/starbucks_to_cl.html

CNN.com

100 Best Companies To Work For. Located on April 20th

.

http://money.cnn.com/magazines/fortune/bestcompanies/2010/full_list/

Coffeehabitat.com

Climate change and coffee pests. Located on March 20th

.

http://www.coffeehabitat.com/2009/08/climate-change-and-coffee-pests.html

Coffeetime.dk

Priser, rabatter og punktafgifter. Located on April 10th

.

http://www.coffeetime.dk/shop/cms-24.html

Conservation.org Conservation Beyond the Farm, In Your Cup. Located on March 25

th.

http://www.conservation.org/campaigns/starbucks/Pages/default.aspx

CSNews.com

Starbucks Raises Prices on Most Drinks. Located on March 2nd

.

http://www.csnews.com/csn/foodservice/article_display.jsp?vnu_content_id=1004060303

D-r-c.dk Dokumentation: Rygeforbud koster danske cafeer 300 mio. årligt. Located on March 13

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http://www.d-r-c.dk/default.aspx?PageId=294&ItemID=199

http://www.bizjournals.com/seattle/stories/2003/03/17/focus1.html

http://trader.borsen.dk/borsendk/site/miniweb/indexpop.page?magic=(cc%20(detail%20(diagram%20(sole%20(tsid%2020953)))))

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http://www.business.dk/detail/burger-king-arm-i-arm-med-starbucks

http://www.business.dk/foedevarer/arla-i-milliardaftale-med-starbucks

http://www.business.dk/detail/danske-cafeer-lukker-paa-stribe

http://www.businessweek.com/magazine/content/04_47/b3909098.htm

http://www.businessweek.com/the_thread/brandnewday/archives/2008/07/starbucks_to_cl.html

http://money.cnn.com/magazines/fortune/bestcompanies/2010/full_list/

http://www.coffeehabitat.com/2009/08/climate-change-and-coffee-pests.html

http://www.coffeetime.dk/shop/cms-24.html

http://www.conservation.org/campaigns/starbucks/Pages/default.aspx

http://www.csnews.com/csn/foodservice/article_display.jsp?vnu_content_id=1004060303

http://www.d-r-c.dk/default.aspx?PageId=294&ItemID=199


Dinesh.com Starbucks Logo – Design and History. Located on March 22

nd.

http://www.dinesh.com/history_of_logos/worlds_best_brands_and_logos/starbucks_logo_-

_design_and_history.html

DR.dk En god kop kaffe! Located on April 15

th.

http://www.dr.dk/DR1/Rabatten/Indslag/2010/Uds._2/20091221131411.htm

Dors.dk (1) The Danish Economy. Located on April 12

th.

http://www.dors.dk/graphics/Synkron-

Library/Publikationer/Rapporter/Efter%E5r%202009/Trykt%20rapport/English%20Summary%20s

amlet%2C%20ny.pdf

(2) Ibid.

Ekstrabladet.dk

Kaffe kan redde dit liv. Located on April 9th

.

http://ekstrabladet.dk/kup/sundhed/article1308833.ece

Fastcompany.com

Coffee Industry Hit Hard by Climate Change. Located on March 22nd

.

http://www.fastcompany.com/1564365/coffee-industry-hit-hard-by-climate-change

Food-Management.com Well-Equipped: Coffee Equipment. Located on April 1

st.

http://food-management.com/business_topics/equipment/coffee-equipment-0310/index.html

Forbes.com

Starbucks' World Won't Be Built In A Day. Located on March 4th.

http://www.forbes.com/2003/06/27/cx_aw_0627sbux.html

Fvst.dk

Om Fødevarestyrelsen. Located on April 19th

.

http://www.foedevarestyrelsen.dk/OmFoedevarestyrelsen/Forside.htm

Gallup.dk

Kompas segmenter. Located on April 11th

.

http://www.gallup.dk/vores-markedsfokus/medier/printmedier/gallupkompas/kompas-

segmenter.aspx

Heinzmarketing.com

(1) Why advertising is secondary. Located on March 5th

.

http://www.heinzmarketing.com/matt-on-marketing/blog/2007/01/why-advertising-is-

secondary.html

(2) Ibid.

http://www.dinesh.com/history_of_logos/worlds_best_brands_and_logos/starbucks_logo_-_design_and_history.html

http://www.dinesh.com/history_of_logos/worlds_best_brands_and_logos/starbucks_logo_-_design_and_history.html

http://www.dr.dk/DR1/Rabatten/Indslag/2010/Uds._2/20091221131411.htm

http://www.dors.dk/graphics/Synkron-Library/Publikationer/Rapporter/Efter%E5r%202009/Trykt%20rapport/English%20Summary%20samlet%2C%20ny.pdf



http://ekstrabladet.dk/kup/sundhed/article1308833.ece

http://www.fastcompany.com/1564365/coffee-industry-hit-hard-by-climate-change

http://food-management.com/business_topics/equipment/coffee-equipment-0310/index.html

http://www.forbes.com/2003/06/27/cx_aw_0627sbux.html

http://www.foedevarestyrelsen.dk/OmFoedevarestyrelsen/Forside.htm

http://www.gallup.dk/vores-markedsfokus/medier/printmedier/gallupkompas/kompas-segmenter.aspx

http://www.gallup.dk/vores-markedsfokus/medier/printmedier/gallupkompas/kompas-segmenter.aspx

http://www.heinzmarketing.com/matt-on-marketing/blog/2007/01/why-advertising-is-secondary.html

http://www.heinzmarketing.com/matt-on-marketing/blog/2007/01/why-advertising-is-secondary.html


Horesta.dk (1) Opstart af egen virksomhed. Located on April 18

th.

http://www.horesta.dk/Emner/GastroFodevarer/Foedevarer2/Opstart%20af%20virksomhed.aspx

(2) Smiley. Located on April 18th

.

http://www.horesta.dk/Emner/GastroFodevarer/Foedevarer2/Smiley.aspx

Interbrand.com

Best Global Brands. Located on April 19th

.

http://www.interbrand.com/best_global_brands.aspx

Kaffeinfo.dk

De mest kaffedrikkende lande. Located on March 27th

.

http://www.kaffeinfo.dk/index.aspx?articleid=147

Klimaupdate.dk Kaffe ramt af den globale opvarmning. Located on April 10

th.

http://www.klimaupdate.dk/default.asp?newsid=853&opt=1

Nasdaq.com

Starbucks Corporation (SBUX) Stocks Holdings Summary (Ownership). Located on April 3rd

.

http://www.nasdaq.com/asp/holdings.asp?symbol=SBUX&selected=SBUX

NYTimes.com (1)Tasting the Future of Starbucks Coffee From a New Machine. Located on March 14

th.

http://www.nytimes.com/2008/03/26/dining/26starbucks.html?_r=1

(2) Starbucks Replaces Chief With Chairman. Located on April 2nd

.

http://www.nytimes.com/2008/01/08/business/08starbucks.html

Nielsen.com

MINERVA. Located on April 11th

.

http://dk.nielsen.com/products/downloads/Markedsinformationer/MarketMonitor/DK/MinervaSnap

MonitorDK.pdf

Prlog.org Coffee Marketing: Starbucks Scores Big In Social Influence Marketing. Located on March 2

nd.

http://www.prlog.org/10487627-coffee-marketing-starbucks-scores-big-in-social-influence-

marketing.html

Q8.dk Altid drikkevarer der frister. Located on April 19

th.

http://q8.dk/Butik/Er+du+toerstig.aspx

Seattletimes.com

Starbucks To Buy U.K. Company – Seattle Coffee Deal Opens Door Into Europe. Located on March

12th

.

http://community.seattletimes.nwsource.com/archive/?date=19980429&slug=2747950

http://www.horesta.dk/Emner/GastroFodevarer/Foedevarer2/Opstart%20af%20virksomhed.aspx

http://www.horesta.dk/Emner/GastroFodevarer/Foedevarer2/Smiley.aspx

http://www.interbrand.com/best_global_brands.aspx

http://www.kaffeinfo.dk/index.aspx?articleid=147

http://www.klimaupdate.dk/default.asp?newsid=853&opt=1

http://www.nasdaq.com/asp/holdings.asp?symbol=SBUX&selected=SBUX

http://www.nytimes.com/2008/03/26/dining/26starbucks.html?_r=1

http://www.nytimes.com/2008/01/08/business/08starbucks.html

http://dk.nielsen.com/products/downloads/Markedsinformationer/MarketMonitor/DK/MinervaSnapMonitorDK.pdf

http://dk.nielsen.com/products/downloads/Markedsinformationer/MarketMonitor/DK/MinervaSnapMonitorDK.pdf

http://www.prlog.org/10487627-coffee-marketing-starbucks-scores-big-in-social-influence-marketing.html

http://www.prlog.org/10487627-coffee-marketing-starbucks-scores-big-in-social-influence-marketing.html

http://q8.dk/Butik/Er+du+toerstig.aspx

http://community.seattletimes.nwsource.com/archive/?date=19980429&slug=2747950


Skm.dk

Selskabsskattesatser i EU-landene. Located on April 9th

.

http://www.skm.dk/tal_statistik/skatter_og_afgifter/4607.html

Starbucks.com (1) Starbucks Company Timeline. Located on February 23

rd.

http://assets.starbucks.com/assets/starbucks-timeline-basic-jan2010.pdf

(2) Retail Locator. February 23rd

.

http://www.starbucks.com/retail/find/LocatorResults.aspx?fs=1

(3) Company Fact Sheet. Located on February 23rd

.

http://www.starbucks.com/aboutus/Company_Factsheet.pdf

(4) Starbucks Company Timeline. Located on February 23rd

.


(5) Company Profile. Located on February 23rd

.

http://assets.starbucks.com/assets/company-profile-feb10.pdf

(6) Mission Statement. Located on April 3rd

.

http://www.starbucks.com/about-us/company-information/mission-statement

(7) Menu Catalog. Located on March 2nd

.

http://www.starbucks.com/menu/catalog/product?drink=brewed-coffee#drink=bottled-

drinks&drink=brewed-coffee&drink=chocolate&drink=espresso&drink=Frappuccino-blended-

beverages&drink=kids-drinks-and-other&drink=tazo-tea&drink=vivanno-smoothies

(8) Whole Bean Coffee. Located on March 2nd

.

http://www.starbucks.com/coffee/whole-bean-coffee

(9) Starbucks VIA® Ready Brew Global Expansion Begins with U.K. and Japan. Located on March

2nd

.

http://news.starbucks.com/news/starbucks+via+begins+expansion+with+uk+and+japan.htm

(10) Menu Catalog - Beveages. Located on March 2nd

.

http://www.starbucks.com/menu/catalog/product?drink=brewed-coffee#drink=bottled-

drinks&drink=brewed-coffee&drink=chocolate&drink=espresso&drink=Frappuccino-blended-

beverages&drink=kids-drinks-and-other&drink=tazo-tea&drink=vivanno-smoothies

(11) Menu Catalog – Food. Located on March 2nd

.

http://www.starbucks.com/menu/catalog/product?food=bakery#food=bakery&food=fruit-and-

snack-plates&food=hot-breakfast&food=salads&food=sandwiches-panini-and-wraps&food=yogurt

(12) Retail Careers. Located on March 5th

.

http://www.starbucks.com/career-center/us-careers/retail-careers

(13) Clover. Located on March 6th

.

http://www.starbucks.com/clover/

(14) Starbucks Shared Planet. Located on March 14th

.

http://www.starbucks.com/responsibility/learn-more/starbucks-shared-planet

(15) Shared Planet. Located on April 20th

.

http://www.starbucks.com/sharedplanet/index.aspx

Starbuckscoffee.co.uk

The Coffee Master Programme. Located on March 5th

.

http://www.starbuckscoffee.co.uk/coffee-masters-uktour/

http://www.skm.dk/tal_statistik/skatter_og_afgifter/4607.html


http://www.starbucks.com/retail/find/LocatorResults.aspx?fs=1

http://www.starbucks.com/aboutus/Company_Factsheet.pdf


http://assets.starbucks.com/assets/company-profile-feb10.pdf

http://www.starbucks.com/about-us/company-information/mission-statement

http://www.starbucks.com/menu/catalog/product?drink=brewed-coffee#drink=bottled-drinks&drink=brewed-coffee&drink=chocolate&drink=espresso&drink=frappuccino-blended-beverages&drink=kids-drinks-and-other&drink=tazo-tea&drink=vivanno-smoothies



http://www.starbucks.com/coffee/whole-bean-coffee

http://news.starbucks.com/news/starbucks+via+begins+expansion+with+uk+and+japan.htm




http://www.starbucks.com/menu/catalog/product?food=bakery#food=bakery&food=fruit-and-snack-plates&food=hot-breakfast&food=salads&food=sandwiches-panini-and-wraps&food=yogurt

http://www.starbucks.com/menu/catalog/product?food=bakery#food=bakery&food=fruit-and-snack-plates&food=hot-breakfast&food=salads&food=sandwiches-panini-and-wraps&food=yogurt

http://www.starbucks.com/career-center/us-careers/retail-careers

http://www.starbucks.com/clover/

http://www.starbucks.com/responsibility/learn-more/starbucks-shared-planet

http://www.starbucks.com/sharedplanet/index.aspx

http://www.starbuckscoffee.co.uk/coffee-masters-uktour/


Starbucksicecream.com Your Starbucks Favorites Now Available In Your Freezer. Located on March 4

th.

http://www.starbucksicecream.com/

Statistikbanken.dk

(1) Inflation. Located on March 4th

.

http://www.statistikbanken.dk/PRIS9

(2) BNP/GDP. Located on March 4th

.

http://statistikbanken.dk/NAT01

(3) Folketal. Located on February 20th

.

http://statistikbanken.dk/FOLK1

(4) Folketal. Located on February 20th

.

http://statistikbanken.dk/BEF1A07

(5) Disponibel indkomst. Located on February 20th

.

http://statistikbanken.dk/INDKP6

Teaandcoffee.net

Working at Starbucks: More Than Just Pouring Coffee. Located on April 15th

.

http://www.teaandcoffee.net/0104/coffee.htm

Theofficialboard.com

Starbucks. Located on April 10th

.

http://www.theofficialboard.com/org-chart/starbucks#

Thepurplepassport.com

A Starbucks Price Index 4. Located on March 5th

.

http://diary.thepurplepassport.com/2009/03/starbucks-price-index-4.html

TV2.dk

Megaselskaber undgår stadig skat. Located on April 9th

.

http://nyhederne-dyn.tv2.dk/article/9314590/

Virk.dk

Fødevarevirksomhed - Autorisation eller registrering, samt ansøgning efter

autorisationsbekendtgørelsen m.v. Located on April 19th

.

https://www.virk.dk/myndigheder/FVST/Foedevarevirksomhed_-

_Autorisation_eller_registrering_samt_ansoegning_efter_autorisationsbekendtgoerelsen_mv

Youtube.com

Real Simple – Save at Starbucks. Located on March 3rd

.

http://www.youtube.com/watch?v=AD65eNONLFE

http://www.starbucksicecream.com/

http://www.statistikbanken.dk/PRIS9

http://statistikbanken.dk/NAT01

http://statistikbanken.dk/FOLK1

http://statistikbanken.dk/BEF1A07

http://statistikbanken.dk/INDKP6

http://www.teaandcoffee.net/0104/coffee.htm

http://www.theofficialboard.com/org-chart/starbucks

http://diary.thepurplepassport.com/2009/03/starbucks-price-index-4.html

http://nyhederne-dyn.tv2.dk/article/9314590/

https://www.virk.dk/myndigheder/FVST/Foedevarevirksomhed_-_Autorisation_eller_registrering_samt_ansoegning_efter_autorisationsbekendtgoerelsen_mv

https://www.virk.dk/myndigheder/FVST/Foedevarevirksomhed_-_Autorisation_eller_registrering_samt_ansoegning_efter_autorisationsbekendtgoerelsen_mv

http://www.youtube.com/watch?v=AD65eNONLFE

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