STARBUCKS

CONTENT• Company Background• Evolution And Growth• Product Line• Customer Satisfaction • Marketing Strategies• Competition• SWOT Analysis• Product Supply• Starbucks Revenue• Conclusion

• We’re not in the coffee business serving people…

• We’re in the people business serving coffee.• -Howard Behar,

• Director of Retail Operations

COMPANY BACKGROUND• Is the largest coffee house company in the world.• Opened in Seattle, Washington, in1971.• Founders Jerry Baldwin, Zev Siegl, Gordon Bowker.• Started as a coffee bean roaster and retailer.• Entrepreneur Howard Schultz joined in 1982.• Left Starbucks in 1985.• Started ilGiornale(ill jor-nahl-ee) coffee bar chain in April 1986.• Three store by April 1987 and sales equaled $1.5 million annually.• Il Giornale acquired Starbucks on august 1987.

EVOLUTION & GROWTH• Over 17000 store in over 55 countries including 11000 in the US.• Opened a new store every workday between the 1990s till 2000s(on an

average).• Entered international market in 1996 from Tokyo.• Expansion strategy• Improvised store ambience and decorum.• Expanded in supermarkets and building lobbies also.• Customer satisfaction and customer tastes.• Anonymous surveys.• Customized product Line.

1971-87

1987-2010

2011

PRODUCT LINE• Wide range of product choices• Introduces new beverage ideas every year • Notable Additions for 2011

– Cocoa Cappuccino, Starbucks Tribute Blend coffee– Cake Pops, Red Velvet Whoopie Pies and Mini Cupcakes

• The company's retail sales mix is– 61 % coffee beverages– 15% whole-bean coffees– 16% food items– 8% coffee-related products and equipment.

• Drink sizes: Tall, Grandee, Venti

CUSTOMER SATISFACTION• Starbucks experience is about the 3 P’s

– People and Product• Customer connection and a fresh, hand-made beverage• Serves with a personalized touch

– Place• The aroma• Store design

• Employee Satisfaction

MARKETING STRATEGY• Word - of - Mouth

– Believed in Mouth-to-Mouth publicity by customer satisfaction• Advertising

– Television advertisement– Print media

• Store Ambience– Location of Stores– Physical layout of stores

COMPETITION

• In 1997, 8000 different coffee outlets in US• Second Cup was closest competitor in US• Competition from nationwide coffee manufacturers such as Kraft General

Foods, Proctor and Gamble and Nestle• It also faced competition from numerous restaurants

SWOT ANALYSISStrengths• Starbucks is the market leader in the coffee Market.• Well-known brand identity and image.• Majority market share.• Recognized for Quality and Service.• Employee Satisfaction due to competitive compensation and benefit

packages.• Top 50 of Fortune’s ‘World’s Most Admired Companies List’.• Strong financial foundation

SWOT ANALYSIS (Cont.)Weaknesses• Pricing are higher as compared to the competitors.• High operating cost.• The business profits are highly dependent on coffee product.• It has closed down many of its outlets due to numb sales in many regions

during year 2008-2009.

SWOT ANALYSIS (Cont.)Opportunities : • New Market Opportunities Internationally.• More bottled drinks such as bottled Frappuccinos sold in supermarkets.• Market extension for Starbucks merchandise, such as aprons, hats, mugs

etc.• Selling Whole bean sales in supermarkets at market price.• Co-branding with other renowned giants of food or beverage industries.• Created a CD-burning service in their Santa Monica (California USA) cafe

with Hewlett Packard, where customers create their own music CD.

SWOT ANALYSIS (Cont.)Threats : • Many entrants and copy-cat brands are a serious threat to the brand.• Being established widely in the U.S., it has a serious threat to face if the

U.S. market faces saturation.• Volatility of pricing in the different countries.• Trends that are creating barriers to the consumption of coffee due to the

level of caffeine it contains.• Global financial crisis which make peoples tend not to spend too much

money.

STARBUCKS REVENUEStarbucks• $15 billion chain coffee business• Total net revenues increased 10% to 2.8 billion• EPS increased 21% to $0.34 in Q2 FY11 compared to $0.28 in Q210‘s

16,706 Starbucks stores in the world located in more than 50 countries

Number of Starbucks’ stores world wide

Starbucks around the Globe

PRODUCT SUPPLY• Company were getting coffee beans through 3 ways.• Importing coffee beans from various coffee producing countries. • 2-Most coffee was purchased in the commodity market.• 3-Starbucks entered into fixed-price purchase agreement.

CONCLUSION• Wide range product choices• Introduces new beverages every year• Mouth to mouth publicity• Importing coffee from various sources.• Good financial condition.

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