English teacher Jerry Baldwin, history teacher Ziev Siegl, and writer Gordon Bowker were the driving forces behind the decision to open a coffee shop. In 1988, they sold the Starbucks chain to Howard Schultz, who already owned Giornale, a popular coffee roaster outlet known for selling roasted coffee beans, tea, and spices. After acquiring Starbucks, Schultz rebranded Giornale as Starbucks Coffee, Tea, and Spices and rapidly expanded the company.
His first Starbucks coffee shop opened in Vancouver Waterfront Station, Chicago, Illinois, and British Columbia. By 1992, Starbucks had grown to 165 coffee shops and was available to investors on the stock market. Today, Starbucks is a world-famous company and continues to grow as the number one coffee retailer.
Starbucks Marketing Plan Executive Summary: In 1971, Starbucks began its journey as a small coffee shop in Seattle’s Pike Place Market. The idea to open a coffee shop was inspired by English teacher Jerry Baldwin, history teacher Ziev Siegl, and writer Gordon Bowker.
Howard Schultz purchased the Starbucks chain in 1988 from Giornale, a coffee roaster outlet. At that time, Giornale focused on selling roasted coffee beans, tea, and spices without offering coffee drinks. After the acquisition, Howard Schultz renamed Giornale to Starbucks Coffee, Tea, and Spices to align with the new brand name and quickly expanded the company. The inaugural Starbucks coffee shop debuted at Vancouver Waterfront Station in Chicago, Illinois, as well as British Columbia. By 1992, Starbucks boasted a total of 165 coffee shops and became publicly traded for investment opportunities.
Starbucks is currently the leading coffee retailer globally, with over 10,000 coffee shops in more than 30 countries. Notable numbers include 925 outlets in Japan, 730 in the U.K., and 314 in Mexico. Starbucks has also expanded to other countries like Spain, France, Germany, Switzerland, Austria, Greece, Turkey, Lebanon, Jordan, Egypt and Saudi Arabia (Faris, 2012). However, Italy remains untouched by Starbucks’ coffee empire. It was in Italy where Howard Schultz first found inspiration for entering the coffee business during a business trip to Milan back in 1983 (Faris, 2012). During his time there he had an epiphany – realizing that coffee could be more than just a drink; it could create a whole experience. This realization had such an impact on Schultz that it caused him physical shaking. He saw great potential in creating an environment between home and work where people could gather to relax and enjoy a slower yet social atmosphere. Prior to Starbucks’ existence most Americans only frequented their homes and workplaces (Tewell et al., 2006).
Schultz established a “third place” for people, which is a space where they can relax and socialize or enjoy solitude (Tewell, Odom, & Snider, 2006). In order to reinforce its position in the market, Starbucks is striving for greater retail expansion, service and product innovation, product development expansion, and overall financial improvement. This way, it aims to maintain its dominance in the market. Schultz believes that success is not a given but is rather an ongoing process of daily accomplishments. According to Dr. Misner, the key to achieving success without hard work remains undisclosed. Therefore, Starbucks puts in continuous effort to achieve success each day.
SWOT Analyses Strengths • Starbucks has a well-structured coffee menu that is effectively combined with its selection of pastries. The menu offers customers a range of options including cold beverages, frappuccinos, traditional espresso, and various types of whole beans. • Starbucks is known for providing exceptional customer service and refers to its employees as “partners.” The company strongly believes that “Partner satisfaction leads to customer satisfaction” (Tewell, Odom, & Snider, 2006). • Starbucks employs a successful pricing strategy that aims to demonstrate the value of its products, providing a luxurious experience at an affordable price.
The drinks come in three sizes: tall, grande, and venti, with an average price of approximately $3.85. The company excels in selecting prime locations for its coffee shops, which is crucial to its successful business strategy. Additionally, with its strong financial position, Starbucks can explore new business opportunities and take calculated risks. Internationally recognized and present in over 30 countries, Starbucks has a stellar reputation for its excellent customer service, respect towards its Partners, and provision of free internet access. In some countries, customers may also have access to wireless internet for a fee through T-Mobile Hotspot (Talpau & Boscor, 2011, 3.1.). Furthermore, Starbucks offers a wide selection of customizable music that can be purchased within the coffee shop while enjoying a cup of coffee. Despite these strengths, the company faces the threat of competitors copying its offerings and potentially outperforming in terms of beverages, services, and overall experience over time.
The company relies on the quality of its beverages and partnerships for good customer service. Some young employees may require additional training or experience to ensure excellent customer service. Over time, customers may become tired of the same beverages and start seeking new flavors, which the company may fail to recognize promptly, resulting in missed opportunities. The company might face international challenges or problems that can lead to various other issues. However, the company is expanding globally, offering more business opportunities and global publicity. In 2004, a CD-burning service was introduced where customers can create their own music CD (Tewell, Odom, & Snider, 2006). The caffeine in coffee beverages creates a chemical dependency, increasing coffee consumption and fostering consumer loyalty. The growing economy also leads to an increased number of individuals willing to purchase expensive coffee beverages. Starbucks has implemented mobile payments processor Square to further enhance the purchasing convenience. Moreover, the company provides a Starbucks payment card that can be loaded with up to $500 for future purchases.
The Starbucks Card Duetto Visa, a collaboration between Starbucks and Bank One, allows customers to earn rewards. However, competition from McDonald’s, Dunkin Donuts, and other fast food restaurants and coffee shops poses a threat as they offer cheaper coffee beverages with similar services (Talpau & Boscor, 2011). According to Tewell, Odom, and Snider (2006), customers might lose interest in coffee and switch to alternative drinks or leisure activities. This creates the possibility of new competitors entering the market. Additionally, political and economic conditions have the potential to negatively impact Starbucks’ overall business.
Despite these challenges, Starbucks continues its rapid expansion both domestically and internationally while maintaining a positive reputation with customers and partners. Their coffee shops are well-known for their welcoming atmosphere and friendly customer service. The unique flavor of Starbucks’ beverages sets them apart from other coffee shops. Furthermore, Starbucks’ extensive presence in numerous busy locations contributes to its ongoing popularity among the majority of customers.
Starbucks aims to provide its customers with high-quality coffee drinks and an exclusive luxurious experience at an affordable cost. They also strive to offer exceptional customer service, create a calming and friendly ambiance, and promote innovation. Additionally, Starbucks provides other distinct products and services such as complimentary internet access and the option for customers to curate their own music collections.
By offering services like the Visa card, wireless internet, and personalized DVDs, Starbucks seeks to enhance the overall “Starbucks experience” in order to retain current customers while attracting new ones (Talpau & Boscor, 2011). The company’s objective is to expand into more public locations across the United States and internationally.
The target market of Starbucks primarily includes well-educated, affluent white-collar customers aged between 25 and 44. However, they have expanded their target market over time to include less educated individuals with lower incomes. Young mothers with strollers who frequently use the internet make up a majority of Starbucks customers, with a female-to-male ratio of 45% to 55% (Tewell et al., 2006).
In terms of product differentiation, Starbucks offers meticulously crafted beverages made from freshly brewed high-quality coffee beans.
Starbucks prioritizes maintaining the temperature of warm beverages to prevent mouth burns. The drinks are carefully crafted with a harmonious blend of ingredients, resulting in a sweet taste that is not overwhelming. The coffee shops are thoughtfully designed with cozy colors reminiscent of coffee, contributing to a serene atmosphere. Starbucks employees undergo thorough training to deliver exceptional customer service and receive ongoing evaluation and development opportunities. Additionally, Starbucks stands out as the only coffee shop offering complimentary internet access. Customers at Starbucks have the chance to savor their coffee while engaging in social interactions and curating music collections. Positioned as a “third place” between home and work, Starbucks strives to offer a welcoming environment for individuals to spend their time comfortably.
The company prioritizes the people it serves over the products it sells, as stated by Howards Schultz: “we aren’t in the coffee business, serving people. We are in the people business, serving coffee” (Talpau & Boscor, 2011, 3.1.). Starbucks creates a physical environment that is both upscale and inviting, catering to all social and economic levels. Instead of relying heavily on TV or other forms of advertising, Starbucks believes in organic promotion through word of mouth. The company’s future looks promising, with a strong and reliable approach to marketing and expansion into new locations ensuring its stability in the market.
Reference
Faris, S. (2012, Feb 09). Grounds zero: A Starbucks-free Italy. Bloomberg Businessweek. Retrieved from ProQuest. Finch, J. (2012) Managerial Marketing. Bridgepoint Education, Inc Kotler, P. & Armstrong, G. (2001) Principles of marketing. Pearson Education, Inc Patterson, P. G. , Scott, J. , & Uncles, M. D. (February, 2010) How the local competition defeated a global brand: The case of Starbucks: AMJ AMJ AMJ. Australasian Marketing Journal 18. Retrieved November 13, 2012, from ProQuest http://search. proquest. com/docview/734593400/13A5F96C2D84B068674/8? accountid=32521 Plog, S. C. (May, 2005) Starbucks: more than a cup of coffee. Cornell Hotel and Restaurant Administration Quarterly 46. 2 Retrieved November 13, 2012, from ProQuest http://search. proquest. com/docview/209704573/13A5F96C2D84B068674/3? accountid=32521 Talpau, A. & Boscor, D. (2011)
Customer-oriented marketing is a strategy that ensures the success of businesses like Starbucks and McDonald’s (Transilvania University of Brasov, 2012). The Starbucks marketing plan, available on Franklin College’s website, provides further insight into this strategy (Tewell et al., 2006). Additionally, a study on the competitive advantages of Starbucks’ Surfers’ Paradise coffee shop confirms the effectiveness of their customer-oriented approach (Zhenjia, 2012).
