Starbucks Corporation is an American global coffee company
and coffeehouse chain based in Seattle, Washington. Starbucks
is the largest coffeehouse company in the world. From
Starbucks' founding in 1971 as a Seattle coffee bean roaster and
retailer, the company has expanded rapidly. Since 1987,
Starbucks has opened on average two new stores every
day. Starbucks is an active member of the World Cocoa
Starbucks serves hot and cold beverages, whole-bean coffee,
micro ground instant coffee, full-leaf teas and snacks. Most
stores also sell packaged food items, hot and cold sandwiches,
and items such as mugs and tumblers. Starbucks-brand ice
cream and coffee are also offered at grocery stores.
To inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.
Q1. Using the full spectrum of segmentation variables, describe
how Starbucks initially segmented and targeted the coffee
Like many other successful companies Starbucks had made goal. After
that their first segment was “Geographical”, as we study in this case study .
Schultz also include people which showed ‘‘Demographic” segment,
which talk about people profile like: ‘the customer was far more likely to be female
than male. Ages were also included.
Then “Psychographic” segment as written in the line of this case study;
‘the typical customer was wealthier, better educated and more professional than
the other average American.
This 3 segments variable played a vital role in Starbucks segmentation.
At first Starbucks determined which segments offered the
best opportunities. It evaluated to provide ‘customer value proposition’
through visiting geographic segments and worked for better image in
front of customers from ‘campaigns’. Starbucks had limited resources
due to ‘Identity crisis’, but they did a great job in serving customer; that
major competitors overlook or ignore. In 20 years time the company
opened almost 17,000 stores in dozens of countries. Moreover they
further intended to open 10,000 more stores in just four years and then
push Starbucks to 40,000 stores.
• Q#2. What changed first- the Starbucks customer or the Starbucks
experience? Explain your response by discussing the principles of
The experience changed first, according to the case study,
‘the more the Starbucks grew, the more the “Starbucks Experience” began
to change’. The place was not special anymore just because of an identity
crisis with respect to its targeted patrons. It had become less attractive to
hang out. Their market targeting became weak just because they didn’t
keep up with proper customer needs and desires. With the ever increasing
number of stores; in turn causing a higher number of consumers,
Starbucks failed in providing its distinctive services. They served the old
traditional and the new class of customers in the same way. It was no
longer a ‘third place’. These factors caused a downsizing impression in the
eyes of the initially targeted customers.
Q#3. Based on the Segmentation variables, how is Starbucks now segmenting and
targeting the coffee market?
Now Starbucks focuses on “Demographics” which play a vital role, then
“Geographic” and after that ‘Psychographics” and other attributes to provide customer
satisfaction and also maintaining its position.
Q#4. Will Starbucks ever return to the revenue and profit growth that it once
enjoyed? Why or Why not.
Yes, because after downsizing they realized their imperfections and flaws.
They incorporated new strategies to not only reclaim the lost spirit of the “Starbucks
Experience”, but also to maintain its position by launching new ventures. Some of
these tactics include focusing on the grocery business to attract a total new crowd of
clients, and also reduction of prices.