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Specialty coffee sales are increasing by 20% per year and account for nearly 8% of the 18 billion dollar U.S. coffee market.
Among coffee drinkers the average consumption in the United States is 3.1 cups of coffee per day.
50% of the population, equivalent to 150 million Americans, drink espresso, cappuccino, latte, or iced/cold coffees.
Independent coffee shops equal $12 billion in annual sales.
At the present time there are approximately 24,000 Coffee Shops across the country. Statistics show there will be approximately 50,000+ Coffee Shops by the year 2011.
Americans consume 400 million cups of coffee per day making the United States the leading consumer of coffee in the world.
Starbucks opened its first store in 1971 in the Pike Place Market in
In 1987 Starbucks opens its first stores outside of Seattle area in Chicago and
1996 Starbucks joins with Pepsi-Cola to begin selling bottled Frappuccino
coffee drink , and also opens its first store outside of North America in Japan.
2002 Starbucks enters into licensing agreements with national Fair Trade
organizations to sell Fair Trade Certified coffee in the countries where Starbucks does business.
By 2009 Starbucks becomes the world’s largest buyer of Fair Trade Certified
Starbucks’ Mission "To inspire and nurture the human spirit - One person, One cup, and One Neighborhood at a time." 5
Starbucks’ Vision “Establish Starbucks as the most recognized and respected brand in the world." 6
Starbucks’ Six Principles
Provide a great work environment and treat each others with respect and dignity.
Embrace diversity as an essential component in the way they do business.
Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of their coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to their communities and their environment.
Recognize that profitability is essential to their future success.
Starbucks’ Unconventional Marketing Strategy Starbucks chose an unconventional marketing strategy that may be unique and seldom-tried, that will most perfectly match the concept that the company wants to portray. Perfect Cup of Coffee- Emphasis on product quality. Their coffee, even though priced slightly more expensive than expected, is notorious for satisfying customers with its rich, delicious taste and aroma. Third Place- Creating this unique and relaxing “experience” and “atmosphere” for people to go to between home and work has been very important for the company as they realized that this is one of the strongest concepts attached to the company, to which customers have been strongly attracted. 8
Starbucks’ Unconventional Marketing Strategy Customer Satisfaction–From the entrance to the store to the very last drop of their coffees, it is a must that customers feel the uniqueness of enjoying their Starbucks coffee experience. Creating a Starbucks Community- The Starbucks marketing strategy has even expanded to create a community around their brand. On their website, individuals are encouraged to express their experiences with Starbucks history, and the company strives to “personally” join in the discussions. Smart Partnerships-Starbucks Coffee Company has been known to create strategic partnerships that demonstrate the fact that another way to grow your business is to partner smart. 9
Starbucks’ Unconventional Marketing Strategy Innovation- Through the years, they’ve added different flavors to their coffee, more food on their menu, and even became one of the first to offer internet capability in their stores. Brand Marketing- The Starbucks marketing strategy has always focused on “word-of-mouth” advertising and letting the high quality of their products and services speak for themselves. 10
Starbucks Expansion Strategy
Establish hubs in large major cities
Ensure city is able to support 20 or more locations in the hub within the first two years
Once hub is blanketed, open more stores in smaller city areas around the region
Implement zone managers to oversee the development process of each hub
SWAT Analysis Strengths:
Established logo, developed brand,copyrights, trademarks, website andpatents
Company operated retail stores,
International stores (no franchise)
High visibility locations to attract customers
Valued and motivated employees, good work environment
Good relationships with suppliers
Industry market leader
Customer base loyalty
Widespread and consistent
Strong financial foundation
SWAT Analysis Weaknesses:
Lack of internal focus (too much focus on expansion)
Ever increasing number of competitors in a growing market
Cross functional management
Product pricing (expensive)
SWOT Analysis Opportunities:
Expansion into retail operations
New distribution channels (delivery)
Emerging international markets
Continued domestic expansion/ domination of segment
SWAT Analysis Threats:
Competition (restaurants, street carts,supermarkets, other coffee shops, othercaffeine based products)
US market saturation
Coffee price volatility in developing
Negative publicity from poorly treated
farmers in supplying countries
Consumer trends toward more healthy ways and away from caffeine
Alienation of younger, domestic market
Corporate behemoth image
Cultural and Political issues in foreign
Green Mountain Coffee Roasters
Coffee Bean and Tea Leaf
Peet'sCoffee and Tea
Procter & Gamble
$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 17
Starbucks Today Starbucks vs. Industry This Chart compares Starbuck's stock to the Special Eateries Industry average. As depicted by the graph, Starbuck's has been a defining force in the industry, as the industry average follows the exact same pattern/line, just slightly below Starbucks, for the past five years. 18
Summary What was once a small coffee shop opened by Gerald Baldwin, Gordon Bowker, and ZievSiegl in 1971, Starbucks Coffee Company has grown into the number one specialty coffee retailer. With over 16,000 coffee shops in more than 50 countries, the company’s main objective is to establish Starbucks as the “most recognized and respected brand in the World. Currently, Starbucks is relying on retail expansion, product innovation, and service innovation to achieve a long-term goal of creating a chain of coffeehouses that would become America’s “third place”. By working toward this goal, Starbucks wants to open new stores in both new and existing markets, expand their product development process, and cater to customers’ needs to eventually improve their financial position and dominate market share. 19
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