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STARBUCKS : Managing A High Growth Brand HAMZA ŞANDA
IntroductionIn 1971; Starbucks is founded by Jerry Baldwin, Gordon Bowker and Zev Siegel in Seattle. It sold only whole-bean coffee and coffee brewing machines. It is establised as a coffee and coffeehouse chain.In 1980’s; Howard Schultz joined Starbucks in 1982, Then Schultz became CEO and changed the vision of Starbucks. He expanded the scope and exposed the brand wider.Now; Starbucks is the largest coffeehouse company in the world with 17,009 stores in 50 countries,including over 11,000 in the United States, over 1,000 in Canada, and over 700 in the UnitedKingdom. From coffee Business to salad, hot&cold sandwich, ice-cream, tea, music and film…
The Main Success Keys1. Quality PolicyStarbucks has always prefered to offer extreme quality in every aspects. Worked directly with thebest growers to puchase high quality coffee beans. Applied the highest standards of excellence toroasting and brewing these beans. Provided the service experience consistently for all customers bywell educated employees which called “Baristas” The taste of your favorite coffee never changesdue to the standardized processes and quality control focus of management…2. Vision of “Third Place”Starbucks aimed to be a “third place” for its customers as well as their workplace and home. EachStarbucks store is carefully designed to enhance the quality of everthing about the customers’sensory feelings such as see,smell,hear or taste. Starbucks symbolize not just a coffehouse ,but apleasurable coffee-centered experience…3. Strong Commitments By Mission Statement and Brand Values“ To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”.Based on this mission statement, Starbucks identified its brand values as;Coffee: Always with high qualityPartners: Starbucks’ employees are passionate in what they are doing.Customers: Uplifting the lives of the customers, creating a special bond.Neighborhood: Social responsibility and leading the way for progress
The Growth Strategy EvaluationStarbucks planned its expansion of specialty coffee stores into new markets carefully worldwide.The most important feature of Starbucks is its expertising in coffee roasting and brewing processes.Also all Starbucks employees’ deep feel has constantly increased the success of the brand in corebusiness.By the way, Starbucks is extremely careful to avoid losing the brand identity and core values whilediversificating the product. So, Starbucks focused on maintaining the leader position in coffeebusiness.Partnershiping is the main and also successful part. It is no coincidence that 14% of Starbuckscustomers had their first Starbucks coffee in United Airlines flights. This is a good example fordesicion of cooperation. On the other hand, it’s a clever venture to expand the distributionnetwork with a strong business partner such as Kraft and Apple.
The Growth Strategy EvolutionWith creating new products such as “Frappuccino” with Pepsi, Starbucks increased its brandawareness and recognation. It provided Starbucks and Pepsi $152 mio in sales and 83%marketshare in ready to drink market in 2005.Howard Schults’ desicion from the beginning was that Starbucks would only enter into partnershipswith companies who maintain the same commitments to quality and people that Starbucks had asthe foundation of its business… WORLD WIDE....
Starbucks: A Global Brand?YES! YES! YES! Starbucks is in over 55 countries around the world and has 17.009 stores now. Over 11.000 in the United States Over 1.000 in Canada Over 700 in England It ‘s easy to understand the growth of the brand by looking at Starbucks revenue thatcomes from the open stores. Also, Starbucks plans to open 900 new stores on the world in next year.
Moving Into Non-Coffee AreaStarbucks has positioned itself not just a coffeehouse, also a pleasurable coffee centeredexperience place. “Third Place” vision is an indicator of this approach.As a result, Starbucks moved into some non-coffee areas such as;1. Credit Cards Made it easier for customers to purchase Combined Starbucks reloaded card and credit card2. Starbucks Entertainment Investment in film industry Custom-made CDs in stores3. Ethos Water4. Tazo Tea
Moving Into Non-Coffee AreaAlthough moving into new areas is succeeded, there are some disanvantages for Starbucks.Advantages Increased Brand Awareness Improved Brand Image Enhanced Parent BrandDisadvatages Lost Brand Identity Lost Core Value Frustrated CustomersIn the next step, Starbucks may improve “new products which will be related with core business ofcoffee” and “its store chain more qualfied and enhanced”
Starbucks International Expansion Starbucks expansion strategy is very successful. Now, Starbucks has 17.009 retail outlets in more than55 countries worldwide. Starbucks has already taken place in many countrieswith an aggresive strategy with brand awareness andrecognation.After then, Starbucks should increase its marketsharein this countries with local approaches and improve itsproduct category.
Starbucks: Turkey Starbucks is brought into Turkey by Shaya A.Ş which also servesdiffirent internatonal brands to consumer market, such as Topshop,Evans, Dorothy Perkins, The Body Shop, Peacocks, Claire’s,Debenhams, Topman, Miss Selfridge, Le Pain Quotidien Starbucks Coffee franchise system in Turkey does notwork like that all over the world. By the central management of Shayaall stores are being opened, operated and controlled. General Manager Can İkinciStarbucks is in 12 cities in Turkey and has 161 stores. 8 7 Over 100 in Istanbul 6 Over 20 in Ankara 5 4 3 Starbucks also has an enlargement strategy in other 2 cities in Turkey. 1 0
Competition Threats: GlobalThe biggest threat for Starbucks in global market is the strongcompetitor, Dunkin’ Donuts...Donkin’ Donuts is one of the most famous food and beveragecompany that headquartered in New York, in international markets. In Feb.2011, Dunkin Donuts earned the No. 1 ranking for customer, Loyalty in the coffee category by Brand Keys for the fifth year,Dunkin Donuts has more than 1,000 donut varieties along withother products, especially with a wide varieties of coffee beverages.In 2010, Dunkin Donuts global system-wide revenue was $6 billion.Brand Keys is active in predictive brand equity, loyalty, andengagement metrics since 1984.
Competition Threats: TurkeyThe biggest threat for Starbucks in Turkish market is the strong competitors, Kahve Dünyası.Kahve Dünyası opened its first store in Eminonu in 2004, selling retail and wholesale coffee, nowone of the major brand names in the sector thanks to its fast growth.Kahve Dünyası offers more than 50 kinds of coffee from traditional Turkish coffee to espresso-based gourmet coffee varieties, from flavored filter coffee to chilled coffee, and from packagedcoffee products to regional coffees.Along with coffee, chocolate production is also another area in which Kahve Dünyası is an expert
Human Resource ManagementStarbucks realized early on that motivated and committed humanresources were the key to the success of a business.Company takes great care in selecting the right kind of peopleand make an effort to retain them. The company’ s humanresource policies reflects its commitment to its employees.Starbucks hires people for qualities like adaptability, dependabilityand the ability to work in a team.Starbucks also is one of few companies who invest in employeetraining and provide comprehensive traing to all classes ofemployees, including part-timers.Employees are trained and educated by “Coffee Master” in coffeetasting, growing regions, roasting and purchasing with 25-hours ofcoursework.
Pay for Starbucks ExperienceCustomerThink, a research company, organized asurvey on the Starbucks in-store experience andthey received 3,865 valid responses collected acrossthe globe.And as you can imagine, “Price” was the No. 1 factorrespondents like least about Starbucks. (%25)No.2 Factor was also “Wait Time” with %24.The Should Starbucks lower its price? As a customer, I believe that pricecuts are always welcome. But if the company could deliver a trulyeffective experience that addresses my most critical needs whilereflecting unique brand values, Im willing to pay a premium price toenjoy my cup of coffee.Starbucks still has ample opportunity windows to provide an effective,branded experience to its customers. It will be interesting to see whatthe company does.
STARBUCKS : Managing A High Growth Brand HAMZA ŞANDA