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Peer Shmelzer Moratin assignment 2 MKTG 6000

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  • Peer, thanks for this comprehensive and detailed presentation about Starbuck. Your numbers are really impressive, 50,000 coffee shops by the end of this year is simply amazing. Now I understand why in San Francisco there is a Starbucks in every corner. As a coffee drinker I believe that Starbucks is far from being a good coffee like “illy” or “Segafredo”, however, despite its expensive prices, I end up buying a “Latte” before class. The reasons are very simple actually: internet, temperature, diversity, cleanliness, closeness and the most important, size. Starbucks got me !

    As you might notice I have a different opinion about the last point (size) which you pointed as a weakness. In fact I believe that it was one of the smartest moves of Starbucks. In economic terms they decide to be “Big” being “Small” thousand of times, avoiding the so unoriginal “economies of scale” that makes companies fail. Do you imagine a Starbucks occupying a entire building or block?.

    Peer, great job. I really enjoyed reading it.

    Herman Jopia
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  1. 1. Peer PEER SHMELZER MORATIN<br />MKTG 6000<br />MAY 2011P<br />STARBUCKS<br />
  2. 2. TABLE OF CONTENTS<br />2<br />Coffee Statistics 3<br />Starbucks’ History 4<br />Starbucks’ Mission 5<br />Starbucks’ Vision 6<br />Starbucks’ Six Principles 7<br />Starbucks’ Unconventional Marketing Strategy 8<br />Starbucks Expansion Strategy 11<br />SWAT Analysis 12<br />Competitors 16<br />Starbucks Today 17<br />Summary 19<br />Works Cited 20 <br />
  3. 3. Coffee Statistics<br /><ul><li>Specialty coffee sales are increasing by 20% per year and account for nearly 8% of the 18 billion dollar U.S. coffee market. 
  4. 4. Among coffee drinkers the average consumption in the United States is 3.1 cups of coffee per day.
  5. 5. 50% of the population, equivalent to 150 million Americans, drink espresso, cappuccino, latte, or iced/cold coffees.
  6. 6. Independent coffee shops equal $12 billion in annual sales. 
  7. 7. 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. 
  8. 8. Americans consume 400 million cups of coffee per day making the United States the leading consumer of coffee in the world.</li></ul>3<br />
  9. 9. Starbucks’ History<br /><ul><li>Starbucks opened its first store in 1971 in the Pike Place Market in </li></ul> downtown Seattle.<br /><ul><li>In 1987 Starbucks opens its first stores outside of Seattle area in Chicago and </li></ul> Vancouver, B.C. <br /><ul><li>1996 Starbucks joins with Pepsi-Cola to begin selling bottled Frappuccino</li></ul> coffee drink , and also opens its first store outside of North <br /> America in Japan. <br /><ul><li>2002 Starbucks enters into licensing agreements with national Fair Trade </li></ul> organizations to sell Fair Trade Certified coffee in the countries where <br /> Starbucks does business. <br /><ul><li>By 2009 Starbucks becomes the world’s largest buyer of Fair Trade Certified </li></ul> coffee.<br />4<br />
  10. 10. Starbucks’ Mission<br />"To inspire and nurture the human spirit - One person, One cup, and One Neighborhood at a time."<br />5<br />
  11. 11. Starbucks’ Vision<br />“Establish Starbucks as the most recognized and respected brand in the world."<br />6<br />
  12. 12. Starbucks’ Six Principles <br /><ul><li>Provide a great work environment and treat each others with respect and dignity.
  13. 13. Embrace diversity as an essential component in the way they do business.
  14. 14. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of their coffee.
  15. 15. Develop enthusiastically satisfied customers all of the time.
  16. 16. Contribute positively to their communities and their environment.
  17. 17. Recognize that profitability is essential to their future success.</li></ul>7<br />
  18. 18. Starbucks’ Unconventional Marketing Strategy <br />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.<br />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.<br />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.<br />8<br />
  19. 19. Starbucks’ Unconventional Marketing Strategy <br />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. <br />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. <br />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. <br />9<br />
  20. 20. Starbucks’ Unconventional Marketing Strategy <br />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.<br />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. <br />10<br />
  21. 21. Starbucks Expansion Strategy<br /><ul><li>Establish hubs in large major cities
  22. 22. Ensure city is able to support 20 or more locations in the hub within the first two years
  23. 23. Once hub is blanketed, open more stores in smaller city areas around the region
  24. 24. Implement zone managers to oversee the development process of each hub</li></ul>11<br />
  25. 25. SWAT Analysis <br />Strengths:<br /><ul><li>Product diversification
  26. 26. Established logo, developed brand,copyrights, trademarks, website andpatents
  27. 27. Company operated retail stores,</li></ul>International stores (no franchise)<br /><ul><li>High visibility locations to attract customers
  28. 28. Valued and motivated employees, good work environment
  29. 29. Good relationships with suppliers</li></ul>Industry market leader<br /><ul><li>Globalized
  30. 30. Customer base loyalty
  31. 31. Widespread and consistent
  32. 32. Strong Board
  33. 33. Strong financial foundation</li></ul>12<br />
  34. 34. SWAT Analysis <br />Weaknesses:<br /><ul><li>Size
  35. 35. Lack of internal focus (too much focus on expansion)
  36. 36. Ever increasing number of competitors in a growing market
  37. 37. Self cannibalization
  38. 38. Cross functional management
  39. 39. Product pricing (expensive)</li></ul>13<br />
  40. 40. SWOT Analysis <br />Opportunities:<br /><ul><li>Expansion into retail operations
  41. 41. Technological advances
  42. 42. New distribution channels (delivery)
  43. 43. New products
  44. 44. Distribution agreements
  45. 45. Brand extension
  46. 46. Emerging international markets
  47. 47. Continued domestic expansion/ domination of segment</li></ul>14<br />
  48. 48. SWAT Analysis <br />Threats:<br /><ul><li>Competition (restaurants, street carts,supermarkets, other coffee shops, othercaffeine based products)
  49. 49. US market saturation
  50. 50. Coffee price volatility in developing</li></ul>countries<br /><ul><li>Negative publicity from poorly treated</li></ul>farmers in supplying countries<br /><ul><li>Consumer trends toward more healthy ways and away from caffeine
  51. 51. Alienation of younger, domestic market</li></ul>segments<br /><ul><li>Corporate behemoth image
  52. 52. Cultural and Political issues in foreign</li></ul>countries<br />15<br />
  53. 53. Competitors <br /><ul><li>7-Eleven
  54. 54. Dunkin Donuts
  55. 55. McDonald's
  56. 56. Green Mountain Coffee Roasters 
  57. 57. Coffee Bean and Tea Leaf 
  58. 58. Costa Coffee 
  59. 59. Peet'sCoffee and Tea
  60. 60. Caribou Coffee
  61. 61. Second Cup
  62. 62.  Kraft 
  63. 63.  Procter & Gamble 
  64. 64.  Nestlé</li></ul>16<br />
  65. 65. Starbucks Today<br /><ul><li> $15 billion chain coffee business
  66. 66. Total net revenues increased 10% to 2.8 billion
  67. 67. EPS increased 21% to $0.34 in Q2 FY11 compared to $0.28 in Q210‘</li></ul>s 16,706 Starbucks stores in the world located in more than 50 countries<br />Number of Starbucks’ stores world wide <br />Starbucks around the Globe <br />17<br />
  68. 68. Starbucks Today <br />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<br />the exact same pattern/line, <br />just slightly below <br />Starbucks, for the past <br />five years. <br />18<br />
  69. 69. Summary<br />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. <br />Currently, Starbucks is relying on retail expansion, product innovation, and <br />service innovation to achieve a long-term goal of creating a chain of coffeehouses that would become America’s “third place”. <br />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.<br />19<br />
  70. 70. Works Cited <br /><ul><li>"Coffee Statistics." Espresso Business Solutions - Espresso Drive Thru Solutions. Web. 05 May 2011. <http://www.e->.
  71. 71. Kembell, Brent, Michelle Hawks, Sean Kembell, Leonard Perry, and Luke Olsen. "Catching the Starbucks Fever - Starbucks Marketing Strategy." Open Sharing of Academic Unpublished Papers & Research Papers. Academic Mind, Apr. 2002. Web. 06 May 2011. < 2002-04-000aag-catching-the-starbucks-fever.html>.
  72. 72. Starbucks Coffee Company. Web. 29 Apr. 2011. <>.
  73. 73. "Starbucks Marketing Strategy." Why Do People Vote - Vote For Us. Voteforus. Web. 01 May 2011. <>.
  74. 74. "Starbucks Mission Statement." Business Intelligence: How Your Business or Organsation Can Rapidly Benefit! Web. 05 May 2011. <>.
  75. 75. "Starbucks Swot Analysis." Scribd. Web. 07 May 2011. <>. </li></ul>Tewell, Katie, Bethany Odom, and Kelly Snider. "Starbucks Marketing Plan." Franklin College. 12 Dec. 2006. Web. 30 Apr. 2011. <>. <br /><ul><li>Thompson, Arthur A., and John E. Gamble. "Starbucks Case Study." Web. 02 May 2011. < business/management/thompson/11e/case/starbucks-2.html>. </li></ul>20<br />