1. Starbucks Case Study John Baab, Charly Costigan,
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Starbucks Case Study
John Baab, Charly Costigan,
Tyler Kleckner, Ashley Kreuer,
Ellen Park, Ashley Wooding

2. Outline
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3. Background and History
Gerald Baldwin, Gordon Bowker, and Ziev Siegl – opened a small coffee shop in Seattle’s Pike Place Market in 1971
Howard Schultz – Joined the Starbucks marketing team
Traveled to Italy and became interested in the espresso bars and tried to bring it to America
Founders sold the company to Shultz
Began to open new stores and had 140 stores by 1992
Decided to take the company public and succeeded by opening more stores
Shultz continued to take the position as chairman and chief global strategist and hired CEO Orin Smith in 2002
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4. Mission/Vision of Starbucks
To satisfy customers and to create a “third place” environment
Three components to branding strategy : the coffee itself, service, and atmosphere
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5. Overview as of 2002 5,886 stores(4574 National, 1312 International)
Customers(20 million total, 570 per week per store)
Net Income of 215 million $
Customer Demographic (Traditional vs. New)
Menu (Average price of drink – $3.85, 30 drinks, and 23 whole bean coffee blends)
Partners – 360 total labor hours and an average pay rate of $9.00 per hour
Partnerships (Pepsi Bottling Co., Kraft Foods, and Dreyers Ice cream)
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6. Starbucks Share of Specialty Coffee Market 42% (estimate) – 13% Total Market Share
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7. Starbucks Share of Specialty Coffee Market 50% (estimate) – 20
Starbucks Share of Specialty Coffee Market 50% (estimate) – 20.5% Total Market Share
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8. Strengths Well developed and established brand strategy: “live coffee”
Locations
Product Mix
“Partners”
Customization of Drinks
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9. Weaknesses Customization of Drinks Lacked a strategic marketing group
Caused tension between product quality and customer focus
Increased menu size
Lacked a strategic marketing group
Very little image & product differentiation
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10. Opportunities Increase Customer Satisfaction
Customer Quota
Increase the number of stores
Domestically/Internationally
Create New Products & Services
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11. Threats Competition Donut & Bagel Chains
Small scale specialty coffee chains
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12. Problem
Key Problem: Maintaining a customer focused brand image while continuing expansion
Customer Satisfaction
Lost sight of the consumer
Lost connection between customers and growing business
Service gap
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13. Existing Plan Investment Plan
$40 million annually
Add 20 labor hours a week
Maintain 3 minute service time goal
Increase customer satisfaction
Goal: All stores achieve $20,000 increase in weekly sales
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14. Reinvigorating a Customer Focused Image
New Incentives for customer
Ideas: Drink of the day, membership cards, serve at your seat
Incentives for Partners
Adding 20 hours during peak hours to maintain 3 minute time
More authority to regional retail managers
Install a rolling menu policy
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15. Maintaining Expansion
Moving into new domestic and international markets
Not saturating existing markets
Instead: move into untapped domestic markets and increase through put at current stores through added hours
Advantages: Will appear more customer focused locally, faster
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16. Recap customer service inovations brand image Marketing plan Expansion
Domestic
International
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