Starbucks A Major Player In The Coffee Industry Marketing Essay

1576 words (6 pages) Essay

1st Jan 1970 Marketing Reference this

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1 INTRODUCTION

Coffee is one of the most widely consumed beverages in the world today. A few interesting facts about coffee is that it originated back in the ninth century from Ethiopia and spread to the rest of the world via Egypt and Europe. It got its name from the region form which coffee originated, named Kaffa, in Ethiopia. From there the popularity of coffee grew worldwide making it now one of the most widely consumed beverage in the world. (Wikipedia (2006) date accessed 11.12.2006).

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Starbucks is a major player in the coffee industry. This company was formed in Seattle, USA in 1971. In a matter of around 35 years, this company is now the largest and most popular coffee company, serving many countries in the world. Starbucks Coffee Company is the leading retailer, roaster and brand of specialty coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim – wherever there is a demand for great coffee.

2 MISSION STATEMENT

Every Organization has its goals and objectives that have been defined by its vision and mission statements. Below are the definitions of vision and mission statement.

A definition of Mission is purpose, reason for being; also, an inner calling to pursue an activity or perform a service.

There is a difference between vision and mission. The Vision describes a future identity and the Mission describes how it will be achieved. A Mission statement may define the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. The mission can remain the same for decades if planned .

The mission statements are as follows:

Provide a great work environment and treat each other with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to our communities and our environment.

Recognize that profitability is essential to our future success.

3 Starbucks Competitors.

Starbucks’ marketing strategy involved positioning its Starbucks outlets as a place where consumers can spend Starbucks Competitors

time other than their home or work. This was done by making each of its stores as comfortable and relaxing as possible. The coffee giant achieved these using creature comforts, such as comfortable furniture and relaxing music. While Starbucks stores are positioned as locations where customers can spend time in a comfortable setting, their product lines are positioned at the higher end in regards to prices and quality.

Starbucks competitors in the coffee beverage sales include 7-Eleven, Dunkin Donuts, BIGGBY Coffee, Caribou Coffee, McDonald’s, Panera Bread, and Einstein Bagels. Competitors such as McDonald’s and Dunkin Donuts not only have extensive menus, but also the financial resources and position to leverage their strengths to threaten Starbucks profitable.(www.starbuck competitor .com)

4 STAKEHOLDERS

Starbucks have different stakeholders which is very important to the company. Starbucks lists its stakeholders as employees, customers, coffee farmers, suppliers, community members, environmental groups, activists, shareholders.

Starbucks customers are mainly youngsters. Customers between 25 to 40 years of age are mainly the main target of the company. However, lately Starbucks is trying to attract to teenagers of age group 16 to 20. Starbucks is trying to launch a new product that will attract the teenagers to get in their stores. “The company also is looking at whether other items in the store that might appeal to kids, such as its signature line of teddy bears, should be placed in parts of the store where kids can’t get to them as easily”. (Allison linn, 2007) .

Starbucks play an important role in the life of local community members. “The local Starbucks coffeehouse has become a central part of many neighbourhoods by serving as a place for people to gather, talk and share. But Starbucks believes it can contribute even more to local communities, by encouraging our partners to become responsible neighbours and active participants in the places where they live, work and play. It is an important part of our company’s culture and values”. (Starbucks.com, 2009)

Starbucks shareholders play a very important role in the day to day functioning of the company. They are represented by a group called “As you saw foundation”. They are concerned about the financial and legal implications of genetically engineered foods, not to mention the company’s reputations

5 SWOT Analysis

This is the first and foremost area where Starbucks will be concentrating. The environmental scanning is very important in context of the feasibility of Starbucks in India. In this Starbucks will be observing both external and internal factors which may affect their decision. This can be done by a SWOT analysis.

5.1 STRENGTHS

Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.The company generated revenue of more than $5000 million in thesame year.

It is a global coffee brand built upon a reputation for fine products and services. It

The organization has strong ethical values and an ethical mission statement as follows, ‘Starbucks is committed to a role of environmental leadership in all facets of our business.’

5.2 WEAKNESSES

Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.

The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.

coffee. This could make them slow to diversify into other sectors should the need arivel,

5.3 OPPURTUNITIES

Starbucks are very good at taking advantage of opportunities. In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.

New products and services that can be retailed in their cafes, such as Fair Trade

Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future?

Starbucks are exposed to rises in the cost of coffee and dairy products.

Since its conception in Pike Place Market, Seattle in 1971, Starbucks’ success has lead to the market entry of many competitors and copy cat brands that pose potential threats.

The organization is dependant on a main competitive advantage, the retail of

6 CURRENT AND PAST STRATEGIES

In 1992 and 1993 Starbucks developed a three-year geographic expansion strategy that targeted areas which not only had favourable demographic profiles but which also could be serviced and supported by the company’s operations infrastructure. For each targeted region, Starbucks selected a large city to serve as a “hub”; teams of professionals were located in hub cities to support the goal of opening 20 or more stores in the hub in the first two years. Once stores blanketed the hub, then additional stores were opened in smaller, surrounding “spoke” areas in the region. To oversee the expansion process, Starbucks created zone vice presidents to direct the development of each region and to implant the Starbucks culture in the newly opened stores. The entire new zone vice presidents Starbucks recruited came with extensive operating and marketing experience in chain-store retailing.

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Starbucks’ store launches grew steadily more successful. In 1995, new stores generated an average of $700,000 in revenue in their first year, far more than the average of $427,000 in 1990. This was partly due to the growing reputation of the Starbucks brand. In more and more instances, Starbucks’ reputation reached new markets even before stores opened. Moreover, existing stores continued to post year-to-year gains in sales.

At present Starbucks is operating at the same strategy it had used previously. The track record is still so good at present economic scenario that it did not need to closed much business around the world.

7 CONCLUSON

Starbucks has not been as successful in other countries as it has been in USA. Therefore it may be seen that they have not implemented and formulated the right strategies. They In fact have been making losses in other places for a variety of reasons.

Even though they have not been able to be very successful in markets outside USA, I do feel they can make an impression in the Indian market and can be successful.

Finally all that needs to be said is that they have the potential to succeed in India but will have to adopt their ways and learn to change according to the cultures.

1 INTRODUCTION

Coffee is one of the most widely consumed beverages in the world today. A few interesting facts about coffee is that it originated back in the ninth century from Ethiopia and spread to the rest of the world via Egypt and Europe. It got its name from the region form which coffee originated, named Kaffa, in Ethiopia. From there the popularity of coffee grew worldwide making it now one of the most widely consumed beverage in the world. (Wikipedia (2006) date accessed 11.12.2006).

Starbucks is a major player in the coffee industry. This company was formed in Seattle, USA in 1971. In a matter of around 35 years, this company is now the largest and most popular coffee company, serving many countries in the world. Starbucks Coffee Company is the leading retailer, roaster and brand of specialty coffee in the world, with more than 15,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim – wherever there is a demand for great coffee.

2 MISSION STATEMENT

Every Organization has its goals and objectives that have been defined by its vision and mission statements. Below are the definitions of vision and mission statement.

A definition of Mission is purpose, reason for being; also, an inner calling to pursue an activity or perform a service.

There is a difference between vision and mission. The Vision describes a future identity and the Mission describes how it will be achieved. A Mission statement may define the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. The mission can remain the same for decades if planned .

The mission statements are as follows:

Provide a great work environment and treat each other with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to our communities and our environment.

Recognize that profitability is essential to our future success.

3 Starbucks Competitors.

Starbucks’ marketing strategy involved positioning its Starbucks outlets as a place where consumers can spend Starbucks Competitors

time other than their home or work. This was done by making each of its stores as comfortable and relaxing as possible. The coffee giant achieved these using creature comforts, such as comfortable furniture and relaxing music. While Starbucks stores are positioned as locations where customers can spend time in a comfortable setting, their product lines are positioned at the higher end in regards to prices and quality.

Starbucks competitors in the coffee beverage sales include 7-Eleven, Dunkin Donuts, BIGGBY Coffee, Caribou Coffee, McDonald’s, Panera Bread, and Einstein Bagels. Competitors such as McDonald’s and Dunkin Donuts not only have extensive menus, but also the financial resources and position to leverage their strengths to threaten Starbucks profitable.(www.starbuck competitor .com)

4 STAKEHOLDERS

Starbucks have different stakeholders which is very important to the company. Starbucks lists its stakeholders as employees, customers, coffee farmers, suppliers, community members, environmental groups, activists, shareholders.

Starbucks customers are mainly youngsters. Customers between 25 to 40 years of age are mainly the main target of the company. However, lately Starbucks is trying to attract to teenagers of age group 16 to 20. Starbucks is trying to launch a new product that will attract the teenagers to get in their stores. “The company also is looking at whether other items in the store that might appeal to kids, such as its signature line of teddy bears, should be placed in parts of the store where kids can’t get to them as easily”. (Allison linn, 2007) .

Starbucks play an important role in the life of local community members. “The local Starbucks coffeehouse has become a central part of many neighbourhoods by serving as a place for people to gather, talk and share. But Starbucks believes it can contribute even more to local communities, by encouraging our partners to become responsible neighbours and active participants in the places where they live, work and play. It is an important part of our company’s culture and values”. (Starbucks.com, 2009)

Starbucks shareholders play a very important role in the day to day functioning of the company. They are represented by a group called “As you saw foundation”. They are concerned about the financial and legal implications of genetically engineered foods, not to mention the company’s reputations

5 SWOT Analysis

This is the first and foremost area where Starbucks will be concentrating. The environmental scanning is very important in context of the feasibility of Starbucks in India. In this Starbucks will be observing both external and internal factors which may affect their decision. This can be done by a SWOT analysis.

5.1 STRENGTHS

Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.The company generated revenue of more than $5000 million in thesame year.

It is a global coffee brand built upon a reputation for fine products and services. It

The organization has strong ethical values and an ethical mission statement as follows, ‘Starbucks is committed to a role of environmental leadership in all facets of our business.’

5.2 WEAKNESSES

Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.

The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.

coffee. This could make them slow to diversify into other sectors should the need arivel,

5.3 OPPURTUNITIES

Starbucks are very good at taking advantage of opportunities. In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.

New products and services that can be retailed in their cafes, such as Fair Trade

Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future?

Starbucks are exposed to rises in the cost of coffee and dairy products.

Since its conception in Pike Place Market, Seattle in 1971, Starbucks’ success has lead to the market entry of many competitors and copy cat brands that pose potential threats.

The organization is dependant on a main competitive advantage, the retail of

6 CURRENT AND PAST STRATEGIES

In 1992 and 1993 Starbucks developed a three-year geographic expansion strategy that targeted areas which not only had favourable demographic profiles but which also could be serviced and supported by the company’s operations infrastructure. For each targeted region, Starbucks selected a large city to serve as a “hub”; teams of professionals were located in hub cities to support the goal of opening 20 or more stores in the hub in the first two years. Once stores blanketed the hub, then additional stores were opened in smaller, surrounding “spoke” areas in the region. To oversee the expansion process, Starbucks created zone vice presidents to direct the development of each region and to implant the Starbucks culture in the newly opened stores. The entire new zone vice presidents Starbucks recruited came with extensive operating and marketing experience in chain-store retailing.

Starbucks’ store launches grew steadily more successful. In 1995, new stores generated an average of $700,000 in revenue in their first year, far more than the average of $427,000 in 1990. This was partly due to the growing reputation of the Starbucks brand. In more and more instances, Starbucks’ reputation reached new markets even before stores opened. Moreover, existing stores continued to post year-to-year gains in sales.

At present Starbucks is operating at the same strategy it had used previously. The track record is still so good at present economic scenario that it did not need to closed much business around the world.

7 CONCLUSON

Starbucks has not been as successful in other countries as it has been in USA. Therefore it may be seen that they have not implemented and formulated the right strategies. They In fact have been making losses in other places for a variety of reasons.

Even though they have not been able to be very successful in markets outside USA, I do feel they can make an impression in the Indian market and can be successful.

Finally all that needs to be said is that they have the potential to succeed in India but will have to adopt their ways and learn to change according to the cultures.

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