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Starbucks Case Study

Starbucks Case Study. John Baab, Charly Costigan, Tyler Kleckner, Ashley Kreuer, Ellen Park, Ashley Wooding. Outline. Background and History. Gerald Baldwin, Gordon Bowker, and Ziev Siegl – opened a small coffee shop in Seattle’s Pike Place Market in 1971

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Starbucks Case Study

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

  2. Outline

  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

  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

  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)

  6. Starbucks Share of Specialty Coffee Market 42% (estimate) – 13% Total Market Share

  7. Starbucks Share of Specialty Coffee Market 50% (estimate) – 20.5% Total Market Share

  8. Strengths • Well developed and established brand strategy: “live coffee” • Locations • Product Mix • “Partners” • Customization of Drinks

  9. Weaknesses • Customization of Drinks • Caused tension between product quality and customer focus • Increased menu size • Lacked a strategic marketing group • Very little image & product differentiation

  10. Opportunities • Increase Customer Satisfaction • Customer Quota • Increase the number of stores • Domestically/Internationally • Create New Products & Services

  11. Threats • Competition • Donut & Bagel Chains • Small scale specialty coffee chains

  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

  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

  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

  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

  16. Recap • customer service • inovations • brand image • Marketing plan • Expansion • Domestic • International

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