Starbucks Case Study

Introduction

Since its' 1992 IPO, Starbucks has continually focused on growth. Initially, the growth was targeted to enable Starbucks to achieve their goal of becoming the leading North American retailer of specialty coffee. The early success they achieved resulted in Starbucks expanding their original goal to that of becoming the most recognized and respected coffee brand in the world.

By way of example, this case study focuses on a request by McDonalds to serve Starbucks coffee at its' restaurants in order to discuss the marketing strategy and the underlying competitive premise that Starbucks has adopted to achieve both of their goals. The study also describes the role the internet potentially can play in developing Starbucks as a global brand.

Background

In 1994 the growth rate in US domestic specialty coffee consumption was 15 percent per year, while the growth rate of the overall US domestic coffee market was essentially stable. Although there was no precise definition on the distinction between specialty and basic coffee, it was generally argued that specialty coffee was of a higher quality. The increase in specialty coffee consumption was believed to be the result of four consumer trends :

1) the adoption of a healthier lifestyle had led North Americans to replace alcohol with coffee;

2) coffee bars offered a place where people could meet;

3) people liked affordable luxuries and specialty coffee fit the bill; and

4) consumers were becoming more knowledgeable about coffee.

As Starbucks drove to achieve their goals, they developed their marketing strategy in response to these trends. The brand they would build as a result would then be leveraged to enable them to grow on a global scale.

Starbucks Strategy

In their quest for growth, Starbucks initial focus was on becoming the leading retailer of specialty coffee. Howard Schultz, Chairman and CEO of Starbucks, wanted to achieve this goal by creating the "Starbucks Experience". Specifically, the vision was to create more than just the store to purchase specialty coffee, the intention was to develop "a kind of ‘third place' where [people] can escape, reflect, read, chat or listen." The brand Starbucks was focused on building was retail based and centered on the place and the experience.

The Starbucks growth plan was centered on developing an integrated supply chain, developing a quality brand that could then be leveraged and upon entering the grocery channel.

Quality brand

Starbucks developed propriety roasting curves and technologies such as the one way valve on the bags used to store roasted coffee in order to ensure a consistent, quality product.