Starbucks Coffee

Starbucks Coffee

Table of Contents

Introduction 3

Product Analysis 3

Product Overview 3

Market Structure 4

Competition 5

Dunkin Donuts 7

Krispy Kreme 3

McDonalds 8

Panera Bread 8

Elasticity Estimates

Pricing Strategy 10

Forecast 12

Determants of Demand 13

Forecast Model 15

Forecast

Summary 15

Works Cited

Introduction

With the economy in trouble, the stock market tanking it is important to start your day with a good cup of coffee to take on these challenges. Can Starbuck’s sustain it business model and place in the market? The paper examines Starbucks business and it respective practices.

In 1971, the original Starbucks opened in Pike Place Market in Seattle, Washington by three partners named Jerry Baldwin, Zev Siegal, and Gordon Bowker. Their focus was to sell coffee beans and equipment. They purchased green coffee beans from Peet’s, a specialty coffee roaster and retailer, during their first year of operation. Later, they began buying coffee beans directly from the growers. In 1983, an entrepreneur by the name of Howard Schultz joined the company; Schultz felt that the company should sell coffee and espresso drinks as well as coffee beans. The partners felt that selling coffee and espresso drinks would take away from their primary focus of selling coffee beans. Since the idea did not work, Schultz started his own company called II Giornale coffee bar chain in 1985. In 1987, the original owners of Starbucks sold their chain to Schultz’s II Giornale. Schultz changed II Giornale outlets to Starbucks chains and quickly began to expand.

Starbucks coffee has grown into the largest coffeehouse company in the world with 16,120 stores in 94 countries such as in Australia, Canada, China, Puerto Rico, etc. Starbucks has thirty blends and single origin coffee. Starbucks brand coffee can also be purchased in local stores to brew at home. Starbucks employs over 140,000 employees worldwide with over five million customers a week. At one point they had typical customers coming in on an average of six times a month while loyal customers come in on an average of eighteen times a month spending averaging $50. Starbucks is one of Fortune magazine’s 100 Best Companies to work for in 2008 and is Business Ethics 100 Best Corporate Citizens for the fourth year.

Product Analysis

Product Overview

Starbucks product line has grown to include fresh brewed coffee, hot and iced espresso beverages, coffee and non coffee blended beverages, Tazo tea, baked pastries, sandwiches, and salads. Starbucks paraphernalia includes coffee grinders, espresso machines, coffee brewers, music CD’s, books, movies and gift cards.