B R A N D M A N AG E M E N T H O M E WO R K - I I I

H A M Z A Ş A N DA

STARBUCKS : Managing A High Growth Brand

Introduction

In 1971; Starbucks is founded by Jerry Baldwin, Gordon Bowker and Zev Siegel in Seattle. It sold only whole-bean coffee and coffee brewing machines. It is establised as a coffee and coffeehouse chain.

In 1980’s; Howard Schultz joined Starbucks in 1982, Then Schultz became CEO and changed the vision of Starbucks. He expanded the scope and exposed the brand wider.

Now; Starbucks is the largest coffeehouse company in the world with 17,009 stores in 50 countries, including over 11,000 in the United States, over 1,000 in Canada, and over 700 in the United Kingdom. From coffee Business to salad, hot&cold sandwich, ice-cream, tea, music and film…

The Main Success Keys

1. Quality PolicyStarbucks has always prefered to offer extreme quality in every aspects. Worked directly with the best growers to puchase high quality coffee beans. Applied the highest standards of excellence to roasting and brewing these beans. Provided the service experience consistently for all customers by well educated employees which called “Baristas” The taste of your favorite coffee never changes due to the standardized processes and quality control focus of management…

2. Vision of “Third Place”Starbucks aimed to be a “third place” for its customers as well as their workplace and home. Each Starbucks store is carefully designed to enhance the quality of everthing about the customers’ sensory feelings such as see,smell,hear or taste. Starbucks symbolize not just a coffehouse ,but a pleasurable coffee-centered experience…

3. Strong Commitments By Mission Statement and Brand Values“ To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”. Based on this mission statement, Starbucks identified its brand values as;

Coffee: Always with high qualityPartners: Starbucks’ employees are passionate in what they are doing.Customers: Uplifting the lives of the customers, creating a special bond.Neighborhood: Social responsibility and leading the way for progress

The Growth Strategy Evaluation

Starbucks planned its expansion of specialty coffee stores into new markets carefully worldwide. The most important feature of Starbucks is its expertising in coffee roasting and brewing processes. Also all Starbucks employees’ deep feel has constantly increased the success of the brand in core business.

By the way, Starbucks must be extremely careful to avoid losing the brand identity and core values while diversificating the product. So, Starbucks must focus on maintaining the leader position in coffee business.

Partnershiping is the main and also successful part. It is no coincidence that 14% of Starbucks customers had their first Starbucks coffee in United Airlines flights. This is a good example for desicion of cooperation. On the other hand ,it’s a clever venture to expand the distribution network with a strong business partner such as Kraft and Apple.

With creating new products such as “Frappuccino” with Pepsi, Starbucks increased its brand awareness and recognation. It provided Starbucks and Pepsi $152 mio in sales and 83% marketshare in ready to drink market in 2005.

Howard Schults’ desicion from the beginning was that Starbucks would only enter into partnerships with companies who maintain the same commitments to quality and people that Starbucks had as the foundation of its business… WORLD WIDE....

The Growth Strategy Evolution

Starbucks: A Global Brand?

YES! YES! YES!

Starbucks is in over 55 countries around the world and has 17.009 stores now. Over 11.000 in the United States Over 1.000 in Canada Over 700 in England

It ‘s easy to understand the growth of the brand by looking at Starbucks revenue that comes from the open stores.

Also, Starbucks plans to open 900 new stores on the world in next year.

Moving Into Non-Coffee Area

Starbucks has positioned itself not just a coffeehouse, also a pleasurable coffee centered experience place. “Third Place” vision is an indicator of this approach.

As a result, Starbucks moved into some non-coffee areas such as;

1. Credit Cards Made it easier for customers to purchase Combined Starbucks reloaded card and credit card

2. Starbucks Entertainment Investment in film industry Custom-made CDs in stores

3. Ethos Water

4. Tazo Tea

Moving Into Non-Coffee Area

Although moving into new areas is succeeded, there are some disanvantages for Starbucks.

Advantages Increased Brand Awareness Improved Brand Image Enhanced Parent Brand

Disadvatages Lost Brand Identity Lost Core Value Frustrated Customers

In the next step, Starbucks may improve “new products which will be related with core business of coffee” and “its store chain more qualfied and enhanced”

Starbucks International Expansion

Starbucks expansion strategy is very successful.

Now, Starbucks has 17.009 retail outlets in more than 55 countries worldwide.

Starbucks has already taken place in many countries with an aggresive strategy with brand awareness and recognation.

After then, Starbucks should increase its marketshare in this countries with local approaches and improve its product category.

Competition Threats

The biggest threat for Starbucks in the market is the strong competitor, Dunkin’ Donuts...

Donkin’ Donuts is one of the most famous food and beverage company that headquartered in New York, in international markets.

In Feb.2011, Dunkin' Donuts earned the No. 1 ranking for customer,

Loyalty in the coffee category by Brand Keys for the fifth year,

Dunkin' Donuts has more than 1,000 donut varieties along with other products, especially with a wide varieties of coffee beverages.

In 2010, Dunkin' Donuts' global system-wide revenue was $6 billion.

Brand Keys is active in predictive brand equity, loyalty, and engagement metrics since 1984.

CustomerThink, a research company, organized a survey on the Starbucks in-store experience and they received 3,865 valid responses collected across the globe.

And as you can imagine, “Price” was the No. 1 factor respondents like least about Starbucks. (%25)

No.2 Factor was also “Wait Time” with %24.

Pay for Starbucks Experience

The Should Starbucks lower its price? As a customer, I believe that price cuts are always welcome. But if the company could deliver a truly effective experience that addresses my most critical needs while reflecting unique brand values, I'm willing to pay a premium price to enjoy my cup of coffee.

Starbucks still has ample opportunity windows to provide an effective, branded experience to its customers. It will be interesting to see what the company does.

B R A N D M A N AG E M E N T H O M E WO R K - I I I

H A M Z A Ş A N DA

STARBUCKS : Managing A High Growth Brand