Case Analysis Startbucks

First Case Analysis: Startbucks

Question 1: What is Startbucks' product?

With its humble roots firmly planted in Seattle, Washington, this little coffee shop has turned from a novel idea, into a veritable necessity for Americans on the go. Starbucks has made a name for itself making and selling coffee and specialty coffee drinks. It has made its biggest impression by becoming the espresso expert and public educator of how to make the perfect espresso. In addition, Starbucks has expanded its product line to include packaged and prepared tea as to cater to additional consumers who may not be "coffee drinkers", also, flavored decaffeinated coffees, other specialty flavor drinks (i.e. Smoothies), and light lunches. However not only has the menu expanded, but also Starbucks has moved to expand internationally and pursue opportunities in to joint ventures with other corporations, such as Pepsi - Cola, Kraft Food and others, which have grown to be successful.

Question 2: What changes in society have helped Startbucks be successful?

Currently, more and more consumers are growing more health conscious; people are cutting back on their consumption of caffeine intake. However, there has not been a noticeable rise in decaffeinated coffee consumption. Coffee beans prices are expected to rise due to the low supply. The end result, higher cost affects the markets and can heighten competition. However, Starbucks major competitors are regional coffee houses. The trend in our society has become more fast pace and on the move. With the decline of the traditional family, the country's culture has become one of convenience. Society wants more drive-thru restaurants, banks, and drycleaners, and Starbucks capitalized on it. They introduced bottled coffee drinks which could be purchase at almost any store or gas station. Starbucks became a place teens wanted to hang out and where businesses professionals could casually meet and conduct business.

Question 3: What strategic factors account for Startbucks in developing brand equity?

Starbucks have defined their business with the mission statement that: "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." (Starbucks mission statement). It is a very profitable organization, earning in excess of $391 million in 2004. It is a global coffee brand built upon a reputation for fine products and services. As of 2005, it has more than 9000 stores in 35 countries. It have also proved the significance of their work force by providing benefits and implementing programs. Also, customer satisfaction is key to maintaining success. Starbucks customer base is very loyal, even to the point of obsession. Originally, Starbucks targeted young professionals, at some point this changed. Keeping the right marketing mix to satisfy their diversifying customer base will be vital for the company's long term success.

Question 4: What opportunities and threats face Startbucks?

Opportunities

- Products and Services: New products and services can be retailed in Starbuck's cafes such as internet, financial services, music, books and others. This new product or service being introduced will attract more customers to visit Starbucks in future, subsequently boost its business performance.

- Expansion: With Starbuck's strength in terms of its strong capital base, the company has the opportunity to expand its global operations. Starbucks is targeting 30,000 stores worldwide in its long term goals. It has big hopes for China markets due to large urban population and rising economy in China. Also, markets such as Brazil, India, and Russia are also among of the expansion opportunities. Continue market expansion will lead Starbucks to new opportunities for revenue growth.

Threats

- Coffee markets: The supply and price of coffee are experiencing a significant volatility. Multiple factors can affect supply and price. These include weather, political and economic conditions in the producing