Pmm Final Doc

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CONTENTS

Title Page Number

1. INTRODUCTION 1

2. HISTORY3. TARGETING 1

4. POSITIONING AND MARKETING MIX 2

4.1.PRODUCT 3

4.2.PRICE 3

4.3.DISTRIBUTION & SERVICE 3

4.4.PROMOTION 4

5. CONCLUSION 4


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1. INTRODUCTION

The Starbucks Coffee, Tea, and Spice Company were founded in Seattle in 1971 by

Jerry Baldwin, Gordon Bowker and Zev Siegl, with a vision to educate the consumers about

fine coffees. Starbucks began to expand when Howard Schultz took it over in 1987. His plan

was to re-create the Italian espresso bar experience in America by making a personal

relationship between consumers and coffee. Within years, they grew from a small, regional

business into the undisputed leader in the speciality coffee industry by buying only the best

quality coffee and providing an unmatched store experience.

To inspire and nurture the human spirit one person, one cup, and one

neighbourhood at a time.

---Starbucks Mission Statement from their website

Ever since its establishment there has been a sharp growth in the company

performance. According to their 2008 annual report, they have nearly 17,000 stores in 49

countries. This report deals with the targeting and positioning of Starbucks when it was

launched and how decisions on marketing mix supported that positioning.

2. HISTORY

Starbucks story began in 1971. Back then they were a roaster and retailer of whole

bean and ground coffee, tea and spices with a single store in Seattles Pike Place Market.

Starbucks is named after the first mate in Herman Melvilles Moby Dick. Their logo is also

inspired by the seafeaturing a twintailed siren from Greek mythology.

The first Starbucks opened in Seattle, Washington, on March 30, 1971 by three

partners who met while students at the University of San Francisco: English teacher Jerry

Baldwin, history teacher Zev Siegl, and writerGordon Bowker.The three were inspired to

sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet

after he taught them his style of roasting beans. Originally the company was to be called

Pequod,after awhaling ship fromMoby-Dick,but this name was rejected by some of the co-

founders. The company was instead named after thechief mate on the Pequod, Starbuck.
http://en.wikipedia.org/wiki/University_of_San_Franciscohttp://en.wikipedia.org/wiki/Jerry_Baldwinhttp://en.wikipedia.org/wiki/Jerry_Baldwinhttp://en.wikipedia.org/wiki/Zev_Sieglhttp://en.wikipedia.org/wiki/Gordon_Bowkerhttp://en.wikipedia.org/wiki/Alfred_Peethttp://en.wikipedia.org/wiki/Pequod_%28Moby-Dick%29http://en.wikipedia.org/wiki/Whaling_shiphttp://en.wikipedia.org/wiki/Moby-Dickhttp://en.wikipedia.org/wiki/Chief_matehttp://en.wikipedia.org/wiki/Chief_matehttp://en.wikipedia.org/wiki/Moby-Dickhttp://en.wikipedia.org/wiki/Whaling_shiphttp://en.wikipedia.org/wiki/Pequod_%28Moby-Dick%29http://en.wikipedia.org/wiki/Alfred_Peethttp://en.wikipedia.org/wiki/Gordon_Bowkerhttp://en.wikipedia.org/wiki/Zev_Sieglhttp://en.wikipedia.org/wiki/Jerry_Baldwinhttp://en.wikipedia.org/wiki/Jerry_Baldwinhttp://en.wikipedia.org/wiki/University_of_San_Francisco


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Year wise progress and story of Starbucks

1971

Starbucks opens first store in Seattles Pike Place Market. 1982 Howard Schultz joins Starbucks as director of retail operations and marketing. Starbucks begins providing coffee to fine restaurants and espresso bars.

1983

Howard travels to Italy, where hes impressed with the popularity of espresso bars inMilan. He sees the potential to develop a similar coffeehouse culture in Seattle.

1984

Howard convinces the founders of Starbucks to test the coffeehouse concept indowntown Seattle, where the first Starbucks Caf Latte is served. This successful

experiment is the genesis for a company that Schultz founds in1985.

1985

Howard founds Il Giornale, offering brewed coffee and espresso beverages madefrom Starbucks coffee beans.

1987 Il Giornale acquires Starbucks assets with the backing of local investors andchanges its name to Starbucks Corporation.

Opens in Chicago and Vancouver, Canada. Total stores:17

1988

Offers full health benefits to eligible full and parttime employees. Total stores:33

1989

Total stores:551990

Starbucks expands headquarters in Seattle. Total stores: 84

1991

Becomes the first privately owned U.S. company to offer a stock option program thatincludes part-time employees.

Opens first licensed airport store at Seattles SeaTac International Airport. Total stores: 116


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Acquires Tazo Tea. Partners with Conservation International to promote sustainablecoffeegrowing practices.

Acquires Hear Music, a San Franciscobased music company. Announces third twofor

one stock split. Opens stores in China, Kuwait, Lebanon and South Korea. Total stores: 2,498

2000

Howard Schultz transitions to chairman and chief global strategist, Orin Smithpromoted to president and chief executive officer.

Establishes licensing agreement with TransFair USA to sell Fairtrade certified coffeein U.S. and Canada.

Opens stores in Australia, Bahrain, Hong Kong, Qatar, Saudi Arabia and United ArabEmirates.

Total stores: 3,5012001

Introduces ethical coffeesourcing guidelines developed in partnership withConservation International.

Introduces the Starbucks Card. Announces fourth twoforone stock split. Opens stores in Austria, Scotland, Switzerland and Wales. Total stores:4,709

2002

Establishes Starbucks Coffee Trading Company (SCTC) in Lausanne, Switzerland.

Opens stores in Germany, Greece, Indonesia, Mexico, Oman, Puerto Rico and Spain. Total stores: 5,886

2003

Acquires Seattle Coffee Company, which includes Seattles Best Coffee andTorrefazione Italia coffee.

Opens roasting facilities in Carson Valley, Nev., and Amsterdam, Netherlands. Opens stores in Chile, Cyprus, Peru and Turkey.

Total stores:7,2252004


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Opens first Farmer Support Centre in San Jose, Costa Rica. Releases Ray Charles, Genius Loves Company CD with Concord Records. Introduces Starbucks Coffee Master Program.

Opens stores in France and Northern Ireland. Total stores: 8,569

2005

Jim Donald becomes president and chief executive officer to replace retiring OrinSmith.

Acquires Ethos Water. Announces fifth twoforone stock split. Opens stores in Bahamas, Ireland and Jordan. Total stores: 10,241

2006

Launches the industrys first paper beverage cup containing postconsumer recycledfibre.

Opens stores in Brazil and Egypt. Total stores: 12,440

2007

Eliminates all artificial trans-fat and makes 2 percent milk the new standard forespresso beverages.

Opens stores in Denmark, the Netherlands, Romania and Russia. Total stores: 15,011

2008

Chairman Howard Schultz returns as chief executive officer. Acquires Coffee Equipment Company and its Clover brewing system. Launches My Starbucks Idea, Starbucks first online community. Launches Pike Place Roast TM, which quickly becomes Starbucks topselling coffee. Opens stores in Argentina, Belgium, Bulgaria, Czech Republic and Portugal. Total stores: 16,680

2009

Launches Starbucks VIA Ready Brew Coffee. Opens East Africa Farmer Support Centre in Kigali, Rwanda.


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Launches my Starbucks and Starbucks Card, iPhone apps and Starbucks Card Mobilepayment.

Opens stores in: Aruba and Poland.


Expands digital offerings for customers with free unlimited WiFi, Starbucks DigitalNetwork. Seattles Best Coffee reinvents business strategy to extend brands reach.

Expands coffee offerings with ultrapremium Starbucks Reserve line and StarbucksNatural Fusions.

Opens stores in El Salvador, Hungary and Sweden.


Celebrates 40th anniversary with updated brand identity and month of globalcommunity service.

Launches Starbucks KCups portion packs. Acquires Evolution Fresh. Opens stores in Guatemala.


Introduces Starbucks Blonde Roast. Announces Verismo system by Starbucks premium singlecup espresso machine. Opens Farmer Support Center in Manizales, Colombia. Acquires La Boulange bakery brand to elevate core food offerings. Launches Starbucks Refreshers beverage platform. Opens stores in: Costa Rica, Curacao, Finland, Morocco and Norway. Total stores: 17,651

3.MARKETING MIX

Product

Starbucks tried to position themselves as a premium product in the coffee industry by

creating a high standard, introducing innovative products and providing excellent service.

Schultz knew how perishable coffee was and they were so fanatical about quality control,

and hence they carefully monitored each and every step of coffee production. They


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bought dark-roast, whole bean coffee from places like Sumatra, Kenya, Ethiopia and

Costa Rica; roasted them in their own plants; and sold only through company-owned

stores. They used total quality management (TQM) in which all companys people are

constantly involved in improving the quality of products. Usage of nonfat milk and

introduction of Frappuccino made a significant presence in the balance sheet of Starbucks.

Moreover, they provided seasonal offerings, such as strawberry and cream Frappuccino in

the summer and gingerbread latte in Christmas, were introduced. Gradually food items

such as cookies, pastries, sandwiches and salads made their way into the stores.Later they

went on to develop new products with other companies. This shows how cautious

Starbucks was to keep their standard high and maintain their premium quality image.

Price

The amount of money a buyer must give to the seller for a specific quantity of the

product is the price of that product and usually consumers use this as an indicator of

quality. Price and quality determines the value of the product. When launched, Starbucks

was expensive and was positioned in accordance with that. They always tried to deliver

the high value promised to the consumers. They bought the quality beans, gave effective

and efficient training to staffs, and moreover, made an atmosphere to enjoy coffee, meet

fellow people and take a break from the busy life. These all jus tify their pricing and

show how price supported their positioning.

Place

Distribution channels links the organisations product or service to its consumers; and

in a producer-consumer (direct supply) channel, as in the case of Starbucks, maintaining a

personnel relationship with the customers is significant .However, from a distribution

point of view Starbucks got an advantage by sticking on to its winning store location

formula for its new stores. They always selected highly visible locations and opened

stores as clusters. As demand grew, these store clusters made them able to manage the

increased traffic and to keep their competitive position. In the same way, they took care

about the services provided in the stores. Howard Schultz aimed to unlock the romance

and mystery of coffee in coffee bars, and he knew how important the role of baristas in

achieving that. Baristas ability to engage the customers was the heart of Starbucks

experience. Starbucks invested heavily in training their staffs and did innovative tactics to


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manage their human capital. Thus they differentiated themselves in the market by

constantly providing higher quality services.

Promotion

All marketing activities that attempt to stimulate buyer action or sales of a product can

be considered as promotion. Starbucks used to organise a big community event prior to

the opening of its stores. Artworks were designed to boast each citys personality, and it

was used on commuter mugs and T-shirts. They also recruited local ambassadors from

new partners and from customers to promote their brand. They didnt use advertising but

they used those funds for acquiring key locations. Starbucks tried to establish a national

dominance before other speciality coffee bars comes into the picture.

4.INTERNAL ENVIRONMENT-THE FCB GRID

Above is the Boston Matrix. It shows the cash cows as the regular Starbucks line of Coffees,

Lattes and Frappacinosfound at nearly every location. These are stable products that account for the

bulk of sales. A potential star is the International locations, which hold less financial risk and open

doors for innovation and stability. Question marks are the recently added VIA instant coffee to be

expanding to grocery stores and convenient stores. Current products like this such as the dog, pre-

bottle Frappuccinosaccount for a tiny fraction of sales. Another question markis the oft forgotten


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sub-brand Seattles Best. The company will be revamping this brand and its future is

unknown.

5.EXTERNAL ENVIRONMENT-PESTEL FACTORS

POLITICAL ISSUES: Stability of political environment, law, taxes, policies on economy,

trading agreements, governments view on culture and religion, terrorism.

ECONOMIC ISSUES: The level of inflation. Interest rates. Income per capita. Long-term perspectives for the economy. Stabilization Unemployment rate

SOCIAL ISSUES:

Continious Improvement of Quality External Stakeholder (Customer) Satisfaction Business Endurance and thrive Ethical Sourcing Raising living standards in Production Areas

TECHNOLOGICAL INFLUENCES

Use of technology can improve operational efficiencies It is always looking to develop and improve the internet facilities. Use of new materials and processes will enable staff to work more effectively and

efficiently.

ENVIRONMENTAL ISSUES:

Recycling: Recycling in Stores, Reusable cups, Greener Cups. Composting ofcoffee ground.

Energy: Reduce energy consumption by 25% by 2010. Purchase renewable energyequivalent to 50% of the electricity used by 2010

Water: continue to include water-saving technology in their equipmentspecifications and going to reduce water consumption by 25% by 2015


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LEGAL ISSUES:

Employment law: working time, age, minimum wage rate, etc.- Ex: Starbucks CEOs announcement that hes cutting his own salary from $1,2

million to $ 10.000 per year.

Health and safety regulations- Ex: Starbucks spend more on health insurance$250 millionsurmount its

coffee bill

Consumer protection:- Ex: Starbucks pay $225.000 to settle Consumer Protection case for gift card

violations.

- Ex: Stored-valued card: this is a prepaid card offer by Starbucks.6.TARGETING

Coffee consumption in the U.S. has been trending down since 1960s . So Starbucks

was extremely cautious in selecting its target markets. A target market, according to Kotler

and Armstrong (2004), consists of a set of buyers who share common needs or characteristics

that the company decides to serve. The decision of selecting target segments can be assessed

by looking at market factors, competitive factors, and political, social, and environmental

factors. Price, bargaining power of customers and suppliers and barriers to entry all comes

under the market factors, and in the case of Starbucks, their coffee was expensive and they

were trying to re-create a new coffee culture in America. Hence, they have low barriers for

entry. Since they were extremely careful in each step of coffee making, they tried to maintain

a long-standing relationship with their suppliers and similarly they did not have any real

competition threats.

Starbucks targeted office workers, with middle to high incomes, who had a desire to

purchase premium products. Schultz wanted Starbucks to become the Third Place, the place

between home and work where people could gather, relax and interact with one another. So

they were vigilant about their quality control to meet the high expectations. Also they paid a

great deal of attention to the details of the store everything from the layout, to the furniture,

to the music. Moreover, they were in the introduction stage in the product lifecycle.

Target marketing can be done in three different ways; undifferentiated, differentiated

and concentrated. Concentrated (or niche) marketing directs its efforts towards a singlemarket segment and creating and maintaining an exclusive strategy for each segments.


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Another approach to the market, known as differentiated (or segmented) marketing, approach

the mass market by designing separate products and marketing programs for the different

segments. In undifferentiated (or mass) marketing, the firm ignore market segment

differences and target the whole market with one strategy. When Starbucks launched, they

used this undifferentiated marketing strategy and they created and maintained the marketing

mix considering the market as a single segment. A major difficulty in using this targeting

strategy is developing the brand to satisfy all consumers. Starbucks used their services

without compromise in quality for attaining this. Moreover, they were aggressive in the

market by opening 15 new stores in 1988; 20 in 1989; 30 in 1990; 31 in 1991; and 53 in 1992

7.POSITIONINGAfter deciding its target markets, the company must decide what position it wants to

occupy in their target market. A products position is the way the product is defined by

consumers on important attributes such as price, quality, competitor, product class,

application and so on. Companies tried to position their products in such a way as to

distinguish themselves from the competitors and give them the greatest strategic advantage in

the target market. By the time Schultz acquired Starbucks in 1987; transactional marketing

was being replaced by relationship marketing. Profit from retained long term customer

relationship became the key of marketing and business. Relationship marketing aims at

delight rather than satisfaction of customers. And Starbucks realised public opinion, even

though it takes longer to cultivate, when energised can help pull the company into the market.

Fig. 1 shows the position of Starbucks on the perceptual map.

High

Low High

Price Quality Low

Fig. 1: Perceptual map

Starbucks


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Competitors

Going into 1997, there were an estimated 8,000 specialty coffee outlets in the United

States. Starbucks' success was prompting a number of ambitious rivals to scale up their

expansion plans. Observers believed there was room in the category for two or three national

players, maybe more. Starbucks' closest competitor,Second Cup,a Canadian franchisor with

stores primarily in Canada, was less than one-third its size; Second Cup owned Gloria Jeans,

a franchisor of specialty coffees, with stores located primarily in malls throughout the United

States. No other rival had as many as 250 stores, but there were at least 20 small local and

regional chains that aspired to grow into rivals of Starbucks, most notably New World

Coffee,Coffee People,Coffee Station,Java Central,andCaribou Coffee.Observers expected

many of the local and regional chains to merge in efforts to get bigger and better position

themselves as an alternative to Starbucks. In addition, numerous restaurants were picking up

on the growing popularity of specialty coffees and had installed machines to serve espresso,

cappuccino, latt, and other coffee drinks to their customers.

The company also faced competition from nationwide coffee manufacturers such

asKraft General Foods (the parent of Maxwell House),Procter & Gamble (the owner of the

Folger's brand), andNestl,which distributed their coffees through supermarkets. There were

also a number of specialty coffee companies that sold whole-bean coffees in supermarkets.

Because many consumers were accustomed to purchasing their coffee supplies at

supermarkets, it was easy for them to substitute these products for Starbucks.

Joint Ventures

In 1994, after months of meetings and experimentation,PepsiCo and Starbucks

entered into a joint venture arrangement to create new coffee-related products for massdistribution through Pepsi channels, including cold coffee drinks in a bottle or can. Howard

Schultz saw this as a major paradigm shift with the potential to cause Starbucks business to

evolve in heretofore unimaginable directions; he thought it was time to look for ways to

move Starbucks out into more mainstream markets. Cold coffee products had generally met

with very poor market reception, except in Japan, where there was an $8 billion market for

ready-to-drink coffee-based beverages. Nonetheless, Schultz was hoping the partners would

hit on a new product to exploit a good-tasting coffee extract that had been developed by

Starbucks' recently appointed director of research and development. The joint venture's first
http://www.secondcup.com/http://www.coffeepeople.com/http://www.java-centrale.com/http://www.caribou-coffee.com/http://www.kraft.com/http://www.pg.com/http://www.nestle.com/http://www.pepsico.com/http://www.pepsico.com/http://www.nestle.com/http://www.pg.com/http://www.kraft.com/http://www.caribou-coffee.com/http://www.java-centrale.com/http://www.coffeepeople.com/http://www.secondcup.com/


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new product, Mazagran, a lightly flavored carbonated coffee drink, was a failure; when test-

marketed in southern California, some consumers liked it and some hated it. While people

were willing to try it the first time, partly because the Starbucks name was on the label repeat

sales proved disappointing. Despite the clash of cultures and the different motivations of the

two partners, the partnership held together because of the good working relationship that

evolved between Howard Schultz and Pepsi's senior executives. Then Schultz, at a meeting to

discuss the future of Mazagran, suggested, "Why not develop a bottled version of

Frappuccino?"18 Starbucks had come up with the new cold coffee drink it called Frappuccino

in the summer of 1995, and it had proved to be a big hot-weather seller; Pepsi executives

were enthusiastic. After months of experimentation, the joint venture product research team

came up with a shelf-stable version of Frappuccino that tasted quite good. It was tested in

West Coast supermarkets in the summer of 1996; the response was overwhelming, with sales

running 10 times over projections and 70 percent repeat business. In September 1996, the

partnership invested in three bottling facilities to make Frappuccino, with plans to begin

wider distribution. Sales of Frappuccino reached $125 million in 1997 and achieved national

supermarket penetration of 80 percent. Sales were projected to reach $500 million in 1998;

Starbucks management believed that the market for Frappuccino would ultimately exceed $1

billion.

In October 1995 Starbucks partnered withDreyer's Grand Ice Cream to supply coffee

extract for a new line of coffee ice cream made and distributed by Dreyer's under the

Starbucks brand. The new line, featuring such flavors as Dark Roast Espresso Swirl, Java

Chip, Vanilla Mocha Chip, Biscotti Bliss, and Caf Almond Fudge, hit supermarket shelves

in April 1996; by July, Starbucks coffee-flavored ice cream was the top-selling super

premium brand in the coffee segment. In 1997, two new low-fat flavors were added to

complement the original six flavors, along with two flavors of ice cream bars; all were wellreceived in the marketplace. Additional new ice cream products were planned for 1998.

Also in 1995, Starbucks worked with Seattle's Redhook Ale Brewery to create Double Black

Stout, a stout beer with a shot of Starbucks coffee extract in it.

Licensed Stores and Specialty Sales

In recent years Starbucks had begun entering into a limited number of

licensing agreements for store locations in areas where it did not have ability to locate
http://www.dreyers.com/http://www.dreyers.com/


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its own outlets. The company had an agreement withMarriott Host International that

allowed Host to operate Starbucks retail stores in airport locations, and it had an

agreement with Aramark Food and Services to put Starbucks stores on university

campuses and other locations operated byAramark.Starbucks received a license fee

and a royalty on sales at these locations and supplied the coffee for resale in the

licensed locations. All licensed stores had to follow Starbucks' detailed operating

procedures, and all managers and employees who worked in these stores received the

same training given to Starbucks managers and store employees.

Starbucks also had a specialty sales group that provided its coffee products to

restaurants, airlines, hotels, universities, hospitals, business offices, country clubs, and

select retailers. One of the early users of Starbucks coffee was Horizon Airlines, a

regional carrier based in Seattle. In 1995, Starbucks entered into negotiations

withUnited Airlines to have Starbucks coffee served on all United flights. There was

much internal debate at Starbucks about whether such a move made sense for

Starbucks and the possible damage to the integrity of the Starbucks brand if the

quality of the coffee served did not measure up. After seven months of negotiation

and discussion over coffee-making procedures, United Airlines and Starbucks came

up with a way to handle quality control on some 500-plus planes with varying

equipment, and Starbucks became the coffee supplier to the 20 million passengers

flying United each year.

In addition, Starbucks made arrangements to supply an exclusive coffee blend

toNordstrom's for sale only in Nordstrom stores, to operate coffee bars inBarnes &

Noblebookstores, and to offer coffee service at someWells Fargo Bank locations in

California. Most recently, Starbucks began selling its coffees in Chapters, a Toronto

book retailer with sites throughout Canada, and in Costco warehouse club stores. A

1997 agreement with U.S. Office Products gave Starbucks the opportunity to provide

its coffee to workers in 1.5 million business offices. In fiscal 1997, the specialty sales

division generated sales of $117.6 million, equal to 12.2 percent of total revenues.

Tata Starbucks Ltd is a 50:50 joint venture company, owned by Starbucks

Corporation and Tata Global Beverages that owns and operates Starbucks outlets

in India.
http://www.hmscorp.com/http://www.aramark.com/http://www.horizonair.com/http://www.ual.com/http://www.nordstrom.com/http://www.barnesandnoble.com/http://www.barnesandnoble.com/http://www.wellsfargo.com/http://www.wellsfargo.com/http://www.barnesandnoble.com/http://www.barnesandnoble.com/http://www.nordstrom.com/http://www.ual.com/http://www.horizonair.com/http://www.aramark.com/http://www.hmscorp.com/


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SWOT Analysis

Strengths

4-Star Brand: Starbucks has a highly developed brand, logo, copyrights, trademarks and

website. Starbucks' profit margins were hit hard by the Great Recession, but the company

recovered quickly, posting a 12.7% increase y-o-y in 2012. The Starbucks brand name is

famous for its intense customer loyalty and innovative products.

Strong financial picture: EPS, net revenues, comparable store sales, operating income and

margins were all up. CPG Revenue grew 45%, driven by increasing share of premium coffee

category.

Expansion: Starbucks plans to open 1,200 net new stores in fiscal year 2013, many in the

United States and China.

Market dominance: The company's aggressive "Starbucks on every corner" strategy has

allowed Starbucks to dominate local markets. Starbucks is the world's largest coffee chain,

with approximately 20,000 stores in 60 countries, 12,937 of which are located in the United

States.

Weaknesses

Starbucks is having difficulty penetrating Europe's "cafe culture", so much so that the

company is considering scaling back its European presence. Different regional tastes have

alsobeen a concern - most notably in France, where Starbucks expresso is considered "toocharred" for French palates. Even if European traffic picks up, customers could switch to

lower priced menu options. Higher real estate and labor costs in Europe are also compressing

margins.

Franchised store margins repeatedly outpace company-operated margins, meaning that higher

profit margins are not necessarily the result of improved performance.

The company also faces an increasing number of competitors, especially niche competitors.

Companies like Coffee Bean & Tea Leaf and Caribou Coffee (NASDAQ:CBOU)are

carving out a confortable space for themselves in the margins of the premium coffee market.

London-based Costa Coffee is undermining Starbucks' push into India.

Deep-pocketed competitors are beginning to compete for the premium coffee space.

McDonald's (NYSE:MCD)recently announced plans to sell bagged coffee in its Canadian

stores. That could be a prelude to a similar marketing campaign in the U.S.,

despiteassurances from McDonald's PR that the company "has no other plans to sell the

coffee elsewhere at this time."
http://www.nytimes.com/2012/03/31/business/starbucks-tailors-its-experience-to-fit-to-european-tastes.html?pagewanted=allhttp://caps.fool.com/Ticker/CBOU.aspxhttp://caps.fool.com/Ticker/MCD.aspxhttp://www.foxbusiness.com/news/2012/10/25/mcdonald-to-sell-packaged-ground-coffee-in-canada/http://www.foxbusiness.com/news/2012/10/25/mcdonald-to-sell-packaged-ground-coffee-in-canada/http://caps.fool.com/Ticker/MCD.aspxhttp://caps.fool.com/Ticker/CBOU.aspxhttp://www.nytimes.com/2012/03/31/business/starbucks-tailors-its-experience-to-fit-to-european-tastes.html?pagewanted=all


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Opportunities

Strengths + opportunities = a company's competitive advantage. Starbucks breakthrough deal

with Square puts Starbucks on the front line of innovation. CEO Howard Schultzpredicts that

customers who currently using a Starbucks card will "...migrate off the card on to the Square

platform very quickly."

After hitting a 34-year high of $2.31 per pound in April 2011, the cost of wholesale green

coffee beans has fallenby nearly 40% over the past year on speculation of increases in

Brazilian production. This development should translate into higher profit margins for

Starbucks going forward, as existing inventory is consumed and replaced at a cheaper cost.

Starbucks Verismo single-serving coffee machine is debuting just in time for the Christmas

shopping season. The company's announcement of the Verismo line and subsequent

downgrade by fund manager David Einhorn has forced a decline in Green Mountain Coffee

Roasters' stock, maker of the Keurig single-cup coffee machine, from around $70 to $24.08in less than a year.

Threats

A double-dip recession within mature Starbucks markets (i.e., United States, Canada, U.K.)

could alter long-term customers' spending patterns. According to the company's 10-K filing,

Starbucks is increasingly dependent on international markets for growth, especially Canada,

Japan, the U.K., and China. Europe, the largest single market in the world, poses a number

of challenges for Starbucks. While earnings in the U.S. and China remain strong, European

sales have fallen off in 2012, as European consumers dial back discretionary spending.

Nestle'sNespresso espresso makers hold a 35 percent share of the global single serve coffee

cartridge market, with a heavy concentration in Europe. Given Starbuck's difficulty in

penetrating the European Market, its Verismo brand machines could effectively be locked out

of the Common Market, further hampering growth.

LEARNINGS:

Marketing mix- 20% External environment- 15% Internal environment- 15% STP Process- 30% SWOT Analysis-10% Joint ventures, licensing and franchising.-10%
http://www.cnbc.com/id/48571089/?Will_Starbucks_Square_Take_Mobile_Payments_Mainstreamhttp://www.ico.org/prices/p2.htmhttp://www.ico.org/prices/p2.htmhttp://www.cnbc.com/id/48571089/?Will_Starbucks_Square_Take_Mobile_Payments_Mainstream


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CONCLUSION:

We arent in the coffee business, serving people. We are in the people business,

serving coffee

--- Howard Schultz

Starbucks claimed their leadership by focusing on a strategy of new products, a

stronger connection with customers as the Third Place and expanding store locations in the

United States and abroad. They never compromised on their quality and service standards and

maintained their customer relationships with utmost care. This report analysed the target

markets and positioning strategy of Starbucks while it was launched. Also, it shows how the

marketing mix variables (product, price, distribution and promotion) along with services

supported their positioning. Today, Starbucks is in cities all over America and in 48 other

countries. The level of success achieved by Starbucks holds some important lessons and some

much needed inspiration to the business world.


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REFERENCES

1. www.forbes.com2. Brassington, F., & Pettitt, S. (2000). Principles of Marketing(2nd ed.). Harlow: Prentice Hall.3. Serwer, A. (2004, January 26). Fortune Magazine. Retrieved October 23, 2009, from

CNNMoney:

http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/26/358850/index.htm

4. Starbucks Case Study

5. Starbucks website. Retrieved October 23, 2009, fromhttp://www.starbucks.com6. www.capgeminiconsulting.com
http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/26/358850/index.htmhttp://money.cnn.com/magazines/fortune/fortune_archive/2004/01/26/358850/index.htmhttp://www.starbucks.com/http://www.starbucks.com/http://www.starbucks.com/http://www.starbucks.com/http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/26/358850/index.htm

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