Starbucks Coffee

Chris AbplanalpKeri ReilleyMark Bigler

Owen Laracuente

The Problem

Starbucks Coffee Company’s reputation is so exceptional; the company must maintain the outstanding brand reputation. Due to such rapid expansion Starbucks must keep quality as their first priority.

Starbucks Mission*

Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.

The following six guiding principles will help us measure the appropriateness of our decisions: Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. 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. Recognize that profitability is essential to our future success.

* Taken from http://www.starbucks.com/aboutus/environment.asp

S.W.O.T Analysis

STRENGTHS

• Excellent reputation throughout the market.

• Over 3,400 coffee houses that dominate 30% of the market share

• Atmosphere is a draw to their consumer

• Premium quality products

• Locations are well placed and very visible

• Exemplary customer service

S.W.O.T Analysis (cont.)

WEAKNESSES

• 80% of their employees are Caucasian, diversity is lacking

• Expending costs on training, while turnover is 60%

S.W.O.T Analysis (cont.)

OPPORTUNITIES

• Only 5% of coffee consumption is done outside the home; there is a great market segment yet to be tapped.

• The opportunity to have the same high quality reputation on other continents.

• The market is still growing with significant potential to expand

• The ability to expand into the full service dining industry

S.W.O.T Analysis (cont.)

THREATS

• The possibility of running out of high quality coffee bean suppliers

• The European and Asia market segment may not accept the brand

• With such close placement of franchises, this could lead to consumer competition issues

• Other large coffee houses, such as a Borders and Millstone.

• Possible increase in milk prices might raise beverage costs

Starbucks Growth

In United States, in 2001, all coffee sales were $18.5 billion.

Starbucks contributed over $2.6 billion of that figure.

An increase of $1.6 billion since 1997. In 2001 Starbucks had an operating

income of over $280 million.

Starbucks Philosophy

Starbucks incorporates the message of, We aren't in the coffee business, serving people. We are in the people business serving coffee.**

Starbucks made coffee drinking a social phenomenon*

The coffee and the atmosphere bring the consumers into the stores.

** Fortune Magazine

* Marketing Management – Case Analysis by Teams

Starbucks believes in quality training of employees.

300 – 400 trainees a month From brewing and coffee knowledge to

listening and everything in-between. Communication skills are extremely

important. No employee mistakes at the customers’

expense.

Starbucks Philosophy (cont.)

Starbucks’ Employees

The annual employee turnover is a minimal 60% compared to the fast food industry which boasts a 140% turnover rate.

Able to gain and maintain employee loyalty.

An employee is not a worker he or she is a “partner”.

Starbucks

Starbucks is staying with the core competency which is doing everything possible to stay as close to the customer as possible.*

Starbucks has succeeded in maintaining its competitive advantage by being located in every nook and corner in every major city.*

* Marketing Management – Case Analysis by Teams

Recommendations

Ensure high quality in every aspect of the Starbucks.

Maintain a positive atmosphere throughout the firm.