History of, and Introduction to Starbucks

Starbucks was established in 1971 by three local businessmen to sell high quality whole beans coffee. In 1981 when Howard Schultz visited the store he plan to build a strong company and expand high quality coffee business with the name of Starbucks. Starbucks air is to provide high quality of coffee to its consumer and aim to achieve product innovation, retail expansion and provide service quality for long term.

Starbucks open its first coffee store in Seattle, Washington. In 1990 Starbucks expand its headquarters in Seattle and also build a new roasting plant. In 1990s Starbucks opens 60 retails shops in United Kingdom. At the end of 2000s Starbucks total branches was 3500. Coffee is one of the rapidly growing industry in this world due to its business strategy. According to national coffee association, USA 49% of American age 18 and more drink coffee beverage every day. Coffee industry was in peak of its success at the end of 1990s.

Target market means to select one or more market segment and product position. Starbucks also focus on consumer habits and share its speciality of coffee with the buyers. In the end of 20th century there are many changes in market that helped Starbucks getting successful. The most important change of the last twenty, thirty years is the changes of economic policies over the world. Starbucks target market was 18 years to 24 years young professional because they are not yet been loyal with coffee industry. Starbucks strategy comprises to locate its stores at picky places such as the first floor of blocks of offices, underground main entrance and urban areas. Starbucks sales totally depends on company operate retail stores and certified retail operations, Starbucks sells coffee and tea products through many others channels like distribution targeting restaurants, hotels, colleges and universities and other work places. According to Fleisher & Bensoussan (2002) Starbucks target market was wealthy, upper class and educated who are agree to pay high prices of Starbucks due to its high quality and customer service.

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STARBUCKS POSITON

Currently Starbucks position is as the leading coffee organization depends highly around the globe expansion policy. Expansion of Starbucks around the globe is still in the early stages and Starbucks has the great opportunity for future growth. Starbucks main objective was to launch itself as the most renowned and respected brand in the world. The company main objective was to the expansion of its branches all over the world, to broad its retail business, develop new techniques, product and introduce new distribution channels in order to achieve its goals.

The company another aims was establish its brand as a leading brand in coffee market by selling high quality products, providing better services and build relationship between customers and the Starbucks. According to Clark (2007) page 137 brief the position of Starbucks that is “This conviction that Starbucks can achieve the unachievable helps explain Schultz’s dismissal of any concerns about resistance to his company’s ubiquity”

STARBUCKS STRATEGY

Starbucks adopt different type of strategy to build its branding in the market. Starbucks has numbers of capabilities likes market leadership and its outlets as customers means its locations which means it is the place where customers can relax from work or home and its supply chain management. According to Porter (1998) there are three types of basic strategies a company can use to establish itself like cost leadership, differentiation itself from the others and focus on the market. Cost leadership has the strategy of develop a low cost product but it has a high quality and also reduces operational cost. Differentiation means a strategy which is unique and self created strategy.

Starbucks’ first outside American store was starting its business in Tokyo in 1996 joint venture with a local company Sazaby Inc. After establishing the business Starbucks increased the pace of international expansion significantly. In 1998, Starbucks broad its business in the United Kingdom with more than 60 busy town hall locations and in the same year it opened stores in Taiwan, New Zealand, Malaysia and Taiwan.

In 1999, Starbucks opened first store in China (Beijing), South Korea, Lebanon and Kuwait and in next year seven markets of Hong Kong, Shanghai, Qatar, Saudi Arabia, Dubai, Australia and Bahrain. Starbucks use the strategy which is real estate management strategy due to its location of its coffee shops. To try to keep the coffee taste in the stores clean, Starbucks banned smoking and asked employees to refresh from draining perfumes. Prepared foods were kept covered so consumer would smell coffee only instead of other food. Starbucks is culture oriented company who introduce new techniques like commuter mugs and T shirts in different regions of USA that was in keeping with each city’s culture(like peach shape coffee mugs for Atlanta State, Paul Revere picture for Boston State and the Statue of Liberty for New York city).

Starbucks’ internal operations can be divided into two parts: Retail and Specialty. The Retail division is governed directly by Starbucks Corporation. The Specialty division includes foodservice, licensing agreements to overseas outlets and revenue from foreign joint ventures.

EXTERNAL STRATEGY

Starbucks not only focus on internal strategy but also focus on external strategy. For this purpose Starbucks focus on marketing mix which is a tool of external marketing strategy which can increase the demand of a product. The four major marketing mixes are like Product, Service, promotion and Location are the set of controllable marketing equipment that any company can adapt to achieve its basic objective in the market. Moreover, physical evidence, people and promotion are the extensive tools which are used in the marketing mix to make further analysis.

Product

Starbucks has a big menu like beverages, bakery food, fruit & snack plates, breakfast and Nutrition but the major product is brewed coffee.

Customer Service

In Starbucks shops customer are enjoying the unique experience of feeling which they call a third place where they can relax between their journeys from home to the work. Starbucks aim to provide customer satisfaction to provide uniqueness of enjoying Starbucks coffee experience. In Starbucks shops the environment is really comfortable, relax, access the wi fi, listen your favourite music and no smoking.

Promotion

According to the Corporate Social Responsibility Starbucks is strongly committed towards a positive picture in the community. Starbucks has transparent relations with the consumer and the media through cultural and environmental events.

Location

Starbucks is committed to make sure of its best stores location. Starbucks every stores is situated at quite place where no traffic round it.

Distribution Channel

Starbucks has mutual understanding around the globe with different coffee farmers and has right reserve to those crops, and most of the coffee beans was packaged and shipped to Starbucks retails stores around the world. Due to these distribution channel Starbucks maintained its differentiation from other competitors.

CONCLUSION

Starbucks is a leading company around the globe. Starbucks used а very simple strategy, “connecting links between treating employees with dignity and respect and producing а good product and services.” That was the major factors that differentiate Starbucks from others and bring the successful to Starbucks. Starbucks broad its business with the help of well established strategies of it positioned itself in the market. But every product has a life cycle, when it reaches its maturity it will tend to decline, position of Starbucks is also not different. It’s time to relocate their market and coordinate their strategies.