Starbuck’s strategy focused on three components; high-quality coffee, intimate service, and ambient atmosphere. Starbucks worked closely with growers in Africa, South and Central America, and Asia-Pacific regions to insure the quality of its product. Starbucks called all employees' "partners" and worked hard to train them with the skills necessary to best serve the customer. The atmosphere at Starbucks was crafted after the European-style espresso bar. The company goal was to create ambience through the Starbucks "experience" and by making the area comfortable, yet upscale.
Its primary objective was, simply put, to become the “most recognized and respected brand in the world.” This objective required most of the company’s strategic goals to be based on company growth and product innovation. There were many opportunities that made expansion plausible, such as a rise in coffee consumption and untapped metropolitan areas. Starbucks had reached all of its success without spending a large amount of money on advertising. Point-of-sale materials were primarily used and their local-store marketing was far less than the industry average.
Starbucks originally opened in 1971. The Seattle based store began by selling whole Arabic coffee beans to consumers. In 1987 it was purchased by Howard Schultz and he made the company what it is today. The company started selling coffee by the cup and opened new stores in various locations. There were 140 stores in the Northwest and Chicago by 1992, and it was at that time that Schultz decided to take the company public. This allowed him to raise $25 million and open stores across the nation. Starbucks was the dominant specialty-coffee chain in North America by 2002. There were over 5,000 stores which served over 20 million customers world wide.
Starbucks faced various challenges in moving forward. Their marketing research shed light on the fact that their focus had shifted from the consumer towards store growth and product expansion. The research also highlighted the fact that they were lacking in customer service. Through these studies, Starbucks was able to identify what their customers wanted in terms of satisfaction. Consumers wanted Starbucks to make improvements to their service and also start offering better prices and incentive programs. The company wanted to add an additional 20 hours of labor to all of its stores in order to bring service time down to less than three minutes. Their goal was to enhance the bottom line by achieving sales of $20,000 a week per store. They needed to tie customer service to the bottom line in order to justify their plan to add the additional labor. We will address this issue in our alternate solutions. Other problems identified from this case include the following:
Brand Image and Differentiation
Starbucks faced various challenges in moving forward. The first of which was brand image and a lack of product...