Keys to Success (Company)

 Rapidly expand retail operations

 Growth in its specialty sales and other operations
 Selectively pursue opportunities to leverage the Starbucks brand through the
introduction of new products
 Continue to be widely available and welcoming
 Maintain reputation for having specialty and gourmet coffee
 Make customers feel welcome with friendly service

Critical Issues (Moon)

 Must increase customer satisfaction through improvements to service

  Friendlier and more attentive staff
 Faster and more efficient service
  Increase in personal treatment (remember customer’s name and order)
 More knowledgeable staff
 Better overall service
 Offer better prices/incentive programs
1. Free cups after “x” number of visits
2. Reduction of price
3. Offer promotions, sales to increase customer satisfaction

OTHER

1. Offer better quality and variety of products

2. Improve atmosphere (friendly, welcoming)
3. Reaching out to community through involvement and awareness
4. More stores and convenient locations

 Other critical issues Starbucks is criticized for and must be aware of are:

1. Clustering
2. Driving out independents
3. Loss of diversity
4. Its policy toward farming communities in developing countries
5. Fair trade
 6. Many of these issues are vital for Starbucks to improve their Customers’
satisfaction (Simmons).

    Critical Issues                                              

Marketing Strategy

 Starbucks Mission Statement (Company)

“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:

1. Provide a great work environment and treat each other with respect and
dignity.
2. Embrace diversity as an essential component in the way we do business.

 Apply the highest standards of excellence to the purchasing, roasting, and delivery
of our fresh coffee o 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.”

Environmental Mission Statement (Company)

“Starbucks is committed to a role of environmental leadership in all facets of our

business.

   We fulfil this mission by a commitment to:

 Understanding of environmental issues and sharing information with our partners.

 Developing innovative and flexible solutions to bring about change.
 Striving to buy, sell, and use environmentally friendly products.
 Recognizing that fiscal responsibility is essential to our environmental future.
 Instilling environmental responsibility as a corporate value.
 Measuring and monitoring our progress for each project.
 Encouraging all partners to share in our mission.”

Other points of importance to Starbucks:

 “Building customer loyalty around cappuccinos, lattes, and other fancy

beverages,” (Overshot).
 Want to create a sense of community
 Want to create a memorable experience for a customer that inspires the
customer to return often, as well as to tell a friend
 Striving to become the most recognized and respected brand in the world
 Putting people before products (Company)
 What a Starbucks store should be: “An authentic coffee experience that
conveyed the artistry of espresso making, a place to think and imagine, a spot
where people could gather and talk over a great cup of coffee, a comforting
refuge that provided a sense of community, a third place for people to
congregate beyond work or the home, a place that welcomed people and
rewarded them for coming, and a layout that could accommodate both fast
service and quiet moments” (Thompson).

Marketing Objectives

 To create a Starbucks experience that makes people come for the coffee, stay for
the ambience and environment, and return for the connection
 To build an image separate from smaller coffee chains
 To clearly communicate the values and commitments of the Starbucks business to
their customers, instead of only growth plans publicized in the media

Financial Objectives

 Have each store reach a $20,000 weekly sales level

 Open new stores with lower store-opening costs (about $315,000 per store on
average).

Target Marketing
  Based on a sample of Starbucks’ 2002 customer base, the attitudes toward
the brand were:
 The chart shows that the new customers have a poorer attitude toward
Starbucks in every category than the existing customers.
 The new customer type that needs attention is:
1. 45% female, 55% male
2. Average age of 36
3. 37% have a college degree
4. Average income is $65,000
5. Drink an average of 15 cups of coffee per week

Store Expansion Strategy

 Target areas with favourable demographic profiles, as well as areas that can
be serviced and supported by the company’s operations infrastructure.
 For each targeted area, select a large city to serve as a focal point.
 Goal of each focal city: Open 20 or more stores in that city in the first two years.
 Once stores cover the city, open additional stores in smaller, surrounding areas in
the region.
 With this plan, the company had only closed 2 of the 1,500 sites it had opened
between 1992 and 1997.
 Stores must be custom-designed.
 The company does not buy freestanding structures, and therefore each store is a
different shape and size.
 Most stores range in size from 1,000 to 1,500 square feet.
 Most stores are located in high-trafficked, high-visibility areas, such as:
1. Office buildings
2. Downtown and suburban retail centres
3. Airport terminals
4. University campuses
5. Busy neighbourhood shopping areas convenient to pedestrian traffic

International expansion
  As of 2004, the company operated over 300 company-owned stores in the United
Kingdom, Australia, and Thailand, as well as 900 licensed stores in Asia, Europe,
the Middle East, Africa, and Latin America.
 Goal: Have 15,000 international stores

Other things to consider:

1. Kiosks
2.  Drive-through windows

Positioning

 Store Ambience

1. Goal: To make customers want to linger

2. Social Appeal—Offer a sense of community, a  splace where people can come
together
3. Physical layout

 Seating areas to encourage lounging

  Appear upscale yet inviting

Aromas

  Smoking is banned in all stores

  Employees are asked to refrain from wearing perfumes or colognes, and prepared
foods are kept covered so customers would only smell coffee aromas.
 Sounds

 Play soothing CDs that are also for sale

  Often offer live music
 Customer Service

1. The company sees a direct link between customer satisfaction and customer
loyalty.
2. The company believes that employee satisfaction leads to customer satisfaction
(Moon).

  Voted onto Fortune‘s Top 100 Places to Work

  Employee satisfaction remains consistently around 80-90%.
  Turnover rate is 70%, one of the lowest in the industry
  Focuses on manager stability in order to decrease employee turnover, but also to help
recognize regular customers and provide personalized services
 Employees are trained to connect with customers and focus on “customer intimacy.”

 Greet customers with a smile.

 Enthusiastically welcome customers into the store.

  Establish eye contact.
  Try to remember customers’ names and orders if they are frequent customers.
 “Just Say Yes” policy, in order to keep the customer happy, which may go beyond store
rules

 Example: Always compensate dissatisfied customers with a Starbucks coupon entitling

them to a free drink

 Example: Give a customer a free refill if he/she spills their drink.

 Advertising—The Company spends very little on advertising and depends on word-of-

mouth promotion.
 Involvement in the Community

 Contributing positively to surrounding communities is one of Starbucks’ guiding

principles in the company’s mission statement.
  Howard Schultz had the plan to “build a company with soul (Student).
 Starbucks has been the largest corporate contributor in North America to CARE, a
worldwide relief and development organization to help Third World countries
where Starbucks purchases its coffee supplies.
The company has an Environmental Committee that looks for ways to reduce,
reuse, and recycle waste, as well as contribute to local community environmental
efforts.
 The company donated almost $200,000 to literacy improvement efforts
(Student).
 Starbucks has many community building programs to “contribute positively to
the communities where our partners (employees) and customers live, work, and
play” (Corporate).
 “As part of Starbucks ongoing commitment to share the comfort of coffee during
times of crisis, the company continues to demonstrate our support of the men
and women serving in the U.S. military overseas” (Company).

The Starbucks Foundation (Company)

 Established in 1997 by Howard Schultz

  Inspired by Schultz’s childhood experiences and those of other inner city children
  Dedicated to creating hope, discovery, and opportunity in the communities of Starbucks

Marketing Mix

 Marketing Research
 Schultz wanted to use research in order for Starbucks to challenge the status quo, be
more innovative and take bigger risks.

 Examples of questions he asked were :

1. What could Starbucks do to make its stores an even more elegant “third place”
that welcomed, rewarded, and surprised customers?
2.  What new products and new experiences could the company provide that would
uniquely belong to or be associated with Starbucks?
3. What could coffee be – besides being hot or liquid?
4. How could Starbucks reach people who were not coffee drinkers?
5. What strategic paths should Starbucks pursue to achieve its objective of
becoming the most recognized and respected brand of coffee in the world?

 At the retail stores, a pamphlet is available for customers to share their thoughts about
their Starbucks experience.
 Starbucks uses “Customer Snapshots,” similar to mystery shoppers, to evaluate partner
performance in the retail stores (Moon).

The four basic service evaluations include:

 Service – Did the register partner verbally greet the customer? Did the partners make
eye contact with the customer? Say thank you?

 Cleanliness – Was the store clean? The counters? The tables? The restrooms?

 Product Quality – Was the order filled accurately? Was the temperature of the drink
within range? Was the beverage properly presented?

 Speed of Service – How long did the customer have to wait? The company’s goal was to
serve a customer within three minutes, from back-of-the-line to drink-in-hand.Customer
Snapshot Scores (North American Stores)
Product

 Starbucks product-mix expanded from 30 varieties of whole bean coffees to eco-

friendly cappuccino, coffee makers, and other Starbuck paraphernalia. Its product
offerings have also expanded beyond pastries and coffee to oatmeal, smoothes, and
wraps to keep up with the competition and satisfy more customer needs.

The company has also been constantly introducing new products, such as “Instant via
Ready” and “Full Leaf Tazo Tea Lattes” and “Tazo Tea Infusions”. The Instant via Ready
is an instant coffee that the company claims is indistinguishable from its regular
brewed coffee (Jargon). Full Leaf Tazo Tea Lattes and Tazo Tea Infusions are the
company’s new tea offerings through which it hopes to attract tea drinkers (Edwards).
The company also offers Starbucks coffee and cappuccino makers for consumers who
wish to replace their existing home coffee makers.

Price

Starbucks products are priced higher due to perceived upscale image attached to its
brand. The company also began to offer $1 bottomless 8 oz. cup of coffee, with
unlimited refills that cost approximately 50 cents less than any other Starbucks
products. The company is also implementing “value strategies” that would emphasize
more on inexpensive coffee products rather being perceived as unaffordable to price-
skittish consumers. For example, the company introduced $3.95 “breakfast pairings,”
including popular breakfast items paired with a coffee, and highlights $2 brewed
coffees instead of the more expensive specialty drinks (Jennings).

Place

 As stated earlier, Starbucks can be found in any neighbourhood where there is a
perceived high traffic for its stores. Starbucks outlets can also be found in-store of
various large chains including Barnes & Noble and Target. Their locations are extremely
conducive for individuals that are on the go and for those who enjoy reading or listening
to music. Starbucks has also been recently testing “stealth outlets”, where the store is
named after the street it is located on. The new stores attempt to “localize” Starbucks
stores with no Starbucks logo on any of the products being offered there, and instead
have the specific street address as the brand name (Allison).
Promotion

Starbucks has implemented numerous promotions to reach its target markets.

Promotions are listed as follows:
• One of the promotions that Starbucks has used is the Starbucks Card. Starbucks Card
is an initiative that offers customers the opportunity to promote company’s products
through a referral system. When a customer purchases a gift card, it not only shows
brand loyalty, but it also provides the company with free advertising, and brings in new
customers. Starbucks also provides a card for corporate sales, which are used for
extrinsic rewards to show employee appreciation for a job well done, or a gift to client or
a vendor. 
• Coffee services delivered to offices without coffee size restrictions.
• Appealing to a diverse customer base by offering international teas and coffees to
accommodate those customers that want a taste from home or for locals that enjoy
tea.
• Using philanthropy as a means for promotion – Starbucks contributes to several non-
profit organizations as a way to improve brand image and awareness in local
communities.