Starbucks Case

STARBUCKS CORPORATION Background

Starbucks started operations in 1971 by opening its first retail store in Seattle and by 2003 had grown to be the world’s leading retailer, roaster and brand of specialty coffee. This lead to an ever increasing business risk as it expanded internationally. The firm’s objective was to establish Starbucks as the most recognized and respected brand in the word. This was achieved by its rigorous financial and marketing strategies. It also pursued opportunities to leverage the Starbucks brand through introduction of new products and the development of new distribution channels. It also devised strategies to attract new customers to its retail stores and retain the existing customers. This was done by: starting in store wireless “Wi-fi hot spots”; introducing re-loadable stored value Starbucks Card; introducing the all in one Starbucks Card with Visa credit card. Starbucks retail stores were typically located in high traffic, high visibility locations. Each store varied its product mix depending upon the size of the store and its location. Larger stores carried a broad selection of the firm’s whole bean coffees in various sizes and types of packaging as well as an assortment of coffee and expresso making equipment and accessories. Some stores also carry travel tumblers, Hear music CD, logo mugs, “grab and go” sandwiches and salads. It also established a joint venture with Pepsi –Coal Co. and began selling Frappuccino as a bottled coffee drink. Another joint venture with Dreyers’ Grand ice cream made Starbucks the number one brand of coffee ice cream in US. In 1998, it entered into a licensing agreement with Kraft Foods to accelerate the growth of Starbucks products in grocery channels throughout US. Starbucks strategy was to reach customers where they work, dine, travel and shop. This was achieved by establishing relationships which could take a number of forms – business alliances, international store licensing agreements, grocery...