Starbucks

MKTG. 5311-Dr. Edward Ramirez Name Id: Jesus Robles (800177406) 03/02/11

Case 9A98M006 STARBUCKS

Statement of problem

Mr. Howard Schultz, the Chairman and CEO of Starbucks corporation was concerned about if business was growing in the best way possible and was Starbucks overextending in the quest for growth. Furthermore marketing department at starbucks was so concerned about keeping its brand equity while growing business in domestic and international markets, meaning that starbucks was never just about the coffee, it was about the place, an experience. One thing to consider was the limitation factor they had as they depended so heavily in equity and debt due to the fact they own all of its stores and were not operating as most of its competitors using the franchise model.

Analysis of situation

Coffee itself and Coffee industry. Coffee was the second most traded commodity next to oil worldwide and it was divided into two categories: specialty coffee and basic coffee. The first one was the highest quality coffee available in the world; the second one was just anything else left. Coffee consumption in 1996 had changed in the U.S. the per-capita consumption of coffee was about 1.7 cups per day per person from two to three cups daily in 1960 and 1970. A different analysis showed that consumption of coffee in kilograms (per person) in 1985 by coffee consuming nations was as follow: Sweden 11.6, Denmark 11.0, Finland 10.0, Holland 9.5, Germany 6.8, France 5.5, Italy 4.9, and U.S. 4.7, consumption of coffee in a few of the producing nations was: Costa Rican 6.5, and Brazil about 5.5.

Specialty coffee and changing consumers trends, by 1996 people had started changing coffee consumption habits as a result specialty coffee was favored with it, the main drivers for this change were: a).-adoption of a healthier lifestyle replacing alcohol by coffee, b).-coffee bars offered a place to met. c).-people like affordable luxuries and specialty...