Starbucks Case (Marketing 300)

Trevor Schulze

14 November

Starbucks Video Case

1. Describe the coffee industry prior to the creation of Starbucks. How did Starbucks change the product and create the specialty coffee sector?

At the time of Starbucks is beginning, especially in the United States of America, there was no specialty coffee sector nor places to enjoy gourmet coffee. No one had heard of a cappuccino or latte and certainly had never ordered a small as a “tall”. According to the video coffee was about $.50 a cup at the time but was kept warm for hours and was not very high-quality at all. Pete’s coffee beans was the company that taught Starbucks how to roast their own coffee. With Howard’s help Starbucks begin to expand and educate people about the gourmet coffee industry and once people tasted the difference of the Arabica beans, they were hooked. Starbucks coffee and tea was able to transform the industry and went from selling only beans, tea leaves, and accessories; to include cups of gourmet creations. Starbucks was able to charge upwards of $4 for something that cost them less than a dollar to make.

2. What did Howard Schultz discovered in Milan that changed Starbucks forever? How did the owners of Starbucks react to Howard’s idea to change Starbucks?

Howard on his first trip to Italy, discovered and fell in love with the Italian coffee bars. This gave him the idea to also sell cups of coffee at Starbucks. He wanted the quiet ambience and place to hang out that the European-style coffee houses offered. Howard was able to convince the owners of this an in turn, brought in hundreds of people a day. This however, was a problem because the owners didn’t want to get big. After acquiring Pete's coffee, the owners of Starbucks couldn't keep up with the demand of running two companies so they ended up selling to Charles Schultz for a little over $3 million.

3. What is “Starbuckian” and why is it important to the mystique of Starbucks? What is the Starbucks “halo effect”...