Starbucks Business Case Study

Research Paper (undergraduate), 2006

8 Pages, Grade: 1.0


Index of contents

1 What is Starbucks’ product?

2 What changes in society have helped Starbucks be successful?

3 What strategic factors account for Starbucks’ success in developing brand equity?

4 What opportunities and threats face Starbucks?

5 What are the advantages of the Starbucks Card to the company and to customers?

6 What should Starbucks do to continue growing its revenues and earnings?

7 Evaluate Starbucks’ mission statement and guiding principles. What do they suggest about the company?


1 What is Starbucks’ product?

Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, coffee-related accessories and equipment, a selection of premium teas and a line of compact discs, primarily through company-operated retail stores. Starbucks also sells coffee and tea products and licenses its trademark through other channels and the company produces and sells bottled Frappuccino coffee drinks and Starbucks DoubleShot espresso drink and a line of ice creams.

Concluding, Starbucks is able to sell in some respects emotions and experiences. This is basically what every marketing try to realize and to measure. By providing a unique atmosphere, the customers enjoy the time they spend in the stores. The interior design and the smell of coffee are the most important aspects that support the company’s store- concept.

2 What changes in society have helped Starbucks be successful?

There are several changes in society that helped Starbucks getting succesful. In my opinion, the most important change of the last two, three decades (time of operation of Starbucks) is the change of economics. Starbucks strategy comprises to locate its stores at special places such as urban areas, the first floor of blocks of offices, and entrances of the underground. These places, of course, get the more crowded the better the economic situation is.

In addition, the development of information technology and related media is another aspect. On the one hand, it helps the company to reach new customers and on the other hand the company encompasses multiple music and technology based initiatives designed to appeal to new and existing Starbucks customers.

Among these initiatives are strategic marketing and co-branding arrangements, such as the 24-hour Starbucks Hear Music TM digital music channel 75 available to all Satellite Radio subscribers, and the availability of wireless broadband Internet service in company-operated retail stores located in the United States and Canada. Additionally, the entertainment business includes Starbucks Hear Music's innovative partnerships with other music labels for the production, marketing and distribution of both exclusive and nonexclusive music, music programming for Starbucks stores worldwide, and CD sales through the company's website.

Furthermore, a more abstract change is the way of life in the “modern world”. People are more often outside having their day by day issues. Because of this hecticness a “to go coffee” seems to be beneficial for busy people.

3 What strategic factors account for Starbucks’ success in developing brand equity?

Specialty Operations strive to develop the company's brand outside the company-operated retail store environment through a number of channels. Starbucks strategy is to reach customers where they work, travel, shop and dine by establishing relationships with prominent third parties that share the company's values and commitment to quality. These relationships take various forms, including licensing arrangements, foodservice accounts and other initiatives related to the company's core businesses. The company plans to continue rapid expansion of its retail operations to grow its Specialty Operations and to selectively pursue other opportunities to leverage the Starbucks brand through the introduction of new products and the development of new channels of distribution. The company also locates retail stores in select rural and off- highway locations to serve a broader array of customers outside major metropolitan markets and to expand brand awareness.

4 What opportunities and threats face Starbucks?

Starbucks most important opportunity for expanding its retail business is to increase its market share in existing markets primarily by opening additional stores and to open stores in new markets where the opportunity exists to become the leading specialty coffee retailer. There are still multiple markets in countries with metropolitan areas that Starbucks has to enter. The company still has the chance to take advantage of the first mover in these locations.

There are several threats that face Starbucks. The company's financial performance is highly dependent on its United States operating segment, which comprised 84% of consolidated total net revenues in fiscal 2005. Any substantial or sustained decline in these operations could materially adversely affect the company's business and financial results.

Furthermore, Starbucks believes it has built an excellent reputation globally for the quality of its products, for delivery of a consistently positive consumer experience and for its corporate social responsibility programs. Consumer demand for the company's products and its brand equity could diminish significantly if Starbucks fails to preserve the quality of its products, is perceived to act in an unethical or socially irresponsible manner or fails to deliver a consistently positive consumer experience in each of its markets.


Excerpt out of 8 pages


Starbucks Business Case Study
Western Carolina University
Marketing Management & Mature Consumers
Catalog Number
ISBN (eBook)
File size
415 KB
Starbucks, Business, Case, Study, Marketing, Management, Mature, Consumers
Quote paper
M.B.A. Nihat Canak (Author), 2006, Starbucks Business Case Study, Munich, GRIN Verlag,


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