Starbucks Presentation

Starbucks history, principles and summary

1. summarized by
Andi S. Boediman
Strategic Innovation Consultant
[email protected]
www.ideonomics.com

2. History
•Founded in 1971.
•Coffee, tea, and spice store.
•Named in honor of the first mate in
Herman Melville’s Moby Dick.

3. History
•1982: Schultz enters as head of marketing
•1987: Jerry and Gordon sold Starbucks and Giornale
acquired it making Howard Schultz the CEO and the
name changed to Starbucks Corporation.
•1996: Starbucks and Dreyer's Grand Ice Cream, Inc.
introduces Starbucks
® Ice Cream and Ice Cream bars,
making Starbucks the number one brand of coffee ice
cream in the U.S.
•Began selling bottled Frappuccino
•1998: Introduced a lighter and milder tasting line of
coffee and Tiazzi, a mixture of tea, fruit juice, and ice.
•Through Kraft Foods begins to extending the Starbucks
brand into grocery stores

4. History
2004
•Began its in-store CD burning service, allowing
customers to create personalized CDs at the Starbucks
Hear Music
•Through Tazo and Kraft Foods they began distributing
Tazo super-premium teas in U.S. grocery stores.
•Jim Beam Brands Co. agrees to develop and market
Starbucks-branded coffee liqueur outside of Starbucks
stores.
•Through XM Satellite Radio, Starbucks offers a 24-hour
"Starbucks Hear Music" channel.
•Introduced a new Frappuccino, a light blended coffee
beverage

5. Howard Schultz
•Kitchen appliance
salesman
•Hired by Starbucks in
1982
•Trip to Milan in 1983
•Left the company in
1985
•Bought the company in
1987

6. Objective
•To establish Starbucks as
the most recognized and
respected brand in the
world.

7. Mission Statement
•To establish Starbucks as the
premier purveyor of the finest coffee
in the world, while maintaining our
uncompromising principles while
we grow.

8. Culture
•Third Space (after home &
work)
•Employee Focus
•Corporate Social Responsibility
http://www.starbucks.com/aboutus/environment.asp

9. 6 Principles
•Provide a great work environment
and treat each other with respect
and dignity.
•Embrace diversity as an essential
component in the way we do
business.
•Apply the highest standards of
excellence to the purchasing,
roasting and fresh delivery of our
coffee.
http://www.starbucks.com/aboutus/environment.asp

10. 6 Principles
•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.
http://www.starbucks.com/aboutus/environment.asp

11. Strengths
•The product is strongly
differentiated from those of rivals
•Strong brand-name image/company
reputation
•Good supply chain management
•Better product quality relative to
rivals
•Wide geographic coverage
•Joint ventures

12. Weaknesses
•Leverage the brand to other that has
to be proven to strengthen the
brand portfolio strategy such as
Hear Music

13. Opportunities
•Expanding into new geographic
markets
•Expanding the company’s product
line to meet a broader range pf
customer needs
•Joint ventures that can expand the
firm’s market coverage or boost its
competitive capability

14. Threats
•Loss of sales to substitute products
•Restrictions trade polices on the part
of foreign government
•Entry of product new competitors

15. Differentiation Strategy
•Unique in ways that are valuable to a
wide range of customers.

16. Attributes
•Command a premium price for its
product
•Increase unit sales
•Gain buyer loyalty to its brand

17. The Growth of Starbucks

18. Starbucks Today
•Starbucks now has approximately
6,294 coffeehouses in North America
alone,
•And they have approximately 900
locations outside of North America.

19. They grow up so fast…
but how?

20. •In 1991, Starbucks became the first
privately owned company to offer a
stock option program to all of their
employees.
•Higher employee satisfaction leads
to lower turnover rates, which in turn
leads to lower employee training
costs, which leads to greater profits.

21. •Starbucks also gives back to the
community, both local and
abroad.
•This provides Starbucks with
plenty of good publicity.
•Starbucks also takes great
interest in its suppliers well-
beings.

22. What major bookstore is a
Starbucks most likely to be
found inside?
•In 1993, Starbucks Corporation started a
relationship with Barnes and Nobles, Inc.

23. Since, they have won accounts with
many other companies, such as:
•Sheraton Hotels (now
Starwood Hotels)
•United Airlines
•Nordstrom
•Canadian Bookstore
Chapter
•Westin Hotels
•Canadian Airlines
•Kraft Foods (to extend
into grocery stores)
•Hyatt Hotels Corp.

25. Hear Music™ Brand Portfolio
Hear Music
Media Bars
Hear Music
Coffeehouses
& Stores
Hear Music
XM 75
Hear Music
Record Label
& CD Sales
•Starbucks brand is about the in-store experience
•Designed to enhance the sensory signals
•Hear Music = “Starbucks” coffeehouse music
•Allows the customer to interact and create their own
music, thus enriching the experience

26. Hear Music™ Brand Portfolio
Products
•66 Exclusive & Co-
Produced Titles
–Artist Choice
–Opus Collections
–In Store Playlists
•Selected Artists &
Albums
Price
•Mid to High + $2
Place
•Starbucks Coffee
Shops
•Hear Music Stores
•Hear Music Website
Promotion
•In Store
•Press (Grammy
Award)
•Online
•XM Radio
Hear Music
Media Bars
Hear Music
Coffeehouses
& Stores
Hear Music
XM 75
Hear Music
Record Label
& CD Sales

27. Hear Music™ Brand Portfolio
Product
•XM Channel 75
Launched in Oct 2004
•The Voice of Music at
Starbucks
Price
•$7.99/Month
Place & Promotion
•Satellite Radio
Receiver
•Online
Promotion
•In Store
•Press
•Online
•XM Radio
Hear Music
Media Bars
Hear Music
Coffeehouses
& Stores
Hear Music
XM 75
Hear Music
Record Label
& CD Sales

28. Hear Music™ Brand Portfolio
Product
•Unique stores that
encourage customers
to discover music
through personal
interaction
•Customers can create
personal compilations
•Library of 250,000+
titles available for
mixing
•Large selection of
titles available for sale
Price
•$6.95 for 5 songs + $1
for each additional
tune
Place & Promotion
•Berkeley
•Santa Monica
Promotion
•Press
•Online
Hear Music
Media Bars
Hear Music
Coffeehouses
& Stores
Hear Music
XM 75
Hear Music
Record Label
& CD Sales

29. Hear Music™ Brand Portfolio
Product
•Interactive CD
creation within
Starbucks Stores
•Customers can
create personal
compilations
•Library of 250,000+
titles available for
mixing
•Large selection of
titles available for
sale
Price
•$6.95 for 5 songs +
$1 for each
additional tune
Place & Promotion
•45 stores throughout
Austin, TX & Seattle
Promotion
•Press
•Online
•Stores
Hear Music
Media Bars
Hear Music
Coffeehouses
& Stores
Hear Music
XM 75
Hear Music
Record Label
& CD Sales

30. Hear Music Brand Weaknesses
•Low Awareness
–19% of those surveyed made no association with Starbucks
–Many could not make the connection between Hear Music
and Starbucks without prompting
•Wrong usage occasion for extended music interaction
–Starbucks coffee shops largely “on the go” & business
customer
–Most music consumers do not think of Starbucks as a
destination for music
–Ability to download to a digital media player
•Unclear Target Audience
–Starbucks persona vs. technically challenged
–Starbucks coffee customer vs. Music Purveyor
•Mixed Messages
–Starbucks Music vs. Variety of Music

31. Starbucks Gives Back

32. CARE
•Starbucks distributes funds in
response to any natural disasters
that may occur in countries where
their coffee and tea originate.

33. Starbucks Foundation
•Created by the Chairman of
Starbucks, Howard Schultz.
•Dedicated to creating hope,
discovery, and opportunity in
communities where Starbucks are
located.

34. Support Conservation
International’s Conservation
Coffee Program
•Encourages ecologically sound
coffee growing practices.

35. Keeping it Fresh
•Starbucks tries to introduce a few
new beverage ideas every year,
just to keep things interesting.

36. summarized by
Andi S. Boediman
Strategic Innovation Consultant
[email protected]
www.ideonomics.com
notes
You can use this summary for non commercial purposes
and cite the credit.
If you can improve this presentation with better slide/
image/illustration, please send it to my email and I will put
them as part of future update.