Assginment-starbucks

1.0 INTRODUCTION

Executive Summary

What was once a small coffee shop opened by Gerald Baldwin, Gordon Bowker,

and Ziev Siegl in 1971, Starbucks Coffee Company has grown into the number one

specialty coffee retailer. With over 10,000 coffee shops in more than 30 countries, of

which 4,200 are licensed and franchised and 6,000 are owned, the company’s main

objective is to establish Starbucks as the “most recognized and respected brand in the

world.”

Currently, Starbucks is replying on retail expansion, product innovation, and

service innovation to achieve a long term goal once set by current chairman Howard

Schultz:

“The idea was to create a chain of coffeehouses that would become

America’s “third place.” At the time, most Americans had two places in

their lives – home and work. But I believed that people needed another

place, a place where they could go to relax and enjoy others, or just be by

themselves. I envisioned a place that would mean different things to

different people.”

By working toward this goal, Starbucks wants to open new stores in both new and

existing markets, expand their product development process, and cater to customers’

needs to eventually improve their financial position and dominate market share.

2.0 MARKET SUMMARY

2.1Target Markets

In the early stages of development for Starbucks, Schultz identified their target

market as “affluent, well-educated, white-collar patrons (skewed female)

between the ages of 25 and 44.”

Over time, market research teams have recognized the new target market as

“younger, less well-educated, and in a lower income bracket than their more

established customer.”

Nonetheless, the original target market has not disappeared, but has expanded

into the demographic of the store location. For example, southern California

stores cater to a growing number of Hispanic customers.

2.2 Market Demographics

2.2.1 Geographic

Data from 2002 showed that in the Southeast there was only one store for

every 110,000 people. Whereas in the Pacific Northwest, there was only

one store for every 20,000 people. Hence, the company was far from

reaching existing markets.

International plans showed Starbucks was operating in over 300 company-

owned stores in the United Kingdom, Australia and Europe, the Middle

East, Africa and Latin America.

2.2.2 Demographics

Young, affluent, tech-savvy customers

A 1999 estimate showed that 70% of customers were internet users, and

today the estimation has exceed 90%

Moms with strollers

People combining work and coffee break

The most frequent customers average 18 visits per month, whereas the

typical customer visits five timers per month.

Average age for an established customer was 40, new customers was 36.

Customers that started visiting Starbucks in 2002 were 45% female, 55%

male

2.3 Market Needs

Starbucks wants to create an experience for their customers that combine their

on-the-go schedule, as well as a place to relax. Senior vice president of the

administration in North America Christine Day explains that, “people come

here for the coffee, but ambience is what makes them want to stay.”

Selection

Starbucks menu contains brewed coffee, espresso traditions and

favourites, cold beverages, coffee alternatives, frappuccinos and the sale

of whole beans.

Accessibility

Starbucks operates over 10,000 retail stores. Most of the 4,200 franchised

stores are located in shopping malls and airports. Starbucks coffee brands

are also marketed through grocery stores in the form of beans and even ice

cream flavours.

Customer services

Starbucks employees are referred to as “partners.” As of 2002, Starbucks

employed 60,000 partners worldwide, 50,000 of those in United States.

From the beginning when Howard Schultz took over Starbucks, he

believed, “Partner satisfaction leads to customer satisfaction.” (Moon)

Competitive pricing

For North American stores in the 2002 fiscal year, the average price of an

order was $3.85. The drink comes in three sizes: tall, grande, and venti

(Italian for small, medium and large). The least expensive price for a tall

drink is $1.40 for brewed Coffee of the day. The most expensive price for

a venti is $4.15 for frappuccino. Whole beans are sold in half and whole

pound bags ranging from $5.20 to $15.95 (Moon)

2.4 Market forecast

Over the next few years, an estimate for the U.S. retail coffee market expects

specialty coffee to have a compound annual growth rate (CAGR) within 9% to

10%.

Starbucks was also estimated in 2002 to grow at a CAGR of about 20% top-

line revenue growth.

As of 2002, coffee consumption had risen with more than half of the

population (about 109 million people) drinking coffee everyday, and an

additional 52 million drinking coffee on occasion.

2.5 Market Growth

Reports show in 2002, the number of specialty coffee drinkers has become the

market’s biggest growth.

An estimated one-third of all U.S. coffee consumption takes place outside of

the home and in places such as office, restaurants and coffee shops.

3.0 MARKET ANALYSIS

Comparison between two countries, Italy and France:

3.1 The People

3.1.1Ethnic Composition

Italy (Nationality – Italian)

Caucasian (southern European) - 99%

Other - 1%

France (Nationality – French (singular and plural)

Celtic and Latin - 90%

Teutonicand Slavic - 5%

North African, Indochinese, Basque - 5%

3.1.2 Education and Literacy

Italy

Education is state-funded and compulsory between the ages of 6 and

14. The adult literacy rate is 98 percent.

France

Education is compulsory between ages of 6 and 16. The adult literacy

rate is 99 percent.

3.1.3 Labour Force

Italy

Total: 23.6 million (2001)

By occupation:

Services - 63%

Industry - 32%

Agriculture - 5%

France

Total: 26.6 million (2001)

By occupation:

Services - 71%

Industry - 25%

Agriculture - 4%

3.2 Geography

3.2.1 Land Mass Total

Italy = 116,305 sq mi (301,230 sq km) (Noted: Includes

Sardinia and Sicily)

France = 211,209 sq mi (547,030 sq km) (Noted: Includes only

metropolitan France, but excludes the overseas administrative

divisions.)

3.2.2 Land Boundaries

Italy

Total: 1,200 mi (1,932.2 km)

Border countries : Austria 267 mi (430 km), France 303 mi (488

km), Holy See (Vatican City) 1 mi (3.2 km), San Marino 24 mi (39

km), Slovenia 144 mi (232 km), Switzerland 459 mi (740 km).

France

Total: 1,795 mi (2,889 km)

Border countries: Andorra 35 mi (56 km), Belgium 385 mi (620km),

Germany 280 mi (451km), Italy 303 mi (488 km), Luxembourg 45

mi (73 km), Monaco 2 mi (4 km), Spain 387 mi (623 km),

Switzerland 356 mi (573 km).

3.2.3 Climate/Weather

Italy

Predominantly Mediterranean; alpine in far north, hot, dry in south.

France

Generally cool winters and mild summers; but mild winters and hot

summers along the Mediterranean coast.

3.2.4 Terrain

Italy

Mostly rugged and mountainous; some plains, coastal lowlands.

France

Mostly flat plains or gently rolling hills in north and west; remainder

is mountainous, especially Pyrenees in south, Alps in the east.

3.2.5 Natural Resources

Italy

Mercury, potash, marble, sulphur, dwindling natural gas and crude

oil reserves, fish, coal, arable land

France

Coal, iron ore, baucite, fish, timber, zinc, potash.

3.2.6 Land Use

Italy

Arable land: 28%

Permanent crops: 9%

other: 63% (1998)

France

Arable land: 33%

Permanent Crops: 2%

other: 65% (1998)

3.2.7 Natural Hazards

Italy

Regional risks include landslides, mudflows, avalanches,

earthquakes, volcanic eruptions, flooding; land subsidence in

Venice.

France

Flooding; avalanches; midwinter windstorms; drought; forest fires in

south near the Mediterranean.

3.2.8 Environment – current issues

Italy

Air pollution from industrial emissions such as sulphur dioxide;

coastal and inland rivers polluted from industrial and agricultural

effluents; acid damaging lakes; inadequate industrial waste treatment

and disposal facilities.

France

Some forest damage from acid rain (major forest damage occurred

as result of severe December 1999 windstorm); air pollution from

industrial emissions; eater pollution from urban wastes, agricultural

runoff.

3.2.9 Geography Note

Italy

Strategic location dominating central Mediterranean as well as

southern sea and air approaches to Western Europe.

France

France is the largest west European nation; occasional strong, cold,

dry, north-to-north-westerly wind known as mistral.

3.3 Demographics

3.3.1 Population

Italy – 57,715,625 (July 2002)

France – 59,765,983 (July 2002)

3.3.2 Age structure

Italy

0-14 years: 14.1% Male: 4,198,569 Female:

3,954,159

15-64 years: 67.3% Male: 19,334,208 Female:

19,492,048

65 years and over: 18.6% Male: 4,436,073 Female:

6,300,568

(2002)

France

0-14 years: 18.5% Male: 5,675,269 Female: 5,401,661

15-64 years: 65.2% Male: 19,503,556 Female:

19,479,646

65 years and over: 16.3% Male: 3,948,433 Female:

5,757,418

(2002)

3.3.3 Growth Rate

Italy: 0.05% (2002)

France: 0.35% (2002)

3.3.4 GDP Per Capita

Italy

Purchasing power parity = us$24,300 (2001)

France

Purchasing power parity = us$25,400 (2001)

3.4 Economy and Trade

Italy

Italy has a diversified industrial economy with roughly the same total

and per capita output as France and the U.K. These capitalistic remains

divided into a developed industrial north, dominated by private

companies, and a less developed agricultural south, with 20 percent

unemployment. Most raw materials needed by industry and more than 75

percent of energy requirements are imported. Over the past decade, Italy

has pursued a tight fiscal policy in order to meet the requirements of the

E.U. and has benefited from lower interest and inflation rates. Italy’s

economic performance has lagged behind that its E.U. partners, and the

current government has enacted numerous short-term reforms aimed at

improving competitiveness and long-term growth. Rome has moved

slowly, however, on implementing needed structural reforms, such as

lightening the high tax burden and overhauling Italy’s rigid labour

market and expensive pension system, because of the current economic

slowdown and opposition from labour unions. Privatization of state-

owned business has been a stated goal of the Berlusconi government,

and his Minister of the Economy, Giulio Tremonti, promised a “very

ambitious” scheme in early 2003 that would supposedly raise US$20

billion through state sell-offs within the year. The move is expected to

face severe opposition from government unions who are willing to give

up their sumptuous benefits. Added to these woes, the economy also has

significant “grey” and “black” market sectors, which together account

for almost 25 percent of GDP, pointing to a major loss in tax revenues.

France

France is in the midst of transition, from a well-to-do modern economy

that featured extensive government ownership and intervention to one

that relies more on market mechanisms. The Socialist-led government

had partially of fully privatized many large companies, banks, and

insurers, but still retains large stakes in several leading firms, including

Air France, France Telecom, Renault, and Thales, and remains dominant

in some sectors, particularly power, public transports, and defence

industries. The telecommunications sector is gradually being opened to

competition. France’s leaders remain committed to a capitalism in which

they maintain social equity by means of laws, tax policies, and social

spending that reduce income disparity and the impact of free markets on

public health and welfare. The current government has lower income

taxes and introduced measures to boost employment, but has done little

to reform an overly expensive pension system, rigid labour market and

restrictive bureaucracy that discourage hiring and make the tax burden

one of the highest in Europe. In addition to the tax burden, the reduction

of the workweek to 35 hours, extended to small firms in 2002, had drawn

criticism for lowering the competitiveness of French Businesses. The

current economic slowdown has thrown the government’s goals of

balancing the budget by2004 off track. The Chirac government began

economic reforms in 2002 but found itself stymied by France’s all too

powerful government unions that were bent on maintaining benefits that

taxpayers can ill afford. Little by little the government is reducing its

ownership share of large enterprises, but it was quick in propping up the

ailing France Telecom 2002with a big “loan”. The national power utility

EDF-GDF continues to snatch up non-French utilities while using its

own government protected monopoly to keep out foreign competitors or

suitors. Like many other E.U. countries, France faces a future of aging

citizens and no means to pay them their promised pensions. Immigration

reform, another sensitive topic in elitist France, will be key to keeping

government tax coffers topped up for the future.

+

3.4.1 Inflation rate

Italy - 2.70% (2001)

France - 1.70% (2001)

3.4.2 Industries

Italy

Tourism, machinery, iron and steel, chemicals, food processing,

textiles, motor vehicles, clothing, footwear, ceramics.

France

Steel, machinery, chemicals, automobiles, metallurgy, aircraft,

electronics, mining, textiles, food processing, tourism.

3.4.3 Exports

Italy - US$243 billion (f.o.b., 2001)

France - US$293.3 billion (f.o.b., 2001)

3.4.4 Imports

Italy - US$226 billion (f.o.b., 2001)

France - US$292.6 billion (f.o.b., 2001)

3.4.5 Total trade

Italy - Purchasing power parity – GDP US$1.402 trillion (2001)

France - Purchasing power parity – GDP US$1.51 trillion (2001)

3.4.6 Top Exports

Italy

Engineering products, textiles and clothing, production machinery,

motor vehicles, transport equipment, chemicals; food, beverages and

tobacco; minerals and nonferrous metals.

France

Machinery and transportation equipment, aircraft, plastics,

chemicals, pharmaceutical products, iron and steel, beverages.

3.4.7 Top Imports

Italy

Engineering products, chemicals, transport equipment, energy products,

minerals and nonferrous metals, textiles and clothing; food, beverages

and tobacco.

France

Machinery and equipment, vehicles, crude oil, air craft, plastics,

chemical

3.4.8 Debt – External

Italy - US$45 billion (1996)

France - US$106 billion (1998)

4.0 SWOT ANALYSIS

4.1 Strengths

The company is good at taking advantage of opportunities.

Starbucks is very profitable and has a strong financial base, therefore

allowing the company to undertake new business ventures.

Revenue increased to $5294.2 million in 2004, a 29.9% increase from

2003. (DataMonitor).

Profits increased to $610 million in 2004, a 43.7% increase from 2003.

Net earnings increased 46% (SWOT).

The company is internationally recognized and has a global

presence.

Their reputation is the one of fine products and services.

Almost 9,000 cafes in almost 40 countries. (SWOT).

Widespread brand recognition, which in turn becomes brand preference,

and ideally eventually brand loyalty .

Strong customer base.

Respected employer

Value its workforce

Voted onto fortune’s “Top Companies to Work For” (2005)

Strong ethical values and mission statement.

Disciplined innovator

Understands the Adapt-or-Die theory of marketing

Has ability to roll out new products relatively quickly, which

translates into a considerable competitive advantages

Clusters company units

Expands business with the continuing growth of the

coffee market, especially in areas where the company is already well

established, and groups stores in an area, therefore able to dominate the

region.

Leads to considerable financial reward without

suffering from cannibalism (DataMonitor)

Focus on opening stores that have convenient access

for pedestrians and drives.

Helps the company capture an increasing share of the

coffee market.

4.2 Weaknesses

Reliance on beverage innovation

Vulnerable to the possibility that their

innovation may falter over time.

Company growth is mostly driven by beverage

innovation.

If U.S. store growth decreases, stock is

lowered in value.

More than 75% of the company’s stores are in

USA (DataMonitor)

May need to look for an assortment of countries in which to pen more

shops in order to spread business risk.

85% of revenue is from its domestic US Market (DataMonitor).

Has high international brand recognition and should look to generate

a greater proportion of revenue from outside the USA.

Would suffer greatly if U>S stores underperformed because of

economic conditions or increased levels of competition.

Dependent on the retail of coffee, this could make them slow to diversify into

other division if the need should rise.

Employee efficiency is poor.

Lower revenue per employee ($71,544 – fiscal 2004) compared to the

industry average ($110,841)(DataMonitr)

Lower income per employee ($5,294 compared to the industry average

($9,500) (DataMonitor)

Lower Return on Equity than peers

Company’s 5 year average ROE (13.65%) have been lower than the

industry average (15.09%) (DataMonitor).

Need to effectively manage its finances to ensure the returns are at par of

higher than industry average.

Problems in some international operations.

Problems of expansion: A number of openings are falling to be

successful.

Japanese operation: the company has experienced some same-store

sluggishness.

Closures of stores in Israel and Tel Viv: Hurts growth prospects in the

regions.

4.3 Opportunities

In 2004, created CD-burning services where customers can create

their own music CD.

Opportunities for revenue growth by expanding its global operation.

New markets for coffee are beginning to emerge; for example,

in India and Pacific Rom (SWOT).

Targeting 15,000 international stores in the next few years.

Expansion potential questionable in Brazil, India and

Russia

China could be one of the largest markets, and therefore the

company will focus on Beijing and Shanghai.

Large urban population

Rising economy

Increase in coffee consumption

Co-branding with other manufacturers of food drinks and brand-franchising

to manufacturer of other goods and services.

Creates loyalty for Starbucks Brand

Recently signed agreement with Jim Beam Brands to develop and

market a Starbucks-branded coffee liqueur drink (DataMonitor), which

has strong revenue potential because:

Liqueurs represent $4-5 billion opportunity (DataMonitor).

Liqueurs with coffee represent a considerable segment of the liqueur

market.

There is a significant overlap between consumers of liqueur and

consumers loyal to the Starbucks brand. (DataMonitor).

Growth in coffee markets: Starbucks has a market share of over 40% of the

special coffee marker. (DataMonitor). The growth in this category would

result in considerable opportunities for further growth and expansion near

future.

4.4 THREATS

Coffee may not stay in favour with customers, and another type of beverage

or leisure activity could replace it.

Rises in the costs of dairy products could affect the company’s margins.

Competitions

Competitive coffee shops

Copy cat brands

Street carts

Competition could enter the market at any time.

The U.S specialty coffee market continues to grow, and an

increasing number of firms are looking to enter.

At any time, a company with greater financial, marketing and

operating resources could enter the market and compete directly

with Starbucks.

Volatile nature of the coffee market

Multiple factors, including weather, political, and economic conditions

for example, can potentially negatively affect the company’s business.

Green coffee prices may be affected due to agreement establishing

export quotas or restricting global coffee supplies.

Slowing U.S. retail sales

Domestic retail account for about 75% of the company’s revenue growth

and an even greater proportion of profit growth. (DataMonitor).

If current U.S stores growth continues, saturation levels within the North

American division may be reached with five years. Before reaching this

point, U.S retail sales growth will slow significantly. (DataMonitor).

4.5 COMPETITION

Competition comes in several forms:

Independent/Local coffee shops

Social and inclusive

Diverse and intellectual

Artsy and funky, typically cosy and very welcoming

Liberal and free-spirited

Lingering encouraged

Particularly appealing to younger coffee house customers

Wide variety of beverages/foods

Appeals to the non-traditional crowd

Franchise/Large Companies

Generally well-recognized names (McDonald’s, Krispy

Kreme, Dunkin’Donuts, etc).

More convenient and accessible

Easy access in and out

Appeals to the more mainstream coffee drinkers

4.6 SERVICES (COMPANY)

Starbucks purchases roasts of the highest quality of

whole bean coffees.

Fresh and rich brewed Italian espresso.

Offers pastries and other appetizing confections

Sells coffee-related accessories (mugs, coffee makers,

cups, espresso, etc)

Expanded sales into supermarkets of whole bean coffee

Introduction the widely popular drink, Frappuccino to

the public

Strives for satisfied customers and welcoming

environment

Works to have highest standards of excellence in way

of business

Offers newspapers and other reading material, popular

music, and Internet access (Local or international provider).

4.7 KEYS TO SUCCESS (COMPANY)

Rapidly expand retail operations

Growth in its specialty sales and other operations

Selectively pursue opportunities to leverage the Starbucks brand through the

introduction of new products

Continue to be widely available and welcoming

Maintain reputation for having specialty and gourmet coffee

Make customers feel welcome with friendly services

4.8 CRITICAL ISSUES

Must increase customer satisfaction through improvement to services

Friendlier and more attentive staff

Faster and more efficient services

Increase in personal treatment (remember customer’s name and order)

More knowledgeable staff

Better overall service

Offer better prices/incentive programs

Free cups after “x” number of visits

Reduction of price

Offer promotions, sales to increase customer satisfaction

Others:

Offer better quality and variety of products

Improve atmosphere (friendly, welcoming)

Reaching out to community through involvement and awareness

More stores and convenient locations

Other critical issues Starbucks is criticized for and must be

an aware of are:

Clustering

Driving out independents

Loss of diversity

Its policy toward farming communities in developing

countries

Fair trade

May of these issues is vital for Starbucks to improve

their customers’ satisfaction (Simmons).

5.0 MARKETING STRATEGY

5.1 Marketing Objectives

To create a Starbucks experience that makes people come for the coffee, stay

for the ambience and environment, and return for the connection.

To build an image separate from smaller coffee chains

To clearly communicate the values and commitments of the Starbucks

business to their customers, instead of only growth plans publicized in the

media.

5.2 Financial Objectives

Have each store reach a $20,000 weekly sales level

Open new stores with lower store-opening costs (about %315,000 per store

on average.)

5.3 Targeting Marketing

Based on a sample of Starbucks’ 2002 customer base, the attitudes toward the

brand were:

NEW CUSTOMERS

(FRIST VISIT THIS

YEAR)

EXISTING

CUSTOMERS (FIRST

VISIT 5+ YEARS AGO)

High quality brand 34% 51%

Brand I Trust 30% 50%

For someone like me 15% 40%

Worth paying more for 8% 32%

Known for specialty coffee 44% 60%

Known as the coffee expert 31% 45%

Best-tasting coffee 20% 31%

Highest-quality coffee 26% 41%

Overall opinion of

Starbucks

25% 44%

The chart shows that the new customers have a poorer attitude toward

Starbucks in every category than the existing customers

The new customer types that need attention is:

45% female, 55% male

Average age of 36

37% have a college degree

Drink an average of 15 cups of coffee per week

5.4 Store Expansion Strategy

Target areas with favourable demographic profiles, as well as areas that can

be services and supported by the company’s operation infrastructure.

For each targeted area, select a large city to serve as a focal point.

Goal of each focal city: Open 20 or more stores in that city

in the first two years.

Once all the stores cover the city, open additional stores in

smaller, surrounding areas in the region.

With this plan, the company had only closed 2 of the 1,500 sites it had

opened between 1992 and 1997.

Stores must be custom-designed.

The company does not buy freestanding structures, and there fore each

store is a different shape and size.

Most stores range in size from 1,000 to 1,500 square feet.

Most stores are located in high-trafficked, high-visibility areas, such as:

Office buildings

Downtown and suburban retail centres

Airport terminals

University campuses

Busy neighbourhood shopping areas convenient to pedestrian traffic.

International expansion

As of 2004, the company operated over 300 company-owned stores in

the United Kingdom, Australia, and Thailand, as well as 900 licensed

stores in Asia, Europe, the Middle East, Africa, and Latin America.

Goal: Have 15,000 international stores

Other things to consider:

Kiosks

Drive-through windows

5.5 Positioning

Store Ambience

Goal: to make customers want to linger

Social Appeal – Offer a sense of community, a place where people can

come together.

Physical layout

Seating areas to encourage lounging

Appear upscale yet inviting

Aromas

Smoking is banned in all stores

Employees are asked to refrain from wearing

perfumes or colognes, and prepared foods are kept covered so

customers would only smell coffee aromas.

Sounds

Play soothing CDs that are also for sale

Often offer live music

Customer Service

The company sees a direct link between customer satisfaction and

customer loyalty.

The company believes that employee satisfaction leads to customer

satisfaction.

Voted onto Fortune’s Top 100 Places to Work

Employee satisfaction remains consistently around 80% - 90%

Turnover rate is 70%, one of the lowest in the industry.

Focuses on manager stability in order to decrease employee

turnover, but also to help recognize regular customers and provide

personalized services.

Employees are trained to connect with customers and focus on

“customer intimacy.”

Greet customers with a smile.

Enthusiastically welcome customers into the store.

Establish eye contact.

Try to remember customers’ names and orders if they are frequent

customers.

“Just Say Yes” policy, in order to keep customer happy, which may go

beyond stores rules.

Example: Always compensate dissatisfied customers with a

Starbucks coupon entitling them to a free drink.

Example: Give a customer a free refill if he/she spills their drink.

Advertising – The Company spends very little on advertising

and depends on word – of – mouth promotion.

Involvement in the Community

Contributing positively to surrounding communities is one of Starbucks’

guiding principles in the company’s mission statement.

Howard Schultz had the plan to “build a company with soul (student)”.

Starbucks has been the largest corporate contributor in North America to

CARE, a worldwide relief and development organisation to help Third

World countries where Starbucks purchases its coffee supplies.

The company has an Environmental Committee that looks for ways to

reduce, reuse, and recycle waste, as well as contribute to local

community environmental efforts.

The company donated almost $200,000 to literacy improvement effort

(student).

Starbucks has many community building programs to “contribute

positively to the communities where our partners (employees) and

customers live, work and play” (Corporate).

“As part of Starbucks ongoing commitment to share the comfort of

coffee during times of crisis, the company continues to demonstrate our

support of the men and women serving in the U.S military

overseas”(Company).

The Starbucks Foundation (Company)

Established in 1997 by Howard Schultz

Inspired by Schultz’s childhood experiences and those of other inner city

children

Dedicated to creating hope, discovering, and opportunity in the

communities of Starbucks

6.0 CONTROLS

Problems and Solutions

In 2002, our felloe associates, including Christine Day, recognized that

customer service needed to be improved upon, and one idea to conquer

this problem was to invest $40 million annually in 4,500 stores.

By adding almost $9,000 to each store, this would allow an additional 20

hours of labour per week.

Day, said” the idea is to improve speed-of-service and thereby increase

customer satisfaction.”

According to survey of customers, 65% believed fast services was a key

attribute to their satisfaction.

In the past when we thought of adding more labour hours to our retail

stores, we decided against it due to the struggling economy, especially

since labour was already our biggest expense.

Another option instead of increasing labour hours is to increase the

efficiency of the tasks, simplified the production process, and

manipulated the stores layout to take better advantage of store space.

Additionally, we installed an automatic espresso machine that was faster,

reduced waste, and improved consistency while still fulfilling our

customers’ needs. We want to continually implement the use of thse

machines in more of our stores.

Furthermore, we want to add more drive-thru lanes to our stores. In

doing so, we can still serve our customers who want to taste of Starbucks

on-the-go.

6.1 MARKET ORGANIZATIONS

Although we have been considered one of the

world’s most effective marketing organisations, we still lask of a strategic

marketing group.

Instead, we have smaller divisions:

Market research group – garthered and analyzed market data

Category group – developed new products and managed the menu

Marketing group – developed quarterly promotional plans

However, we need to find a way to

get these divisions to collaborated so all the information about the market and

customer trends is not overlooked like it has been in the past and we can make

better decisions about dring our business in the future.

REFERENCES:

“Company, The” Starbucks, 2006 www.starbucks.com

“Corporate Social Responsibility” Starbucks Coffee, 2006 Starbucks Corp.

http://www.starbucks.com/

Moon, Youngme and John Quelch, Starbucks Delivering Customer Service. Barvard

Business School, 2006

Simmon, John. “Starbucks: Supreme Bean.” Brand Channel 2005.

www.brandchannel.com

“Starbuck Corp”, Hoovers Inc, 2006 www.hoovers.com/xtarbucks

“Starbucks Corp” Student Resources, 2006. MsGraw Hill 2006

Http://www.mhhe.com/starbucks

Thompson, Arthur A., and John E. gamble. “Starbucks Corp”, McGraw Hill Com,

2006 http://www.mhhe.com

“Starbucks Corp” DataMonitor, 2005 http://wwwalacrastore.com

“SWOT Analysis Starbucks”, 2006 Marketing Teacher Ltd 2006.

<http://www.marketingteacher.com>