Question

Please write-1-2-page analysis Starbucks about its history, how they manage, their planning, and controlling in the market, also include a summary.

Answer 1

Company name " Starbucks ".

The mission statement for Starbucks is to motivate and nourish the human spirit with a philosophy of one person, one cup and one neighbor at that particular time which clearly matches with the culture aspects of the company.

The products it provides:

Premium coffees with more than thirty blends

Handwrought quenchers like iced espresso, brewed coffee, frappuccino and much more

Coffee related merchandise like mugs and accessories, packaged books and gifts

Fresh food items like sandwiches, salad, yogurt, pastries and fruit cups etc

Ready to drink items

• The target market for Starbucks contains all men and women from age 25-44, students or professionals aged 18-24 which almost brings 40% of the sales and revenues to the company.

It is a multinational American Company with a largest coffe house chain around the globe and headquartered in Seattle, Washington. The company was founded by three people named: Jerry Baldwin, Zev Siegl and Gordon Bowker in 1971, with a common passion in tea and coffee and graduating from same academics. In 1980, they managed to open four new stores and captivate customers through their top quality roasted coffees purely fresh in ingredients. The partners purchased a roaster in order to blend their own flavours and customisations. Henceforth they sold the company to Schultz who decided to manage a coffeehouse after taking a trip to Milan and excel in serving espresso drinks. He lead to an aggressive expansion of the company from Seattle to US through a drastic series of coffee wars with it's competitors. Orin Smith who served the company for atleast five years, worked to expand the company by making it the largest player of coffee around the globe. From 2005-2008, Jim Donald worked as a Chief Executive of the company and intensified the sales to another level. Amidst the economic and financial crisis in 2008, Schultz again took over as the CEO of the company and worked hard to gain the market share, thus succeeding intensively in sales and corporate social responsibilities. The company then started selling packaged food products, cold sandwiches, tumblers, mugs and most of the stores also serve beers, wines and appetisers around the horizon. The beans, ice creams, coffee drinks in bottles etc make a large proportion of aisles at the grocery stores.

Pricing and Customer Acquisition Strategy:

• The products of Starbucks are not that cheap or modest but it focuses more on differentiation generic strategy. It looks for the quality of products and services so that customers are willing to pay premium prices. The prices of products are high whereas modest prices of coffee as a raw material makes it a lot profitable strategy for the company. The advancement of product differentiation, warm and friendly staff, delightful ambience and well-designed stores help to have a competitive advantage for the company. As discussed above, it provides a lot no. Of products and services and allows every customer the customisation in coffee or other beverages the way they want. In fact, the customers who are health conscious can opt for soya milk in Starbucks along with other varieties of milk and how much ice they want, or special flavour, extra hot or not, what quantity of milk and much more. It also offers unsweetened ice tea options so that customers can enjoy the taste of green tea with zero-calorie count. The strategy of differentiation has given a unique selling proposition for the company giving a competitive advantage globally which is quite successful. Even if the prices are premium, they offer various products as per customisations which other brands don't even offer and so customers are willing to pay for the value. Therefore, pricing based on values is the perfect strategy used by the company by providing premium prices due to which a customer believes that he is consuming the best quality and premium coffee.

• The company focuses on more than one domain and long term growth and success. It has proved itself as one of the biggest coffee chain companies successfully targeting its customers. Its corporate strategy lies in providing more than just coffee experience where customers enjoy conversations with their friends, colleagues, families and professionals. It allows customers to have delightful gatherings and meetings with the best ambience and staff service. It provides premium quality coffee and products with customisations along with beverages and delicious snacks. Next strategy involves opening stores at almost everywhere, thereby expanding its business globally in developed and emerging markets.

Revenue Model:

• Starbucks operates on a very effective revenue model where the sources for generating profits are outstanding stores present around the globe, revenues collected from licensed stores and other channel development segments where the stores form the largest proportion of revenues, in 2018 the no. was 80 per cent. The percentage of revenues from licensed stores comes out to be 11 per cent of total revenues where these have lower gross margins than operated stores while higher operating margins on the other side. In licensing model of revenue, the company grabs a smaller share of revenues and the costs of operations are born by licensees where the company sells coffee, food, tea and other products to licensees so that they can resale to customers and company can receive royalties and license fee from them. Along with food items, the licensees are also given brewing machines and espresso brewery for the operational work. Starbucks is also able to generate revenues by selling packaged food items like coffee, beverages, tea, ready to drink items which are not included in the licensed model.

• The core competencies of Starbucks is an excellent quality of brewing, delightful customer service, time and again advancement in technology and communication, ubiquitous presence and ultimate care and safety for employees. The function in which it can improve is the company sells its products only through its own channels and stores whereas it can use the distribution via wholesalers or big retail supply chains. Next would be that the products like beans and capsules sold through retail chains like supermarkets and retail grocery stores which is not that profitable and the company needs to look into that. Since the company is using a premium price strategy to sell products, it should use more of a retail chain model in order to improve core competency.

Monetization Strategy:

• The company is quite successful in implementing corporate-level strategies since it is considered as one of the best quality coffee with 22,500 of stores around the globe. It is creating value for its customers since it has become the best place for the customers to have gatherings and enjoy with their friends and families. Therefore, it is much more than just having coffee. It also offers round tables in its stores where a lonely customer can have alone time and read or do whatever activity he wants without disturbance. With all these strategies, it has reached an advanced level of innovation and technology with a greeting gesture from staff. The leadership is another compliment to the company which focuses on social initiatives and global retail chains enhancing the company's growth and operations. They usually work with the belief of providing additional experience and services than expected by customers. They have the capability to experiment with the blending of different coffees and make the best product out of it. Facilities like offering free wifi to the customers, being a whole day hangout spot rather than just driving through for coffee, mobile pay or online services have added more values for the company. Additionally, corporate social responsibilities have taken the brand to the next level of success since it's initiatives are more based on sustainability and greener environment and sourcing 100 per cent ethical coffee products. Also, employees are considered more as partners rather than just staff and are provided with various perks and benefits.