Starbucks Corporation is a company that operates coffeehouses. The company also sells such items as bulk coffees and teas and bottled coffee drinks to grocery stores. Starbucks is based in the United States, but it has stores in dozens of countries.
Starbucks is named after the coffee-drinking first mate in the novel Moby-Dick (1851) by the American author Herman Melville. The company was founded in 1971 in Seattle, where it still has its headquarters. In its early years, Starbucks roasted and ground coffee beans and locally sold this bulk coffee. Howard Schultz, later Starbucks's chairman, joined the company in 1982 as director of retail and marketing. Schultz persuaded the company?s directors to open a Starbucks coffeehouse in downtown Seattle in 1984, after he visited espresso bars (coffeehouses serving coffee brewed with steam) in Milan during a trip to Italy.
The company?s name was changed to Starbucks Corporation in 1987, after Schultz and a group of investors purchased it. Starbucks became a publicly traded company in 1992. By the end of 1994, Starbucks had a chain of 425 establishments and had begun to spread its coffeehouse culture across the United States. The company?s mermaid logo became familiar.
Starbucks had established a presence in Canada with a coffeehouse in Vancouver opened in 1987. But the company began its international expansion in 1996, with coffeehouses in Japan and Singapore. Today, Starbucks has thousands of stores worldwide.
In short order, Starbucks Corporation has become a premier purveyor of coffee and related beverages along with selected merchandise and has acquired almost universal domestic brand name recognition (MacArthur, 2001). Currently, Starbucks is engaged in a number of activities designed to expand its presence in the new global beverage market. Starbucks' growth strategy thus far has tended to emphasize positioning its stores in high traffic areas, including mini-stores located in hotels, upscale grocery stores, shopping mall food courts, and other ventures which are not free-standing (Kim, 2000).
The company has also adopted a highly aggressive globalization strategy to capitalize upon European tastes and interest in American coffee products (Moran, 1999). Equally significant, according to Moran (1999), is the company's emphasis on Starbucks' in-store experience of customer service. Company executives believe that this orientation has been the key to the firm's success, moving sales from a 1994 level of $284 million to over $1.3 billion in 1998. While Starbucks has also entered into joint ventures or alliances to penetrate the grocery market with its whole bean and ground coffees and Frappuccino, it is also using a new Internet presence to provide customers with online opportunities to purchase coffee and other food products as well as a growing range of kitchen and beverage accessories (Kramer, 1999).
What Starbucks has not done thus far is emphasize a traditional advertising strategy utilizing the mass media, including, television, radio, and print (Kramer, 1999). Thus, the competitive strategy to be recommended in this analysis consists of a multi-faceted and multi-media American advertising campaign designed to expand market share by reaching consumers who live in community areas currently lacking a Starbucks franchise or an outlet in a grocery store or other venue. While the firm has defined its primary mission as expanding market s hare by establishing and sustaining a defensible and premium market position and providing an uplifting experience that enriches peoples' everyday lives, it has become associated with a limited number of markets and a somewhat narrowly defined portion of those markets (Moran, 1999).
Moran (2001) stated that as of May 31, 2001, Starbucks reported consolidated net revenues of $204 million for a four-week period, an increase of 20 percent over net revenues of $171 million for the same period in fiscal 2000. As of May 27, 2001, Starbucks had 2,760 company-operated stores in continental North America, along with 758 licensed stores. Internationally, the firm had 244 company-operated stores and 541 licensed stores, for a total retail outlet profile of 4,303 locations. Overseas, Starbucks has stores in the United Kingdom, continental Europe, the Middle East, and the Pacific Rim. In addition to its Internet venue for selling coffee and tea products, Starbucks produces and sells bottled Frappuccino coffee drinks, a line of super-premium ice creams, Tazo Tea Company premium teas, and Hear Music compact discs - with many products produced, distributed, and/or marketed through joint venture partnerships.
By locating Starbucks stores in high-traffic urban and suburban areas and initially limiting its ground and