Marketing Case: Starbucks

"Coffee is at the heart of what we do."

Benne Peto, HR director of Starbucks

Starbucks is that rare business story: a company that has single-handedly breathed new life in an old commodity and established a new "killer category." Starbucks was a first mover in a largely fragmented industry and its strategy of focused differentiation has put it well ahead of other consumer products coffee providers.

The company's stated objective is "to establish Starbucks as the most recognized and respected brand of coffee in the world." (www.starbucks.com)

US DOMESTIC MARKET

Coffee has become for Americans, a very personal and highly distinctive consumption choice. What once appeared to be simply an interesting niche within a tired, margin-less industry, has grown into a food service phenomenon rivaling the fast-food chains of the 1950's. Starbucks and competitors have effected a wholesale change in consumption patterns and redefined consumer tastes.

Domestically, Starbucks has quickly become a fixture in most large urban cities.

Starbucks Bean Life display in Miami at the Latin ...

Grounds for Your Garden, the Starbucks recycling s...

English: Starbucks' headquarters building in Seatt...

Despite recent years' nearly store-a-day rate of opening, Starbucks has not finished growing its North American base.

It's important to recognize that what we have built is one of the most powerful consumer brands in North America."- Starbucks Chairman and CEO Howard Shultz in an interview with Nations Restaurant News. (NY Times. Jan 16, 2004)

PRODUCT

Twenty-five years ago few US consumers drank premium coffee concoctions like lattes. Today millions do. It's all part of a coffee-café trend that Starbucks largely started. Starbucks's main product is coffee, and the category is high-end Java that simply tastes better. . Unlike other food products that have enjoyed a fast but relatively short-lived success, coffee is a daily staple and it is addictive.

Starbucks sells premium coffee beverages and beans through company-owned and licensed retail outlets. Through its retail outlets, Starbucks also sells bakery goods,