Chapter 15 - Retailing

Starbucks is essentially a chain store as all the coffeehouses are owned and manage by the company. They have over 170 stores in NYC. Starbucks locates It’s stores at highly observable places or central points close to Bus or Subway Stations. The company also cooperates with other retail stores such as Macy’s to create brand recognition and sell their coffee. Starbucks licenses their brand for other drink and food companies to help build as they are a specialty retailer. Their mission statement involving customer service: “When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.” Reflects a high level of the stores overall atmosphere and customer service.

I visited a Starbucks on 51 Astor Place. Located near 8^th Street  right outside the downtown 6 train (St Mark’s Place) the area has housed two Starbucks coffee shops until one closed recently. Students and late twenty to early thirty-something comprise the main clientele for this Starbucks. Nearby institutions such as The Cooper Union, NYU, and The New School provide a various mix of students, who use the coffee shop as a modified library. I ordered a standard medium roast coffee; the staff seemed genuinely friendly in taking my order as their coffee is already brewed so I did not have to wait on the other side of the counter. This Starbucks is especially large, by boasting lots of tables and few cushy armchairs. Although the building is old, it has been modified to include sunrooms on two sides.

While Starbucks’ corporate headquarters are in Seattle, NYC feels like the coffee chain’s second home, as there seemed to coffeehouses on every corer. There are lots of unique Starbucks throughout the five boroughs of New York.

Chapter 6 - Consumer Making Decision

The Consumer Decision Making Process is what most customers go through before endeavoring into new product or brand. For marketers it is key to note how the customer comes to its final decision- buying or not buying. The diagram below shows the single steps of that process. The depth of information gathered will vary from consumer to consumer. All these steps are depended on individual, social, cultural and psychological factors.

The effort and time investment depends on what the customer wants to purchase. More time and effort will be invested on more expensive goods. Since Starbucks sells beverages and food, the decision making process is not as intricate as it would be when buying a house or car. 

Values are an important factor when engaging the decision making process for example Americans place high value on convenience. As Starbucks is almost on every block in Manhattan and is among top coffee brands, people will automatically think of the company when it comes to satisfy the need. Because Starbucks belongs to the low-involvement product purchases, the customer does not exactly no what kind of beverage the person might want until the customer gets into the store. Therefore, Information search takes place while being at the store. The coffee brand provides in store promotion by eye catching advertisement of popular or new products or having deals such as “buy before 2:00pm get $2 in the afternoon” and  "happy hours" to promote their coffee. The next stage is purchasing. Starbucks is a beverages company; it does not often happen where a customer walks in because of the desire of coffee, but walks out without a cup. In most cases, the customer already decided to purchase by the time he or she stepped into the store. 

 

Overall, most of Starbucks customers are routine purchases. They know what they want and what they can expect from experience. That is a vital reason why most of the customers are satisfied with the product after the purchase.

Chapter 5 - Developing a Global Vision

The world’s largest coffee retailer, Starbucks has approximately 19,972 stores in 60 countries with just over 12,000 of those stores in the United States. Across the world, Starbuck sticks with its marketing plan and integration of global marketing standardization where globally standardized products to be sold the same way all over the world. This uniform production enables Starbucks to lower production and marketing costs and increase profits. Although some products may vary to adjust to local taste, in places for instance Asia, Middle East and parts of Europe there cafiteria food is more culturalizd. But in general Starbucks coffee is the same here as it is in any other country.

Starbucks enters the foreign market mainly through licensing arrangement’s or joint ventures with local retailers. Few of the international coffee houses are also owned or operated. The first international coffee house was launched in Japan with assistance of SAZABY Inc. in 1996. The company stays passionate about their relationships with the foreign market as they way they are in their own country. It is essential for Starbucks to carry their mission to be more than just a coffee house in the United States.

“Starbucks is dedicated to supporting communities around the world, where we live, where we work and in the countries where coffees are produced”

On a whole Starbucks as the worlds largest coffee house brand still accumulates most of their revenue from their national customers.

Chapter 4 - The Marketing Environment

Students getting stuck into books at their local Starbucks in PA

Starbucks caters to a wide variety of people all over the world. From kids who enjoy a delicious hot chocolate to the everyday businessman getting his standard medium roast coffee. The company predominantly targets men and women who are in the workforce typically 9 till 5, who are the informed and well off type demographic to represent Starbucks’ standing as a high class label. Starbucks have come to notice it’s not just that particular demographic they are attracting it is also the younger adults that are widely seen in Starbucks Cafes. Approximately 45 percent adults are in the age range of 25 to 50 years with typically higher income proficient careers. Starbucks entices those who with their modern, urban designs and café feel. 40 percent of customers are thee young adults in the age 18 to 25 who are generally students who’ve been see to use it as study using the free facilities such as the Wi-Fi, meet up with friends. The younger generation and Starbucks’ main customers who take over roughly 15% of the target segment who are more or less attracted to Starbucks cabinet food and milkshakes, whom are accompanied by a parent which also use at as place for homework or general chit chat. Moreover Starbucks serves to diverse range of customers whose way of life can really be categorized as ones professional career does not reflect that.

Chapter 3 – Ethics and Social Responsibility

Ethics is defined as what is right and wrong. Business ethics relates to an individual’s or company’s decision that society defines as what is right and wrong. In regards to Starbucks, the mission statement show’s that company’s work and business ethics is based on “respect and dignity” not only to the stockholders, partners and employees but also the community.  

Because of Starbucks worldwide popularity the company must preserve a positive image, to care about the community and the environment! Those are positive standpoints that define the company’s self-portrayal.

With the coffee industry coming out of a major crisis coffee farmers had been going out of business, this didn’t just become a problem for a farmers it became a social problem. The problems that they incur are that with over production. Brazil at one point use to produce 25-30million bags and coffee in the last few years they’ve had the ability to ring up over 50milion bags. Vietnam, 20 years ago they didn’t produce any coffee at all, they have become the 2nd largest producer in the world in 2010. It’s not the coffee Starbucks buy that affects Starbucks, it's the coffee they buy that affects farmers globally. The dynamics of supply and demand played out in a way that has been very dramatic, consequently negative for farmers. What Starbucks have stepped in to do is come out with a buying program called café practices that stand for Coffee and Farmer Equity practices. Working alongside conservational international, and other NGO’s they have worked out a way of buying coffee that is sustainable for the future and can allow farmers to stay in business. It involves Starbucks paying a fair price for their coffee, as well as economic transparency; they know and is audited by a third party what that farmer was paid for the coffee. Starbucks began purchasing in a way that is socially responsible and by that the farmer pickers; migrant pickers that work on the farm are paid a fair wage, as well as health and dental care. In an environmental friendly way Starbucks opposed to famers cutting down trees to plant more, they wanted buffer zones between streams where wastewater is used in the coffee mills. Starbucks are well aware what is happening in the environment. As a result of that, farmers can not only earn a premium price for their coffee, they can earn a premium price on top of what they paid and help them make these changes which Starbucks is willing to pay for.

Keeping in touch with new farmers in way or another on a yearly basis but is imperative to have good client rapport. Since 2004 Starbucks have opened farmer customer support centers in Costa Rica, Rwanda in 2009, Tanzania in 2011 so they are on ground in producing countries. Starbucks plans to eventually have an agronomist in each country in Central America. The office for the agronomist in central America is as of now a four wheel drive and a laptop, so they are on multiple farms every day which was they want. Incorporating Starbucks presence there talking to them about their growing practices, learning from them and sharing with them. To them that’s where the collaboration in the equity peace comes in café practices. They believe that profitability and social responsibility are mutually exclusive they work hand in hand and that’s what Starbucks demonstrates.

Chapter 2 - Strategic Planning for Competitive Advantage

"IT'S NOT JUST COFFEE. IT'S STARBUCKS"

Starbucks separates themselves from other coffee houses with their one of a kind selling point which is a lavish experience that goes above and beyond a cup of coffee. Starbucks distinctly positions themselves as an upscale brand that offers more than just a coffee. It targets a wide demographic as it a place "to be seen" from office workers to students, cultural and social classes that gather and have a quality coffee in a cozy and relaxed atmosphere. Starbucks has left any form of competitors in the dust by identifying themselves as prestigious and valuable, with product and service differentiation thus creates a competitive advantage.

To provide this lavish experience their marketing plan involves a homely feel to customers who feel invited to make a purchase. Starbucks takes a great amount of care right as you set foot inside you a greeted with an ambient environment, comfortable furniture, relaxing jazz music and other features such as wireless internet, handicapped access also free song, and application gift cards.

Furthermore, Starbucks is on the go seeking various strategic alternatives. The coffee house is constantly being updated with promotions for example seasonal beverages; Caramel Brulée. Other promotions include prepaid member cards with levels of Green and Gold, an incentive that awards complementary drinks.

The fact that Starbucks is the largest coffee brand in the international market, benefits the company in terms of competition. The company has been able to convince their customers that Starbucks is just more than coffee. Starbucks customers throughly believe they offer more than just a great cup of coffee, it is recognized as a luxury coffee that gives customers a feeling of prodigality as they go about their day holding a Starbucks beverage.