Starbuck's and Frappuccino

Marketing Strategy: Starbuck's and Frappuccino

Starbucks Coffee Company is North America's leading roaster and retailer of specialty coffees. Headquartered in Seattle, WA, Starbucks operates nearly 1,610 retail locations in North America and the Pacific Rim (Starbucks reports March revenues, 1998). For the fiscal year ended September 1997, net sales rose 39% to $966.9M. Net income rose 36% to $57.4M (Starbucks Corporation, 1997).

The objective of Starbucks is to establish the most recognized and respected brand of coffee in the world. To achieve this goal, Starbucks will continue to rapidly expand its retail operations, and grow its mail order and specialty sales operations. Starbucks will also selectively pursue other opportunities to leverage and grow the Starbucks brand through the introduction of new products and the development of new distribution channels.

Starbucks is extending its brand name in several innovative ways. Starbucks has expanded into coffee ice cream with Dreyer's and makes Frappuccino (a low-fat blend of ice, milk, coffee, and flavorings), a bottled coffee drink with PepsiCo. Frappuccino, available in Starbuck's franchises, is sold in grocery stores with soft drinks and iced teas, where Pepsi already commands prime shelf space (Starbucks the java juggernaut, 1997).

Starbucks chairman and CEO, Howard Schultz, focused on detail and quality to positively establish the Starbucks brand. The coffee buying public perceives the St

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operates and expects to expand there are local or regional competitors with substantial market presence in the specialty coffee business. As a result, Starbucks has developed a shark-like reputation for putting competing mom-and-pop coffee shops out of business (Starbucks the java juggernaut, 1997). The primary competitors for beverage sales are restaurants, shops, and street carts. There has been a significant increase in competition in the specialty coffee beverage business and this trend is expected to continue. Starbucks also expects that competition for suitable sites for new stores to support the Company's planned growth will be intense. There can be no assurance that they will be able to continue to secure adequate sites at acceptable rent levels (Shilling & Kotha, 1997, 11). In addition to fluctuating coffee prices, management believes that in the future, the Company's results of operations and earnings could be significantly impacted by other factors such as increased competition within the specialty coffee industry, the Company's ability to find optimal store locations at favorable lease rates, the increased costs associated with opening and operating retail stores in new markets, the company's continued ability to

Category: Business - S