Starbucks
Marketing Strategy
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According to ACNielsen, the coffee retailer industry experienced dollars sales of approximately $3.5 billion in 2001 (Marketing 2002). Starbucks, founded in 1971, is a gourmet or specialty coffee retailer. According to the National Coffee Association of Americans, in 2001 the percentage of gourmet coffee drinkers increased to 14% of the U.S. population, or approximately 29 million coffee drinkers (Marketing, 2002). For the second fiscal quarter of 2002, Starbucks posted $32.1 million on revenues of $783.2 million and increase of 32% in revenues over the previous yearÆs same period (Winters, 2002, 1). For 2001, retail sales grew by 22% and specialty revenues increased 37% to $106 million (Murphy, 2001, 1). Profits have remained flat during the second quarter of 2002 compared to 2001, despite increased revenues. The downturn in the economy, increased competition and an $18 million dollar lawsuit settlement are contributory factors. In order for marketing strategy to be successful, according to Bishop (2002), such a strategy must create synergy, ôSynergy is realized when the whole (the integrated strategy) is greater than the sum of its parts (the different marketing approaches)ö (78). We will now examine the marketing strategy of Starbucks. Increased competition in the specialty coffee market, high prices in a down economy, risk of caffeine over-consumption and other factors make the marketing strategy for Starbucks criti
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arrogance when it came to control. The Starbucks license holder in Taiwan was not permitted to set up its own Starbucks website and all marketing strategies were subject to control from U.S. management. Hsu Chung-jen, President of PCC, believed Starbucks was valuable because success would only come, he felt, by going with the number one brand. However, matters ôlarge and small from marketing strategy right down to paper coffee cups are completely controlled from the U.S.ö (Starbucks, 2001, 1). Hsu Chung-jen argued that ôIf they are the best in the field, then their supervision, and the things they insist on, is our opportunity to learnö (Starbucks, 2001, 1). The strategy for both companies has paid off, with profits being realized in three years of operation in Taiwan, brand establishment, and infrastructure for future growth firmly in place.
Starbucks is also planning on market entry in Spain. If we look at the requirements for Starbucks Spanish marketing strategy, we can see that the company developments specific requirements and policies to ensure successful entry into international markets where the 4Ps of marketing need reconsidered:
Strategy: Incorporate differences into a regional or global strategy that will allow
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Approximate Word count = 1607
Approximate Pages = 6 (250 words per page)
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