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 critical for competitive advantage. Starbucks marketing strategy is innovative, aggressive and has positioned them as the number one brand in the industry. As Naomi Klein says in her book No Logo, of Starbucks overall marketing strategy, ôStarbucks is an image-obsessed mammoth that understands brand names at a level even deeper than Madison Avenue...[they] made their brand concept into a virus, sending it out into the culture via a variety of channelsö (Kearney, 2002, 1).
Starbucks has as its underlyi...