Starbucks case study

Charlotte de Cugnac

Alexandra Hautefeuille

Tiana Rakotomalala

STARBUCKS CASE STUDY

• Depicit and analyse Starbucks BM

Value proposistion:

Focused on a brand strategy made of three components:

- The coffee: highest quality coffee, with a control of as much as possible of the supply chain.

- The service: when you go to Starbucks, people call you by your name when your coffee is ready

- The atmosphere: when people come into a Starbucks, they want to stay even if they planned to take the coffee to go.

Customer relationship:

Before 2007, Starbucks did not use a lot of media to communicate. They reinvested only 1% of their annual revenue in advertising (compared to 10% for usual retailers). But in 2007, for the first time Starbuck’s sales started to decrease so they started to advertise.

Starbucks has a very good relationship with its clients, and it is part of its value proposition. Starbucks’s baristas are nice, and close to the clients. Even the ads feel warm, and the brand tries as much as it can to be close to its clients.

Sales Channels:

- Starbucks Stores. One of Starbucks’ policy is to have as many Starbucks as they can. In the USA, wherever you are, you will find a Starbucks

Customer Segment:

- Mass market. It used to be only for coffee drinkers, but now Starbucks can more be compared to a restaurant than a coffee shop. Some people who don’t drink coffee come here, just to have a slice of pie, and enjoy the wifi. According to studies made on Starbucks, the perfect client would be a client who comes at least 8 times, as those customers make 62% of Starbucks’ transactions.

Starbucks is a company which has had a very rapid growth but which is confronted to difficulties to face with its competitors and with the market. At the beginning, its business model was only centered on the sales of coffee but now, facing these difficulties it has opened its business model to other ways to earn money: selling of food, coffee machines, equipments, phone applications, etc. So Starbucks tries to diversify its business model. Nevertheless, its business model remains simple! And if premium coffee is no more a fad for customers and if they don’t want any more to pay so much, Starbucks will face with a huge difficulty and may be die.

• Explain Starbucks difficulties abroad and how do they relate to its BM?

One of the difficulties Starbucks has to face when it goes abroad is to integrate the country in the cultural way. As Kathy Lindemann, SVP of Operations for Starbucks International says in the document we had, Starbucks focuses on the partnership, and after on the country. Of course it is important to focus on the partner who will work with us on the country. But it is even more important to know in which country you are getting into. Even if you have a very good partner in a country, it might not work if you did not check the country can be targeted by the company. If for example McDonald has a very good partner in a country where meat is sacred or prohibited, it won’t work.

So, yes it is important to have a good partner, but first you have to make sure your product will work in the country you want to implant it.

Starbucks’ Business Model in the USA rests on one very important parameter: There is not so many competition in the USA. Starbucks was one of the pioneer when it comes to “cafés” in the USA. But when Starbucks decided to go abroad, some issues came in. In Europe, “cafés” are everywhere,

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