Marketing CASE Discussion for Starbucks

Marketing CASE Discussion for Starbucks - Marketing CASE...

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Marketing CASE Discussion for Starbucks - Kim MinGyung 1. What factors accounted for the success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? Howard Schultz bought Starbucks a few years before 1992. He began his vision to make a chain of coffeehouses as America’s “third place.” In the early 1990s, it was successful to not just sell coffee but also create “customer satisfaction” in the coffeehouse. Therefore, Howard Schultz focused on expanding its coffee stores since the early 1990s. Moreover, there are three factors of branding strategy that took accounts for the success of Starbucks in the U.S. coffee retail market: coffee itself, service and atmosphere. (1)Coffee itself Starbucks tried to produce the highest-quality coffee in the world. It also tried to maintain coffee standards by controlling the supply chain such as producers of green coffee beans and coffee-roasting process. (2)Service To satisfy customers, there should be a balance in “hard skills” and “soft skills.” “Hard skills” were connected with how to use the cash register and roast coffee. “Soft skills” were connected with “customer intimacy.” For example, there was a “Just Say Yes” policy. To give better service, Starbucks tried to satisfy its workers. It was deeply believed that partner satisfaction leads to customer satisfaction. For instance, there were a generously-given health insurance and promotion chance. (3)Atmosphere Starbucks tried to make its stores to be a place where customers wanted to stay in with comfortable seating areas. Among these three value propositions, ‘service’ was the most compelling. As we think of STP, the target market of the Starbucks was “affluent, well-educated, white-collar patrons (skewed female) between the ages of 25 and 44.” To expand the target market share, Starbucks practiced its marketing strategy by improving its differentiated service. To create loyal customers who were likely to visit Starbucks more than 18 times a month, Starbucks tried to give the best service. We can see the change in marketing concept with the success of Starbucks in the early 1990s. In the early 1990s, Starbucks’ value-creating marketing skills were seemed dubious to many investors. However, Starbucks succeeded with its strategy, touching customers. Marketing was not a term for just selling the product. It was selling product and service. Moreover, it was delivering some value to customers. As Starbucks accepted these new marketing concepts focusing on customers faster than other coffee retail companies, it could make difference in Starbucks. 2. How does the Starbucks of 2002 compare to the Starbucks of 1992? In 1992, the Starbucks went public and began to expand its stores widely. By 2002, Starbucks became the
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Marketing CASE Discussion for Starbucks - Marketing CASE...

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