Chapter 1 Understanding Marketing

Preview Case

The Starbucks

Starbucks Corporation is a global coffee company and an Italian-style coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 20,366 stores in 61 countries, including 13,123 in the United States, 1,299 in Canada, 977 in Japan, 793 in the United Kingdom, 732 in China, 473 in South Korea, 363 in Mexico, 282 in Taiwan, 204 in the Philippines, and 164 in Thailand.

In June 2009, the company announced that it would overhall its menu and sell salads and baked goods without high-fructose corn syrup or artificial ingredients. This move was expected to attract health- and cost-conscious consumers without affecting prices.

Starbucks introduced a brand new line of instant coffee packets called VIA “Ready Brew”, in March 2009. It was first unveiled in New York City with subsequent testing of the product also in Seattle, Chicago and London. The first two VIA flavors included Italian Roast and Colombia, which were then rolled out in October 2009, across the U.S. and Canada with Starbucks stores promoting the product with a blind “taste challenge”of the instant versus fresh roast. Many people could not tell the difference between instant and fresh brewed coffee. Some analysts theorized that by introducing instant coffee, Starbucks would devalue its own brand.

Starbucks began selling beer and wine at some US stores in 2010. As of April 2012 it was available at seven locations and others had applied for licences.

In 2011, Starbucks introduced its largest cup size, the Trenta, which can hold 31 ounces. In September 2012, Starbucks announced the Verismo, a consumer-grade single service coffee machine that uses sealed plastic cups of coffee grounds, and a “milk pod” for lattes.

On November 10th, 2011, Starbucks Corporation announced that it had bought juice company Evolution Fresh for $30 million in cash and plans to start a chain of juice bars starting in around middle of 2012, venturing into territory staked out by Jamba Inc. Its first store released in San Bernadino, California and plans for a Store in San Francisco, which will be launched in Early 2013.

In 2012, Starbucks began selling a line of iced refresher beverages in its stores which contain an extract from green arabica coffee beans. The beverages are fruit flavored and contain caffeine but, according to the company, “with none of the coffee flavor”. Starbucks’ green coffee extraction process involves soaking the beans in water.

In late 2012 Starbucks stated it would pay $620 million in cash to buy Teavana Holdings Inc.

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Discussion Questions:

1.Who does Strabucks’ consumers? What might their needs be?

2.Show how Marketing principles and practices will enable Strabucks to satisfy the customers’ need, bearing in mind the company’s diverse range of product and geographic markets.

3.Have you bought a cup of coffee in Strabucks? Do you satisfy their goods and services? If not, could you recommend an advice about their marketing strategy?