Starbucks Company Case

1. Describe how Starbucks initially segmented and targeted the coffee market? * Starbucks at first segmented and targeted the coffee market by providing customers a “third place.” Customers saw Starbucks as a place to get away from work, home, and etc. Soon enough, The Starbucks Experience started; giving personal service and appealing atmosphere. The company was known in the coffee market for premium brand, Starbucks Experience, and value. Starbucks initially appealed to traditional customers, which was wealthier, better educated, and more professional than average American. Usually female than male, Caucasian, and ranged between the age of 24-44, whom was loyal, loved the lounging in the coffee shop, and the music.

2. What changed first, the Starbucks customer or the Starbucks experience? * I think the Starbucks experience changed first because the company began opening on average nine new stores every day and attracted new customers, which changed the quality of the whole Starbucks Experience. Starbucks business strategy was focused on an undifferentiated marketing. Undifferentiated marketing basically meaning mass marketing, trying to appeal the service to the largest number of buyers. A company will primarily focus on the common needs of a consumer rather than the different.

3. Is Starbucks’ “value” positioning targeting a new type of customer or simply appealing to existing customer types? * Starbucks “value” is targeting a new type of customer. As Claire Cain Miller said, “the new breed of customer was less affluent, less educated, and less professional.” As the unstable economy affected Starbucks, so did the growth of Starbucks. The growth of Starbucks changed the evolution of the Starbucks customer. Loyal customers no longer thought of Starbucks as a special place. It became a “hustle and bustle,” environment. New customers were not frequent, not valued as much as a traditional, and certainly not given personal service.

4. Will Starbucks “value” efforts work? What alternatives did Starbucks have? * I think Starbucks “value” efforts will work to a certain limit, because they are to widespread they will only be able to give value to a certain amount. Alternatives that Starbucks had was closing down more shops and giving more attention to a smaller segment of consumers. Another alternative was, the new innovation of breakfast combos and instant coffee. Last alternative was Starbucks CEO; Howard Schultz was educating consumers and employees that Starbucks wasn’t expensive, and dispelling the “myth” of a four-dollar cup of coffee. 5. Is it possible for Starbucks to eventually succeed with its goal of 40,000 stores? * It is possible for Starbucks to eventually reach its goal of 40,00 stores, but I don’t believe they will be successful in expanding their company to 40,000. CEO, Schultz sees a great deal of potential abroad, bringing premium coffee to different cultures. But, I actually have to disagree. Overseas, in places such as Asia, their coffee market like Starbucks is Coffee Bean and Pacific Coffee Company. Overseas, many countries already have their own premium brand of coffee, which majority probably has their loyal & frequent customers.