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Mmg 480 Week 1 Case Analysis Starbucks

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Mmg 480 Week 1 Case Analysis Starbucks
Case Analysis for
Starbucks-Early 2008

October 4,2010
MKTG 480

By: Brandy Johnson

Instructor: Dr. Jeff Totten

Table of Contents

I. S.W.O.T. 3 II. Situation Analysis 5
III. Problems Found in Situation Analysis 7
IV. Strategic Alternatives for Solving Problem 8 V. Selection of Strategic Alternative and Implementation 9

S.W.O.T.

Strengths

• Established reputation/High brand recognition
• Strong financial background
• High visibility locations to attract customers
• Well trained/motivated employees/favorable work environment
• Low employee turnover
• Brand loyalty
• Product variety
• Good relationships with suppliers
• Leader in gourmet coffee industry …show more content…
Most companies did not consider cups of coffee to be a very profitable or expandable market, until Starbucks. Starbucks started selling their gourmet coffee at almost four times the cost of a regular cup of coffee and people flocked into their stores. Starbucks is now considered the number one leader in the gourmet coffee industry. Since Starbucks created this extremely profitable and somewhat simple market, many competitors have taken interest in trying their hands in the gourmet coffee market. Starbucks number one competition is McDonalds new line of gourmet coffee. McDonalds started selling McCafe coffee, which include items such as frappes and lattes with popular flavors such as mocha and caramel. The biggest advantage that McDonalds possesses is the price difference. McDonalds gourmet coffee is cheaper than anything Starbucks offers. Another company that is beginning to come up in the gourmet coffee world is Sonic. Sonic started selling items such as their Premium Roast coffee and their Java Chiller with your choice of caramel, mocha, or hazelnut flavors. Both of these competitors offer a cheaper substitute for Starbucks gourmet coffee. Another problem Starbucks is facing is the rise in dairy and coffee products and the loss of flavor due to their cost saving methods. The resources required to sell gourmet coffee is rising which will make it difficult to …show more content…
Customer service satisfaction is one of the most important measures that Starbucks stands on. The firm principles of the company are seen with its preservation of a great and proven work environment for every staff member. They put their employees through a thorough, difficult, and challenging training program that educates every employee about the gourmet coffee industry. I cannot say that Starbucks “teaches“ but maybe “instills“ the importance of customer service and satisfaction through wonderful service standards and requirements. Starbucks strives to create an “experience” around the consumption of coffee. They want to create an inviting atmosphere where people can come to enjoy their coffee and feel relaxed and comfortable. Starbucks saw a 21% increase in their net revenue in 2007. The company’s net earnings, in 2007, were 673 billion dollars. Starbucks has a vast target market, it ranges from high school students to the working class adults. Coffee drinkers of all ages enjoy the flavors and atmosphere of Starbucks. Starbucks product is primarily gourmet coffee, although, they are branching out into retail sales. When Starbucks first started gaining brand recognition, cities could not wait to have a store built. Now, there is practically a Starbucks on every corner. The company uses prime
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