Starbucks on Facebook

OK, so I want to end my blog by mentioning the popularity of Starbucks on Facebook. I became a member of Starbucks Facebook group when I started my blog.

Few minutes ago I checked again the number of members that join this group: 5,158,393 fans. Wow.. There is something new posted on the group every day. It can be information about a new product, event, sales promotion, deal or a "Happy Holiday" message. No matter what it is posted, there are around few hundred comments every day, and few thousand "likes" every day...Isn't that crazy?

Yes, Starbucks is a worldwide company that gained the hearts and pockets of their customers. It is amazing to witness all of this process, to watch how big companies are expending and surviving even during a recession.

The way Starbucks does business made me choose this company for my marketing assignment, not necessarily their product. The way they keep selling coffee at a high price, even though MC Donald's is screaming that they offer espresso for half price.

Starbucks listens to its customers. The consumers have the opportunity to speak up, to share their opinions, complains or satisfaction. I think this is an important factor in Starbucks success.

Strabucks in Supermarkets(Marketing Channels and Supply Chain Management)

In September 1998, Starbucks company and Kraft Foods announced that they were making a long-term licencing agreement to allow growth of Starbucks in grocery channel across U.S.

In the same year Starbucks brought to groceries several coffees : House Blend, Decaf House Blend, Colombia Espresso Roast and French Roast. "We've employed state-of-the-art technology to guarantee that our uncompromising quality standards are maintained in this new effort", said Mary Williams, Starbucks senior vice president during that period.

In April 1998, Starbucks started to offer whole bean and ground coffee in supermarkets. Six selections of roasted coffee became available in supermarkets in 12-ounces Flavor Lock bags.

"Thanks to Kraft, we are now in a position to provide Starbucks coffee through grocery stores much quicker than we would have been able to do it ourselves" said the CEO, Howard Schultz. this agreement was a step farther for Starbucks expansion national wide and worldwide.

Nowadays, Starbucks has around 16,000 retailers in over 50 countries. The company's expansion is a proof of a intelligent way of doing business and a willingness of taking risks. Starbucks is an example of a company that is ready to face the competition and to bring innovation and great experience to its customers.

Starbuck's Channel Alliances (Marketing Channels and Supply Chain Management) )

Starbucks, Pepsi and Unilever partner grow the Tazo Tea Ready - to - Drink business.


Starbucks Coffee Company, PepsiCo , Inc and Unilever made a licensing agreement for the manufacturing and marketing Starbucks super- premium Tazo ready to drink(RTD) beverages- including iced tea, juiced tea and herbal infusion- in the U.S and Canada. Tazo's RTD line is integrated to Pepsi/Lipton Tea partnership.

Tazo created more tha a hundred beverages. All of them are done at Tazo headquarters in Portland, Ore. to ensure quality and flavor consistency. Kraft Foods, which distributed Tazo RTD line as part of its 10-year relationship with Starbucks, will continue the distribution of Tazo filter bag teas and tea-latte concentrate, as well as Starbucks and Seattle's Best Coffee.




Starbucks relationship with PepsiCo was established in 1994, when the companies created the North American Coffee Partnership , a joint venture that helped built the RTD, Starbucks Frappuccino, DoubleShot Espresso, Doubleshot Energy+Coffee and other beverages. The beverages were an immediate success. Today PepsiCo is still the sole distributor for Starbucks RTD beverages, and Starbucks has continued access to the thousands of outlets where Pepsi is sold.


Usually producers don't use only one channel to distribute their products. They create strategic channel alliances in order to be able to use another manufacturer's channel. Strategic channels are used specially by growing companies that are developed worldwide. Starbucks is an example of a company that focuses on strategic channel alliances.

Starbucks Ice Cream (Devepoling and Managing Products)

Starbucks sells its ice cream from 1996, under a partnership of Dreyers Grand Ice Cream Inc. In 2009 Starbucks announced an licencing agreement with Unilever , for the manufacturing, marketing and distribution of the Starbucks ice cream in U.S and Canada. Unilever's capabilities as the leading global manufacturer of ice cream will straighted super-premium position of the company in the U.S and Canada.


Starbucks Coffee is made with only high quality arabica coffee, purchased and roasted in accordance with Starbucks standards. "Unilever's industry - leading innovation and commitment to social responsibility with brands like Ben&Jerry's are well aligned with our values and vision for the business" said Gerry Lopez. Ice cream market in U.S and Canada is worth about 17 billion, Unilever estimates.



The new line of Starbucks ice cream has the fallowing flavors:
caramel macchiato, java chip frappuccino, mocha frapuccino and coffee. The ice cream is not sold in Starbucks stores because many of them don't have freezer. Customers can find the new products in groceries and supermarkets.


I personally love Starbucks ice cream because of its richness and flavor; Java Chip Frappuccino is one of my favorite ice cream.
Starbucks will never stop bringing innovation and new experience to its customers.

Vivanno Products(Developing and Managing Products)

On July 15, 2008 Starbucks introduced its new products Vivanno Nourishing Blends. Developed with a strong nutritional goal in mind, the drinks provide at least one serving of fruits, 16 grams of protein and 5 grams of fiber with 270 calories and no artificial colors.

Vivanno line is one way Starbucks takes in consideration customers' ideas for great tasting and healthy products. They are very receptive to the customers' messages. On MyStarbucks Idea everyone can tell his opinion about the company and its products. There are many specialists that answer and are in contact with those willing to share their experience.

Vivanno drinks can be also customize. By adding espresso to the Banana Chocolate Blend, the drink provides the bold, smooth flavor of espresso with no extra calories. Matcha Green Tea Powder added to the Orange Mango Banana Blend gives the beverages the antioxidants of green tea with only 40 additional calories.
The way Starbucks develop and manage products is interesting to follow. They have the sense of bringing inovation and receptiveness to their business.

Starbucks' Food (Develping and Managing Products)

Even though Starbucks' primarily product is coffee, the company is focusing on improving their food products as well. The company introduced its food line from 1991, but it was always secondary to the coffee.

In 2007, the company was finally ready to serve a high-quality food to its customers. Starbucks made huge investments in new high-speed, high-heat ovens. The ovens developed by companies including TurboChef combine microwave and convection technology and can be used for both cooking and reheating.

Pastries were long brought from different bakeries, only in 2007 the company created its own receipts and made the cookies taste the same in the whole country. Starbucks wants to offer high quality food next to its high quality coffee. "We are determined to serve food our coffee can be proud of", said Mr. Barr, director of food research and development.

The company brings new healthy food products like : "Starbucks Perfect Oatmeal", "Chewy Fruit Nut Bar", "Apple Brown Muffin", "berry Stella" and many others. Starbucks food products are addition to the existing products. They want to keep the customers in their stores, giving them the opportunity to eat and drink coffee in the same place.

Starbucks' "Treat Receipt" Sales Promotion

Starbucks' "Treat Receipt" promotion was a version of Happy Hour. Between June 30 and September 29, 2009, customers were able to purchase more coffee for less money. Those who purchased a coffee before 2 p.m. could get any Grande cold drink for $2.00 after 2 p.m. by just showing the receipt.

It was a good deal especially for those customers whose drinks after 2 p.m. were fancy coffee, like frapucciono or any other complex drinks; This way they could save more money. I think "Treat Receipt" was a good promotion because it encouraged people to double purchasing; as well as it made them try complex products. The idea of offering cold drinks in a hot season was a good one , bringing profit to the company.

Personal Selling

As defined in our Marketing book, personal selling represents the direct communication between a sales representative and one or more prospective buyers in an attempt to influence each other in a purchase situation.

Personal selling is very important to those companies which sell complex and pricey products because more time is needed to be spend on giving information and explanation about the details and benefits of the product.

Starbucks sales representatives are the baristas, which are in charge of making and selling the coffee. Even though Starbucks primarily product is coffee, the company focuses on improving and providing a high quality service. Therefore, the baristas are trained a long time before they start working. Anyway, the type of the product is an important factor in determination of the need of personal selling.

Starbucks Via Taste Challenge (Sales Promotion)

Starbucks Via instant coffee is the most recent change brought by Starbucks. The new product was introduced on September 29th, 2009.

This time the company used an interesting sales promotion: "Starbucks Via Taste Challenge". Between October 2nd and October 5th, the customers were invited to taste the new coffee by being challenged to differentiate the new instant coffee from a fresh brewed one.

In addition to the possibility of being challenged and enjoying some Starbucks coffee, all the participants received a coupon for a free Tall brewed coffee for their next visit as well as $1 off a Starbucks Via purchase.

In conclusion, Starbucks used a fancy sampling method. They let customers tell their opinion about the new product. Many participants couldn't tell which one is the instant coffee, this fact proving the high quality of the product. The company's purpose was to show that Starbucks Via is not just an instant coffee, it's Starbucks.

The success of the sales promotion is not known, the company announced that the selling of the new instant coffee exceeded their expectations.

Satrbucks' (Red) Fights AIDS in Africa (Public Relations)

In October 2008 Starbucks announced multi-year partnership with (Red).
Between November 2008 and January 2009, Starbucks donated 5 cents from the sales of Red Exclusive Holiday beverages: Peppermint Mocha Twist, Gingersnap Latte and Espresso Truffle to the Global Fund, established in 2007 to fight AIDS, tuberculosis and malaria worldwide.


The company said that the partnership with (Red) it's a way of showing the company's responsibility for the planet, community and people . In addition, it gives costumers the opportunity to participate in the action of doing good.




After selling the (Red) beverages, Starbucks included the (Red) Card, from January 2009 to December 31st. Each time a costumer uses his card , the company gives 5 cents to the Global Fund. This way both the company and the costumers are getting involved in helping the planet.


In one month of the partnership, Starbucks accumulated funds for 1.4 million doses of medicine to save lives in Africa.
I think, that's a good way a company can show its responsibility and commitment for the planet. Doing business responsibly, that's what Starbucks focuses on many times. They create the link between their company and people from the entire world. In general, company's social action are always supported by its costumers.

Starbucks' Advertising

On May 2009, Starbucks created an advertising campaign that spread lots of messages on a common theme: "It's not just coffee, It's Starbucks". The ads were written on the newspapers and magazines.

Starbucks used a non-traditional style of advertising because they wanted to tell their stories. Therefore, lots of the ads were one page long, bringing information about the way they select the beans, emphasizing on the quality of their products.

For example, the ads "If your coffee isn't perfect, we'll make it over. If it's still not perfect, make sure you 're in a Starbucks" and " Beware of a cheaper cup of coffee. It comes with a price", are emphasizing the quality of their coffee and fight against the competition.

On that period McDonald's was promoting it's line of McCafe coffee drinks saying that they can offer an espresso for less money: "four bucks is dumb. now making espresso."

Starbucks wanted to communicate that they offer more than coffee, they bring value, history and information to their costumers. As a result, consumers are not paying only for coffee, they are getting Starbucks Experience and satisfaction.

Did these ads work?

My opinion is that the ads' messages were not able to convince a price sensitive costumer to go and buy a cup of coffee for over $4. While, for the regular costumers these messages could encourage and prove value. These ideas of bringing more information and being opened to the public show a tentative of closeness to the costumers; the company invite their costumers to be a part of their world.

Starbucks' Pricing Concepts

A regular cup of coffee at Starbucks costs around $2, and a "fancy" cup of coffee costs over $4.

Why paying this price?

Starbucks differs from other coffee companies because it offers value to its costumers. Starbucks sells not just coffee, but also image, status and satisfaction. I think this is the case of a prestige pricing, which means charging a high price to help promote a high quality product.

Starbucks often talks about serving coffee ethically traded, paying farmers high prices for the coffee beans, reducing the environmental footprint and supporting the communities where they do business. They give information to the public related to their ways of doing business. They make costumers realize the company's involvement in society.

In addition, the company focuses on "Starbucks Experience", by offering professional service and friendly atmosphere to its costumers. The company has a variety of 87, 000 types of beverages, and it sells coffee beans from 4 continents.

In conclusion, Starbucks means image, value, variety and premium coffee. That's the reason why their prices are high and the costumers pay them.

Strabucks Adjusting Prices (Pricing Concepts)

At the end of August this year Starbucks announced that the prices will be raised for "complex beverages" like frapuccino, and lowered for the simpler beverages like plain cup of coffee.
The prices changed on average between 10-30 cents. "This is as a part of our comprehensive approach to providing the value while balancing our business responsibilities" said spokeswoman Valerie O'Neil.
Raising prices in the middle of a big downturn it's not such a crazy idea says J. Miguel Villas-Boas, marketing professor. Even though seams paradoxical, it is a strategy premium company often take.
This is the first time Starbucks decreases prices. The price of the most popular beverages -12 - ounce lattes and brewed coffee decreases 5-15 cents.
Starbucks' strategy of reducing prices of the regular drinks, shows how the company is approaching price sensitive costumers. For those who buy frapuccinos and other "fancy" drinks, the raising of few cents might not be an issue. While for the costumers who purchase plain coffee and lattes, the decreasing of prices could be an important stimulus.
Another reason of decreasing prices for the simpler drinks can be the company's intention to encourage the selling of simpler beverages, that requires less time to make. This way the costumers will spend less time in line, and the baristas will be able to provide a faster service.

A visit to Whole Foods Market (Retailing)

Few days ago I went to a Whole Foods Market. The purpose of my visit was to observe some details related to retailer and also to buy some food.
Whole Food market is an example of a supermarket retailer store. It is a large and departmentalized store which specializes in food and nonfood products. The supermarket meets the needs of all types of consumers offering vegetarian products, vegan products, dairy and meat items. In addition, the store has a lot of organic foods and prepared meals. As I mentioned before the nonfood departments get a large space in the supermarket. As a result, there are departments with products like: cosmetics, accessories, bath products and many others.

The prices in Whole Foods Markets are higher than other market's prices. The reason of high pricing is the quality and variety.

Being a self-serving retailer, I didn't get involved in any interaction with the supermarket's employee.

I had a good experience in this store because I found the products that I was looking for. In addition, the way the items are organized and the cleanness of the store make me come back.

Starbucks' Retailing

Retailers can be classified by the form of ownership:independent, part of chain or franchise outlet. Starbucks Company is an example of chain because the stores are operated as a group by a single organization, in this case Starbucks. Starbucks has around 16,000 store in over 50 countries.
Talking about the types of retail operations, Starbucks coffeehouses can be considered specialty retailer because the company is specialized on a specific type of products: coffee products.

Important facts for retailers:

• Level of service - Starbucks is concerned about its service. Even though it's a global company with millions of costumers , they focus on the relationship between costumer and employee. As the CEO, Howard Schultz, said when he returned to his position in 2008, that the company has to refocus on "costumer experience".


• Product Assortment - The company has a large product assortment. There are 87,000 different beverage options (according to Starbucks Newsroom). In addition, they sell many food products , ready to drink beverages and coffee beans.


• Price - Starbucks pricing it's a big issue. Are Starbucks products overpriced? Well, if thinking about a product from the perspective of utility, quality and value, no Starbucks coffee is not overpriced. "It's not just coffee. It's Starbucks". Few examples of Starbucks prices: a tall coffee is $1.65, twelve ounce latte costs $3.10, a tall mocha costs $3.40.

In conclusion, Starbucks chain is a retailer that expended globally and is always ready to make additional changes in order to keep its costumers.

Product Concepts II

Starbucks company has a large variety of products:

• 1. Starbucks Beverages - Starbucks has more than 87.000 different beverages option. They can be classified as handcrafted beverages and ready to drink beverages. Some examples of handcrafted beverages are: espresso, brewed coffee, tazo tea, cappuccino.Ready to drink beverages, which are sold outside the retail store through a number of channels, are: Starbucks Double shot,Starbucks Double shot Energy+Coffee, Frappucciono.

2.Starbucks Food - Starbucks has a line of nutritious food options for breakfast. Breakfast items ingredients are:whole grains, fruits, natural fats from nuts and seeds. Some items of Starbucks foods are:

• Perfect Oatmeal with Choice of Dried Fruits
• Power Protein Plate
• Baked Berry Stella
• Apple Brown Muffin
• Multi grain Roll with Spreads

3. Starbucks Coffee Beans:

• Latin American Coffee
• African Arabica Coffee
• Asian Pacific coffee
• Cafe Verona
• Organic Shade Mexico

Starbucks always adds new products and new lines of products in order to satisfy costumer's expectations. Starbucks is an example of a brand that listens to its costumers and is ready to make changes where necessary.

Product Concepts I

After just few weeks of introducing its new product Starbucks Via Ready Brew, the company is announcing a decaf option starting November 17.

The instant coffee Via exceeds its expectation. In addition ,

Progressive Grocer in their annual 2009 Editor's Pick called the newest Starbucks product "The Best New Consumer Product".

The new Via Ready Brew Decaf Italian Roast will be introduced on November 17, just before the Holidays. The new product is made from the same high quality arabica coffee, being roasted to the specific Starbucks Roast profile to deliver the aroma, body and rich flavor.

Starbucks Via Ready Brew has been voted "Most Innovated New Product of the Year" by Allegra Strategies in the U.K, and "Best New Consumer Product" by Progressive Grocer magazine in the U.S. These positions place the product as a leader in the instant coffee market.

The new Via ready Brew Decaf coffee will be sold in single packets and is packaged in books of three or boxes of 12. The costumer will pay $2.95 for a three-pack, and 10.95 for a twelve-pack.

The company gives costumers the possibility to have a Starbucks coffee for less than $1. As the tests showed, the majority of the costumers couldn't recognize the difference between the Via instant coffee and the regular Starbucks coffee. It's interesting to see if the product will bring the maximum profit, as the CEO said that Via product represents a business of $21 billion.

Segmenting and Targeting Markets II

Starbucks is the favorite restaurant for teens, according to a new study Piper Jaffray & Co. The study showed that restaurants with a value message are becoming more popular among teens.

Piper Jaffray survey reflects the opinion of more than 11,200 teens, average age 16 years old; 1,200 of teens were surveyed at school and 10,000 online. Starbucks is the teens favorite restaurant brand, garnering a 12% share on the school survey and 9% share online.

Teens' decisions of where to dine is created around idea of value. While taste and menu selection are the factors having the highest influence in buying decision, the value is the third factor.

One thing is clear, teens are getting the company's messages. It's not just coffee, it's Starbucks - that's what teens assimilate. Starbucks is a place where many teens meet with friends, enjoy, have fun and also drink beverages. Looking from the ethical perspective, I don't think that it is ethical to engage teens in drinking coffee and high calories beverages. On the other hand, the company is getting another market segment that can bring profit.

Segmenting and Targeting Markets I

Segmentation represents a marketing strategy that allows an organization to group their costumers and to create products that will satisfy costumer's needs.The main objective of segmentation is to provide the products that will best benefit the specific groups.

Starbucks consumer segment falls in the following characteristics:

• Women 18-49 represents 43% of the consumers, compared to the 29 % of men 18-49
• 42% of pulled have children that fall into 6-17 year old range
• 30% of consumers have graduated college, or any post college education
• 39% have a house hold income between $75,000-149,999
• The Western United States has the highest concentration of Starbucks consumers (36%), followed closely by the South
• 57% of the costumers are currently married
• 82% of the consumers are moderate to heavy Internet users

As a conclusion, Starbucks targets both male and female between 18-49 years old. However, studies show that the company has more female customers. Starbucks houses educated people: college graduates, business professionals and usually from a dual income households. The main target audience is college graduates with a high income.

Starbucks Types of Business Products(Business Marketing)

There are several categories of business products. I will discuss the main business products of Starbucks: raw materials and equipment.

The main raw material for Starbucks is the coffee beans. The company buys coffee beans from many continents: South America, Africa, Asia . Every country has its own way of preparation of the product ,and the coffee has different flavors and aromas. This way costumers can find a diversity of coffees in Starbucks stores.

Another important business product of Starbucks is their equipment. Starbucks uses brewing equipment, coffee presses, grinders, espresso machines. The newest innovation in equipment is the acquiring of the Clover machines. The new technique blends the best of the vacuum pot and coffee press method and gives the unique flavor nuances of specialty coffee.