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Starbucks Essay

2114 words - 9 pages

|Accounting |
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|Starbucks Annual Report 2012-13 Assignment |
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|6/7/2013 |
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INTRODUCTION

Executive Summary

What was once a small coffee shop opened by Gerald Baldwin, Gordon Bowker, and Ziev Siegl in 1971, Starbucks ...view middle of the document...

Currently, Starbucks is replying on retail expansion, product innovation, and service innovation to achieve a long term goal once set by current chairman Howard Schultz:
“The idea was to create a chain of coffee houses that would become America’s “third place.” At the time, most Americans had two places in their lives – home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves. I envisioned a place that would mean different things to different people.”

By working toward this goal, Starbucks wants to open new stores in both new and existing markets, expand their product development process, and cater to customers’ needs to eventually improve their financial position and dominate market share.
MARKET SUMMARY
Target Markets
← In the early stages of development for Starbucks, Schultz identified their target market as “affluent, well-educated, white-collar patrons (skewed female) between the ages of 25 and 44.”

← Over time, market research teams have recognized the new target market as “younger, less well-educated, and in a lower income bracket than their more established customer.”

← Nonetheless, the original target market has not disappeared, but has expanded into the demographic of the store location. For example, southern California stores cater to a growing number of Hispanic customers.

Market Demographics
Geographic

← Data from 2002 showed that in the Southeast there was only one store for every 110,000 people. Whereas in the Pacific Northwest, there was only one store for every 20,000 people. Hence, the company was far from reaching existing markets.

← International plans showed Starbucks was operating in over 300 company-owned stores in the United Kingdom, Australia and Europe, the Middle East, Africa and Latin America.
← Selection
■ Starbucks menu contains brewed coffee, espresso traditions and favourites, cold beverages, coffee alternatives, Frappuccino’s and the sale of whole beans.

← Accessibility
■ Starbucks operates over 10,000 retail stores. Most of the 4,200 franchised stores are located in shopping malls and airports. Starbucks coffee brands are also marketed through grocery stores in the form of beans and even ice cream flavours.

← Competitive pricing
■ For North American stores in the 2012 fiscal year, the average price of an order was $3.85. The drink comes in three sizes: Tall, Grande, and Venti (Italian for small, medium and large). The least expensive price for a tall drink is $2.40 for brewed Coffee of the day. The most expensive price for a Venti is $4.85 for Frappuccino. Whole beans are sold in half and whole pound bags ranging from $5.20 to $17.95 (Sumatra Dark)

Market forecast

← Over the next few years, an estimate for the U.S. retail coffee market expects specialty coffee to have a compound annual growth rate (CAGR) within 9% to...

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