Breakthrough marketing -STARBUCKS
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival coffee brands used cheaper coffee beans to compete on price. Starbucks founders decided to experiment with a new concept a store that would sell only the finest imported coffee beans and coffee-brewing equipment. The original store didn’t sell coffee by the cup, only beans.
Howard Schultz came to Starbucks in 1982. While in Milan on business, he walked into an Italian coffee bar and had an epiphany with his espresso. “There was nothing like this in America. It was an extension of people’s front porch. It was an emotional experience, ” he said. He knew right away that he wanted to bring this concept to the United States. Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality.
He envisioned Starbucks as a “personal treat” for its customers, a “Third Place”- a comfortable, sociable gathering spot bridging the workplace and the home. From its launch in Seattle, Starbucks expansion throughout the United States was carefully planned. The management team agreed that all stores would be owned and operated by the company, ensuring com- control to cultivate an unparalleled image of quality. Starbucks employed a”hub” expansion strategy, in which coffeehouses entered anew market in a clustered group Although this deliberate saturation often cannibalized 30% of one store’s sales by introducing a store nearby, any in revenue was offset by efficiencies in marketing and distributors costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer Visits. Part of the success of Starbucks undoubtedly lies in its products and services, and its relentless commitment to providing customers with the richest possible sensory experiences. But another key is the enlightened sense of responsibility that manifests itself in a number of different ways. Schultz believes, to exceed the expectations of customers that it is first necessary to exceed the expectations of employees.
As tar back as 1990, Starbucks provided comprehensive health care to all , including part-timers. Health insurance now costs Starbucks more each year than coffee. The firm also introduced a stock option plan called “Bean Stock,” which allows Starbucks The company donates millions of dollars to charities via The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz’s book. The mission of the foundation is to “create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work.” The primary focus of the foundation has Den on improving young peoples lives by supporting literacy pro-for children and families. By 2007, the foundation had pro-vide over $12 million to more than 700 youth-focused organizations in the United States and Canada. Starbucks also has donated 5 cents of its every sale of its Ethos bolted water to improving the quality or water in poor countries as part of a five-year, $10 million pledge.
Starbucks believes that by focusing and aligning the giving priorities of Starbucks Coffee Company with The Starbucks Foundation, a separate 501 (c)(3) charitable organization, its contributions will have greater impact and provide more benefit to communities around the world. The Starbucks Foundation celebrated its 10-year anniversary in 2007 with the announcement of Starbucks About Youth, a global philanthropic endeavor focused on supporting educational initiatives and youth leadership in Starbucks retail markets around the world. Starbucks also promotes “fair-trade” export practices with third- world coffee bean producers–no other retailer in North America sells more fair-trade coffee and pays its producers in those countries an average of 23% above market price. It took the company 10of development to create the world’s first recycled beverage cup made from 10% postconsumer fiber, conserving five million pounds of paper or approximately 78,000 trees a year. The company 87 urban locations co-owned by Earvin “Magic” Johnson. Schultz stepped down as CEO in 2000, but he remains and “Chief Global Strategist.” Starbucks currently has over 12,400 stores worldwide, with 115,000 employees and almost $8 billion in revenue. The company hopes to expand to 40,000 out- lets, cafés, and kiosks worldwide, half of them outside the United No matter what the growth trajectory, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to always treat workers as individuals.
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