Starbucks Company Analysis

By now almost everyone in America is familiar with the Starbucks chain of coffeehouses. It has become a staple in urban and suburban landscapes in the United States and plans on expanding to every part of the globe. The remarkable thing about this modern mega brand is that it bases its allure and appeal on being a small time, comfortable "3rd place" in people's lives. As Chief Executive Officer Orin Smith forges ahead in the more mature stage of Starbucks' existence, she seeks to incorporate the original homey atmosphere of the first Starbucks coffeehouse established in 1971 within all 5,886 stores worldwide.
Starbucks now has evolved to situate itself as one of the most recognizable brands in the world, and it has all happened without an extensive marketing effort on behalf of the Starbucks Corporation. This business has prided itself upon word of mouth and point of sale experiences to spread its message of quality coffee at comfy locations, and so far it has been very effective. Aside from its primary retail locations, Starbucks is involved with other facets of business. Specialty Operations such as deals with airports and grocery stores account for a strong portion of net revenue.

Internally Starbucks has focused on a strong employee support structure, even choosing to refer as every single worker as a "partner" with the company. Offering each employee healthcare and stock options is an almost revolutionary way to treat hourly workers, and has lead to strong worker loyalty and company devotion.

Customer intimacy and quality products have led Starbucks to the forefront of the specialty coffee market, controlling over 50% of the industry, or roughly $4.51 billion dollars. Maintaining a quality service relationship with your customer becomes difficult at such a sheer volume of business, and moving ahead Starbucks will focus on this aspect to succeed.

Constraints

Starbucks faces numerous problems in its current structure that threaten to hinder its expansion and continued profitable existence. In consumers' minds it has changed positions. Starbucks used to be considered a unique coffee location in town, but it has shifted towards becoming a huge chain supplier. During this change it lost the mystique or "je ne sais quoi" that Charles Shultz imported from Italy when he brought the corner coffee location idea to America in 1982. Regaining this intimate connection with the customer is the most important step that Starbucks needs to make in changing operations. Right now Starbucks' stores seem to be one on top of another in our communities, and these outlets are in extremely close proximity to one another. These stores hurt each others profit margins and rob customers from one another. This over population has hurt the brand image in the consumer's mind, because they now see the product as more common and less of a specialty product that draws them in for a comfortable and personalized experience.

On the other hand, some of Starbucks' current efforts to connect with the customer are also holding back the efficiency of the stores. Workers are extensively trained to prepare prescribed recipes for Starbucks beverages, but most customers order personalized or altered forms of the actual item. This creates a question as to whether or not worker training is properly preparing the employee for each unique and individual location's needs.

Competitors have as so far been dwarfed by the Starbucks corporation in the specialty coffee market, but Starbucks must now turn its eyes towards major competitors in the traditional coffee industry such as Dunkin Donuts. Starbucks needs to realize it is no longer just a specialty coffee provider and that it must keep up with every major coffee supplier in America and globally.
Furthermore, Starbucks claims to have compiled copious amounts of consumer transaction information through its store-valued card. This data has yet to be considered or even touched by the marketing department at Starbucks, which presents another major issue in itself. The lack of a true marketing department is holding back the entire corporation right now. It prevents Starbucks from using important information about their customers in an efficient and advantageous way. The current marketing structure forces high level employees to assumed added responsibilities to help the marketing effort. This compels them to split their attention between their main objectives and additional marketing endeavors, lowering their ability to operate efficiently and with focus on both aspects.

Recommendations

There is still hope for Starbucks to have a positive and profitable future. Christine Days' new labor increase plan may be costly, but it is necessary to bring the Starbucks brand back to the consumer. The forty million dollar plan is expensive, but it is worthwhile in the effort to make the Starbucks experience quicker and more customer friendly.

Throwing money and labor hours at the problem are not the only remedy for the problems that Starbucks are facing. Re- connecting the Starbucks logo with customer intimacy and small town themes is essential to maintaining positive growth and profits. Rather than coming off as trendy, Starbucks needs to establish a unique connection with every local outlet. This may require eliminating certain establishments in over saturated locations. This over population can drive people away from the brand as they see it as a common in and out café rather than a "3rd place" for them to spend their quality time. These uprooted locations can be offered lower rates for establishing new locations in less deeply penetrated markets such as the southeast or the eight states that lack a company owned location.

Changing the way employees are trained will also lead to better customer experience within each individual store. Rather than focus on how to make each specific drink by certain steps employees could be taught how to use all the equipment on location separately, then the "partners" should be given a chance to create drinks for customers on a personal basis, increasing product customization. Making sure that the latest beverage technology, such as the Verismo machine, is installed at every store will also improve consistency and efficiency. Allocating a certain portion of the budget for the increased hourly work program that Christine Day is implementing would be sensible as well.

Starbucks needs to be careful to maintain balance and contact between their small shop roots and global aspirations to ensure future company success. A comprehensive marketing division needs to be created to head these efforts. Without a collective and focused piece of the company devoted entirely to maintaining their brand image, Starbucks risks falling out of style and becoming only a fad company of the past.