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Investigation Of The Harvard Business School Case Study "Starbucks: Delivering Customer Service"

3563 words - 15 pages

The focus of the paper is to explore the marketing process at Starbucks and evaluate the firm's decisions. Marketing concepts portrayed in the case will be examined as well.Mission StatementThe company's mission is to: Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. Starbuck's mission statement sets a corporate vision for the company by identifying the focus of expertise, coffee, and establishing the desire to grow larger.In addition to their mission statement, Starbuck's operates on the following principles:1. Provide a great work environment and treat each other with respect and dignity2. Embrace ...view middle of the document...

Sales History/FutureFollowing the initial public investment in 1992, sales grew by an annual compound percentage rate of 40% and net earnings had risen over 50%. From 1998 to 2002, gross profit has increased in millions from 730.2 to 1938.9 and the number of Starbuck's retail stores have increased from 1,886 to 5,886. As sales continue to grow, Starbuck's itself seems recession proof. Even following the 9/11 attacks as other segments of the economy took a dive, Starbuck's continued to open new stores and increase sales. In considering Starbuck's long-term outlook for investor, said:"We recommend purchase for aggressive growth-oriented investors with a longer-term time horizon. Despite a weaker economy and what some thought would be soft demand for an optional premium-priced food product, consumers show that they would not forgo their Starbucks in the morning. Bottom line-the core business remains healthy despite the challenging economy, and we expect that investor confidence in the story will remain strong".Financial Health of the Company/StocksFor the fiscal year 2002, Starbucks reported that profits rose 19 percent to $215.1 million, compared with $181.2 million the previous fiscal year. Revenues for fiscal year 2002 were $3.3 billion, up 24 percent from last year's revenues of $2.65 billion. Starbucks had 5,886 stores at the end of the quarter; with 1,177 of those opening in 2002.The income statement shows strong sales growth for the years 1999 - 2002. Revenues grew at an annualized rate of 22%. Percentage of revenues being applied to cost of goods sold has declined every year from a high of 48% in 1998 to 41% in 2002.This company is growing fast and generating profits and cash.The Four P's of MarketingProductThe brand components at Starbucks are products, service, and atmosphere. The tangible products are coffee beverages, food items, whole beans, and equipment/accessories. Other products such as service and atmosphere are intangible. Service is geared toward customer satisfaction, giving the customer what he/she wants, including customized beverages. This process can take a little longer, which causes time delays in line. Employees are to make friendly conversation with customers while they wait. The friendly environment adds to the homey atmosphere inviting customers to hang out and come back.Coffee beverages come in various forms. Classic favorites include traditional espressos, cappuccinos, and lattes. Brewed coffee takes form in a variety of gourmet flavors including seasonal and the "coffee of the day." Cold beverages are typically chilled versions of the traditional flavors. Hot chocolate, ciders, and teas are also available as coffee alternatives, as well as frappuccino's in regular, crème, and tea.There are food items available for snacking while enjoying a nice beverage at Starbucks. Cookies, brownies, danishes, mini-cakes, and bisquetti are some of the common favorites. There are also seasonal food items,...

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