Starbucks

Jessica Olivier

History of Company

• The very first Starbucks originated in 1971 in Seattle, Washington. The company was named after the chief mate of a whaling ship from "Moby-Dick." Three college friends (Jerry Baldwin, Zev Siegl, and Gordon Bowker) became partners post-college and created the small coffee shop. When Starbucks was first established by these three partners; there wasn't any brewing of coffee. The only products sold were high-quality coffee beans. By 1986, the company had six store locations in Seattle and began selling espresso. Howard Schultz purchased Starbucks in 1987.

CEO Biography

• Howard Schultz was born on July 19, 1953 in Brooklyn, New York. As a boy, Schultz found an escape through playing sports. He graduated high school in 1971 and received an athletic scholarship to Northern Michigan University. He was the first in his family to attend college. He went on to receive his bachelor's degree in Communications in 1975. Schultz became a general manager for a Swedish coffee maker manufacturer and visited that company's client; Starbucks. He decided to join the Starbucks team as the "Director of Marketing." Schultz travelled to Italy for business and felt inspired by the coffee shops there. He wanted to bring the Italian coffeehouse tradition to Starbucks. In fact, he went off and started his own coffeehouses. In August of 1987, he returned to the company and purchased it for $3.8 million.

Equities Data

• Ticker Symbol: SBUX
• Exchange: NASDAQ
• Current Dividend Rate: $0.26 per share quarterly
• Open: $74.80
• Close: $75.89
• High: $76.10
• Low: $74.77
• Volume: 4,114,500

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Marketing Strategy

• Annual Sales for 2013

$14.9 Billion

(a 12% increase from the previous year)

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• Starbucks Customers

Kids and teens (ages 13 - 17) only account for 2% of the company’s customers. Starbucks’ primary customers are targeted for adults and young adults. Young adults (ages 18 - 24) make up 40% of Starbucks’ sales. This customer audience grows approximately 4.6% annually. Men and women (ages 25 - 40) make up almost half of the customer population at 49%. This customer audience grows approximately 3% annually.

Marketing Strategy Continued

• Starbucks is well known for the products and services it provides. Starbucks supplies a wide variety of cold and hot beverages as well as food products. They offer beverages such as teas, hot chocolates, espressos, and of course, coffee. During specific seasons, limited time flavors are available. As for food and snacks there’s anything from yogurt and fruit, to sandwiches and salads, to bakery treats. Customers can purchase cups and mugs at most Starbucks locations. They even sell coffee makers, tea kettles, etc. And if you really like their beverages, you can even purchase K-Cups for the Keurig, the same sauces and syrups they use in their beverages, and packaged coffee blends.
• Starbucks has a very tactical pricing strategy. They use profit maximization to determine a price and product output level to make the most profit. They target price increases that will still attract and keep their customers. A 1% increase in the cost of products can increase profit as much as 11%.

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Marketing Strategy Continued

• Starbucks sells its products through a direct retail system in company-owned stores. They import and process coffee and then sell it under their own brand name in their own stores. Additionally, Starbucks has distribution agreements with office coffee suppliers, hotels, and airlines.
• Starbucks offers many promotions. Most promotions are offered through the “Starbucks Rewards card”. Customers can earn a star when making a purchase and according to what they purchase, personalized rewards become available to the customer. The stars work as an incentive to the customer. There are many benefits to the rewards card which keeps loyal customers coming back. Besides that, there are small promotions that Starbucks’ host throughout each season.

Main Competitors

• Dunkin’ Brands Group, Inc.

The company controls Dunkin’ Donuts and Baskin-Robbins in about 60 countries with more than 16,800 franchise locations. Dunkin’ Donuts is widely known for its popular donuts and flavored coffees. Baskin-Robbins is known for its variety of ice cream flavors.

• Nestlé S.A.

Nestlé is mostly known for its hot chocolate. But it’s also one of the top bottled water makers as well as popular in frozen pizza (DiGiorno), pet food (Friskies, Purina), and of course, coffee (Nescafé),

• McDonald’s Corporation

McDonald’s has more than 35,000 locations within 120 countries. Although it’s mainly known for its burgers and fries; it’s now creating competition with its “McCafé” beverages.

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Human Resources

• The recruitment process includes: �Job analysis and developing a person specification, matching candidates to job requirements and screening individuals using testing, candidates’ motivations assessment and their fit with organizational requirements by interviewing and other assessment techniques.
• Once there is a qualified amount of job applicants, the selection process is used to determine which applicants have the best ability to complete the tasks within a given job. Selection procedures include: �1) Application forms and resumes �2) References and background checks �3) Selection tests �4) Interviews
• What It’s Like to be a Starbucks Partner

Benefits Offered to Employees

• Starbucks offers something to employees called, “Your Special Blend.” For those that work twenty or more hours a week; receive various benefits. It includes bonuses, 401(k) matching, and discounted stock purchase options. It also offers adoption assistance and health coverage for the employee, their dependents, and domestic partners.
• Employee’s also have availability to career sabbaticals and other time-off programs. As well as partner perks such as 30% in-store discounts and one free pound of coffee, a box of K-Cup Packs or tea a week.�
• “Starbucks College Achievement Plan” is an opportunity for all benefits eligible partners (all brands) to complete a bachelor’s degree with full tuition reimbursement through Arizona State University’s top-ranked degree programs, delivered online.

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Demographic Information

• Starbucks is an Equal Opportunity employer.
• Starbucks has 137,000 employees as of 2010.
• A majority of Starbucks employees that work in the corporate offices; were at one time or another, a sales associate in a store location. Starbucks also offers career opportunities to veterans of the armed forces, as well as their spouses. Twenty-four percent of top corporate officers are women. For all executives, vice presidents and above; the total representation by women is thirty-one percent. The representation of employees of color is thirteen percent.

Corporate Mission

“With our partners, our coffee and our customers at our core, we live these values: �Creating a culture of warmth and belonging, where everyone is welcome.�Acting with courage, challenging the status quo and finding new ways to grow our company and each other.�Being present, connecting with transparency, dignity and respect.�Delivering our very best in all we do, holding ourselves accountable for results.�We are performance driven, through the lens of humanity.”

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Corporate Social Responsibility Policy

• It is Starbucks responsibility to advance their partners, customers, suppliers, and neighbors in order to create positive change. It is their responsibility to lead and create a healthy environment for everyone to endure and thrive off of.
• Some other responsibilities are:
• Commitment to good governance
• Ethical conduct
• Drive to create and increase shareholder value
• Commitment to maintain their relationships with stakeholders and gain their input and feedback on issues

Stance on Ethics

• Starbucks believes that conducting business ethically and striving to do the right thing are vital to the success of the company.
• They have a program that supports their mission called, “Business Ethics and Compliance.” It supports their mission and protects their culture and reputation by providing resources to help partners make ethical decisions at work.
• The program develops and distributes awareness materials, including the Standards of Business Conduct; facilitates legal compliance and ethics training; investigates issues such as potential conflicts of interest; and provides additional ways for partners to voice concerns.

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Commitment to Environment/Sustainability

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• Starbucks looks at all aspects of their business in order to reduce their environmental impact. They look at how they can integrate new solutions to create meaningful and sustained change. Starbucks contributes to the environment in three major ways.

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Building Greener Stores

• Starbucks’ approach on creating more energy efficient stores involves conserving the energy and water they use. By building more energy-efficient stores and facilities; they are conserving the energy and water they use.
• The U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) is a certified program that Starbucks started using in 2010. LEED enables Starbucks to build eco-conscious stores from construction to operations.

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Energy Conservation

• Starbucks continues to try and reduce their environmental footprint. It is their goal to reduce their energy consumption by 25% and convert 100% of their electricity consumption to renewable energy by 2015.

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Recycling and Reducing Wastes

• They prove their commitment to lead the entire industry toward greater access to recycling cups and other packaging. Ultimately they want their cups to be recyclable in both material and practice, so that their customers have access to recycling services wherever they choose to dispose of their cups.
• In 2008, a goal was put in place to implement front-of-store recycling for customers in all company-operated locations. They offer front-of-store recycling for customers, which proves that they are pushing themselves to reduce the environmental footprint of the business. Since that time, Starbucks has implemented recycling in many places to expand their acceptance of materials within the foodservice industry.

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