Case Study: Starbucks Coffee
Christopher Wingert
Busn 279-40C
Ivy Tech Community College – Northeast
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The first Starbucks location was opened in the center of Pike Place Market, located in
Seattle Washington. The name of the company was inspired Moby Dick’s first mate which was
named Starbuck. Both the mermaid logo and the name of the company were motivated by the
love of the sea and the maritime tradition of early coffee traders of the world. Starbucks started
as just a single shop offering the world’s finest fresh-roasted whole bean coffees to its customers.
Over time Starbucks Coffee grew to be the largest roaster in Washington with multiply locations
being opened throughout the state.
In 1981, current CEO Howard Schultz began working with the founder Jerry Baldwin
and sensed a great opportunity to expand services offered by Starbucks. Mr. Schultz and Mr.
Baldwin decided to take a trip to Italy to research new products and services for their company.
Mr. Schultz while traveling around Italy witnessed and experienced the café community
environment that Italy offers in its coffee shops. From his experiences in Italy Mr. Schultz got
the idea to bring the café community environment back with him to the United States and
implement it into his company Starbucks.
The first test that the company performed was selling espresso by the cup to their
customers. Mr. Schultz decided to part ways with Mr. Baldwin and open his own Italian coffee
shop the II Giornale, which became very successful. In 1987 Mr. Baldwin decided to sell all six
of his Starbucks original locations. Mr. Schultz caught wind of this opportunity and partnered
with investors and raised the money to purchase the company from Mr. Baldwin. After Mr.
Schultz purchased Starbucks he then decided to merge the company with his Italian bistro
locations. He then experienced exceptional growth and went public in 1992; by 1997 the
company has grown tenfold. With this great success being formed Mr. Schultz decided to add
locations around the United States, Japan, and Singapore.
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According to the article published in The Telegraph Forty years young: A history of
Starbucks the company added the following product lines. Selling premium teas through
Starbucks’ owned and operated Tazo Tea Company. They also decided to start distributing whole
bean and ground coffee to supermarkets for people to purchase. Selling music CD’s in their
Starbucks retail stores. The company uses word of mouth and brand recognition as their
marketing strategy to bring in new customers and retain their current ones.
According to the Starbucks website, they have 21,160 stores in 63 countries and
territories. Starbucks has 12,067 locations in the United States, 1,570 locations in China,
1,451locations in Canada, 1,070 locations in Japan and 793locations in the United Kingdom.
Starbucks is also the world’s largest buyer of Fair Trade Certified coffee. Their mission statement
from the company’s website is as follows: “Our mission is to inspire and nurture the human spirit
– one person, one cup, and one neighborhood at a time.”
An article written by Charles Orton-Jones titled: Why is Starbucks so successful?
Attention to detail. He states that Starbucks is willing to lose money in the short run to bump out
other coffee shops by opening Starbucks in high-concentration, “clustering”, in small districts.
Starbucks then sells its products at price points that put a strain on smaller coffee shops in the
area. Mr. Orton-Jones goes on to say that the cups used by Starbucks for their coffee beverages
are a walking billboard. He also states that the language that Starbucks uses such as tall, venti,
and grande, are to set an atmosphere where customers feel like members.
Time and time again Starbucks has shown that it’s still the people’s favorite spot to stop
in for a cup of coffee. Starbucks relay on its brand loyalty to keep customers coming back and
keeping their edge on competitors. Starbucks has shown to continue to outperform such big
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names in the industry such as McDonald’s, Dunkin’ Donuts, Krispy Kreme, smaller chains and
independent outfits. Starbucks makes customers welcome on numerous levels. The employees
are trained to go out of their way to give their customers the best experience possible by meeting
and exceeding all their needs. Most Starbucks locations also offer a cozy atmosphere to their
customers with oversized couches and free Wi-Fi.
It is hard to imagine that a single coffee shop opening 30 years ago in Seattle has
developed into such a huge corporation it is today. Thanks to their market strategy and sticking to
their core values Starbucks was able to continuously multiply over the years. This is a huge
motivation for entrepreneurs looking to start a small business here in the United States or
anywhere in the world. Starbucks market strategy is rare and unique, they do not advertise on
