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Starbucks Corporation Product Strategy

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Headquartered in Seattle Washington, Starbucks Corporation is a premium coffee retailer offering a wide selection of hot and cold beverages, fresh food, premium ice cream, merchandise, and entertainment. Starbucks opened its first location in 1971 at Seattle's Pike Place Market. Although Starbucks closed approximately 600 underperforming stores this year, it still operates more than 16,000 stores worldwide with over 11,000 stores in the United States. Each store varies its product mix depending upon the size of the store and its location. Larger stores carry a broad selection while smaller stores offer a more limited selection.

The product strategy of Starbucks can be summarized by the company's vision statement. As stated on its website, the company's vision is to "establish Starbucks as the most recognized and respected brand in the world and to be the premier purveyor of the finest coffee in the world". Starbucks has strong global brand recognition which is built on a solid reputation for premium products. The company is well known with consumers for making high quality beverages, food and associated goods. Starbucks takes pride as being recognized and respected as the top coffee store in the world. The atmosphere of its stores is what keeps customers coming back. The stores are designed where customers can get in and out quickly or stay and enjoy the camaraderie. Starbucks does not mass advertise. Most of their marketing is done by word of mouth, and in supporting local events within the communities where their stores are located. As Howard Schultz, the CEO of Starbucks states:

At Starbucks, we have integrated ourselves in a way that is very different than selling a cup of coffee. We have an emotional relationship with our customers. It's not one thing, but a lot of things. It's not good enough to have a good ad, but everything you do helps complete the circle...the packaging, the community involvement, the service all help build that emotional connection.

Starbucks has created very loyal customers who continue to return to Starbucks. These customers are willing to pay four dollars for a cup of coffee. The average Starbucks customers are middle to upper class, working adults. Also, there are a lot of college students who are extremely loyal to Starbucks as well. "These students will go to Starbucks, spend their money on drinks and hang around to do homework or meet with friends, turning Starbucks into a social meeting place". Starbucks also offers kid-friendly drinks such as the Frappuccino. The company does not directly market to this customer base, but their coffee appeal reaches all generations.

Before Starbucks was available nationwide, the option for gourmet coffee was limited. One option was to go to a gourmet café, which usually did not stay open for extended or early hours of the day. Another option was to pick up a cup of coffee from a local gas station or from a fast-food restaurant in which it could not be specifically blended to the customer's preference. Starbucks saw this opportunity and fully captured the market with a quality drink and a social environment. Starbucks is the first mainstream coffee shop that allows customers to dictate how their coffee should be made. Customers can choose a product that is fine tuned



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