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It cannot be denied that the story of Starbucks is the story of Howard Schulz. Shultz never purported himself to be the original owner of the Starbucks franchise. Neither was he the originator of the coffee making business. But he is responsible for the love affair that has existed between Americans and coffee for the last 24 years. The story of its beginning is infamous and integral to the marketed Starbucks experience.
"The one common thread to the success of these stories and the company itself," says Schultz, "is that they have to be true—and they have to be authentic (Business Week, 2007)."
Today Starbucks owns 11,000 stores in the United States and is established in 43 countries around the world as the number one provider and seller of gourmet coffee.
The Starbucks Corporation is a very different company now as when compared to 2009. It combined several marketing strategies with corporate responsibility and environmental consciousness. According the company’s main website Starbucks purpose as a company is to inspire people and connect with them through excellent customer service.
They aim is to achieve this through the quality of their coffee, achieving partnerships within their communities and neighborhoods, embracing persity and being accountable to their shareholders. Recently they have also endeavored to be more environmentally conscious by understanding environmental issues, striving to buy and sell environmentally friendly products and seeking solutions while integrating environmentally ethical values into the corporate structure of their own and their partners companies.
With recent economic troubles, foreclosure of several stores and increasing environmental concerns the focus of the company has changed significantly within the past year. It has endeavored to now change it business model completely. Now instead of delivering a unified experience through all of its store chains Starbucks intends to deliver a personalized experience through each of its stores. Their new business model is set to “engage” their customers as they never have before and to further integrate themselves as viable parts of the communities where the stores are located.
Starbucks is endeavoring to work this new direction by focusing on putting more of an emphasis on their primary merchandise that of course being the Starbucks experience. The coffee is the most important component of that experience and new flavors such as Pike Place Roast and the use of newer technologies to streamline their coffee production. The Starbucks Mastrena is the most versatile espresso machine in the world developed specifically by the company in response to the demands of its customers. They intend to emphasize this new technology as the new industry standard.
“We are returning to the very best elements of our heritage and bringing back the simple romance and excitement of coffee,” said Schultz. “Since 1971, we have sourced, roasted and sold the world’s finest coffees. By highlighting that history through Pike Place Roast, and bringing back the sounds and aromas of the coffeehouse, we are raising the bar on what it means to serve the perfect cup of coffee (Starbucks, 2008).”
The second is its new nutritious program introducing the Vivano blends and extending their food menus to include more health conscious foods such as oatmeal. The third is its new rewards program. This program will take the very successful Starbucks Cards program and endeavor to reward its loyal customers by offering them incentives for their continued support.
All these new directives will be aggressively marketed by the Starbucks Company in 2009 along with increasing its focus to make its company more environmentally conscious and to improve their relations with their Costa Rican partners who provide them their main source of coffee beans.
Looking at the current business model Starbucks has adopted. It’s quite clear that Starbucks entrepreneurial image will not come into play in 2009. The recent economic collapse in the United States has sent several reverberations around the world. A sharp decrease in overall sales and franchises has forced the company to close down over two thousands of its stores in the Worldwide over the course of 2006-2008. Fifteen hundred and ten of those stores were located in the United States (Starbucks, 2008).
Despite the decreasing sales the net revenue of income of 10 billion dollars within the 2008 fiscal year speaks for itself (Starbucks, 2008). Starbucks though wanting to create an image of being part of a community and brand loyalty has not given enough evidence to convince its consumers of its intentions. Though the brand will continue to serve to its primary consumer base and will possibly have an increase in revenue as compared to its performance in 2008. The total revenue will not be enough to stave off more cutbacks and store closures.
The marketing idea set forth by its founder to return to its roots and simply let the product speak for itself while imbedding themselves into various communities is appraisable but unlikely. The brand name has lost much of the good will it had on the part of its customers. In the end they simply know that the corporation will look towards its shareholders first and they second. And continuing such foreclosure practices will not only disturb consumer confidence but shareholder confidence as well.
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