Group assignment paper
Skylerreybrasil
man_3353_-_group_project_full_paper_3.docxBrewing a Better Starbucks 7
Brewing a Better Starbucks
Bernard Alexander (P)
Justin Jordan (P)
Hannah Kim (P)
Jasmyne Stanley (P)
Jamin Trinidad (NP)
Albert Zymberi (P)
Florida State College of Jacksonville
Starbucks Position Towards its Products
According to the video, Starbucks Chief executive officer Howard Schultz made global growth/global expansion its number one priority in 2007. The following year the companies’ profits decreased due to this strategy. The country itself was in a financial recession, and the price of coffee at Starbucks, didn’t change to reflect the financial recession. On a personal note, I am big coffee drinker, my day starts with a cup of coffee, and my perception of Starbucks has always been that their products were quite costly when compared to their competitors.
According to the video, the loss of revenue was directly related to the products not being of good quality. Starbucks like many corporations within the United States and abroad choose growth/profits over its employees, customers, and the products that they produce. The video demonstrates that Starbucks was more focus on global expansion rather than product quality, and customer satisfaction.
During the interview with Katie Couric, Howard Schultz admits that Starbucks made a huge mistake by not making the product or the customer the number one priority. Since this blunder Starbucks takes certain positions when it comes to their products. The first step according to the video was to partner with its employees, the second step was to re-invent their products, by using enhanced tasting techniques, the third step was to enhance their machinery to make better coffee, the fourth step was to make Starbucks more people friendly by making it a place where customers could go to after work and un-wind, the last step was to remove the name Starbucks from their logo, so that they could provide customers with the option to buy other Starbucks products such as tea or nutritional bars at local retail stores not affiliated with Starbucks.
Starbucks Position Towards its Customers
Starbucks position towards its customers has greatly changed in the past few years. Before 2007, according to CEO Howard Shultz, the focus of the company was on global expansion, setting up stores all across the world. Due to this focus on expansion, its products and customers kind of took a backseat on the priority list. According to Shultz, that was their big mistake, and since the recession he has begun steering Starbucks on a new path.
Starbucks New Direction; is it Right or Wrong?
Like most businesses in today’s competitive market strive to be a global organization and cover as much ground as they possibly can, Starbucks sought out to broaden its horizon by opening coffee shops all around the world like Canada, Britain and even Japan. However In 2007 Howard Schultz decided to shut down nine hundred of their locations that drastically cut down on cost. He wanted to bring focus back to the company by developing a closer and more personal relationship with their customers and also drawing attention to their employees. CEO Howard Schultz recognized the changes that needed to be made in order to steer the company not back on course but on a new course with a new perspective. He realized that by bringing other products into the picture instead of just coffee he would open new doors and meet the demand from customers who prefer tea or a sandwich. It’s better to have fewer stores with great success than to have many stores with okay success. For example If a farmer had all the land he could dream of and produced an abundance of corn but was only able to sell half of it then all the investment it took to produce the other half would just turn into cost. What Howard Schultz is doing will allow Starbucks to use those extra resources that would have normally went to cost to be used for other purposes like testing new products, researching with customers as to what they would like to see from Starbucks, and even raises for their employees. To conclude Howard Schultz is indisputably proceeding in the right direction with Starbucks by minimizing unnecessary cost, bringing focus to the customers and strengthening its relationship with its employees.
Why is Starbucks still in the Coffee Business?
In the beginning, growth became a strategy opposed to an outcome. It was all about the growth of Starbucks rather than the quality and relationship with the customers and partners. With the failing economy in 2007 businesses everywhere were facing hard times, including Starbucks. So, how is Starbucks celebrating its 40th anniversary and still in the coffee business?
When the company hit hard times, Howard Schultz took back his position of CEO at Starbucks. He sees Starbucks as a ‘deep sense of community,’ and wanted it to be a third place from home and work to people. He believed that people are hungry for human connection, so he removed physically barriers between them and their customers so there was a direct sight line when they ordered. He renewed his focus on coffee with the help of the Director of Coffee and his team. There is a lot of slurping and spitting down batches of different quality of coffee around the world, and believed that their new brewing system made the best coffee around; and it being a reasonable price of $1.75 for the best coffee is a bonus.
Indicators of Starbucks Future
CEO Howard Schultz spoke in the video to interviewer Katy Couric about what Starbucks is to their partners and customers; which was “a third place to go between home and work.” During the video, Schultz spoke on the future of Starbucks and the way they are evolving from being solely coffee to now up scaling to teas, pastries, and nutrition bars. Schultz stated they would transition into selling adjacent products that are complimentary to their coffee; which is a selling tactic- a very strategically thought out selling tactic to help produce more sales to better the company.
Schultz spoke in a video on their Starbucks website where he elaborated more on the story behind the change of the logo; which indeed indicates that Starbucks will continue to stay in the coffee business as they are now. During the video, Schultz states that they wanted to stay true to their heritage, and ultimately took the siren “out of the circle” which “gave her freedom”; thus giving the company the freedom and flexibility to think beyond coffee. The marketing perspective behind the logo change has shown to be successful thus far. Starbucks exists in 65 countries as well as hold 20,863 retail stores, there is no doubt that they will still be in business in the future. Like any other successful company, Starbucks supports the wants of their customers. Schultz briefly spoke during the video about the drop in business in 2007 along with the failing economy- he stated that Starbucks was not alone, but they adjusted to the needs of the customers. Schultz admitted that at that time, the company was focused on growth rather than quality which affected them dramatically in the end. At the same time, the customers are opposed to this new logo; many believe that the company should return to the old logo despite the fact that with this change, it has broadened the options for them to choose from.
Ultimately, it is evident through the expansion in the menu stepping out of the “coffee box” and venturing into teas as well as smoothies, nutrition bars and pastries that Starbucks will continue to excel and grow in the future. The logo change is a major indicator as well that they will continue to broaden their variety of products in order to keep their customers happy.
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