CASE QUESTIONS: STARBUCKS

1. What factors accounted for Starbucks’ extraordinary success in the early 1990s?

First, Starbucks offered the premium-quality product. Its coffee beans were sourced from the Africa, Central and South America, and Asia-Pacific regions. Starbucks purchased green coffee beans directly from growers and controlled the custom-roasting process, and distribution to retail stores around the world. Most coffee beverages were handcrafted following the number of specific steps.

Second, Starbucks offered uplifting customer service to customers. Store employees (partners) recognized regular customers and provided personalized service. Partners were trained to listen to customers, identify their real
3. How does Starbucks of 2002 differ from Starbucks of 1992? What changed? What has stayed the same?

| 1992 | 2002 | Number of stores | 140 stores in the Northwest and Chicago | 4574 stores in North America and 1312 stores Outside North America; 65.9% of total stores were company-oriented stores were and the remaining were licensed stores. (Exhibit 2) | Number of products | Info unavailable, but assume very limited | * Typically, 33 Beverages + 23 whole-bean coffees (Exhibit 5), excluding foods and equipment & accessories * New products were continuously added due to new innovations in beverages (e.g., Frappuccino beverages, bottled ready-to-drink coffee beverages distributed by PepsiCo) | Type of products | Whole-bean coffees and coffee beverages | Whole-bean coffees, coffee beverages, food items, and equipment & accessories | Revenues in company-operated stores | About half (50%) of store revenues from sales of whole-bean coffees | 77% of store revenues from coffee beverages; whole-bean coffees sales were only 6%, 13% from food items and 4% from equipment & accessories (Exhibit 4) | Customer profile | Affluent, well-educated, white-collar female between the ages of 25 and 44 | * Younger (Avg. age 36), less well-educated (37% w/ college degree+), and in a lower income bracket than historical customers. (Exhibit 8) * Also, variety in ethnicity; about