Market analysis of starbucks

Market analysis of starbucks Starbucks was founded in 1971, in Pike Place Market, nestled in Seattle with hopes of creating a third place between home and work. The company was originally named Starbucks Coffee, Tea and Spices, but today change to Starbucks Coffee Company. Now stores are located all over the U.S. They sprung up in urban areas, suburbs, as well as rural areas. This expansion developed the brand as we know it today. It has become a well known name for quality coffee. The company has realized that people dont only come for coffee; they come for the atmosphere, (Kembell). Customers are able to socialize, read, study or enjoy music while drinking coffee. They changed the normal experience of going to a coffee shop. The music selection, furnishings, wide selection of coffee, and great customer service set them apart. Howard Schulz, CEO of Starbucks, once stated, You get more than the finest coffee when you visit a Starbucks-you get great people, first-rate music and a comfortable and upbeat meeting place. In their own words, Starbucks describes this as, champions business practices that help produce social, environmental and economics benefits of communities in which we operate. Starbucks wants to open new stores in both new and existing markets, expand their product development process, and cater to customers needs to eventually improve their financial position and dominate market share. Situational Analysis The limiting of impact on the environment comes in many forms, from materials they use to the way the coffee in produced. The Urban Coffee Opportunity is to help get Starbucks Coffee Company stores into ethnically diverse communities. The mission and principles are listed among many other aspects of the company on their web site, starbucks.com. Coffee being their staple product, they offer over 30 blends, which come from all over the world. They package these as well as produce a premium handcrafted beverage in their stores. Starbucks also offers its customers a wide assortment of home coffee machines. That means in the United States they had 11,168 stores, 7,087 company operated stores and 4,081 licensed stores make up this staggering number. They now have 4,588 stores in over 43 countries. Their brand is top notch in the coffee world, but this awareness is mainly in respect to their handcrafted beverages and other items located at their store. Market Summary Target Markets The primary target audience was found by evaluating information from focusing in on those that drink ground pre-packaged coffee in the home. another target audience is women 20 to 45. A secondary target audience is men aged 20 to 45. They understand that Starbucks is more than just a brand of coffee, but instead, its an experience that a person is savouring in the morning during their coffee time. the original target market has not disappeared, but has expanded into the demographic of the store location. Market Demographics Data from 2004 showed the company was far from reaching existing markets. That in the Pacific Northwest, there was one store for every 20,000 people whereas in the Southeast there was only one store for every 110,000 people. Some Researches showed Starbucks was operating in over 300 Company-owned stores in the United Kingdom, Australia, and Thailand. Customers that started visiting Starbucks in 2002 were 45% female,55% male. The most frequent customers average 21 visits per month, whereas the typical customer visits seven times per month. Average age for an established customer was 38, new customers was 42. Demographic factors are important to Starbucks so executives can make vital decisions regarding population, ethnic groups and expansion. According to the CIA World Factbook, people between the ages of 15-64 make up the largest percentage of the population, and therefore have the greatest influence on Starbucks to maximize profit. Market NeedsMarket Growth Starbucks wants to create an experience for their customers that combine their on-the-go schedule, as well as a place to relax. they believe people come here for the coffee, but ambience is what makes them want to stay, Starbucks operates over 10,000 retail stores. Most of the 4,200franchised stores are located in shopping malls and airports. Starbucks menu contains brewed coffee, espresso traditions and favourites, cold beverages, coffee alternatives, frappuccinos, and the sale of whole beans. From the beginning when Howard Schultz took over Starbucks, he believed, Partner satisfaction leads to customer satisfaction, Starbucks employees are referred to as partners. As of 2002,Starbucks employed 60,000 partners worldwide, 50,000 of those in the United States. Specialty coffee was an estimated $5 billion business in the foodservice channel. Starbucks was estimated to have a 5% share. In-the-home consumption was an estimated $3.2 billion business. Starbucks was estimated to have a 4% share. The coffee market can be divided into consumers segment by where the coffee is drunk, In-Home vs. Out of Home; and type of product, Soluble (Instant) vs. Ground coffee. Three market trends worth noting are firstly the anticipated growth of the out of home segment based on a recent study by Nestle (As reported in Bernama Press 2009), where Malaysians currently spend 35 per cent of their total food and beverage expenses out-of-home. Secondly, instant coffee market caters quite specifically to local tastes. This can be witnessed by the behaviour of Nestle , the market leader, who in 2009 (Chan 2009) also introduced a range of instant hot drinks targeted at local tastes to compete directly with other domestic brands who have specialised in domestic flavours such as White Coffee or Kopi-O. PEST ANALYSIS The PEST analysis examines the broad environment in which the organisation is operating. (Johnson Scholes, 1999) There are the four key areas in which to consider how current and future change can affect the business of Starbucks. Political factors Political factors include government regulations and legal issues and define both formal and informal rules under which the company must operate. (Knowles et al, 2001) As Starbucks is expanding internationally, trade restrictions, tariffs, tax policies and employment laws of related to their business countries have influence upon Starbucks. Economic factors The Starbucks business depends on economic factors in developing countries, where it buys the coffee beans. Coffee is the principle commercial crop. Social factors The social and cultural influences on business vary from country to country. Social factors include the demographic and cultural aspects of the external environment. These factors affect customers needs and the size of the potential market. (Johnson Scholes, 1999) Technological factors Technologies allow Starbucks to offer the higher standard quality products; its computerised roasters allow the company to create unique computerised curves in roasting coffee beans.