From Bean To Cup Starbucks Channel Strategy: Jennifer Brinkman Donnych Diaz Rian Miller Yelena Tupitsyna Greg Welch

From Bean to Cup
Starbucks Channel Strategy
Jennifer
Jennifer Brinkman
Brinkman
Donnych
Donnych Diaz
Diaz
Rian
Rian Miller
Miller
Yelena
Yelena Tupitsyna
Tupitsyna
Greg
Greg Welch
Welch
Bean
•Bean
Arabica Beans
• C.A.F.E. certified growers
http://www.starbucks.com/whatmakescoffeegood/good_coffee.html
Roasting
• Roasts beans in 3 domestic
roasting plants and 1 in
Amsterdam
Tasters
• Starbucks’ professional coffee tasters may
taste up to 800 cups of coffee a day.
Distribution
• Packaged Coffee is then stored in Distribution Centers

• Then picked up by Partners filling store orders
Stores
• Starbucks Partner or Barista is the company’s contact with

the customer
• The process ends at the store where customers enjoy
freshly prepared coffee drinks
Intermediate Functions
INTERMEDIARIES
• Starbucks depends upon both outside brokers and its direct
contact with exporters for the supply of green coffee
• Channel Members are part of a “Dependent channel
arrangement”
• Starbucks operates its own distribution system
• Coffee is traded on a negotiated basis, usually quite a bit
higher in price
• Reduce risk of unpredictability of coffee price and supply,
Starbucks enters into long-term fixed price contracts with its
suppliers
Intermediate Functions
INTERMEDIARIES
• Starbucks sells a wide variety of whole and ground bean
coffees in grocery and warehouse club stores as well as
Frappucinos and coffee-flavored ice creams
• Other channel of delivering coffee is through direct
distribution, the selling and distributing product to account
members in airports, hotels, schools, restaurants and
hospitals
Channel Strategy Factors
Customer/Market Served
Focus Market Region: United States
• In the United States, some 78% of consumers drink coffee7
• Of that percentage, females are more likely to be the consumers rather
than males
• The higher frequency of consumption tends to be older people
Focus Market Region: China

• Coffee consumption in China is highly concentrated in large cities
• Coffee appeals to adventurous, open-minded, young, affluent, urban
consumers
• Many of these returnees have lived in Western countries for a decade and
they have become accustomed to the coffee culture
Product Service Characteristics

• Starbucks’ whole business is driven by their strong brand
image
• They strive to have a knowledgeable staff and unique,
recognizable packaging
• Starbucks also has the image of being known for $5 cups of
coffee but you’re also getting some image for your $5, too
• Starbucks also uses an intensive distribution strategy to make
their logo and coffee ubiquitous around the world
Product Life Cycle

• Most items Starbucks sells are consumables, representing
their core business (77%) Coffees, teas, Frappacino’s, etc.
• They also distribute at-home coffee in-store as well as
through convenience and grocery stores
• Starbucks strives to keep its coffee drinks fresh by changing
menu
• Many drinks are cash cows, while others are seasonal with
limited life
Competition
• Biggest threat MacDonalds threat to market share
• Dunkin Donuts
• Competes with both direct channel and retailer channel
through website, their stores and grocery stores
• Multiple distribution gives competitive advantage over
smaller coffee chains and at-home coffee companies
Environmental Factors
• Eliminates competition via Cluster bombing tactics, buyouts
and cannibalization
• Open several stores next to competition
• Aggressive advances increased revenue by 24% in one year
alone
Human Resource Considerations

• Employees offered stock
• Health Benefit (including part time)
• 1 LB free coffee per week
• Special/Continuous Training
• Turnover Rate
• 50% Starbucks vs 400% Coffee Industry
• 401k
Distribution Strategy
• Starbucks’ level of distribution is intensive via

retail stores
• Starbucks has Direct Retail System through
operation of its own Retail outlets
 Accomplishes direct marketing of product while
maintaining marketing strategy and mission
statement
 Maintains high level of customer service via product
offerings and vast number of locations
• S.B. has control/power over channels of distribution

• S.B. imports high quality coffee beans
• S.B. developed socially responsible coffee buying
guidelines called C.A.F.E.
• Exclusive contracts from growers usually 5 years out
 High level of cooperation amongst growers/suppliers
leads to rapid inventory replenishment
 Reduces total costs of marketing channel and improves
customer service
 Roasts beans in its roasting plants
 Stores beans in warehouse for distribution to retail
outlets.
• S.B. has Corporate Dependent Channel Arrangement

• Operates its own distribution system in a manor that
produces an integrated channel
• S.B. imports and processes coffee then sells it under
their own brand name in their own stores
• Has other ways to distribute products via groceries
stores and mail order using a multi-channel structure to
market products
• Channel relationships are increasingly important in
creating market value; maintain brand image and a
sustainable competitive advantage
Channel Strategy Assessment
• Are the distribution decisions in order to facilitate an effective

and efficient distribution system accomplishing this and are
the results in line with the marketing strategy?
 At the direct retail system level yes, the current channel
strategy and decisions are facilitating the marketing at the
retail level delivering a high quality product to the
customers.
 S.B. also accomplishes integration of marketing and
distribution via mail order as well as grocery stores.
 Other partner relationship dependent on a multi-channel
strategy have been successful i.e. PepsiCo – Frappucino
product.
• Is marketing strategy supported by the channel strategy?

 The marketing strategy of offering a differentiated
product is supported by the purchase of high quality
coffee along with high quality controls/standards
applied to growers/suppliers.
 Expansion of retail outlets promotes further
marketing and brand image
 S.B. has seen extensive growth in the international
markets. Developing retail units as well as licensed
units abroad. This again strengthens the company’s
position as a global purveyor of quality coffee drinks.
RECOMMENDATIONS
• Specialty Coffee Segment
 Expand and re-strategize how it markets and brands
specialty coffees.
• Expand Multi-channel Relationships
 Expand and develop new domestic channels focus on Specialty soft
drinks, energy drinks, and ready-to-drink products
 Nutritional and Health drink segment. Acquire company whose
product lines offer nutritional/health drinks and ascribe to
principles of sustainability and environmental stewardships re-
enforcing the company’s mission statement, brand image and
positioning.
THANK YOU!

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From Bean to Cup

Starbucks Channel Strategy

• Packaged Coffee is then stored in Distribution Centers

• Starbucks Partner or Barista is the company’s contact with

Focus Market Region: China

Product Service Characteristics

Product Life Cycle

Human Resource Considerations

• Starbucks’ level of distribution is intensive via

• S.B. has control/power over channels of distribution

• S.B. has Corporate Dependent Channel Arrangement

• Are the distribution decisions in order to facilitate an effective

• Is marketing strategy supported by the channel strategy?

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