Starbucks – Then and Now

Starbucks was known as the “third place” between home and work with its comfortable atmosphere. The company was environmentally, socially, and economically responsible, as they donated several dollars and community service hours. They had several training programs to be sure they enhanced their employee loyalty. There were convenient loyalty cards, which helped boost the use of technology.

As for the cooperative environment, this led way to several opportunities for Starbucks.Coffee drinkers were actually increasing in the mid 1990’s. The company picked up an alliance with SYSCO Corporation, as well as several licensing agreements with: Pepsi-Cola Company, Kraft Foods, Inc. , Dreyer’s Grand Ice Cream, Inc. , and Jim Beam Brands, Inc. This helped Starbucks distribute its products; not only the in-store coffee experience, but the bottled products, packaged products, ice cream, and its premium liqueur products.

This helped with profit, and between 1997 and 2007, revenue continued to increase. But as time went on, a few factors caused Starbucks’ stock price to drop.The political environment is where problems began to occur. Since Starbucks kept expanding its stores, consumers lost recognition towards the company. Previously, if a store was being added in the area, consumers would become excited; however, Starbucks became over-saturated, and its customers lost the excitement of the new stores.

Competition also drove the decrease in stock prices, and it was not exactly because Starbucks was striving for the best coffee. Starbucks was already the largest supplier of coffee in the world; however, the company tried to be more like its competitors and vice versa.The success of Starbucks encouraged competitors to focus on coffee products and new restaurants. This is when McDonald’s began emphasizing on the quality of their coffee and when Panera opened cafe-style coffeehouses.

Starbucks also began competing with McDonald’s by adding hot sandwiches and bakery products, which essentially made it seem more like a fast-food restaurant. Starbucks also traded in its comfy chairs for plastic ones, which gave away the quality of the coffee-drinking experience. Lastly, drive-through windows were added which sped up service and forced consumers to view Starbucks coffee as more of a commodity.This also changed the view of their employees from knowledgeable coffee experts to regular order-takers. Starbucks also did not offer any discounts, sales, or special prices.

All of these factors in the competitive environment seemed to have switched the whole meaning of Starbucks. The target market for Starbucks is the out-of-home coffee consumers. These consumers are looking for a place with a comfortable atmosphere—a “third place” between home and work; however, this is beginning to be taken away by adding drive-throughs, etc.As for the company itself, net revenues and net earnings continue to increase year-to-year, as well as the number of stores in the United States and internationally; however, as mentioned before, stock prices were decreasing. As for the product, Starbucks’ product line offers more than 30 blends of coffee, as well as espresso, tea, and frappuccino.

Starbucks—Now: In 2011, Starbucks has a much hoped for turnaround and is beginning to increase its profits. Stores are now international, and underperforming stores in the United States were closed.Starbucks even introduced a $25 Gold Card, which offers customers ten percent off all items (Harrer, 2010). Starbucks still plans to grow business in the U. S.

, while implementing new store designs, increasing drive-through business, and several new products (Penney, 2010). Social factors affecting Starbucks is people going green and wanting to preserve the planet. Starbucks has a partnership with Conservation International to focus on their environmental protection, as well as one with Green Teams to focus on recycling. Another social trend is the concern of being healthy.Starbucks is looking to add healthier foods to their menu to accommodate those who are trying to be healthier. Technology is also having an impact on Starbucks.

More and more business is beginning to be done online. Products are being sold on the website, which draws several consumers to their site. Since more consumers are viewing the website, Starbucks could also take advantage of the search engine optimization strategy (Gib, 2011). Starbucks is known as a responsible company.

They are environmentally friendly, involved with the community, concerned about their onsumers’ wellness, and strive to create the best experience as possible while at Starbucks. This gives Starbucks a competitive advantage over other coffee suppliers. As in any business, competition exists for Starbucks. Dunkin Donuts, a supplier of coffee, continues to be a competitor of Starbucks, as well as McDonalds, since they have introduced their new product, the McCafe. McDonald’s has also begun trying to make their restaurants more comfortable by adding televisions and wifi, something that Starbucks once had a competitive advantage over.One company that is beginning to have an edge over coffee sellers is Green Mountain Coffee Roasters.

This company introduced a new single-brewing coffee product. Starbucks has plans to introduce this product soon, which will lose Green Mountain Coffee Roasters edge on the competition (Lepore, 2011). There is one controversy as of late that may slightly affect the company. After Starbucks changed its logo in the beginning of 2011, customer ratings proved to be negative.

This shows the strong connection that consumers had for the brand. Usually, the most loyal customers react negatively toward logo changes.Researchers show that loyal brand consumers pose a threat to the relationship of the brand when the logo is changed (ScienceDaily, 2011). This may be a slight problem for Starbucks’ loyal customers. Currently, Starbucks continues to be on top in the coffee business.

Profits are increasing and competition is calling for new products and innovations. The original consumer outlook still shines through Starbucks, as the company continues to provide the best experience for their customers. As of year-end 2010, Starbucks reached record fourth quarter and full-year results.Shares of stock have risen this year from Starbucks by two percent—up to $30. 40.

Even with the raised prices on large and labor intensive drinks due to an increase in the cost of coffee, Starbucks’ profit continues to rise. New products and brands are continuing to increase through Starbucks, such as their instant coffee and their middle-market, ‘Seattle’s Best’ brand (Baratti, 2010). Starbucks Then and Now—Compare and Contrast: Starbucks has changed in various ways since 2008; however, the company continues to remain the number one coffee business.A few aspects about the company stayed the same, but it seems that more things have changed than not. One thing that remains true with this company is its mission.

From a few years back to current, Starbucks still strives to make their customers feel comfortable and experience the best time while they are present. The stores continue to train employees to be loyal and coffee experts and remain environmentally, socially, and economically responsible. One major turnaround that Starbucks has made since 2008 is the financial problems they were having. In 2008, the company’s stock price decreased.

Currently, Starbucks is back up and running and is continuing to round up increasing profits and increases in stock. In 2008, oversaturation was to take the blame for the decreasing stock prices. Back in that time, they decided to close down some stores. Currently, Starbucks is also closing down underperforming stores, but has plans to build more stores in the United States and internationally. Starbucks has also raised its price since 2008 due to an increase in the cost of coffee and other commodities; however, this has not shown a negative impact on the company.The competition from 2008 until now pretty much remains the same.

Starbucks coffee is continuing to compete with McDonald’s coffee. Starbucks also continues to sell hot sandwiches, just as McDonald’s does. In 2008, the company was doing such things and began to get the feel of a fast-food restaurant. Seemingly enough, it does not seem that Starbucks has tried to stop this from happening. Just as before, Starbucks is continuing to add drive-through windows to some locations. Maybe the customer service and the experience of Starbucks will drive consumers’ opinions of the fast-food feel.

Just as Starbucks copied McDonald’s by selling hot sandwiches and bakery products in 2008, Starbucks also felt the need to stay up on competition by having plans to introduce Green Mountain’s single-brewing coffee cup. Also, in 2008, Starbucks offered a loyalty card but did not offer discounts or sales on any items; however, currently, the have the Gold Card for $25, which gives customers ten percent off all items. This, in turn, will help out Starbucks, since several of its competitors offer discounts and sales.One thing that has not changed is Starbucks response to competition. One obvious difference in Starbucks from 2008 to 2011 is the change in the logo.

This may negatively affect some consumers that have been brand loyal and developed relationships with the brand. All-in-all, Starbucks has remained the same company over the past few years, even though there has been changes made. It seems that most of the aspects of Starbucks have changed since 2008—all except the company’s mission and goals.