Starbucks tried to position themselves as a premium product in the coffee industry bycreating a high standard, introducing innovative products and providing excellent service.Schultz knew how perishable coffee was and they were so fanatical about quality control,and hence they carefully monitored each and every step of coffee production. They boughtdark-roast, whole bean coffee from places like Sumatra, Kenya, Ethiopia and Costa Rica;roasted them in their own plants; and sold only through company-owned stores (refer casestudy). They used total quality management (TQM) in which all company’s people areconstantly involved in improving the quality of products (Kanji, 1996). Usage of nonfat milk and introduction of Frappuccino made a significant presence in the balance sheet of Starbucks. Moreover, they provided seasonal offerings, such as strawberry and creamFrappuccino in the summer and gingerbread latte in Christmas, were introduced. Graduallyfood items such as cookies, pastries, sandwiches and salads made their way into the stores(ibid.). Later they went on to develop new products with other companies. This shows howcautious Starbucks was to keep their standard high and maintain their premium qualityimage.
3.2 . Price
The amount of money a buyer must give to the seller for a specific quantity of the product is the price of that product and usually consumers use this as an indicator of quality(Dalrymple & Parsons, 1986). Price and quality determines the value of the product. Whenlaunched, Starbucks was expensive and was positioned in accordance with that. They alwaystried to deliver the high value promised to the consumers. They bought the quality beans,gave effective and efficient training to staffs, and moreover, made an atmosphere to enjoycoffee, meet fellow people and ‘take a break’ from the busy life. These all justify their pricing and show how price supported their positioning.
3.3. Distribution & Service
Distribution channels links the organisation’s product or service to its consumers; andin a producer-consumer (direct supply) channel, as in the case of Starbucks, maintaining a personnel relationship with the customers is significant (Brassington & Pettitt, 2000).However, from a distribution point of view Starbucks got an advantage by sticking on to itswinning store location formula for its new stores (refer case study). They always selectedhighly visible locations and opened stores as clusters. As demand grew, these store clustersmade them able to manage the increased traffic and to keep their competitive position. In thesame way, they took care about the services provided in the stores. Howard Schultz aimed tounlock the romance and mystery of coffee in coffee bars, and he knew how important therole of baristas in achieving that. Baristas ability to engage the customers was the heart of Starbucks experience. Starbucks invested heavily in training their staffs and did innovativetactics to manage their human capital. Thus they differentiated themselves in the market byconstantly providing higher quality services.
3.4. Promotion
Starbucks tried to position themselves as a premium product in the coffee industry bycreating a high standard, introducing innovative products and providing excellent service.Schultz knew how perishable coffee was and they were so fanatical about quality control,and hence they carefully monitored each and every step of coffee production. They boughtdark-roast, whole bean coffee from places like Sumatra, Kenya, Ethiopia and Costa Rica;roasted them in their own plants; and sold only through company-owned stores (refer casestudy). They used total quality management (TQM) in which all company’s people areconstantly involved in improving the quality of products (Kanji, 1996). Usage of nonfat milk and introduction of Frappuccino made a significant presence in the balance sheet of Starbucks. Moreover, they provided seasonal offerings, such as strawberry and creamFrappuccino in the summer and gingerbread latte in Christmas, were introduced. Graduallyfood items such as cookies, pastries, sandwiches and salads made their way into the stores(ibid.). Later they went on to develop new products with other companies. This shows howcautious Starbucks was to keep their standard high and maintain their premium qualityimage.3.2 . PriceThe amount of money a buyer must give to the seller for a specific quantity of the product is the price of that product and usually consumers use this as an indicator of quality(Dalrymple & Parsons, 1986). Price and quality determines the value of the product. Whenlaunched, Starbucks was expensive and was positioned in accordance with that. They alwaystried to deliver the high value promised to the consumers. They bought the quality beans,gave effective and efficient training to staffs, and moreover, made an atmosphere to enjoycoffee, meet fellow people and ‘take a break’ from the busy life. These all justify their pricing and show how price supported their positioning.3.3. Distribution & ServiceDistribution channels links the organisation’s product or service to its consumers; andin a producer-consumer (direct supply) channel, as in the case of Starbucks, maintaining a personnel relationship with the customers is significant (Brassington & Pettitt, 2000).However, from a distribution point of view Starbucks got an advantage by sticking on to itswinning store location formula for its new stores (refer case study). They always selectedhighly visible locations and opened stores as clusters. As demand grew, these store clustersmade them able to manage the increased traffic and to keep their competitive position. In thesame way, they took care about the services provided in the stores. Howard Schultz aimed tounlock the romance and mystery of coffee in coffee bars, and he knew how important therole of baristas in achieving that. Baristas ability to engage the customers was the heart of Starbucks experience. Starbucks invested heavily in training their staffs and did innovativetactics to manage their human capital. Thus they differentiated themselves in the market byconstantly providing higher quality services.3.4. Promotion
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