Can Starbucks Sustain its High Prices in China?
Case Code: ECON063
Case Length: 13 Pages
Period: 2010- 2017
Pub Date: 2017
Teaching Note: Available
Organization : Starbucks
Industry : Beverages, Retail
Countries : India
Themes: Manegeraial Economics, Competition, Market Structure, Pricing, Consumer Behavior
Abstract Case Intro 1 Case Intro 2 Excerpts
Headquartered in Seattle, Washington, Starbucks was founded by Jerry Baldwin (Baldwin), Zev Siegl (Siegl), and Gordon Bowker (Bowker) in 1971 with the objective of selling coffee beans and coffee making equipment. When Howard Schultz (Schultz) joined Starbucks as director of retail operations and marketing in 1982, he suggested that the company sell drinks rather than just beans and machines. As he failed to convince his employers, he left the company and started his own coffee bar, 11 Giornale, in Seattle in 1986. In 1987, Schultz purchased Starbucks with the help of local investors and became its CEO. Subsequently, Starbucks became one of the fastest growing coffee chains in the US. From selling brew coffee and espresso beverages in its first store in the US, Schultz expanded the company rapidly during the 1980s and 1990s and opened stores outside of North America. With its mission "to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time," Starbucks soon became the largest coffee chain in the world In the new millennium, the Starbucks stores served hot and cold beverages, whole-bean coffee, microground instant coffee, full-leaf teas, pastries, snacks, packaged food items, hot and cold sandwiches, and items such as mugs and tumblers. More than the offerings, the company focused on selling a ‘third place’ experience, and the stores became places for relaxing, chatting with friends, reading the newspaper, holding business meetings, or browsing the Web. The 'experience' brought spectacular success for the store. Starbucks was considered an iconic brand and most of its customers were passionate about it. Of those who visited Starbucks, 8% were repeat customers...
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