Starbucks... a Value Chain Analysis

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Starbucks... A model like no other Starbucks is the leading retailer of specialty coffee beverages and beans and related food and merchandise. Starbucks’ mission is to provide people with the opportunity to savor a good cup of coffee while engaging good conversation in a relaxed atmosphere. Starbuck’s retail strategy, which is designed primarily to maintain loyalty and repeat business among its target market (upscale coffee drinkers), encompasses hiring and training knowledgeable counter servers, called baristas (Italian for bartenders), to educate customers about Starbucks’ specialty coffee drinks and associated products, and to provide customers with an opportunity to take a break from their busy lives in a relaxing atmosphere. The company has also entered some creative partnerships to put its cafes in Nordstrom and Barnes & Noble stores and serve its coffee on United Airlines. Licensing the brand name for other food products such as ice cream and soft drinks also increases its brand awareness. Starbucks, like every retailer, supports its strategy with its retail mix. With regard to location, individual sites are selected in the most highly visible places possible, and centralized cities serve as hubs or regional centers (clustering) for rollout expansion into nearby markets. Besides its stand-alone stores, Starbucks has set up cafes and carts in hospitals, banks, office buildings, supermarkets and shopping centers. Other distribution agreements have included office coffee suppliers, hotels, and airlines. Office coffee is a large segment of the coffee market. Associated Services (an office coffee supplier) provides Starbucks coffee exclusively to thousands of businesses round the United States. Starbucks has deals with airlines, such as an agreement with United Airlines to provide Starbucks coffee to United’s nearly 75 million passengers a year.

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