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Discussion Questions for Starbucks Case
The discussion questions below will be the focus of the in-class case discussion. Try to answer them with as much detail as you can. Write down your answers and bring them to the class for discussion.
Starbucks operates in the retail coffee market. In the home, it has 4% share specialty coffee. In the food service channel, it has 5% share. In the grocery stores, it has 7.3% in the ground coffee and 21.7% in the whole beans category.

1. What is Starbucks’ winning formula in its earlier days? Specifically, recall the four components that define a marketing strategy (discussed in week 1 lecture): what characterizes Starbucks’ products and their customers (i.e., the product-market component)?
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Describe the main challenge that Starbucks faces in the case. What has changed from its earlier halcyon days? Think in terms of both internal and external factors (e.g., is the problem due to a change in consumer composition, or more intense competition, or changes in broad social/economic environment? Or is the source of problem internal company performance (for example, deterioration in product/service quality, or change in brand association)? It is important to separate the underlying causes and mere symptoms when approaching this question.
Internal: lacked a strategic marketing group, market- and customer- related trends could sometimes be overlooked, they good at measuring things, at collecting market data but we are not very disciplined when it comes to using this data to drive decision making (little image or product differentiation between Starbucks and the smaller coffee chains, significant differentiation between Starbucks and the independent specialty coffeehouses)
Customer positioning: starbucks just cares about making money and growing stores.
External: compete against small-scale specialty coffee chains which were regionally concentrated, and independent specialty coffee shops offer wide range of foods and beverages.
Changing customer to younger, less educated, lower income bracket