Starbucks MBO Analysis

Summary: For my Principles of Public Relations course at Indiana University, we were assigned to develop a MBO analysis. Students were compiled into teams and each assigned a client. My group was required to evaluate Starbucks by outlining a situation analysis, a SWOT analysis, and a MBO persuasion platform. We decided to focus on the client's problem of growing competition. After research, we created a strategy to combat this increasing threat. This project provided the opportunity be analytical and innovative with a huge brand. I was able to think critically and be creative in a media and public relations lens. Here is a compressed version of the project.

Below: Situation Analysis, Client Problem, Objective, & Creative Strategy Statement

Situation Analysis

History

Starbucks began in 1971 in Seattle, Washington as a single store in Pike Place Market. The name was originally inspired by the famous Moby Dick, correlating with the values of early coffee traders. It wasn’t until 1981, when Howard Schultz realized the true potential of Starbucks after trying a cup of coffee, joining the team a year later. Schultz was committed to sharing Starbucks with the world by commercializing it. After a visit to Italy, Schultz was inspired by the ambiance of Italian coffee bars. This fascination is what led to what Starbucks is today, a company focused on building a unique experience. Today, Starbucks works tirelessly to uphold their mission to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time.

Current Position

Today, Starbucks is one of the most recognizable brands in the world with over 10 billion dollars in revenue and 24,000 stores in 70 different countries. With endless promotional and marketing efforts, Starbucks has established a brand loyal community and a booming business. Starbucks has been growing throughout the years with an 11% increase in revenues in the past year. Since the single coffee shop in Seattle, the franchise has expanded their menu significantly, by incorporating food and other specialty drinks. Recently, they have been transferring business digitally. Today, Starbucks offers a mobile app that correlates with their rewards program with over 19 million monthly users. Customers are able to order their drinks online and pick up once they enter the store, making the experience easy and quick for busy lifestyles. Through its efforts, Starbucks is the third-largest fast food restaurant chain. In 2017, Starbucks opened its first tasting room in Seattle “The Roastery,” which can be compared to the experience of a winery. They are hoping this unique addition will help increase in-store traffic. This is something that has never been done before in the coffee market.

Client Problem

Increased competition

Starbucks is being threatened by the increased competition within the coffee market. Other big brand names are competing with Starbucks, attempting to minimize its market share. Starbucks offers a variety of products that have high costs, causing individuals to purchase their coffee at alternatives such as McDonald’s, Caribou, and Dunkin Donuts. Starbucks has also gained a “mainstream” reputation, causing people to move more towards local coffee houses for a more authentic experience. Local coffee houses are appealing to the local community and niche consumer segments, who are very devoted to these local businesses. In this target segmentation, Starbucks is displeasing in comparison. Although Starbucks has such a strong brand identity, other issues have arisen that have made alternatives more attractive to the consumer. Starbucks lost 1.1% of its’ market share from January to February. We are hoping to change this.

Objective

By September 2018, have in-store traffic increase by 3.5%, incorporating in-store happy hours and tasting rooms

Creative Strategy Statement

Starbucks has established a community of loyal customers who not only enjoy the coffee, but also uphold the same values as the brand. Although Starbucks has a variety of delicious drinks, they also promote unity, inspiration and social responsibility. These aspects contribute to the positive customer base and brand image. To encourage this idea of community, Starbucks aspires to grow in-store traffic and make the experience more interactive. By expanding the tasting rooms, we are hoping to have customers embrace the true Starbucks experience and embody the values of Starbucks while also having the opportunity to be social. With this new addition, customers will have incentive to stay in the store and take a break from their chaotic lifestyle. By adding the happy hour, customers will have the opportunity to taste samples of new products, without full commitment to purchase, while socializing with their fellow coffee lovers.

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