Starbucks and the United Parcel Service

Strengths

The number and location of stores is a tremendous strength, and the same-stores strategy has worked effectively for years as a means of expanding market share ("Growth strategy," 2002).

Starbucks offers a wide variety of products which are sold in its coffee shops, in grocery stores, in other retail outlets, and through its Website ("Schultz return," 2008).

Loyal customers visit Starbucks stores an average of 18 times per month, illustrating the strong loyalty and affinity experienced by the brand ("Schultz return," 2008).

Starbucks introduced The Third Place to its public -- a place for gathering that is not work and is not home, yet plays a prominent place in customers' lives, or especially in their work lives (Mitchelli, 2010).

The fiscal crisis in 2009 resulted in reduced in-store sales so a less expensive Starbucks coffee product was needed. The home-brewed, thermos toting practices of the newly frugal were eroding market share. Starbucks introduced Via® on February 17, 2009, instant coffee in tubes which has been described as indistinguishable from the drip brew in the Starbucks' stores. In an exceptional stroke of distributive genius, the instant coffee is also sold in retail operations like Office Depot and REI, a Seattle-based recreational equipment outlet. Via® was being sold on supermarket shelves, right along with bags of Starbucks beans ("Schultz return," 2008).

Starbucks makes excellent use of market research and has a number of social media connections with its customers. This emphasis on deep-listening should help the company implement its plans to "shift its emphasis back on customer-facing initiatives" ("Schultz return," 2008).

Starbucks is a strong and active innovator. It introduced a music store to the coffee shops and to the Website. The company made use of technology in its stores, as a means for ordering drinks, and was one of the first businesses to invite local, local customers into stores through check-in applications like Four-Square.

The company has been a leader in the provision of benefits to its employees and in participation in philanthropic contributions and activities.

Starbucks has a strong commitment to ensuring its transactions in global coffee markets are ethical, and actively participates and promotes the growth and distribution of Fair Trade coffee beans.

Weaknesses

The public tends to fall on either side of the fence, really liking the brand or really disliking the brand. Starbucks tends to underestimate the number of people who would just as soon see the company fail (Mitchelli, 2010).

Market saturation, though Starbucks management denies this is a dynamic, Schwartz corrected for it in 2009 when he returned to the company as CEO. Schwartz argued that Starbucks had "invested ahead of the growth curve" ("Schultz return," 2008).

The company has had to jettison several hundred stores in order to help "bring its back-end costs in line with the business model" ("Schultz return," 2008).

Opportunities

Starbucks Global Consumer Products business unit offers substantive opportunities to increase market share, particularly in international stores. Growth in Europe has occurred at a slower pace than in the U.S. There has been less market saturation and cannibalization of stores ("Growth strategy," 2002).

Starbucks has become expert at engaging customers and developing digital voice-of-the-customer channels. As a result, Starbucks innovations emerge in a fully conditioned environment, and nearly always, flourish. If Starbucks is able to sustain this type of relationship with its consumers, additions to the product mix are likely to be well received ("Schultz return," 2008).

Starbucks is moving more assertively into the single-cup / single-serving coffee market -- a U.S.$21 billion international industry and -- at U.S.$2 million -- the fastest growing U.S. coffee category. Partnering with Green Mountain Coffee Roasters, Starbucks is introducing K-Cups of both coffee and tea which are designed to work with the Keurig style single-cup brewing systems. K-Cups distribution will include supermarkets, membership / club outlets, drug stores, specialty food and beverage stores, and even department stores (Coffee is hot," 2011).

The Keurig patent is scheduled to expire in the near future, which will open the door to a Starbucks manufactured single-cup brewing machine. The single-cup coffee is a big market in Europe, but estimates are that only about 20% of Starbucks customers in the U.S. own single-serving brewing machines (Coffee is hot," 2011).