Analysis of Starbucks’ Product Life Cycle

Introduction

The first Phase, where the product is first introduced to the market by the company, and its first ever contact with consumers.

Starbucks has been and still is considered one of the best Coffee making brands in the beverages industry worldwide, the first even Starbucks was founded in Seattle, Washington, on March 31 in the 1970s, (1971). The first ever store was located at 2000 Western Avenue from 1971 to 1976 before the branch moved to a different location, settling in 1912 Pike Place, where it stayed and was never to be moved again.

Starbucks was founded by three people who met back while they were in college at the University of San Francisco, the three were English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker, they talked and were eventually interested to sell high quality coffee beans and equipment, after they were inspired by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans.

The three men then named their company after the chief mate character in the book “Moby-Dick”: Starbuck, although the first two names they considered at the beginning were "Cargo House" and "Pequod".

Gordon Bowker, the third founder recalled that Terry Heckler, a man that he owner an advertising agency with, thought words that begins with “St”, were powerful, Thus the founders started brainstorming a list of catchy words that started with St, one of the first two pulled out an old mining map of the Cascade Range and saw a mining town named "Starbo", which was immediately caught on by Bowker, making the word “Starbuck” the first to appear in his mind.

“Moby-Dick didn’t really have anything to do with the project directly; it was only coincidence that the name made sense and matched the café perfectly. ” said Bowker. During Starbuck’s early stage, the café only sold roasted whole coffee beans and was yet to start brewing its own, the only ever brewed coffee inside the café was that of mini samples to help promote their beans quality and café's image, later on they started Purchasing green coffee beans from Peet's, then began buying directly from growers, and kept doing so throughout the first year of operation.

Growth

This is the second stage, this is the growth stage where sales began to increase. One of the very first campaigns that boosted Starbucks sales was conducted in 2009 in America where Starbucks offered American customers a free pastry upon buying a drink before the clock striking 10:30 A. M, and the campaign succeeded, about one million people took advantage of that offer and pursued it. t.

Another One of the campaigns that boosted Starbucks popularity was in 2013, when a strong blizzard hit America, Starbucks took this as the perfect chance to advertise about one of the most basic products they had, which was Hot, Steamy, deliciously “brewed Coffee”, The campaign was specifically made on social media which made it spread like wild fire. Immediately after, the company’s main Facebook and Twitter account were booming with conversations about the storm, which was nicknamed “Nemo”. The campaign was very ordinary compared to the other advertisements, it was images of people dressed warmly in the cold weather holding hot cups of coffee, this campaign appeared as Facebook and Twitter ads, making them the most ads to appear when people search for hashtags such as #Nemo or #blizzard.

The image of people dressing warmly while drinking Starbuck’s hot delicious coffee in this incredibly strong, cold snow blizzard taunted the audience/ customers / consumers, and especially teenagers, to target Starbucks, even if the coffee promoted was just a regular coffee.

Maturity

The third stage where the sales hit the peak of its highest point. Starbucks has become a mature brand in the 1990s all the way to the day we are in now, Starbucks mainly depended on the word of mouth to spread its words more than advertisements. In 2015 the Starbucks gained profit jumped 22% over the ordinary due to an increase in customer traffic which was equal to 23 million new transactions.

The revenue for the quarter jumped 17. 5 percent, boosting profit to $4. 9 billion, up from $4. 2 billion in the same period a year ago, but it doesn’t stop there, it grows even more to $626. 7 million, or 41 cents a share, a 22 percent increase from $512. 6 million, or 34 cents a share, last year.

Decline

The fourth stage is the decline stage where a certain company’s product starts to turn down and reach its diffusion point. Starbucks reported its first ever decline in 2008, which was caused by a financial meltdown due to increased shares, which made it very cautious about opening new stores and eventually ended up shutting down many of its branches and losing up to 28% of its profit.

In addition to market shares, consumers started ventured for cheaper drink because While Starbucks quality is unquestionable, its price has always been higher than those offered by the normal/ competitive coffee houses in various countries, which caused Starbucks to shut down 600 branches that were not making profit. But Starbucks then started to recover when Howard D. Schultz returned as CEO of Starbucks after a gap of eight years, shifting its focus away from bureaucracy and back to customers.