Starbucks Case Study

Starbucks in 2004: Driving for Global Dominance Strategic Management STRA 703 Assignment Prepared by: Sherif Hendi (M1100758) Presented to: Dr. Gamal Shehata Questions Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? (What is the store concept, the customer offerings and differentiators? The expansion strategy? The financial strategy? The personnel management and social responsibilities? Conduct a five forces analysis? ) Q. No. 02 What was the original strategic vision and objectives and how did they evolve? What is your opinion of Starbucks’ mission statement? What grade would you give Howard Schultz for his job as the CEO Starbucks and why? Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Q. No. 04 What were the key issues faced by Starbucks in 2004? Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? ANS: Key Elements of Starbucks’ Strategy Starbucks adopted a lot of innovative strategies throughout its journey from 1971 to 2004. These strategies in brief are as follows:- * The restaurant/store concept * The offering of Innovative product line * Differentiation from competition * National and international expansion * Distribution channels (Pepsi partnership/online store/Dreyer partnership) * Efficient Financial management (Centralized Information Systems) * Capitalizing on enhancing the people element * Engaging in social responsibility programs (CARE). Competitive Advantages or Differentiators Their differentiating elements are as follows:- They were the pioneers to introduce espresso bar idea in USA * Mail order sales * Word of mouth marketing * Employee motivation strategies to attain improved employee commitment * Convenient distribution channels * Introducing chemical free cultivation process. Q. No. 02 What grade would you give Howard Schultz for the job he has done as CEO of Starbucks? Be prepared to support you r answer based on how well (or not so well) he has performed the five tasks of strategic management discussed in Chapter 2. ANS: Howard Shultz gets a grade of 95% in his Strategic Management approach. In my opinion Howard Shultz just didn’t do perfect in the area of marketing as he did not spend adequate budgets on advertising and product innovation. Last but not the least is that he did not attempt to study the environment properly while entering into new geographical areas e. g. he opened a store down street in Chicago which was not a good idea due to cold weather conditions. Other than that, he made a great task of performing all the five tasks of Strategic Management Q. No. 3 What was Howard Schultz’s original strategic vision for Starbucks? Is his present strategic vision for Starbucks different from the one he had in the 1980s? How many times has his strategic vision changed? Is his present strategic vision likely to undergo further evolution? ANS: Howard Shultz original Strategic Vision â€Å"To establish Starbucks as the most recognized and respected brand in the world. † Strategic Objectives * They wanted to have 15,000 stores by the year-end 2005. * They aimed to provide a great work environment and treat each other with respect and dignity. * They believed in taking on diversity as an essential component in the way they do business. * To apply the highest standards of excellence to the purchasing, roasting and fresh delivery of coffee. To develop loyal and satisfied customers all of the time. * To contribute positively to their communities and environment, and recognize that profitability is essential to future success of business. How did they evolve? At the earlier stages they promised themselves that they will not leave even a single stone unturned to make Starbucks the most recognized and re spected brand in the world. Therefore, they thought that this could only be possible if they will develop these strategic objectives because these are basis to earn the respect and fame for any business. Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Growth Rate| Years| 1998| 1999| 2000| 2001| 2002| 2003| Growth rate| 0| 0. 2889| 0. 29095| 0. 2164| 0. 2415| 0. 2391| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profitability| Years| 1998| 1999| 2000| 2001| 2002| 2003| Operating profit margin | 8. 34| 9. 29| 9. 4| 10. 57| 9. 6183| 10. 42| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ROE| Years| 1998| 1999| 2000| 2001| 2002| 2003| Return on equity| 8. 6| 1. 58| 8. 23| 13. 1| 18. 35| 12| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Price Per Earning Share| Years| 1998| 1999| 2000| 2001| 2002| 2003| Price Per Earning Share| 0. 19| 0. 27| 0. 24| 0. 46| 0. 54| 0. 67| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Control of Major Cost Categories In this portion we have analyzed that how Starbucks controlled its fixed cost. If we talk about the locations, it was very expensive to purchase land and then develop it as a store, so to overcome this problem Starbucks started leasing the land for long term periods. In our opinion, it was a quit impressive move to cut down its fixed cost. Secondly they observed that to get the license was too costly for them, so they made contracts with the partners who had license with them. Financing For the financing, Starbucks instead of taking loans preferred raising the equity. It was a better idea to generate capital because they did not have to pay any short term and long term interests against the borrowings. Q. No. 04 What were the key issues faced by Starbucks in 2004? Every company faces major challenges, even companies that are as successful as Starbucks. Although they have an outstanding reputation, have won many awards like top sustainable retail store award and most ethical company award etc, and even give back to their community, they are still facing challenges like any other company. Following are the most obvious challenges that Starbucks is dealing with:- * Schultz was overflowing with the ideas for the company, early on he noticed that first-time customers sometimes felt uneasy in the stores because of their lack of knowledge about fine coffees and because store employees sometimes came across as a little arrogant or superior to coffee beginner. Howard Schultz when came back from Italy shared his ideas for modifying the format of Starbucks’ store with Baldwin and Gordon Bowker. But instead of winning approval for trying out some of his ideas, Schultz encountered strong resistance but after a year Schultz succeeded in winning the approval from Baldwin and Bowker. * After sometime Baldwin and Bowker again went against th e ideas of Schultz so he became so frustrated and left Starbucks in late 1985 to open his own separate Espresso Bars in high-traffic down town locations. Schultz acquired Starbucks in 1987 and after the 20 months of acquiring, some employees felt unappreciated that there was a feeling of prior management had abandoned them. So, Schultz decided to make building a new relationship of mutual respect between employees and management. * Starbucks lost its money when it expanded market to Chicago because in Chicago that was the first downtown store opened on to the street rather than into the lobby of the building where it was located; in the winter months, customers were hesitant to go out in the wind and cold to acquire a cup of coffee. It was expensive to supply fresh coffee to the Chicago stores from Seattle warehouse. * The challenge to Starbucks, in Schultz view, was how to attract, motivate, and reward store employees in a manner that would make Starbucks a company that people would want to work for and that would generate enthusiastic commitment and higher level of customer service. * A values and principles â€Å"crisis† arose at Starbucks in 1989 when customers starting requesting nonfat milk in making Cappuccinos and lattes (an espresso coffee with frothy steamed milk) So, Starbucks started selling both fat milk and nonfat milk Cappuccinos and lattes. They were facing the issue of Wi-Fi (wireless internet service) in 2002, the number of accesses was in the millions by T-Mobile; internal research showed that the average connection last approximately 45 minutes So, in October 2003, Starbucks announced that they will expand Wi-Fi capability to additional locations and would have 2700 stores equipped wit h wireless Internet access by year end. * They were also facing challenges from their competitors. In 2003 there were an estimated 14000 specialty coffee outlets in the United States but they were not competent enough to exert pressure at Starbucks. Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Recommendations After analyzing the whole case study, we became able to give few suggestions to Howard Schultz which can be handy to sustain the growth and support strong financial performance in the forthcoming years:- * He should spend more budgets on advertisement of products. He should bring innovations in his products because we saw in this case study that he was inspired by espresso bars so he imitated the whole theme of Italian espresso bars and the idea of dark roasted bean was an older one as well. * Before entering to any new geographical region he should study the market environment of that particular region as we saw that at Chicago there was an issue of cold weather and his store was at down-town-street. Furthermore, the labor rates and rents of building were higher as well. * At the stores Starbucks’ technique to teach customers about how to make coffee was not a good idea ecause it does not support their business model. Therefore, it should be avoided in future. Above elaborated things were having details about the strategies of Starbucks which drove it for the Global dominance till 2004. Starbucks is in fact the recognized and respected brand in the world and if it can overcome the shortcomings which we identified then nobody can create bother for it to be successful and there will be no point left as a mistake on its part. Reference www. starbucks. com Case Study â€Å"Starbucks in 2004: Driving for Global Dominance† written by Arthur A. Thompson, Amit J. Shah and Thomas F. Hawk. Starbucks Case Study Conner A Intro to Business 3/26/2013 Case Study Consumer Behavior in the Coffee Industry Did you know one franchise alone dominated an entire payment-processing market in just one year? You might have heard of this giant company by the name Starbucks. Howard Schultz, CEO of Starbucks, had a significant role in the company’s growth. Starbucks has steadily dominated the coffee market and has even extended to being a 3rd home for many of its consumers. Based in Seattle, Starbucks had significant competition when it opened its first store in the Pike Place market in Seattle, yet still managed to become superior.Starbucks used new advertising tactics and presented a unique experience for its customers, all of which was a game changer in the business world. Starbucks was created when three friends opened a small store to sell coffee beans and roast in 1971[1]. Jerry Baldwin, Gordon Bowler and Zev Siegl opened their store in the heart of the unique open air market in downtown Seattle . Located just off the harbor, Pike place market was the optimal location and attracted many residents and tourists.After ten years of incredible growth, Jerry Baldwin hired Howard Schultz as head of management. When Schultz first started, he slowly learned the coffee industry and helped made subtle but significant changes. For example, Schultz noticed that â€Å"first-time customers sometimes felt uneasy in the stores†[2] so he developed â€Å"customer-friendly sales skills and produced brochures that made it easy for customers to learn about fine coffees†2 Schultz had the vision of making Starbucks a coffee lounge versus a bar after being inspired by eastern traditions.Even though he did not agree with the new direction, Baldwin allowed Schultz to open one espresso bar and in 2 years, Schultz was able to buy out Baldwin and equity owners with the help of investors in 19921. Howard Schultz initially saw the power of consumer behavior early on when he realized Starbuck s began to be a social gathering mecca for people instead of just an espresso stand. When Schultz first noticed the ‘seismic change in consumer behavior,’ he adopted a free-Wi-Fi service and mobile payment service and noticed that Starbucks began to attract people as if it was a third home for coffee enthusiasts.Although he jokes about not getting rent from consumers, it allowed Starbucks to create an online-experience in their ‘3rd home’ which was unique to the coffee scene in the United States. With scheduled deliveries and privatized ad networking, Starbucks was maximizing its profits and allowing an experience for coffee enthusiasts that did not make them feel locked-into paying. This shift in consumer behavior was in response to the cultural need for a place between home and work. As social beings, humans thrive for an excuse to hang out and socialize or participate in a community environment.This amazing experience that Starbucks supplied needed to be fine-tuned like any business plan. Like any business, Starbucks had challenges, such as their management of spending. In an interview entitled Business Brilliant, Schultz said that too much was focused on the customer instead of the infrastructure. To improve this, Schultz developed a unique experience in the store with the paired pastry-drinks and released free Wi-Fi for customers. In addition to free-Wi-Fi, mobile payments allowed consumers to avoid lines and continue their private work in the confines of the lounge.Soon Starbucks was thriving and announced that â€Å"the opening of 150 new stores in five years significantly exceeded the 1987 business plan’s objective of 125†[3]. Like every company, Starbucks faced unique issues in their business which slowed down growth initially which in effect slowed down growth in the long run. Schultz attributed the biggest hold-back in the long run to not investing in the supply chain, technology or manufacturing. Although Sta rbucks was marketing their franchise extremely well, they did not invest ahead of the growth curve and the infrastructures became under-par.In the Business Brilliant, Schultz candidly admitted that Starbucks â€Å"solely accelerated growth of the company. † Moreover, Schultz said the issue was that Starbucks â€Å"needed competency well beyond the size of the company and needed the kind of capability they didn’t have. † Since their infrastructure’s efficiency in the short run was hindered by technological limitations coupled with access to capital, the entire store chains needed to be shut down. Schultz defined the event as a need to redesign their image and retrain their employees.Starbucks was losing grip on the customers and their loyalty because the experience of Starbucks was losing its unique features. All of these internal and external issues that Starbucks was facing were all connected with values and company image according to Schultz. Schultz wa s so specific with the Starbucks experience that when he smelt burning cheese in a store he decided to ask the workers and they told him â€Å"So what, profits are up! † Soon after this, Schultz decided to close down and retrain all stores and employees. He sent out a press release admitting that Starbucks was misrepresenting itself.Although no one had accused or criticized Starbuck’s prior to his declaration, it was a bold move which negatively impacted the financial strength of the Company. However, the action proved loyal to the consumer and enhanced brand loyalty for Starbuck-addicts. This root issue of misrepresentation in the Starbuck’s experience and the company vision was so significant to Schultz that he needed rework his company from the ground up. This road block of ‘conserving the core businesses’ and ‘pushing for relevant innovation’ made Schultz tweak and adjust the Starbucks experience constantly but effectively.While Sch ultz attributes the root issue for Starbucks to be company image and adapting core values, could it be possible that the vision and image were not correctly portrayed because of unwise funding? Schultz does admit the funding issues contributed to the core issue of misrepresentation of company image and values, but he does not see the two issues in separate environments. Schultz assigns the core issue to misrepresentation and the surface symptoms to be funding. However, more funding or a different funding plan with more focus in infrastructure would have changed the outcome.The core issue was funding and the symptoms of the core issues were misrepresentation because of resource allocation. While their short term fixed costs of infrastructure and labor were solved, their reserved and recurring allocation towards the upgrades of their infrastructure lacked significantly. If properly funded before and seen ahead of the curve, their growth could have been anticipated. This is evident thr ough the need to shut down and retrain employees. It’s clear that the total fixed and variable costs exceeded their revenue initially.Like all companies, there was a start-up curve but when the curve was dealt with, resource allocation was not the focus. The best plan of action ideally would start with addressing resource allocation. Starbucks was able to stay in business and have great growth so it’s clear the management was able to properly allocate their average variable costs and fixed costs for the most part. Nevertheless, it would have been best if the costs were optimized and revenue was set aside for changes in infrastructure. Funding should have been directed at things which would have produced stability in the long run.This would have lowered their total costs and properly funded their infrastructures for the long run and short run. Schultz should have looked at the management immediately after buying out the company and properly hired people with skills that would be able to guide Starbucks through significant growth. Investment in infrastructure to avoid long-term costs would have saved Starbucks from funding issues at later times. In addition to optimizing their infrastructure for the long run, Starbucks needed to invest more in manufacturing and supply chain for the success in the long run.For example, Starbucks should have initially allocated more funding towards small upgrades in their infrastructure such as ovens versus microwaves to avoid unpleasant scents in the customer’s experience. This also connects to Schultz’s emphasis on hiring employees and affiliates based on similar values. If the decision to hire those employees would have initially been more focused on similar values in addition to management skills, the variable costs to upgrade the infrastructure in the long run would have been lower because the management would have been more motivated to deal with the issue before the CEO had to see the symptoms.Fi nally, the management of Starbucks needed to choose their employee’s more wisely from the start. If Schultz would have chosen his employee’s based on the similarity of their values and the company vision, little issues such as smell in the customer’s experience would have been dealt with more efficiently. This connects to optimizing their infrastructure but focuses on the employees instead of the technology. It’s important to treat both with separate solutions because Schultz reminded us that the employees can only work with the assets they are provided with.This small change in the focus of the start-up of the company could benefit the image of Starbucks very efficiently and in a cost-productive way. Schultz jokes about not getting rent from Starbucks admirers yet he also notes that the potential to plug into the social media of the internet and create the environment was more beneficial than the issue of customers hanging out inside the store. The evolv ing Starbucks experience caused consumers to have incredible brand loyalty over alternatives such as Pete’s Coffee and Tea and Tullies.Yet the quick and agile response of technology was exactly what Starbucks needed to put it ahead of the ‘growth curve’ in social media while its competitors struggled behind. Schultz’s solutions were effective in the short run but he still realized his long run potential was limited by resource allocation. The problem with Starbucks and consumers was not the shift in demand for coffee consumers but it was resource allocation and initial planning. Howard Schultz’s plan of action was headed in the right direction apart from the minor mix-up between the surface symptoms and the core issue.In addition to new work practices, Schultz integrated new management and had to let go many of the people he knew were limited to the knowledge of the short-term. This new resource allocation towards what Schultz called ‘the back side’ of the company, allowed the company to finally resolve its funding and allocation issues. The new plan of action consisted of hiring new employees and investing in infrastructure to anticipate growth and new forms of technology; the poor management habits of the past from would not hinder Starbucks in the future.Similar to my suggested plan of action, Schultz’s initiative consisted of new employee’s, new technology and investing in the short term. If Schultz’s would have put more funding towards infrastructure to bring stability in the long run, he would have been able to manage the shift in consumer behavior and maintain profit without the need to close down the stores for retraining. The issue for Starbucks is not losing customers but how to accurately represent the company’s values. Moreover, if the employees were chosen correctly and the infrastructure was properly optimized, Schultz plan would have worked perfectly.All in all, every comp any in any industry is going to face challenges and have limited resources to meet them in an efficient manner. Howard Schultz used the resources he had to best manage Starbucks and handled the big issues he had efficiently and creatively. The future of Starbucks all depends on its management and commitment to adhering to the company vision and values. After experiencing the 2000-2008 period, one can see that the values will inevitably shift with changes in management. 4] The future of Starbucks is highly dependent on how long Howard Schultz continues to be an active part of the company and in shaping its vision. If affiliates and employees are chosen intelligently and have values matched properly with the company’s mission, Starbucks’s vision should be passed down effectively through each generation of new management. Nevertheless, the rise and fall of competitors in a market is inevitable and time will tell if Starbucks will eventually be surpassed by a competitor. S tarbucks will be a primary educational focus for many business programs.It is one of the best managed franchises in history and will remain one of the most successful for a long period of time. Like any business, Schultz received criticism for extreme responses yet these responses excelled the growth of the company. Much like my suggestions, Schultz acted quickly and made extreme changes which were crucial to repairing the infrastructure. Unlike most companies, Starbucks’s major focus is promoting the company image and values instead of putting profits first. Works Cited I. Schiff, Lewis. â€Å"Starbucks CEO Howard Schultz Coming to NYC. Inc. com. INC, 18 Mar. 2011. Web. 25 Mar. 2013. II. â€Å"Starbucks Corporation History. † History of Starbucks Corporation – FundingUniverse. Funding Universe, n. d. Web. 25 Mar. 2013. III. McGraw Hill. â€Å"Starbucks Corporation. † Starbucks Case Study. MHHE. com, n. d. Web. 25 Mar. 2013. ———†”———– [1] Funding Universe, Starbucks Corporate History [2] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [3] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [4] Funding Universe, Starbucks Corporation History Starbucks Case Study Starbucks in 2004: Driving for Global Dominance Strategic Management STRA 703 Assignment Prepared by: Sherif Hendi (M1100758) Presented to: Dr. Gamal Shehata Questions Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? (What is the store concept, the customer offerings and differentiators? The expansion strategy? The financial strategy? The personnel management and social responsibilities? Conduct a five forces analysis? ) Q. No. 02 What was the original strategic vision and objectives and how did they evolve? What is your opinion of Starbucks’ mission statement? What grade would you give Howard Schultz for his job as the CEO Starbucks and why? Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Q. No. 04 What were the key issues faced by Starbucks in 2004? Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Q. NO. 1 What are the key elements of Starbucks strategy as of 2004? ANS: Key Elements of Starbucks’ Strategy Starbucks adopted a lot of innovative strategies throughout its journey from 1971 to 2004. These strategies in brief are as follows:- * The restaurant/store concept * The offering of Innovative product line * Differentiation from competition * National and international expansion * Distribution channels (Pepsi partnership/online store/Dreyer partnership) * Efficient Financial management (Centralized Information Systems) * Capitalizing on enhancing the people element * Engaging in social responsibility programs (CARE). Competitive Advantages or Differentiators Their differentiating elements are as follows:- They were the pioneers to introduce espresso bar idea in USA * Mail order sales * Word of mouth marketing * Employee motivation strategies to attain improved employee commitment * Convenient distribution channels * Introducing chemical free cultivation process. Q. No. 02 What grade would you give Howard Schultz for the job he has done as CEO of Starbucks? Be prepared to support you r answer based on how well (or not so well) he has performed the five tasks of strategic management discussed in Chapter 2. ANS: Howard Shultz gets a grade of 95% in his Strategic Management approach. In my opinion Howard Shultz just didn’t do perfect in the area of marketing as he did not spend adequate budgets on advertising and product innovation. Last but not the least is that he did not attempt to study the environment properly while entering into new geographical areas e. g. he opened a store down street in Chicago which was not a good idea due to cold weather conditions. Other than that, he made a great task of performing all the five tasks of Strategic Management Q. No. 3 What was Howard Schultz’s original strategic vision for Starbucks? Is his present strategic vision for Starbucks different from the one he had in the 1980s? How many times has his strategic vision changed? Is his present strategic vision likely to undergo further evolution? ANS: Howard Shultz original Strategic Vision â€Å"To establish Starbucks as the most recognized and respected brand in the world. † Strategic Objectives * They wanted to have 15,000 stores by the year-end 2005. * They aimed to provide a great work environment and treat each other with respect and dignity. * They believed in taking on diversity as an essential component in the way they do business. * To apply the highest standards of excellence to the purchasing, roasting and fresh delivery of coffee. To develop loyal and satisfied customers all of the time. * To contribute positively to their communities and environment, and recognize that profitability is essential to future success of business. How did they evolve? At the earlier stages they promised themselves that they will not leave even a single stone unturned to make Starbucks the most recognized and re spected brand in the world. Therefore, they thought that this could only be possible if they will develop these strategic objectives because these are basis to earn the respect and fame for any business. Q. No. 3 What is your assessment of Starbucks financial performance during years 1998-2003? (Growth rates, profitability, control of major cost categories, financing, ROE, and P/E ratio? ) Growth Rate| Years| 1998| 1999| 2000| 2001| 2002| 2003| Growth rate| 0| 0. 2889| 0. 29095| 0. 2164| 0. 2415| 0. 2391| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profitability| Years| 1998| 1999| 2000| 2001| 2002| 2003| Operating profit margin | 8. 34| 9. 29| 9. 4| 10. 57| 9. 6183| 10. 42| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ROE| Years| 1998| 1999| 2000| 2001| 2002| 2003| Return on equity| 8. 6| 1. 58| 8. 23| 13. 1| 18. 35| 12| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Price Per Earning Share| Years| 1998| 1999| 2000| 2001| 2002| 2003| Price Per Earning Share| 0. 19| 0. 27| 0. 24| 0. 46| 0. 54| 0. 67| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Control of Major Cost Categories In this portion we have analyzed that how Starbucks controlled its fixed cost. If we talk about the locations, it was very expensive to purchase land and then develop it as a store, so to overcome this problem Starbucks started leasing the land for long term periods. In our opinion, it was a quit impressive move to cut down its fixed cost. Secondly they observed that to get the license was too costly for them, so they made contracts with the partners who had license with them. Financing For the financing, Starbucks instead of taking loans preferred raising the equity. It was a better idea to generate capital because they did not have to pay any short term and long term interests against the borrowings. Q. No. 04 What were the key issues faced by Starbucks in 2004? Every company faces major challenges, even companies that are as successful as Starbucks. Although they have an outstanding reputation, have won many awards like top sustainable retail store award and most ethical company award etc, and even give back to their community, they are still facing challenges like any other company. Following are the most obvious challenges that Starbucks is dealing with:- * Schultz was overflowing with the ideas for the company, early on he noticed that first-time customers sometimes felt uneasy in the stores because of their lack of knowledge about fine coffees and because store employees sometimes came across as a little arrogant or superior to coffee beginner. Howard Schultz when came back from Italy shared his ideas for modifying the format of Starbucks’ store with Baldwin and Gordon Bowker. But instead of winning approval for trying out some of his ideas, Schultz encountered strong resistance but after a year Schultz succeeded in winning the approval from Baldwin and Bowker. * After sometime Baldwin and Bowker again went against th e ideas of Schultz so he became so frustrated and left Starbucks in late 1985 to open his own separate Espresso Bars in high-traffic down town locations. Schultz acquired Starbucks in 1987 and after the 20 months of acquiring, some employees felt unappreciated that there was a feeling of prior management had abandoned them. So, Schultz decided to make building a new relationship of mutual respect between employees and management. * Starbucks lost its money when it expanded market to Chicago because in Chicago that was the first downtown store opened on to the street rather than into the lobby of the building where it was located; in the winter months, customers were hesitant to go out in the wind and cold to acquire a cup of coffee. It was expensive to supply fresh coffee to the Chicago stores from Seattle warehouse. * The challenge to Starbucks, in Schultz view, was how to attract, motivate, and reward store employees in a manner that would make Starbucks a company that people would want to work for and that would generate enthusiastic commitment and higher level of customer service. * A values and principles â€Å"crisis† arose at Starbucks in 1989 when customers starting requesting nonfat milk in making Cappuccinos and lattes (an espresso coffee with frothy steamed milk) So, Starbucks started selling both fat milk and nonfat milk Cappuccinos and lattes. They were facing the issue of Wi-Fi (wireless internet service) in 2002, the number of accesses was in the millions by T-Mobile; internal research showed that the average connection last approximately 45 minutes So, in October 2003, Starbucks announced that they will expand Wi-Fi capability to additional locations and would have 2700 stores equipped wit h wireless Internet access by year end. * They were also facing challenges from their competitors. In 2003 there were an estimated 14000 specialty coffee outlets in the United States but they were not competent enough to exert pressure at Starbucks. Q. No. 05 What recommendations would you make to Howard Schultz to sustain the company growth and support strong financial performance in the years ahead? Recommendations After analyzing the whole case study, we became able to give few suggestions to Howard Schultz which can be handy to sustain the growth and support strong financial performance in the forthcoming years:- * He should spend more budgets on advertisement of products. He should bring innovations in his products because we saw in this case study that he was inspired by espresso bars so he imitated the whole theme of Italian espresso bars and the idea of dark roasted bean was an older one as well. * Before entering to any new geographical region he should study the market environment of that particular region as we saw that at Chicago there was an issue of cold weather and his store was at down-town-street. Furthermore, the labor rates and rents of building were higher as well. * At the stores Starbucks’ technique to teach customers about how to make coffee was not a good idea ecause it does not support their business model. Therefore, it should be avoided in future. Above elaborated things were having details about the strategies of Starbucks which drove it for the Global dominance till 2004. Starbucks is in fact the recognized and respected brand in the world and if it can overcome the shortcomings which we identified then nobody can create bother for it to be successful and there will be no point left as a mistake on its part. Reference www. starbucks. com Case Study â€Å"Starbucks in 2004: Driving for Global Dominance† written by Arthur A. Thompson, Amit J. Shah and Thomas F. Hawk. Starbucks Case Study Conner A Intro to Business 3/26/2013 Case Study Consumer Behavior in the Coffee Industry Did you know one franchise alone dominated an entire payment-processing market in just one year? You might have heard of this giant company by the name Starbucks. Howard Schultz, CEO of Starbucks, had a significant role in the company’s growth. Starbucks has steadily dominated the coffee market and has even extended to being a 3rd home for many of its consumers. Based in Seattle, Starbucks had significant competition when it opened its first store in the Pike Place market in Seattle, yet still managed to become superior.Starbucks used new advertising tactics and presented a unique experience for its customers, all of which was a game changer in the business world. Starbucks was created when three friends opened a small store to sell coffee beans and roast in 1971[1]. Jerry Baldwin, Gordon Bowler and Zev Siegl opened their store in the heart of the unique open air market in downtown Seattle . Located just off the harbor, Pike place market was the optimal location and attracted many residents and tourists.After ten years of incredible growth, Jerry Baldwin hired Howard Schultz as head of management. When Schultz first started, he slowly learned the coffee industry and helped made subtle but significant changes. For example, Schultz noticed that â€Å"first-time customers sometimes felt uneasy in the stores†[2] so he developed â€Å"customer-friendly sales skills and produced brochures that made it easy for customers to learn about fine coffees†2 Schultz had the vision of making Starbucks a coffee lounge versus a bar after being inspired by eastern traditions.Even though he did not agree with the new direction, Baldwin allowed Schultz to open one espresso bar and in 2 years, Schultz was able to buy out Baldwin and equity owners with the help of investors in 19921. Howard Schultz initially saw the power of consumer behavior early on when he realized Starbuck s began to be a social gathering mecca for people instead of just an espresso stand. When Schultz first noticed the ‘seismic change in consumer behavior,’ he adopted a free-Wi-Fi service and mobile payment service and noticed that Starbucks began to attract people as if it was a third home for coffee enthusiasts.Although he jokes about not getting rent from consumers, it allowed Starbucks to create an online-experience in their ‘3rd home’ which was unique to the coffee scene in the United States. With scheduled deliveries and privatized ad networking, Starbucks was maximizing its profits and allowing an experience for coffee enthusiasts that did not make them feel locked-into paying. This shift in consumer behavior was in response to the cultural need for a place between home and work. As social beings, humans thrive for an excuse to hang out and socialize or participate in a community environment.This amazing experience that Starbucks supplied needed to be fine-tuned like any business plan. Like any business, Starbucks had challenges, such as their management of spending. In an interview entitled Business Brilliant, Schultz said that too much was focused on the customer instead of the infrastructure. To improve this, Schultz developed a unique experience in the store with the paired pastry-drinks and released free Wi-Fi for customers. In addition to free-Wi-Fi, mobile payments allowed consumers to avoid lines and continue their private work in the confines of the lounge.Soon Starbucks was thriving and announced that â€Å"the opening of 150 new stores in five years significantly exceeded the 1987 business plan’s objective of 125†[3]. Like every company, Starbucks faced unique issues in their business which slowed down growth initially which in effect slowed down growth in the long run. Schultz attributed the biggest hold-back in the long run to not investing in the supply chain, technology or manufacturing. Although Sta rbucks was marketing their franchise extremely well, they did not invest ahead of the growth curve and the infrastructures became under-par.In the Business Brilliant, Schultz candidly admitted that Starbucks â€Å"solely accelerated growth of the company. † Moreover, Schultz said the issue was that Starbucks â€Å"needed competency well beyond the size of the company and needed the kind of capability they didn’t have. † Since their infrastructure’s efficiency in the short run was hindered by technological limitations coupled with access to capital, the entire store chains needed to be shut down. Schultz defined the event as a need to redesign their image and retrain their employees.Starbucks was losing grip on the customers and their loyalty because the experience of Starbucks was losing its unique features. All of these internal and external issues that Starbucks was facing were all connected with values and company image according to Schultz. Schultz wa s so specific with the Starbucks experience that when he smelt burning cheese in a store he decided to ask the workers and they told him â€Å"So what, profits are up! † Soon after this, Schultz decided to close down and retrain all stores and employees. He sent out a press release admitting that Starbucks was misrepresenting itself.Although no one had accused or criticized Starbuck’s prior to his declaration, it was a bold move which negatively impacted the financial strength of the Company. However, the action proved loyal to the consumer and enhanced brand loyalty for Starbuck-addicts. This root issue of misrepresentation in the Starbuck’s experience and the company vision was so significant to Schultz that he needed rework his company from the ground up. This road block of ‘conserving the core businesses’ and ‘pushing for relevant innovation’ made Schultz tweak and adjust the Starbucks experience constantly but effectively.While Sch ultz attributes the root issue for Starbucks to be company image and adapting core values, could it be possible that the vision and image were not correctly portrayed because of unwise funding? Schultz does admit the funding issues contributed to the core issue of misrepresentation of company image and values, but he does not see the two issues in separate environments. Schultz assigns the core issue to misrepresentation and the surface symptoms to be funding. However, more funding or a different funding plan with more focus in infrastructure would have changed the outcome.The core issue was funding and the symptoms of the core issues were misrepresentation because of resource allocation. While their short term fixed costs of infrastructure and labor were solved, their reserved and recurring allocation towards the upgrades of their infrastructure lacked significantly. If properly funded before and seen ahead of the curve, their growth could have been anticipated. This is evident thr ough the need to shut down and retrain employees. It’s clear that the total fixed and variable costs exceeded their revenue initially.Like all companies, there was a start-up curve but when the curve was dealt with, resource allocation was not the focus. The best plan of action ideally would start with addressing resource allocation. Starbucks was able to stay in business and have great growth so it’s clear the management was able to properly allocate their average variable costs and fixed costs for the most part. Nevertheless, it would have been best if the costs were optimized and revenue was set aside for changes in infrastructure. Funding should have been directed at things which would have produced stability in the long run.This would have lowered their total costs and properly funded their infrastructures for the long run and short run. Schultz should have looked at the management immediately after buying out the company and properly hired people with skills that would be able to guide Starbucks through significant growth. Investment in infrastructure to avoid long-term costs would have saved Starbucks from funding issues at later times. In addition to optimizing their infrastructure for the long run, Starbucks needed to invest more in manufacturing and supply chain for the success in the long run.For example, Starbucks should have initially allocated more funding towards small upgrades in their infrastructure such as ovens versus microwaves to avoid unpleasant scents in the customer’s experience. This also connects to Schultz’s emphasis on hiring employees and affiliates based on similar values. If the decision to hire those employees would have initially been more focused on similar values in addition to management skills, the variable costs to upgrade the infrastructure in the long run would have been lower because the management would have been more motivated to deal with the issue before the CEO had to see the symptoms.Fi nally, the management of Starbucks needed to choose their employee’s more wisely from the start. If Schultz would have chosen his employee’s based on the similarity of their values and the company vision, little issues such as smell in the customer’s experience would have been dealt with more efficiently. This connects to optimizing their infrastructure but focuses on the employees instead of the technology. It’s important to treat both with separate solutions because Schultz reminded us that the employees can only work with the assets they are provided with.This small change in the focus of the start-up of the company could benefit the image of Starbucks very efficiently and in a cost-productive way. Schultz jokes about not getting rent from Starbucks admirers yet he also notes that the potential to plug into the social media of the internet and create the environment was more beneficial than the issue of customers hanging out inside the store. The evolv ing Starbucks experience caused consumers to have incredible brand loyalty over alternatives such as Pete’s Coffee and Tea and Tullies.Yet the quick and agile response of technology was exactly what Starbucks needed to put it ahead of the ‘growth curve’ in social media while its competitors struggled behind. Schultz’s solutions were effective in the short run but he still realized his long run potential was limited by resource allocation. The problem with Starbucks and consumers was not the shift in demand for coffee consumers but it was resource allocation and initial planning. Howard Schultz’s plan of action was headed in the right direction apart from the minor mix-up between the surface symptoms and the core issue.In addition to new work practices, Schultz integrated new management and had to let go many of the people he knew were limited to the knowledge of the short-term. This new resource allocation towards what Schultz called ‘the back side’ of the company, allowed the company to finally resolve its funding and allocation issues. The new plan of action consisted of hiring new employees and investing in infrastructure to anticipate growth and new forms of technology; the poor management habits of the past from would not hinder Starbucks in the future.Similar to my suggested plan of action, Schultz’s initiative consisted of new employee’s, new technology and investing in the short term. If Schultz’s would have put more funding towards infrastructure to bring stability in the long run, he would have been able to manage the shift in consumer behavior and maintain profit without the need to close down the stores for retraining. The issue for Starbucks is not losing customers but how to accurately represent the company’s values. Moreover, if the employees were chosen correctly and the infrastructure was properly optimized, Schultz plan would have worked perfectly.All in all, every comp any in any industry is going to face challenges and have limited resources to meet them in an efficient manner. Howard Schultz used the resources he had to best manage Starbucks and handled the big issues he had efficiently and creatively. The future of Starbucks all depends on its management and commitment to adhering to the company vision and values. After experiencing the 2000-2008 period, one can see that the values will inevitably shift with changes in management. 4] The future of Starbucks is highly dependent on how long Howard Schultz continues to be an active part of the company and in shaping its vision. If affiliates and employees are chosen intelligently and have values matched properly with the company’s mission, Starbucks’s vision should be passed down effectively through each generation of new management. Nevertheless, the rise and fall of competitors in a market is inevitable and time will tell if Starbucks will eventually be surpassed by a competitor. S tarbucks will be a primary educational focus for many business programs.It is one of the best managed franchises in history and will remain one of the most successful for a long period of time. Like any business, Schultz received criticism for extreme responses yet these responses excelled the growth of the company. Much like my suggestions, Schultz acted quickly and made extreme changes which were crucial to repairing the infrastructure. Unlike most companies, Starbucks’s major focus is promoting the company image and values instead of putting profits first. Works Cited I. Schiff, Lewis. â€Å"Starbucks CEO Howard Schultz Coming to NYC. Inc. com. INC, 18 Mar. 2011. Web. 25 Mar. 2013. II. â€Å"Starbucks Corporation History. † History of Starbucks Corporation – FundingUniverse. Funding Universe, n. d. Web. 25 Mar. 2013. III. McGraw Hill. â€Å"Starbucks Corporation. † Starbucks Case Study. MHHE. com, n. d. Web. 25 Mar. 2013. ———†”———– [1] Funding Universe, Starbucks Corporate History [2] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [3] McGraw Hill, Starbucks Case Study, Starbucks Corporate History [4] Funding Universe, Starbucks Corporation History

Andrew hellen essays

Andrew hellen essays In our continuous discussion of ethics and death Benjamin, in chapter 7 of Philosophy and this Actual World, asks us to imagine a case where a child, Andrew, is born with anencephaly, ... a condition in which the embryologic closure of the neural tube never completes, leaving the embryo to develop without the upper portion of its skull. These embryos sometimes continue to develop into the fetal stage and may even survive to be born alive, but with upper cranium and scalp missing and the brain open to the outer world. [Although anencephalic infants have a function brain stem but because they lack the functioning cerebral hemispheres, they do not and will never experience consciousness] These babies may survive outside the womb for varying amounts of time, anywhere between minutes and weeks. Although the condition is always fatal and there are no techniques to correct the problem...(anencephaly web page). In another hospital there is Helen, a newborn with hypoplastic left heart syndr ome [which] consists of an underdeveloped Left Atrium and Left Ventricle. The whole left side of the heart which pumps the blood to the body is underdeveloped and small and is unable to perform that function. This means the baby is unable to get blood to his body through the Aortic Valve, the Aortic Arch and the front parts. [a congenital malformation very likely to lead to an early death] (childrens heart institute). Apart from their conditions both infants are healthy; Helens brain, in particular, is fine, and Andrews heart is fine. So comes the question If it is surgically possible to replace Helens heart with Andrews healthy one should the surgeons do it? Is it morally right or wrong? There are many aspects to take into account when surveying a situation like this. Aside from mere ethics there are people involved, and differing opinions from religion to background belief. Right away when conc...

George Meany essays

George Meany essays I have always enjoyed watching action/love movies. I have been scouting out for these kinds of movies for the last 4 years. It was early morning, December 7, 1941. As the sun was just beginning to rise in Oahu, Hawaii, a fleet of Japanese naval air forces were taking off to the Pacific Ocean. No one was prepared for what was occurring. Pearl Harbor, the United States center for military action in the Pacific Ocean, was almost completely destroyed. The anger led the United States to enter into World War II. Then 60 years later the movie Pearl Harbor makes it to the big screen. Was it really the history of what happened that morning on December 7 or another love story with the wrong title? Calling a movie Pearl Harbor puts a certain responsibility on a filmmaker to tell the historical events story more fully. Selling a misleading title seems like a studio is trying to take advantage of an events memory. I feel that the movie Pearl Harbor should have focused more on the historical tragedy that happened that day rather than being based on a love triangle story. The first half of the movie concentrates on three characters and very little about the historical facts leading up to WWII. We are led to the false impression that Japan went to war over just a fuel problem. Japan had many other problems to deal with. It had begun to rely more and more for raw materials from outside sources because their land was lacking in these. Instead of spending so much time on telling us how Kate Beckinsale (Evelyn) and Ben Affleck (Rave) met, they could have provided us with more information on how the problems began with the U.S. and Japan. Like how the military in Japan started getting highly involved in the government that got them into trouble. Also the United States began to supply materials to the countries at war with Germany and Japan, but wanted to remain neutral. This film has very l ...

Quotes From Hemingways The Sun Also Rises

Quotes From Hemingways The Sun Also Rises The Sun Also Rises brought Ernest Hemingway fame and fortune. The novel became one of the most well-known books of the lost generation. The story was largely based on the lives of Hemingway and his friends in Paris following World War I. Here are a few quotes from this famous book by Ernest Hemingway. Quotes From the Epigraph Through Chapter Five of The Sun Also Rises You are all a lost generation. I rather liked him and evidently she led him quite a life. Nobody ever lives their life all the way up except bull-fighters. Listen, Robert, going to another country doesnt make any difference. Ive tried all that. You cant get away from yourself by moving from one place to another. Theres nothing to that. This was Brett that I had felt like crying about. Then I thought of her walking up the street and stepping into the car, as I had last seen her, and of course in a little while I felt like hell again. It is awfully easy to be hard-boiled about everything in the daytime, but at night is another thing. Quotes From Chapter Six Through Chapter Ten of The Sun Also Rises Youre not a moron. Youre only a case of arrested development. Dont have scenes with your young ladies. Try not to. Because you cant have scenes without crying, and then you pity yourself so much you cant remember what the other persons said. We all ought to make sacrifices for literature. Look at me. Im going to England without a protest. All for literature. [S]he took great pride in telling me which of my guests were well brought up, which were of good family, who were sportsmen, a French word pronounced with the accent on the men. The only trouble was that people who did not fall into any of those three categories were very liable to be told there was no one home, chez Barnes. This wine is too good for toast-drinking, my dear. You dont want to mix emotions up with a wine like that. You lose the taste. I was a little ashamed, and regretted that I was such a rotten Catholic, but realized there was nothing I could do about it, at least for a while, and maybe never, but that anyway it was a grand religion, and I only wished I felt religious and maybe I would the next time. I have never seen a man in civil life as nervous as Robert Cohnnor as eager. I was enjoying it. It was lousy to enjoy it, but I felt lousy. Cohn had a wonderful quality of bringing out the worst in anybody. I was blind, unforgivingly jealous of what had happened to him. The fact that I took it as a matter of course did not alter that any. I certainly did hate him. Quotes From Chapter Eleven Through Chapter Nineteen of The Sun Also Rises Youre an expatriate. Youve lost touch with the soil. You get precious. Fake European standards have ruined you. You drink yourself to death. You become obsessed by sex. You spend all your time talking, not working. You are an expatriate, see. You hang around cafà ©s. For one who had aficion he could forgive anything. At once he forgave me all my friends. Without his ever saying anything they were simply a little something shameful between us, like the spilling open of the horses in bull-fighting. It was like certain dinners I remember from the war. There was much wine, an ignored tension, and a feeling of things coming that you could not prevent happening. Under the wine I lost the disgusted feeling and was happy. It seemed they were all such nice people. I thought I had paid for everything. Not like the woman pays and pays and pays. No idea of retribution or punishment. Just exchange of values. You gave something up and got something else. Or you worked for something. You paid some way for everything that was any good. Enjoying living was learning to get your moneys worth and knowing when you had it. That was morality; things that made you disgusted afterward. No, that must be immorality. The things that happened could only have happened during a fiesta. Everything became quite unreal finally and it seemed as though nothing could have any consequences. It seemed out of place to think of consequences during the fiesta. I hate his damned suffering. Oh, darling, please stay by me. Please stay by me and see me through this. In  bull-fighting  they speak of the terrain of the bull and the terrain of the bull-fighter. As long as a bull-fighter stays in his own terrain he is comparatively safe. Each time he enters into the terrain of the bull he is in great danger. Belmonte, in his best days, worked always in the terrain of the bull. This way he gave the sensation of coming tragedy. Because he did not look up to ask if it pleased he did it all for himself inside, and it strengthened him, and yet he did it for her, too. But he did not do it for her at any loss to himself. That seemed to handle it. That was it. Send a girl off with one man. Introduce her to another to go off with him. Now go and bring her back. And sign the wire with love. That was it all right. [T]he  end  of the line. All trains finish there. They dont go on anywhere. You know it makes one feel rather good deciding not to be a bitch. Isnt it pretty to think so?

Logic & Reasoning Discussion Forum Essay Example | Topics and Well Written Essays - 250 words

Logic & Reasoning Discussion Forum - Essay Example Reasoning involved is: XYZ is old, so XYZ is better. The logic is that- how can the age of something relate to its efficiency? For example, fallacious appeal to tradition makes us believe that witches cause diseases and microorganisms do not, because witches myth is a belief that has been there since ages. 3. This fallacy is called hasty generalization. Was Smith not hastening in believing what he saw only once? Also called fallacy of insufficient statistics or hasty induction, this fallacy takes place when a person, Smith here, jumps to conclusion by looking at insufficient evidence or small sample of a large population (Sellnow 392). Reasoning involved is: if observed X% of all As are Bs, still all As cannot be Bs, or if two of all squirrels are white, still all squirrels cannot be white. Logic here is that a conclusion cannot be drawn from merely observing a small sample taken from population. 4. Paraphrase: Under the new targets, the United States and Russia guarantee that both of them will deploy 525 to 700 fewer strategic nuclear warheads by 2016 when presently, by 2012, they are 2200

Consumers' Attitude toward Brand Extensions Dissertation

Consumers' Attitude toward Brand Extensions - Dissertation Example I would first like to thank my tutor who offered valued and constructive advice on how to put this piece of work together. I would like to thank my family for allowing me the space to work and contributed through support for this endeavour. I would also like to thank the University for contributing significantly to my education to get me the point of being able to complete this work. Contents Contents Contents 5 Figures 7 Abstract 8 Chapter One: Introduction 9 1.1 Background 9 1.2 Aim and Objectives 10 1.2.1 Aims 10 1.2.2 Objectives 10 1.3 Research Design 11 1.3.1 Theoretical Frameworks 11 1.3.2 Purpose of the Study 12 1.4 Structure of Study 12 Chapter Two: Literature Review 14 2.1 Introduction 14 2.2 Brand 14 2.2.1 Brand Equity 15 2.2.2 Brand Mythology 18 2.2.3 Global Brand Power 20 2.2.4 Brand Extensions 21 2.3 Consumer Behaviour 23 2.3.1 Attitude Theory 25 2.3.2 Expectancy Value Theory 26 2.4 Summary 26 Chapter Three: Methodology 28 3.1 Introduction 28 3.2 Research 29 3.2.1 Resear ch Questions 29 3.2.2 Secondary Research 30 3.2.3 Primary Research 30 3.2.4 Questionnaires/Surveys 31 3.2.5 Sampling 32 3.2.6 Pilot Study 33 3.3 Research Study 34 3.3.1 Research Subject 34 3.3.2 Data Analysis 34 3.3.3 Limitations 35 3.4 Ethics 36 3.5 Summary 36 Chapter Four: Results and Discussion 37 4.1Introduction 37 4.2 Quantitative Research 38 4.2 1 Demographics 38 4.2.2 Questionnaire Results 39 4.3 Qualitative Research 45 4.3.1 Group Interview 45 4.3.2 Observation 49 4.4 Discussion 50 4.5 Summary 51 Chapter Five: Conclusion 52 5.1 Introduction 52 5.2 Motivating Consumers 53 5.3 Decision Making Process 55 5.4 Responses to New Products 56 5.5 Reputation 56 5.6 Consumer Types 58 5.7 Consumer Attitudes 59 References 61 Appendixes 63 Appendix 1: Questionnaire 63 Appendix 2: Interview Questions 66 Figures Fig. 1 Stakeholder Journey (Fisher-Buttinger and Valaster 2003: 206) Fig. 2 Brand Extension Longevity from Originating Product (Kapferer 2008: 334) Fig 3 Male to Female Ratio compar ed to Male to Female Brand Buying Habits Fig. 4 Trust in a Brand Fig 5 Meaning Associated with using a Brand Name Fig 6 Comparison of Trust and Meaning of a Brand Name Abstract The following paper has been written in order to explore the nature of consumer attitudes towards brand extension. The research has been conducted through a mixed methodology with quantitative research conducted through a questionnaire format, and qualitative research conducted through both a group interview format and a period of observation on the response to brand extensions within a retail venue. The results show that while consumers wish to believe that each product is assessed purely on its own merits, the truth of their experience is that they will more likely try a new product that is brought onto the market by a trusted brand than one that has a brand name that is unfamiliar, even if it is the same product. As well, a product that merely carries a brand name, but without attributes of any of the prod ucts that are carried by that brand, will be suspect and will not have the same power. It is the conclusion of this research that a brand extension provides a powerful resource for expanding a business if done with the power and equity built by that brand in consideration of relatable attributes.

Draft Report 1 Essay Example | Topics and Well Written Essays - 500 words

Draft Report 1 - Essay Example Notably, Valentine’s day also marks a remarkable consumption rate of chocolate and candy. This is because of the gift-culture in the United States, whereby many people prefer buying chocolates for those they love and treasure ("Hot Chocolates" 182). Many of those buying gifts are usually consumers themselves. Without doubt, chocolate and candy have a ready market more than in any other country across the globe. As highlighted above, the United States registers the highest consumption of chocolate and candy. However, it is worth noting that some brands of chocolate consumed by many Americans have lasted for the last 50 years. They are established chocolate and candy brands with a unique taste and quality (Research and Markets). They are given reverence as premium chocolates because of their outstanding taste and quality over the years. Companies such as Hershey and Mars have the leading percentage of the market share and are the main suppliers of chocolate and candy in the United States. Although chocolate is a preferred snack in the United States, this does not mean that businesses operating in this industry do not have to indulge in rigorous research. Notably, the American consumer is very specific with taste when it comes to snacks and chocolate (Kim, Lopetcharat, and Drake 4850). Moreover, there is a varied preference for either dark chocolate or milk chocolate. These are some of the factors that companies with the leading market share have often considered in a bid to maintain their market position. There is evidence that the packing of the chocolate has the potential to evoke different feelings to the consumer. This gives manufacturers of candy and chocolates a new task of ensuring that the packaging of the chocolate evokes emotions such as desire, satisfied, joy, and pride. Chocolate packs evoking such emotions are likely to have a higher chance compared to others in the market (Johnson). Moreover, the health