E-marketing Final Assignment_ TISAPOL RATITONG 470893
1. Hogeschool van Arnhem en Nijmegen
HAN University of Applied Sciences
E-Marketing Final Case Assignment:
Comparisons of Starbucks Coffee and Peet’s Coffee &
Tea, and the Companies’ Online Websites
V.S.
Submitted to
Prof. Peter Steemers
By
Mr. Tisapol Ratitong ID# 470893 ti_zola@hotmail.com
November 11th, 2009
3. 1. Coffee War
1.1 Introduction
Coffee, a brewed beverage from roasted seeds firstly found in the southern
regions of the middle-East Asia and Southwest of Ethiopia, is currently one of the most
famous beverages in the world. With its chemical properties that keep drinkers’ eyes
wide-open, as well as the aromatic smell and the smooth taste of coffee that caught
millions of coffee drinkers’ desires and addictions as morning, lunch and any free-time
social drink nowadays. The coffee industry has become more and more competitive in
the past few decades as the growing of interests in this type of beverage throughout the
world. The popularity of premium roast coffee has begun since the emergence of the
company named “Starbucks,” the world’s most recognized brand for coffee beverage at
present. Starbucks has crated a new experience for coffee drinkers by generating a
social gathering place for people to meet, enjoy their cups of coffee and experience the
relax and “like-home” feeling in their coffeehouses. The company has started the
coffee generation and coffee trend that influence consumers at many different ages, if
not all crazy for coffee, to think of Starbucks as the first place in mind to gather up and
meet new people, attracting in more individuals and enterprises to follow and try to
imitate Starbucks’ business model, juicing up the competition in the coffee industry.
2. Starbucks Coffee
The company is an international coffeehouse chain and is based in Seattle,
Washington, USA, made to life by Howard Schultz, the Chairman, President and CEO
of Starbucks Corporation. With over 15,000 stores in 49 countries in the world, the
company is listed as the largest coffeehouse company in the world. Starbucks Coffee is
selling everything related to coffee including coffee beans, made-to-order beverages
(mainly fresh brewed coffee), boxed tea, bottled beverages, baked goods and store-
branded merchandises as well as home-kitchen scale coffee brewer. The company is
putting much efforts and concerns on its employees, both part-time and full-time, by
giving them exceptionally higher employee benefits, including healthcare and stock
option programs, compared to other companies in any industry. By this, the employees
feel happy working for Starbucks and have strong loyalty to its company, which will
eventually be shown in the higher quality of service provided to the visiting customers.
A part-time worker for Starbucks entitled to comprehensive health benefits, covering
everything from medical, prescriptions, dental, and vision to hypnotherapy and
naturopathy. The company also offers retirement savings plans, discounted stock
options, income protection plans, adoption assistance plans, management bonus plans
and support resources for child and elder care. Then, there is also the discounted
Starbucks merchandise, the free pound of coffee or tea each week and all the drinks
you can down during your shift.[6]
“Our mission statement about treating people with respect and dignity is not just
words but a creed we live by every day,” says Howard Schultz, Starbucks’ CEO and
president. “You can't expect your employees to exceed the expectations of your
customers if you don't exceed the employees' expectations of management. That's the
contract.”[6]
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4. The company has spent very little budget on their media advertisement and
marketing campaigns but rather the “word-of-mouth” by their customers that made
Starbucks’ business a huge success in a relatively short time. Their rapid growth and
expansion of its numbers of store locations is among one of their successful strategies
to capture the consumers for brand recognition, while emphasizing its quality of
premium coffee through the “word-of-mouth” that build up their strong brand
reputation in consumers’ minds. Starbucks has also tried to create their brand
awareness and reputation through environment protection campaigns, using of recycled
and recyclable products
Due to its macro-scale of business and its numbers of store locations
worldwide, Starbucks’ effort to manage and control all of its branches is mostly done
through sophisticated networking systems and the Internet. These systems efficiently
help them control their inventory and the activities going on in each store around the
world to share the information to the central system in Starbucks’ base in the U.S. for
immediate responses and reacts instantaneously to any unexpected circumstances.
Aiming at its loyal customers and their potential consumers, Starbucks’ own website is
another approach to reach into every corner around the world and acts as the
company’s showcase where they can effectively carry out special promotions and
advertise their most recent events and campaigns to consistently keep their customers
update with the company’s current activities and improve their business performance
through the customer-oriented thinking at all time.
3. Peet’s Coffee & Tea
Founded by Alfred Peet in 1966 in Berkeley, California, the company has been
the coffee business for more than 40 years and is specialized in coffee roaster and
coffee beans. The store and its founder have a strong inspiration and significant
influence to the emergence of Starbucks. The company went public in January of
2001, and has been listed as one of the main competitors for Starbucks with a annual
revenue of around $400 millions dollars, compared to Starbucks’ annual revenue of
roughly more than 25 times higher. Comparing to Starbucks, Peet’s Coffee & Tea has
been growing much slower than its great rival. The company is mainly focused on its
coffee beans and as a coffee and tea retailer rather than a coffee bar. This difference
has positioned Peet’s to compete better in the market with Starbucks that has been
carrying out its main products through its baristas and made-to-order premium brewed
coffee. The company has around 200 store locations in the U.S., mostly in the state of
California where its headquarter is, and small numbers of store locations outside its
own state. In year 2007, Peet's opened its new and completely green roasting plant in
Alameda, California--the only completely green roasting facility in the world. This new
roasting plant replaced the former operations in Emeryville, California, and is expected
to provide enough roasting capacity to allow Peet's to double its current annual sales to
about $500 million per year.[5]
4. Websites Comparison
Starbucks is white snowflake background for their main page website, with the
link icons arranged neatly for users to clearly glance through and select their link with
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5. little to no confusion. Most of the contents in the homepage screen is boundless and
plain in colors, giving it a cleaner look and less crowded, and with the main graphic or
video clips in the middle of the page for special events and promotions.
On the other hands, Peet’s website is rather bounded with boxes. Most of the
icons and information are crowded in a page-size box, with the background color of
brown color that reflects the color of coffee beans, their main products. Only having
text icons and pictures, Peet’s website is more colorful and packed with many icons
and promotions in the bounded homepage screen. The more detailed comparisons are
explained in the following section of 6 P’s Analysis.
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6. 5. 6 P’s on Company’s Website: Starbucks Coffee vs. Peet’s Coffee & Tea
5.1.1 Product: Starbucks Coffee
The company is selling almost everything you can find in its stores in their
online store. Starbucks’ online store is selling everything from its signature coffee
beans, Tazo Teas, Brewing Equipment, Drink-wares, Syrups and gift cards. Apart
from its coffee related products, the company also sells the music records by Starbucks
Entertainment that include the songs they play in their local stores for customers to
create their own Starbucks experience at home, as well as the movies and books picked
by Starbucks.
Starting with the coffee beans, Starbucks is selling all kinds of coffee beans
named after their sources of raw materials such as Latin American Coffees, Africa
Arabia Coffees, Asia Pacific Coffees, Multi-Region Blends, as well as their Specialty
Roasts and Organic beans. The varieties of coffee beans offered in their online store
covers all types of beans whether they want their beans to be mild, medium, bold, extra
bold, whole bean coffee or ground for instant coffee. All these different types of coffee
beans are introduced in details of where they are originated from and the uniqueness of
each one in the websites, which help consumer choose among the types of coffee beans
that suit their taste the most or best for any particular occasions. Starbucks is having
their various types of coffee beans sold at different portion (by a pack of 1 lb. or a box
of eighteen 2.5-oz. packs and 12 serving packs per box of Starbucks VIA TM) for
consumers to choose based on their individual desires.
Brewing equipment such as an espresso machine and coffee grinders are also
sold in the online store, including brand-imprinted merchandise such as Starbucks
brand cups and various kinds of mugs are readily available for instance purchase.
Starbucks also promotes and sells in their website its customizable gift card that you
can refill your money and use for purchasing at their local braches and online stores.
All pages in their product pages are decorated uniquely to distinguish the
different among each type of coffee beans and products. The contents are clearly
defined and easily to understand, having the background color and icons arrangement
that is comfortable for your eyes and easily to scroll through, their product showing
pages are enjoyable to go from one page to another and well define the aromatic
experience of Starbucks.
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7. 5.1.2 Product: Peet’s Coffee & Tea
The company is offering everything from its signature blends coffee beans,
decaffeinated and beans collected from different countries of the world, its tea
products, coffee gift sets including coffee pot, brewer and brand signature cups and
mugs, as well as store gift cards.
Right from its main page, the shop icon is readily opened with sub icons of
product choices for customers to directly choose to view (compared to Starbucks’s
main page that customers have to click through to a sub page to begin selecting each
type of product to proceed) and proceed to their quickly complete their purchase if they
already have in mind what products they are looking for, as well as the “Express Buy”
icon that gets customers to their best selling product lists that ease the customers for
quickly choosing their popular products and complete their purchase. These icon
layouts help reduce time and less complication to proceed to checkout.
Peet’s online store also provides information of each type of coffee beans,
though the viewer has to click through “Grocery” and then “Our Coffee” icon to
actually get to the product descriptions page, of which customers can read through the
brief explanation and then select the particular beans that they desire, then another sub
display pop-up will appear and there you can find very detail description, reading other
customers’ reviews and make your own review, as well the bars that show the
characteristics of coffee bean body and its liveliness for consumers to distinguish
among the tastes of each product.
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8. 5.1.3 Product: Comparisons
The varieties of products offered in both online websites are comparably similar
due to the same core business the two companies are having. Both sites are selling
coffee beans, both the common types of beans and their special signature beans, tea,
coffee related merchandises and gift cards. Starbucks is having their various types of
coffee beans sold at different portion (by a pack of 1 lb., a box of eighteen 2.5-oz.
packs and 12 serving packs per box of Starbucks VIATM), whereas Peet’s only sell their
beans in a pack size of 1 lb. Though having products in entertainment category such as
music CDs, movies and books sold in Starbucks’ website, Peet’s online store seems to
be less complicated for customers to proceed through to checkout with its “Express
Buy.” Starbucks product description page appears to be easier to reach compared to
Peet’s. However, the products are described in more details with actual product
pictures and product characteristic level bars in Peet’s product description page where
you can read others’ reviews and make your own review.
5.2.1 Pricing: Starbucks Coffee
Starbucks’ coffee beans are sold by a pack of 1 lb., pricing range of around $10
to $14 per pack; a box of eighteen 2.5-oz. packs priced around $43; and a 12 serving
packs per box of Starbucks VIATM of around $10. Prices are also varied based on the
way they are packed up for sales and special occasions in different time periods. Its
Tazo Tea brand is sold by a box of two 24-piece boxes priced at $10, and an 8.8-oz.
bag priced average of around $14 and ranges up to $42 per bag depending on the types
of tea.
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9. Starbucks brand signature mugs are priced around $7-$11 each according to
their designs.
5.2.2 Pricing: Peet’s Coffee & Tea
Peet’s coffee beans are sold at a price ranging from its house blend of $11 per
lb. to a special type of beans that is priced up to $19 per lb. Its brand of tea is sold by a
set of 25-bag package priced around $7 to $9, and a 4-oz. package priced from $12 to
$20.
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10. Peet’s brand signature mugs are priced from $6 to $12 depending on the size,
design and what material the mug is made from.
5.2.3 Pricing: Comparisons
The pricing strategies of these two companies are relatively similar, having
comparable products offered at a competitively price range. Starbucks is, however,
offering their coffee beans in many different packaging sizes and combos to better
match with its customers’ preferences. Peet’s coffee beans are sold at slightly higher
price than Starbucks if compared ounce by ounce, while there is no obvious distinction
between the price of tea offered by each brand if compared between the same type of
tea. The signature mugs of both brands are also priced in the same range. The two
companies are offering very similar products, many of which are actually retrieved
from the supplier sources locating at the same regions in the world that leads to the
similarity in taste and smell, thereby generating a low switching cost for consumers to
substitute between these companies’ products. These similarities in the two
companies’ pricing strategies have created a difficult decision for a customer to select a
product of one brand over the other; however, it is a matter of strong branding and
customer loyalty that would determine their success.
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11. 5.3.1 Place: Starbucks Coffee
- Physical Distribution: Starbucks’ coffee beans and other products are exclusively
sold only in their online store or on the shelves in their local branches, rather through
wholesalers such as Wal-Mart and Carrefour. This exclusive distribution of Starbucks
help raise and maintain its brand value and sell it products at higher price compared to
commodity coffee beans sold in the supermarkets. Starbucks’ use their online store and
local braches to sell all of its products to its end users (customers) through direct
distribution. By this, they avoid having to go through wholesalers and retailers, saving
any cost related to indirect distribution and maintain a complete control over all
activities, quality of services in product handling procedures and the product itself, as
well as direct communication with its customers in terms of introducing new products,
special news and events, and instant responses to complaints to keep customer
satisfaction at its highest level. However, the company has realized its potential to
grow its sales through some re-intermediaries that can broadly get to its customers such
as ‘amazon.com’ or other similar intermediaries available online. Changing from
exclusive to selective distribution channels help get Starbucks’ product across to more
customers online, thereby generating higher margin through its online selling efforts.
These help Starbucks realize its growth in sales and more number of online
shoppers to easily reach to Starbucks products without the need of directly visiting its
own online store.
- Navigation: Starbucks’ homepage is decorated with light and warm color tones,
clean layout and easy to understand texts that you would comfortable to stare at and
glance around without tiring your eyes. The link icons and texts are not crowded on
the page, but rather in a neatly grouping arrangement with only main link icons,
shortcut links, and special promotions on the bottom portion of the page. The layouts
of the icons and links are not bounded with boxes and lines, making the page to look
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12. wide, relax and comfortable to glimpse through. In the center of the homepage,
Starbucks uses high bandwidth graphics to show playable video clips with music to
promote its new events, having a ‘News Headlines’ bar just below the main graphic
display to continuously display and rotate current events and company’s news. The
homepage graphic display does not affect the page loading up speed when you open it
but only when you click to play it, it seems to use up a lot of bandwidth and the video
clip might not be continuously played if your Internet speed is not fast enough. The
sub pages appear to have the same layouts as the main page. Having graphic displays
that take up quite a bit of bandwidth in many of it sub pages slowing down the page
opening speed and can be slightly annoying if your broadband speed is inadequate and
if you already have specific destination to click through to.
However, the advertisement of its products, promotions and news events are
cleanly displayed and reflects the warm, relax and comfortable experience you also find
in Starbucks’ local stores. There are very little to none advertisements other those of
Starbucks itself. Having less icons and links in each page, you need to click through
more links to actually get you to the destination that you might want to go to in the first
place. This might be one of their online strategies that Starbucks use to get the
customers to walk through as many product sections as possible to get you to come
across many of its products and possibly buy more items once the customers have
actually reached to the checkout page. At the bottom of the main page, there are
shortcuts that link to the company’s customer services and various ways to contact
them, as well as the ‘frequently asked questions’ that quickly give you the answers to
commonly found problems on their website. This ease of getting a contact with
Starbucks make it deals better and quickly with complaints, questions and problems
that customers might have and improve the customer relationship in the long-run.
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13. As my Internet provider speed where I conduct this research is relatively slow,
the high-bandwidth graphic of many of Starbucks’ web pages are the problems for me.
The contents on the graphic display may attract my attention and I want to play it on,
but the streaming speed is not smooth and that distract me from continue viewing it.
This is rather a problem that many visitors of Starbucks’ page have to face with, and
the messages might not get across to many viewers no matter how interesting the
company’s graphic video clips are. Though, I find Starbucks’ website very
comfortable to click through due to its use of soft and comfortable colors for your eyes,
with its user-friendliness and the icons and contents that are easily to understand and
click through, guiding you to where you wish to go in their website without any
hesitation or pullback.
- Reach: The percentage of global Internet users who visit Starbucks’ website can be
found using ‘alexa.com’ website. The number of visitors around the world is
fluctuated in the past 3 months in 2009. There were less number of visitors to its
website in September than they are in November. This trend shows the growing of
interests in Starbucks product by consumers around the world; one of the reasons might
be from the change of consumers’ purchasing behaviors as the world financial
downturn gradually recovers. The average numbers of visitors in Starbucks’ website is
around 0.02 percent of global Internet users.
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14. - Localization: Starbucks has currently expanded its business to 49 countries
worldwide. From its main page in Starbucks’ website, there is the ‘International’ icon
on top of the page that links you to many different Starbucks’ websites for different
countries and available in many different languages that Starbucks is operating in.
Each website is specifically made to meet the local market and consumers,
offering different types of products, promotions, services, and product packaging that
better suit with the local people and their uniqueness of demand.
Comparing between the U.S. website of Starbucks to its websites in China and
Japan. There are the differences in background colors, icons and pictures layout,
though all of them are composed of main graphic display in the middle of the main
page that play moving clips and use relatively high bandwidth. Starbucks uses soft-
pink background color for its online store in China with the default language of
Chinese, but you have an option to switch to English language for foreigners living in
that country. However, Starbucks’ website in Japan uses vibrant red color as their
background rather than soft color tones like they usually use in websites in other
countries, this reflects the difference in perception that different consumers living in the
different parts of the world have, hence, difference in consuming behaviors.
5.3.2 Place: Peet’s Coffee & Tea
- Physical Distribution: Peet’s website is also aimed at direct distribution, where they
can use their website to reach out to its end customers directly and sell its products
without having to distribute through wholesalers and retailers to maintain high control
over the quality of products and services carried its customers.
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15. Similarly with Starbucks, the company not only sell its product through its own
website, but also adapt from exclusive to selective distribution channels by using re-
intermediaries such as ‘amazon.com’ and other popular intermediary websites to push
its sell and make it easier for consumers to reach its products.
- Navigation: Peet’s main page in their website is rather simple and takes up low-
bandwidth, making it faster to load up the page compared to Starbucks. The pages is
decorated with many sharp colors and dark tones that reflects the color of coffee, their
core business. The main icons are readily available on the main page for you to select
to where you want to go in their website, as well as the sub icons that slide down when
you select the main icons and show the divided sub-sections for you to quickly get to
your designated pages.
The main page of Peet’s website is stuffed with a lot of information already
available for viewers to chooser right of, heavily focusing on introducing and selling its
products and store promotions, making the page look less pleasant and lower value
compared to Starbucks. The sub pages are mostly filled with text contents and pictures,
making it faster to open them up. The unclean pages that are crowded with texts and
pictures of Peet’s online stores help them get their product across to the customers with
less effort; however, the pages are rather dull and show less culture of its brand to its
coffee.
15
16. It is easy to find a link to contact Peet’s customer service and company’s
information, as there are icons that link to those pages on the bottom portion of their
main page. In Peet’s own online store, the company has done well in grouping the
popular products together and creates a direct link to page that sell their best-selling
products right from its main page. The advertisements or links to any stores or
products other than that of Peet’s are not available in their website.
Though it is a user-friendly website and very easy to navigate through Peet’s
online store, I feel it is boring and not attractive to surf through their pages. The
company is doing well in creating a website that is not complicated and consists of less
links to proceed to checkout, but the pages are appeared to be dull and very focus on
selling rather than educating the customers about their products and news events.
Moreover, it is very fast to click from link to link without confusion, and take a short
time to complete loading up a page.
- Reach: The percentage of global Internet users who visit Peet’s website is
fluctuating around its average line of 0.002 percent in the last 3 months in 2009. The
trend is also increasing from September to the end of November. This increasing of
numbers of visitors might derive from its new ‘Peetniks’ program that the company is
promoting through its website and trying to gain more customers to sigh for its
automatic reorder program, as well as the better situation of the financial situation
worldwide.
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17. - Localization: Peet’s Coffee & Tea mainly operates in the West Coast of the U.S. and
the handful numbers of stores outside the state of California. The company is
considered main rivals for Starbucks in the U.S. where they are headquartered. Since
the company only operates in the U.S., Peet’s website is only available in English and
only targeted the U.S. consumers and markets.
5.3.3 Place: Comparisons
The physical distributions of these two companies, in the U.S. at least, are
relatively identical. Both Starbucks and Peet’s are focused on high-end consumer
segments and sell their products exclusively only in its store branches. The two
companies are implementing direct distribution through their own online stores, as well
as adapting from exclusive to selective distribution in their online selling through the
use of re-intermediaries that help them get their products across to the end consumers
with less effort and wider range. Judging at their online websites, the main pages and
sub pages of Starbucks are decorated with soft colors and fewer icons with the high-
bandwidth graphic display in the middle of the page to emphasize the news events of
the current period, compared to the main pages and sub pages of Peet’s that uses dark
color tone for its background and are more crowded with links and contents (lower
bandwidth) that gets you to where you want to go right from their first webpage.
Starbucks’ strategy is to try to use its user-friendly links with comfortable
display to lure customers to walk around their website and try to educate them with
their products, events and promotions before smoothly guide them to the checkout page
with the possibility of picking up more products than the customers actually intended to
buy in the first place. On the other, Peet’s website is rather simple with less effort to
get to their product listing pages and proceed to check out and having an ‘Express Buy’
page that group up all its best-selling products together for the customers to quickly
choose to purchase. Many of Peet’s web pages that are packed with icons and
promotions can get customers to the products they are looking to observe or purchase
quick and easy.
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18. Comparing between the reach of their websites by global Internet users in the
past three months, ‘Starbucks.com’ website has been opened by Internet users globally
10 times more than ‘Peets.com,’ which has total visitors of around only 0.002 percent.
The greater number of Starbucks website visitors is related to its much bigger size of
business, its global brand recognition and store locations that operates in many
countries worldwide. Starbucks has many websites available in many different
languages for the local consumers in their target markets such as in Asia
(‘Starbucks.cn’ and ‘Starbucks.co.jp,’ etc.) and Europe. The total number of reach will
be higher than 0.02 percent if combine all of the company’s websites together.
Starbucks has many different websites that are decorated uniquely to fit the local target
markets in 49 countries worldwide and are available in many different languages;
whereas Peet’s website is only available in English due to its business that is only
available in the Western U.S. market.
5.4.1 Promotion: Starbucks Coffee
Starbucks is using many promotional strategies to introduce its new line of
products, improve its sales and promote their brand awareness and customer loyalty.
Using of its main page graphic display to promote its Starbucks (PRODUCT)RED items
and (STARBUCKS)RED Card, advertising that every time a customer purchase one of
these set of products, the company will make a contribution to the Global Fund to help
the people fight against HIV disease in Africa. This social contribution will benefit
Starbucks in both their public image through their donation and the increase in number
of sales of its products.
The company is promoting many of its environmental and social responsibility
campaigns to help raise its brand value to its customers by promoting its Starbucks
Shared Planet web page that talks about their commitment to ethical sourcing of their
coffee beans and trades, environmental friendly materials such as recycle and reusable
cups, and their commitment to 1 million community service hours each year.
18
19. Apart from their public relation campaigns, Starbucks also promotes their new
products, Starbucks VIATM, its new on-the-go instant coffee packs, and the new
products for the upcoming holidays on the main page of their website. The company is
putting huge effort in social contribution to raise its public image, while sneaking in a
little bit of their new product advertisement as their promotional strategies in their
website.
5.4.2 Promotion: Peet’s Coffee & Tea
The company is promoting its ‘Peetniks’ program that customers can sign up
for and the company will be notified when the customers are running out of coffee
beans, then the company will automatically ship out a new set of order to the customers
by the amount that they inform Peet’s in the program. This program helps diminish the
time necessary for its customers to visit their website and make an order every time
they run out of their coffee beans. The company promote this promotion in their main
page as “Save 50% on Shipping & get a free pound of Holiday Blend” when a
customer join its program.
The company is putting less effort on social contribution programs and
environmental concern. Most of its promotion strategies are to increase its sales by
offering cheap delivery method and free giveaways.
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20. 5.4.3 Promotion: Comparisons
Starbucks is emphasizing on their public relation, social contribution and
environmental concern campaigns in their promotional website pages to increase its
public image and brand value to the customers while adding their new product
advertisement along the side; whereas the promotional on its new services and products
are the main promotional theme for Peet’s Coffee & Tea and little concern on the
public relation. The differences between the two companies’ promotional strategies are
due to their scale of business. Starbucks is an international corporate firm with great
numbers of stores worldwide, the strong public image is very significant to the
company’s brand value as a base to support their rapid expansion strategy to every
corner of the world; whereas for Peet’s, the company scale is relatively much smaller
and that its public image does not affect much on its sales and its business compared to
Starbucks.
5.5.1 People: Starbucks Coffee
The company is putting much effort in creating new campaigns that deal with
the social responsibility and environmental concern to build up its public image in their
consumer’s mind and the societies they are doing their business in, as well as to create
a world of learning about its company, its coffee, the company’s cultures and try to get
them across to consumers through its own website. By creating value to its brand in
consumers’ mind, the value of its product and services are added and Starbucks’
community is built. The company’s commitment to bringing great benefits for its
employees and workplaces environment, which will eventually perceived and
experienced by the customers through the quality of products and services provided to
them.
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21. 5.5.2 People: Peet’s Coffee & Tea
Peet’s is also trying to guide the customers to know more about their company,
their people and the products they are selling in their websites. The company has put
less concern on social contribution and environmental issues, and due to its smaller
scale of business compared to Starbucks, Peet’s can focus more on selling of its
products by carrying special promotions and deals to attract and retain its customers.
5.5.3 People: Comparisons
Starbucks’ strategy for its rapid-expansion of store locations is relied greatly on
its brand image and public relation. Gaining of acceptance from local consumers and
people in the society where they are planning to operate their business in, as well as
putting high concerns in their own workforces are the key to their smoother business
operation in the long run. Comparing Peet’s to Starbucks, the scale of the company is
by far smaller than its rival and they are mainly operating in its birthplace and that the
community and local consumers are familiar with its brand and the public relation has
affected their business less than Starbucks, so they can emphasize more on promoting
great deals and products in their website.
5.6.1 Physical Evidence: Starbucks Coffee
Once a customer has signed up for his/her account in Starbucks’ website, an
immediate e-mail confirming that his/her account has been successfully created along
with a welcome message and the e-mail address where a customer can use to contact
the company’s online staff members for any customer account problems. After a new
account has been created, a customer can choose to add a new Starbucks card
containing his/her own information to use in the future with online purchasing in the
company’s website for used for their customer relationship management. The credit
card number will only requested once the customer has selected items toward the
checkout page. This somehow makes its customers to feel more comfortable logging
on to their own log in page without having to leave any financial-related information in
the website until they choose to purchase something from the online store. During the
registration the customers can choose to receive any newsletter or promotions from
Starbucks in the future. The navigation experience is more of a gradual education
toward Starbucks products and cultures through their web pages one by one, most of
the company’s web pages are full with information related to the news and events about
what the company is currently doing and the new lines of products and packaging for
special occasions and social contributions for public.
5.6.2 Physical Evidence: Peet’s Coffee & Tea
When new customers first registered to Peet’s website, they are somewhat
requested to key in their financial information (credit card number) before the
registration of their new accounts are fully completed. This might scare consumers
away from wanting to complete their registering. The customers may want to be a part
of the company’s website and see what better deals they would get by creating their
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22. own accounts online. There is no confirmation letter to let you know whether your
account information has proceeded or not, but they are asked to choose to subscribe to
the company’s newsletter and promotions automatically sent to their e-mail address in
future. The navigation is relatively straightforward; many of the web pages are filled
with products, descriptions and prices for you to directly place in your online shopping
carts and ready for checkout.
5.6.3 Physical Evidence: Comparisons
Starbucks is comparably better than Peet’s on their customer relationship
management in trying to get their customers to register personal information in their
website. The less in pressure results in the more willingness of online consumers to
participate in Starbucks online website. The deals and sales promotions are much
clearer showed in Peet’s online store, persuading online consumers to go quickly
through their pages to checkout. Starbucks, however, is more toward creating its brand
value and culture to online visitors, emphasizing on news events and public relation
campaigns to raise their brand reputation toward the society.
6. Traffic Ranking: Starbucks.com vs. Peets.com
The traffic ranking of global Internet users from ‘alexa.com’ comparing
between the two companies’ websites for the past three months, September to
November 2009, is as shown below.
Starbucks.com (blue line) has attracted much more online visitors as well as the
higher number of web pages on the site in the past three months (ranked in the top
7,000 most-visited websites in the entire world), resulting in a much higher traffic
ranking compared to Peets.com (red line, ranked in the top 85,000 websites). The
much larger number of viewers toward Starbuck.com is mainly due to the much larger
business size and its worldwide operation compared to Peet’s Coffee & Tea that has
much lower brand recognition since it only operates in the U.S. market.
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23. Comparing on the average time global Internet users spend on viewing each
website, visitors usually spend around three minutes on Starbucks.com (blue line) and
there is not much of a fluctuation between each day in the past three months. The
average time online users spend on Peets.com (red line), however, fluctuates in a much
larger fashion from one period to another.
These fluctuations might derive from different promotions and great deals the
company promoted to support their sales during different occasions, attracting
consumers to search around and stay in their website longer (around 4 minutes) in early
September and slid down as most consumers were already aware of the deals and
promotions to about 2.5 minutes per visit in early October, then climbs up again to
about 3.5 minutes in the third quarter of October as new promotions, products, or
annual occasions had been reached.
Starbucks.com, however, can keep its online viewers to spend time on its
website in a much steady fashion (low fluctuation) based on the fact that the website is
rather a front window for the company to educate and promote the news events, new
products during different occasion and culture toward the online consumers rather
focus on selling as in Peets.com, as well as the appearance of the website and web
pages that are less crowded with information and texts but rather with attractive
pictures, video clips and the use soft and cozy colors and page layouts that are
comfortable to perceive.
7. Vision Statement
7.1 Starbucks Coffee
“To establish Starbucks as the most recognized and respected brand in the world.”[10]
Starbucks’ vision statement is very clear in a sense that they are trying to make
their brand name and logo the first thing consumers everywhere in the world think of
when they are thirsty or looking for places to hang out. The company’s main strategy
is to rapidly expand its coffeehouse branches to as many corners domestically and
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24. internationally, and they strongly believe that eventually their vision will come to
reality. Their vision statement is specific, measurable and realistic. The world’s
number one brand recognition is the Coca-Cola Company. Coca-Cola has been in the
carbonated beverages market for a very long time, so it is very difficult and quite long-
term goal for Starbucks to compete for the top ranked brand recognition position. The
goal is achievable, but it is not time-framed as it is long-term goal of the company.
7.2 Peet’s Coffee & Tea
“To be the gold standard specialty coffee and tea brand available to the world, with one
of the most dedicated and loyal customer followings of any brand.”[11]
The vision statement is very straightforward as the company is consistently
trying to bring out a premium quality of its specialty coffee and tea products to the
world. Currently, the company is only operating mainly in the U.S. western market and
has not expanded to international market yet. Peet’s Coffee & Tea has been in the
coffee business for a very long time and it is trying to increase its brand reputation to a
wider markets. The statement is specific as to be “gold standard” of coffee retail
business, measurable by customers’ feedbacks and percentage of market share,
achievable, realistic, but not time-framed.
8. Mission Statement
8.1 Starbucks Coffee
“To inspire and nurture the human spirit – one person, one cup, and one neighborhood
at a time.”[10]
While “to inspire and nurture the human spirit” of their mission sounds
somewhat vague and not related to coffee, it tells consumers very well about their
existence and the way they are doing their business. Starbucks’ mission is to expand
their unique experiences offered to their customers every time they make a visit in any
of their coffeehouses located anywhere in the world. The company continues to
increase its numbers of stores and expand itself to every location worldwide to serve
every consumers their premium roast cup of coffee and warmth welcome through their
“like home” quality of services, gradually fulfill those experiences to as many
neighborhoods.
8.2 Peet’s Coffee & Tea
“To enable and inspire customers to enjoy the daily pleasure of Peet's Coffees & Teas
by providing a distinctive, superior product, superior coffee and tea knowledge and
superior service to every customer, every day.
1. Create a work environment that values and promotes teamwork and diversity, where
we treat each other with dignity and respect.
2. Communicate honestly and directly to each other, our customers and our partners.
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25. 3. Remain dedicated to the highest standards of bean and leaf selectivity, our signature,
artisan roasting process and freshness.
4. Expand and deepen the coffee and tea knowledge and passion among our own
people.
5. Focus on developing fanatic customers, not just satisfied customers, who evangelize
Peet's to others.
6. Positively contribute to the communities and environment of producing countries
globally and in the communities we operate in locally.
7. Recognize that improving profitability over time is essential to our success.”[11]
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26. 9. SWOT Analysis
Strengths Weaknesses
• Brand recognition and
customer loyalty • Expensive product pricings
• Extensive store network • Entire business relies on one
• Diversified product ranges, industry, risky in case of coffee
including non-coffee industry breakdowns.
Starbucks beverages and food items • Market saturation
Coffee • Good work environment • Under Fair Trade Certified
• Strong Human Resource coffee, paid 23% higher than
Management and employee market price
relationships
• Social responsibility image • Low switching costs for
• Effective store location consumers
strategy
• Only available in the western
• Brand reputation, long U.S.
presence in the market
• Conservative image
• High experience and
Peet’s Coffee • Low brand recognition
knowledge in extensive range
& Tea • Low switching costs for
of coffee beans and related
consumers
products
• Strong customer base (in
western U.S. market) • Lack of social image, public
relation and global contribution
Opportunities Threats
• Possible saturation in coffee in
• Regional and Global
the U.S. market
expansion
Starbucks • Higher prices of raw materials
Coffee • Widen its distribution
• Intense competition from
channels (delivery,
rivals, eq. McCafe
+ supermarkets)
(comparative pricing), Dunkin’
• Expand product ranges, food
Peet’s Coffee Donuts (lower pricing)
and non-food products
& Tea • Growing of interests in lower-
• Possible future trend toward
price coffee due to the
substitution of coffee and
financial situation
social gathering places
Starbucks Coffee:
1. Strong Human Resources Management and Employee relationships + Global
expansion:
- To globally expand its stores, Starbucks can use its Strong HRM to manage
its branches in foreign countries through recruiting local employees with
high potential and effectively train them to provide the same standard of
services found in every Starbucks branches in the U.S. or any countries
worldwide. With efficient employee benefit programs, the employees will
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27. feel secure and happy working for Starbucks, hence, the better the services
provided to customers.
2. Brand recognition and Customer loyalty + Widen its distribution channels
(delivery, supermarkets) and Expand product range:
- Starbucks can also push out its products (coffee beans, tea, and
merchandises) to a broader range of distribution channels. With its strong
branding and high recognition in the market, the company can use this
advantage to sell its products over other brands on the shelves.
3. Expensive product pricings + Growing of interests in lower-price coffee due to
the financial situation:
- The financial crisis has strong influence in the consumers’ purchasing
behavior to prefer different brands of coffee with acceptable quality that
offered at lower prices in the market. Starbucks can try to introduce a new
line of coffee in their menu selling at lower price and try to capture the
lower-end consumers. Though this strategy may decrease the brand image
of the premium coffee Starbucks has over the years, the company needs to
clearly distinguish between its premium product lines from its more
affordable products to gain lower-income consumers while maintaining the
loyalty of its higher-end consumers for its premium roast coffee.
4. Brand recognition + Possible saturation in coffee in the U.S. market Global
expansion:
- The increasing of new coffee-making companies and the higher competition
in the coffee business in the U.S. market has created a sign for the possible
saturation of the market in the near future. Starbucks, with thousands of
branches in the U.S. market alone, can use the strength of its brand image
and reputation to emphasize on expanding to the worldwide market as many
of the markets internationally are still at early ages of coffee trend. The
company should maintain its standing in the U.S. market as the brand for
coffee industry, and put more efforts in learning and adapt to international
markets for rapid growth in the future.
5. Low switching costs for consumers + Intense competition from rivals such as
McCafe and Dunkin Donuts:
- Consumers have lower and lower switching cost due to the increasing in
availability of the premium roast coffee in the market. Starbucks can try to
create a new line of products at lower price to compete with its rivals.
Having their strong brand that mainly focused in making coffee as its
advantage, consumers will have higher tendency to choose Starbucks over
other brands if sold at the same price due to its brand.
6. Under Fair Trade Certified Coffee + Higher prices for raw materials:
- Starbucks is under the Fair Trade Certified coffee that the company is
obligated to pay 23% higher than the actual market price of its coffee beans;
the rising of prices for raw materials will definitely have great impact on the
cost for the company. Starbucks can encounter this crisis by acquiring the
suppliers of its raw materials to have higher control over the prices, as well
as seeking for more suppliers in different region of the world to avoid the
rising of supplier’s bargaining powers.
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28. 7. Possible future trend toward substitution + Lower switching costs:
- The coffee consuming trend is out of the company’s control. Starbucks must
consistently focus on its customers and be consumer-oriented to adjust its
products or services to best meet the current consumer demands. This is
considered as the long-term possibility that Starbucks might have to face in
the future. Though, in many countries the trend of coffee drinking is still at a
very early stage and the impacts on the company at the moment is still very
low.
Peet’s Coffee & Tea:
1. Brand reputation, long presence in the market + Regional expansion:
- The company can use its brand reputation and try to spread its braches
toward other regions in the U.S. market first and to measure its brand and
product acceptance from domestic consumers. With the long presence in
the coffee industry, the company can use its experience found on one region
of the national market as a base to adjust their strategies to suit consumers’
demands determined by market research to expand its business to broader
regions in the U.S.
2. High experience and knowledge in extensive range of coffee products + Expand
product ranges:
- Based on the facts that Peet’s has been in the coffee beans and related
products for a very long time, the company can use the market research to
define what the customers really want with their coffee or products to go
along with the coffee or tea to consistently develop new products to attract
more customers and expand its product selections to satisfy existing
customers and keep coming back to the stores.
3. Low brand recognition and Low switching costs for consumers + Growing of
interests in lower-price coffee due to the financial situation:
- The lack of brand recognition of Peet’s in other regions of domestic market
and the low switching costs for consumers to change their desires to
purchase products from its competitors have created major problems for the
company and the need of strategic adjustment to over these crisis. The
opportunity created from the world financial crisis is that more and more
customers are leaning from premium prices toward lower prices for coffee.
The company will have to emphasize more on expanding its brand
awareness to consumers around the market and differentiates its products to
higher the switching costs for consumers and use the recognition of its
brand to come up with new lower-price lines of products to capitalize on the
new opportunity created by the change in the purchasing behavior of the
consumers, as well as to continuously come up with new promotions and
deals to make consumers feel they getting more (premium quality compared
to lower price coffee, sales promotion) for less (money they pay) the higher
prices of Peet’s brand of coffee is well deserved.
4. Widen its distribution channels (delivery, supermarkets) + Low brand
recognition
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29. - One of the company’s main weaknesses is the lack of brand recognition in
the U.S. market alone. The company is selling their product exclusively
through its handful store locations, Peets.com website and online re-
intermediaries such as Amazon.com to preserve its brand premium image
and not mass selling coffee. Though, the distribution channels the company
is selling their products through are limited and the expansion of its
channels toward home delivery and occupying shelf-spaces in major
supermarkets might be a way to rapidly increase its brand recognition and
widen the consumer markets. The company may choose to only expand its
products distributions through selecting only intermediaries with premium
brands and avoid low-cost leadership wholesalers such as Wal-Mart to
increase the ease of reach by its consumers while preserving its brand
premium for coffee.
10. Summary of Strategies for Starbucks Coffee and Peet’s Coffee & Tea
Starbucks is clearly following its mission statement of consistently growing its
business worldwide and reach out to as many consumers as possible, serving them with
premium cup of coffee along with friendly services and comfortable atmospheres
inside the coffeehouses to make customers feel “just like home” every time they visit,
while expanding its culture and social contributions to the people around the world.
Starbuck is using its website to rapidly expand its culture and brand, reaching its wing
further to cover as many consumers online as possible.
All the strategies of rapid store expansion, strong customer relationship, as well
as the great quality of services and products that meet an extensive range of consumer
desires of Starbucks will bring forth financial success to the company and increase
shareholder values, propelling Starbucks to move closer toward the company’s vision
statement of becoming the most recognized and respected brand in the world.
Starbucks’s online website, Starbucks.com, is well supporting their vision, mission and
company’s goals. The way the company is trying to spread out its culture, unique
aroma of its premium brewed coffee and the global contribution that reflects the
company’s ultimate direction of creating the brand Starbucks to be the world’s listed
number one brand in the future.
Peet’s Coffee & Tea is also trying to capitalize on its sales and brand reputation
in the regions where the company is mainly operating in. Peets.com has created
another significant way for the company to connect and reach out to its existing
customers in its market, promoting its brand and products through sales and attractive
deals such as ‘PEETNIKS’ to emphasize on creating customer loyalty to its brand
through ‘automatically reorder’ program that knows when each customers participating
in the program is running out of Peet’s coffee beans and other products and
automatically place a new order for the customers periodically based on the amount
they requested when they signed up for the program. The company is also using its
website as a base to try to spread its image of passion for coffee and tea to the
consumers’ perceptions.
Though Peets.com is appearing toward the selling activities rather educating
customers and public relations as for Starbuck.com, it is doing well in supporting its
vision, mission and goals of creating gold quality of products to people in around the
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30. world and becomes one of the most dedicated brands with strong customer loyalty by
consistently come up with new products, deals and superior services that keep on
satisfying its customers more and more everyday.
11. Recommendation
Starbucks.com and Peets.com are aiming at different approach, one is to
increase its brand through products education and social contribution events while the
other is more toward pushing its products to sell and sales promotions, though they
both are moving in the same direction of attracting more customers and convincing
them to have higher interests in their brands and products. Starbucks, having higher
bandwidth graphics displayed in many of its webpage for new events and public
relations, can emphasize more on creating product deals and promotions to increase its
online sales. Though, it is very important to notice that Starbucks.com stands for much
larger market coverage (Eastern vs. Western regions in the U.S., as well as many other
countries that Starbucks uses its Starbucks.com website for rather than creating a
special website for that particular country) than Peets.com, making it very challenging
for Starbucks to provide promotions and sales deals to satisfy all the demands in
numbers of areas.
Starbucks.com is doing well in making its high-bandwidth graphic to only work
when consumers choose to play it, reducing the time to open its websites for online
consumers with lower bandwidth Internet connection. Peets.com, with its much
smaller scale of business and only operates in several states in the Western U.S., can
control its website to aim at improving its sales of products. Based on the result shown
in the traffic rank section, Peets.com can try to manage its promotions and deals in a
more frequent manner to keep online consumers who visit its website to spend more
time exploring their contents for a longer period in each month. Peet’s Coffee & Tea
can also try to expand its products offering in more packaging sizes to satisfy more
demands and compete strongly with Starbucks’ offers such as instant coffee packs.
12. Conclusion
In this report, the internal situation (strengths and weaknesses) and company’s
external factors (opportunities and threats) of Starbucks Coffee and Peet’s Coffee &
Tea have been studied and analyzed, as well as the comparisons on the different in
online sales and marketing activities and the appearances presented on their online
websites.
Starbucks.com website is well supporting what the company is actually doing
‘in real life.’ Most, if not all, the things they do and offer online is well matched with
the company’s goals toward its mission and vision stated. Starbucks is clearly
following its mission statement of consistently growing its business worldwide and
reach out to as many consumers as possible, serving them with premium cup of coffee
along with friendly services and comfortable atmospheres inside the coffeehouses to
make customers feel “just like home” every time they visit, while expanding its culture
and social contributions to the people around the world. All the strategies of rapid store
expansion, strong customer relationship, as well as the great quality of services and
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31. products that meet an extensive range of consumer desires of Starbucks will bring forth
financial success to the company and increase shareholder values, propelling Starbucks
to move closer toward the company’s vision statement of becoming the most
recognized and respected brand in the world.
Peets.com, on the other hand, is supporting its smaller operational scale through
the strong enforcement of sales and promotions in it online website. The company is
promoting its brand through specialty coffee with great deals and automatic reordering
delivery program, all of which are leading to the company’s stated vision and mission
of serving gold standard specialty coffee while promoting its brand loyalty along the
way.
In my opinion, Starbucks should adjust its websites and the categories to make
consumers who are only looking to purchase Starbucks products and not desire to read
through all the product description pages to proceed through to checkout faster with no
hustle. By providing pictures of product promotions as a quick link to its express
online checkout page will help the company capitalize on the groups of consumers who
demand quick online purchasing and transaction, thereby increasing the customer
satisfaction to use its website, generating “word-of-mouth” from customers to
customers and increase the number of traffic in Starbucks.com, hence, the increase in
measurable online sales. Peets.com, however, can alter its online website to bring out
the company’s culture to online viewers rather than only using the company’s website
as a tool to increasing its sales, or else the image of its online website will eventually be
a just another typical website that sells premium coffee products in consumers’ minds.
The core value and brand culture of Peet’s Coffee & Tea can be enhanced to project a
long-term profitability and customer loyalty. The availability of different languages
should also be provided in Peets.com even though the company is only operating in the
U.S. It is important to note that there are many foreigners livening the country
especially in the western region of the U.S. such as Mexicans and Asians, the company
can make these groups of customers feel that they are cared and put attention by the
company and thereby leading to higher number of potential customers, a base for future
growth and expansion toward other regions of the U.S. and nearby countries, and the
increase in company’s sales and profitability in a long run.
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