C.U.S.

T
Capital University of Science & Technology

Submitted By:
Ihtisham Hussain

Reg#:MBAR163009

Kashif Khan

Reg#:MBAR163013

Ali Zeb

Reg#:MBAR163014

Submitted To:
AHSAN M. AHMAD
Date of Submission: 10-10-2016

Application of Product/Market Expansion Grid on Starbucks Coffee

Market Penetration: The vast majority of coffee in America is bought in retail stores and
brewed at home. To capture this demand, Starbucks has also pushed into Americas supermarket
aisles.
Beyond supermarkets, Starbucks kiosk have popped up everywhere, and in service businesses
from airlines to car dealerships, now proudly announce We serve Starbucks coffee.

Market Development: Starbuckss strategy has been to put stores everywhere. One threeblock stretch in Chicago contains six of the trendy coffee bars. In New York city there are two
Starbucks in one Macys store. A new Starbucks opens in the restroom of existing Starbucks.

Product Development: Beyond opening new shops, Starbucks has added in-store products
and features that get customers to stop in more often, stay longer, and buy more. Over the year
the retailer has beefed up its menu to include hot breakfast sandwiches plus lunch and dinner
items increasing the average customer purchase.

Diversification: Starbucks has partnered over the year with several firms to extend its brand
into new categories. For example, it joined with PepsiCo to stamp the Starbucks brand on bottled
Frappuccino and its Double-shot espresso drink. Starbucks ice cream, marketed in a joint venture
with Dreyers is now the leading brand of coffee ice cream; and Starbucks recently teamed with
Hershey to develop a line of coffee-flavored chocolates. It has also diversified into the
entertainment business.

Downsizing: Howard Schultz, who stepped down as CEO in 2000, grew worried. In a 2007
memo to Starbucks management Schultz lamented that in order to achieve the growth,
development, and scale necessary to go from less than 1,000 stores to 15,000 and beyond,
[Starbucks has made decision that may] have led to the watering down of the Starbucks
experience that Starbucks may be losing its soul.
Prepared by: Ali Zeb
Kashif Khan
Ihtisham Hussain