MARIANO MARCOS STATE UNIVERSITY

College of Business, Economics and Accountancy

“The Consumer’s Odyssey:

Navigating the World of Buying,
Having, and Being”

In partial fulfilment of the Requirements

for PMM 101 – Consumer Behavior

Alexandra Jane A. Albino

Student

Dr. Jeffrey T. De Vera

Faculty-In-Charge

December 2023
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

Introduction

This activity focuses on the product I have chosen, Starbucks (coffee). The purpose of this paper is
to identify the analysis and process of consumer behavior in this product. This product's objective is to
know a consumer's target, needs, and wants. It also includes the foundation of the strategy, design,
launch, and improvements of the product said which is Starbucks.

Product Service/Selection

The history of Starbucks starts in 1971 in the cobblestone alleys of Seattle's famed Pike Place
Market. Starbucks initially opened its doors here, providing consumers with freshly roasted coffee
beans, tea, and spices from all over the world to take home. The name evoked the maritime heritage of
the early coffee traders and was inspired by the classic story "Moby-Dick”. Ten years later, Howard
Schultz, a young man from New York, would enter through these doors and, from the moment he took a
sip, instantly fell in love with Starbucks coffee. Another discovery would come down a different
cobblestone road when he joined the company in 1982. After visiting several coffee shops in Milan in
1983, Howard was so moved by the country's warmth and artistic coffee culture that he returned to
Seattle with the idea of introducing it to Starbucks. In 1987, we changed from brown to green aprons
and started a new chapter in our coffeehouse history. They would expand over the next 20 years to
serve millions of clients every week and integrate into tens of thousands of neighborhoods globally. The
purpose is to nourish the boundless potential of human connection with every cup, every discussion,
and every community. This mission guides all we do.

Starbucks is a multinational corporation that runs the world's largest chain of coffee shops and one
of the most well-known brands. With its main office in Seattle, Washington, the corporation runs over
35,000 stores in 80 countries. Besides popularizing and selling variations on coffee as a beverage,
Starbucks also sells teas, blended and dessert-like beverages to suit nearly every taste. Their other
products include whole-bean or ground coffee, teas, juices, and pastries. Most locations also sell pre-
packaged items, sandwiches, and various branded merchandise. Starbucks branded retail items, such as
bottled drinks, and instant and ground coffees are sold through grocery outlets as well. One of the main
strengths of Starbucks is its ability to effectively use its brand equity to offer products at premium prices
relative to other coffee products. An important part of their brand equity is accomplished by providing a
distinctive “Starbucks Experience”, which includes a personalized, neighborhood coffee shop
experience, combined with consistent quality and convenience. This is all a part of a goal to create
customer loyalty. Another notable strength is its leverage as one of the largest coffee buyers in the
World and builds strong relationships with its suppliers to deliver a consistent product while maintaining
strong profit margins. Although it wasn't the first large coffee chain in the United States, Starbucks was
the first to develop and widely disseminate a specific type of café culture. Starbucks started marketing
coffee as a comprehensive experience that integrated function, atmosphere, community, and lifestyle in
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

the 1990s. Starbucks became one of the most well-known brands in the coffee shop business and saw
enormous growth by changing people's perceptions of coffee and coffee shops.

I chose this product because as a Gen-Z who loves to drink coffee every single day, it is right for
me to choose the best brewing and selling coffee in the market which is Starbucks. The drinks in
Starbucks particularly coffee are one of the best-selling drinks right now in the market because of their
appetizing taste and one of the best ways to catch consumers' eye to the product is the aroma of the
coffee around the shop/store.

Internal Influence Analysis

Products

Starbucks boasts a wide variety of over 30 coffee products that customers can choose from. The
company is always introducing novel products in the market to suit the changing demands, tastes, and
preferences of its growing customer base. Some of the notable new products include “Instant via Ready”
and “Tazo Tea Infusions.”

Price

Starbucks’ products are priced at a premium owing to the perceived upscale image in the eyes of
the consumers. In this case, Starbucks uses high pricing to differentiate itself from the rest of the
competition (Starbucks, 2011).

Place

Most Starbucks coffee stores are in neighborhoods with high traffic. The company’s coffee stores
are also located in different large chains. The “third place” concept as practiced by Starbucks has helped
to turn its stores into an ideal environment away from home where customers can relax, surf the
internet, or listen to music.

Promotion

One of the fundamental requirements for successful promotion is to facilitate friendly and smooth
interactions between the company’s representatives and the market without compromising the efficient
way a company can offer its services to the target market.

Until very recently, Starbucks has relied on word of mouth and its large store presence as its
advertising and promotional and advertising tools. The management was convinced that a memorable
and distinct brand would result in customer loyalty and repeat business. However, as competition
becomes stiffer, Starbucks has had to embrace various promotional strategies. The success of any
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College of Business, Economics, and
Accountancy

service firm largely depends on the ability of the organization in question to target, acquire, get hold of,
and retain the ‘right’ customers. Good organizations are mainly based on cultivating customer retention
relationships, as opposed to the acquisition/transaction mentality. Starbucks is one such organization.

The firm knows that a loyal customer is often a reliable source of revenue for the firm for many
years, and hence viable business. This has seen Starbucks launch the Starbucks Card (Starbucks, 2011) to
facilitate customer loyalty. Starbucks has also embraced a philanthropic philosophy as a tool for
promotion. The company contributes to different non-profit organizations in a bid to enhance brand
awareness and image among local communities.

External Influence Analysis

Socio-cultural environment

Consumers across the world are increasingly demanding fair practices, and this has seen many
firms change their operating practices to accommodate these demands, and Starbucks is no exception.
The company implemented the C.A.F.E program to address issues raised by customers regarding
Starbucks’ social reasonability. The company has also had to adjust its product offerings to meet the
growing demands of the rising number of educated and health-conscious consumers.

For example, Starbucks now has non-fat milk coffee. Consumers are also increasingly becoming
aware of the need to reduce their sugar intake and Starbucks has also had to adjust the sugar content of
its coffee products as well (Wall Street Journal, 2009).

Technological Segment

Advances in technology affect product innovation, product services, customers’ store experience,
and the way organizations can interact with other business partners. Technological improvements can
enable a company to market its products directly to its target market using emails, text messages, and
social network sites as well. By technology, Starbucks has managed to change its product mix to suit new
market segments. A good example is the company’s VIA ready brew (Starbucks, 2011) and internet
surfing services using Wi-Fi internet connectivity.

Competitors

The two main competitors of Starbucks are MacDonald’s McCafé and Dunkin Donuts. On the one
hand, McCafé maintains a low-price strategy for its products. On the other hand, Dunkin Donuts offers
customers a variety of coffee flavors to choose from, in addition to its emphasis on quality (Dicarlo,
2004).
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

Customers

Starbucks offers its patrons interpersonal services that involve a lot of interaction between
baristas, employees, and patrons. To better cater to the tastes and preferences of consumers in
particular markets, the corporation has attempted to alter the formula of a few of its goods.

Starbucks' contact staff is essential to building stronger bonds with its patrons. These contacts serve as
the company's brand ambassadors in this instance. Because the management at Starbucks understands
the critical role that employees and baristas play, they provide incentives and prizes for their exceptional
performance.

Decision-Making Process

Identify User Needs

➢ Secondary research, or desk research, is useful for obtaining information and insights to
comprehend consumer demands based on data already available from a variety of internal and
external sources. Publications, scholarly articles, industry studies, online resources, social media,
and other third-party data sources may all provide this information.

Evaluate Potential Buyers (10 Strategies for Evaluating a Potential Buyer)

➢ (1) Hiring a business broker is a time-saving and efficient method for evaluating potential buyers
for your practice. They have expertise, resources, and a network of contacts to help find
qualified buyers and negotiate the best deal.
(2) Before selling your practice, research the potential buyer's financial capability by gathering
information on their assets, liabilities, and credit history. A strong financial portfolio can provide
necessary funds for acquisition and long-term business growth, while financial instability may
hinder business stability. It's crucial to understand the buyer's finances to avoid future issues.
(3) Assessing a potential buyer's industry knowledge and experience is crucial for successful
business growth. Look for those with previous experience in healthcare, accounting, legal
services, or other private practice areas. This ensures they have the necessary skills to manage
the business effectively and make informed decisions. Consider their experience in managing
similar-sized businesses to ensure they have the necessary skills.
(4) To find a potential buyer, analyze their business ownership history to understand their
management style and success rate. Look for experienced business owners with sound financial
decisions and experience in running successful businesses. Research any red flags or issues in
their previous ventures to ensure they have the skills and experience to continue growing your
practice after you leave.
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

(5) Understanding potential buyers' motivations for acquiring a business is crucial. They may be
interested in expanding their current business, personal interest in the industry, or seeking
investment opportunities. Some buyers may be curious competitors seeking insider information
about your practice. Asking questions about motivation helps determine their intentions and the
seriousness of their acquisition and helps determine if their goals align with yours for the future
of your business.
(6) Researching past sales of local businesses can provide valuable insights into market trends,
helping to determine if a potential buyer's offer is fair and accurately reflects the business's
market value. This knowledge also helps in understanding what to expect during negotiations
and navigating them with confidence.
(7) Assessing a potential buyer's understanding of your business model is crucial for evaluating
their ability to successfully take over and grow your practice. Asking specific questions about
operations, services, and policies helps gauge their knowledge and familiarity with your
business, identifying areas where they may need further education or training.
(8) During the evaluation process, ask potential buyers to outline their vision for the future of
your business and how they plan to implement it. This will provide insight into their goals and
strategies for growth, helping you identify candidates with strong intentions and ensuring they
have a realistic understanding of the industry and your specific business.
(9) Before making a final decision, ask potential buyers for references from previous business
acquisitions or partners. This will allow you to speak with other business owners who have sold
their companies to the same buyer or have done business with them. References can also
provide insight into the buyer's negotiation skills and commitment to promises after acquiring
businesses. This helps you make an informed decision.
(10) Consult a lawyer to review all legal documents related to selling your practice, ensuring all
necessary agreements and contracts are in place and understanding any noncompete clauses or
restrictions that may affect your future involvement in the industry. This will help avoid
potential legal issues and provide peace of mind during the transaction.

Bid, Negotiate, and Select Suppliers

➢ Pricing, along with supply security, is unquestionably the most important role for the
procurement team, particularly considering the present economic climate when firms are
looking to reduce expenses. However, the ability to successfully negotiate lower supplier pricing
is ultimately what matters. Teams in charge of procurement must be ready with arguments on
why their supplier ought to reduce costs. Beyond price, though, for discussions to be successful,
companies and suppliers must agree on reasonable conditions about volume commitments,
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College of Business, Economics, and
Accountancy

lead times, and pricing. No matter what, the most important thing for a successful negotiation is
to have a win-win mindset. A winner-takes-all approach only offers short-term rewards and may
erode important supplier relationships.

Purchase Approval

➢ A procedure for approving orders and advancing them toward fulfillment is purchase approval.
They are essential because companies must monitor and manage their spending closely. After
all, especially in huge firms with hundreds or thousands of workers, it's easy for employees to
lose sight of how different departments are distributing money. Purchase approvals also
establish contracts that are valid by law between suppliers and consumers. This is required to
approve service agreements and carry out important duties. As an example, a company may
contract with a third party to handle a crucial procedure like marketing support. The agreement
of both parties to the transaction is guaranteed by the signing of a purchase order. This keeps
the legal issues at bay and allows both parties to carry out the agreement.

Release and Receive Purchase Requirements

➢ Many organizations are beginning to re-evaluate their purchasing processes and identify new

types of e-procurement tools that will meet their needs. The physical communication of
purchase needs takes place during this stage of the purchasing cycle. This portion of the buying
cycle ought to be somewhat standard if not always the most effective. While some organizations
use fax machines or mail to distribute material releases, others use electronic means to send
orders. Order cycle times can be shortened by using electronic data interchange (EDI), which
entails the electronic exchange of purchase documents between the customer and seller. The
number of EDI transactions is expected to rise in the next years, especially via the Internet.
Several additional critical papers, such as the bill of lading, the receiving discrepancy report, and
the material packing slip, are also required for the shipping and receiving processes and may be
sent electronically.

A quick survey in purchasing the chosen product (Starbucks)

What triggers the decision to buy a cup of coffee? Is it a need? A want?

➢ Although there may be a need in this situation—some people "need" a caffeine boost to start
the day—I think a want is what drives the decision to purchase coffee because it's not necessary
to choose that drink option over a glass of free water. However, the fundamental want of that
cup of coffee—which started that addiction—makes it a crucial indicator of not a need.
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

How do you seek information about purchasing a cup of coffee, knowing that coffee is a commodity?

➢ Usually, I turn to other people for information when looking for a decent place to buy coffee,
including friends and family who often buy coffee from shops nearby. I am also motivated to
visit stands by advertisements on the internet, television, and YouTube. Since beginning Sook
last year, I have also been experimenting with coffee, so I have some internal research to do.

What evaluative criteria do you use when purchasing a particular coffee brand?

➢ My decision-making criteria for selecting a coffee brand are based primarily on the objective
aspects of the product. Since I prefer colder, slushier coffee over hot, smooth varieties, the
taste, appearance, and temperature of my coffee are the objective factors that I pay attention
to. I believe that choosing a certain store has some subjective component when it comes to
companies like Starbucks. Starbucks is well-known for selling products bearing its emblems, such
as ornaments and recyclable coffee mugs.

What is your evoked set of coffee brands?

➢ Among the various coffee brands currently available, my selection includes Starbucks, Tim
Hortons, Coffee Project, and a few local coffee brands.

When and where do you buy a cup of coffee?

➢ I usually decide to get a cup of coffee in the morning and occasionally at night when I have to
stay up late to accomplish my homework. Usually, I get my coffee from fast-food restaurants
and cafés.

Do any of you use a Starbucks Card now? What are the benefits to you? What are the benefits to
Starbucks?

➢ No, but I did in the past when I received them as gifts for Christmas or my birthday. I used these
cards, of course, as Starbucks sells snacks, pastries, breakfast, and treats in addition to coffee.
I'm rather pleased with the choice.
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

Conclusion

Starbucks External Analysis & Internal Analysis: Summary of the key findings

Based on the foregoing arguments, the following key findings are made to enable Starbucks to enhance
its business philosophy in the face of increasing competition and a challenging business environment:

• Starbucks needs to keep coming up with fresh and creative ways to design and develop its
products. A move like that would strengthen Starbucks' business plan.
• To capitalize on the prosperity of the local business, the corporation ought to think about
forming alliances with businesses in outside markets. Additionally, this would lessen cultural
resistance.
• Additionally, Starbucks should think about forming alliances with unrelated businesses like car
wash services, movie theaters, and international retail chains like Walmart and IKEA.
• Because it is becoming more and more crucial for businesses to collaborate closely with rivals,
Starbucks should think about partnering with fast-food restaurants to enhance its coffee
offerings in addition to facing fierce competition from direct rivals like McDonald's.

Recommendations:

• Starbucks's biggest growth is in its international segment. The emerging markets of Brazil, India,
China, South Africa, and Mexico with a growing middle-class population continue to offer
significant opportunities to add new stores and serve more customers. Starbucks has already
made significant inroads into the Chinese market but there still is a lot of untapped potential
growth in these markets.
• Starbucks should grow in these emerging markets by winning locally Starbucks must remain
relevant to the customer to grow in these markets, and its management teams should have the
freedom to operate within their overall framework to tailor store format, introduce local
product mix, and price points to the needs, lifestyles, and tastes of each market/community.
• Under Starbucks's international strategy, it should transfer its core competencies and
capabilities from country to country and then gradually build profit drivers in several countries
as it continues its global expansion organically.
• Starbucks has great growth opportunities in the Tea and Fresh Juice products mix. They should
build up these products along the same lines as their core coffee products.
• Starbucks has great growth opportunities in the Tea and Fresh Juice products mix. They should
build up these products along the same lines as their core coffee products.
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College of Business, Economics, and
Accountancy

• Coffee beans are a significant input into Starbucks's value chain and there have been wide
fluctuations in the market prices of high-quality coffee beans. Starbucks could mitigate this price
volatility risk by implementing an effective hedging strategy like futures contracts to lock in their
estimated quantity inputs at a low swing price so that the future costs can be managed to a
greater extent.
• Starbucks's growth strategy in the saturated U.S. market should focus on getting additional
penetration into untapped rural markets.
• Another growth sector is its packaged coffee packets and iced beverage products. Starbucks
should build better relationships with big box retailers to get premium shelf space and increase
the efficiency of this distribution channel.
• Further build and retain customer loyalty, by building on the beta concept of on-the-go home
delivery.
• Their mobile apps business drove 10% of the sales in the US, so it would be recommended for
further building to streamline ease of use and payment process which would help drive more
customers, decrease wait time in stores, and increase efficiency. Integrating the Starbucks
loyalty program with the mobile application would also be recommended.

Based on the activity I accomplished, I learned that launching a business is not simple; there are
many challenges that a business owner must face to have a successful company. The activity
encompasses not just the business but also the individuals who work persistently to make their
company successful in the marketplace. Like Starbucks, it is well-known as one of the successful
businesses that provides the finest coffee in the vicinity. It's tough to break into the business world, but
if you pursue it and work hard, you can succeed and establish a well-known brand.
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

References:

1 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

2 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

3 BIS World: The Coffee & Snack Shop Industry in the US Report, October 2013

4 IBIS World: The Coffee & Snack Shop Industry in the US Report, October 2013

5 IBIS World: The Coffee & Snack Shop Industry in the US Report, October 2013

6 http://www.starbucks.com/about-us/company-information/mission-statement

7 http://www.starbucks.com/responsibility/sourcing/coffee

8 http://interbrand.com/en/best-global-brands/2013/Starbucks

9 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

10 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

11 http://www.starbucks.com/coffeehouse/store-design

12 http://money.cnn.com/magazines/fortune/best-companies/2013/snapshots/94.html

13 http://www.starbucks.com/responsibility/community

14 GlobalData: Starbucks Corporation Research Report, March 2013

15 http://blogs.wsj.com/corporate-intelligence/2013/07/26/starbucks-talks-about-its-future-morefood-
more-digital/

16 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

17 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

18 http://online.wsj.com/article/PR-CO-20131122-905464.html

19 http://www.forbes.com/sites/walterloeb/2013/01/31/starbucks-global-coffee-giant-has-newgrowth-
plans/

20 http://seekingalpha.com/article/637841-starbucks-smart-acquisition-strategy

21 http://techcrunch.com/2013/07/26/mobile-payment-at-u-s-starbucks-locations-crosses-10-asmore-
stores-get-wireless-charging/

22 http://www.starbucks.com/blog/introducing-starbucks-mobile-pour
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College of Business, Economics, and
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23 Starbucks 2013 10-K Form for FY ended on September 29th, 2013

Supplementary Sources:

http://www.mckinsey.com/insights/growth/starbucks_quest_for_healthy_growth_an_interview_

with_howard_schultz

http://www.forbes.com/sites/walterloeb/2013/01/31/starbucks-global-coffee-giant-has-newgrowth-
plans/

http://seattletimes.com/html/businesstechnology/2020031178_starbucksteavanaxml.html
 MARIANO MARCOS STATE UNIVERSITY
College of Business, Economics, and
Accountancy

Appendices

Starbucks's annual/quarterly income tax history and growth rate from 2010 to 2023. Income taxes can
be defined as the total amount of income tax expense for a given period.

• Starbuck's income taxes for the quarter ending September 30, 2023, were $0.374B, a 67.88%
increase year-over-year.
• Starbucks income taxes for the twelve months ending September 30, 2023, were $1.277B,
a 34.65% increase year-over-year.
• Starbuck's annual income taxes for 2023 were $1.277B, a 34.65% increase from 2022.
• Starbuck's annual income taxes for 2022 were $0.949B, a 17.99% decline from 2021.
• Starbucks annual income taxes for 2021 were $1.157B, a 382.52% increase from 2020.

Starbucks's total assets from 2010 to 2023. Total assets can be defined as the sum of all assets on a
company's balance sheet.

• Starbucks's total assets for the quarter ending September 30, 2023, were $29.446B, a 5.24%
increase year-over-year.
• Starbucks's total assets for 2023 were $29.446B, a 5.24% increase from 2022.
• Starbucks's total assets for 2022 were $27.978B, a 10.88% decline from 2021.
• Starbucks total assets for 2021 were $31.393B, a 6.87% increase from 2020.

Brand Logo
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College of Business, Economics, and
Accountancy

Products