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Deck 23: Conducting Marketing Responsibly for Long-Term Success
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Virgin Group
Virgin roared onto the British stage in the 1970s with the innovative Virgin Records, brainchild of Richard Branson, who signed unknown artists and began a marathon of publicity that continues to this day. The flamboyant Branson sold Virgin Records (to Thorn-EMI for nearly $1 billion in 1992) but went on to create over 200 companies worldwide whose combined revenues exceeded €11.5 billion (about $16.2 billion) in 2009.
The Virgin name-the third most respected brand in Britain-and the Branson personality help to sell such diverse products and services as planes, trains, finance, soft drinks, music, mobile phones, cars, wine, publishing, and even bridal wear. Branson can create interest in almost any business he wants by simply attaching the "Virgin" name to it. He supplies the brand and a small initial investment and takes a majority control, and big-name partners come up with the cash.
The Virgin Group looks for new opportunities in markets with underserved, overcharged customers and complacent competition. Branson explained, "Wherever we find them, there is a clear opportunity area for Virgin to do a much better job than the competition. We introduce trust, innovation, and customer friendliness where they don't exist."
Some marketing and financial critics point out that Branson is diluting the brand, that it covers too many businesses. There have been some fumbles: Virgin Cola, Virgin Cosmetics, and Virgin Vodka have all but disappeared. But despite the diversity, all the lines connote value for money, quality, innovation, fun, and a sense of competitive challenge. And then Virgin's vaunted marketing expertise kicks in.
A master of the strategic publicity stunt, Branson knew photographers have a job to do and they'd turn up at his events if he gave them a good reason. He took on stodgy, overpriced British Airways by wearing World War I-era flying gear to announce the formation of Virgin Atlantic in 1984. The first Virgin flight took off laden with celebrities and media and equipped with a brass band, waiters from Maxim's in white tie and tails, and free-flowing champagne. The airborne party enjoyed international press coverage and millions of dollars' worth of free publicity.
When Branson launched Virgin Cola in the United States in 1998, he steered an army tank down Fifth Avenue in New York, garnering interviews on each of the network morning TV shows. In 2002, he plunged into Times Square from a crane to announce his mobile phone business. In 2004, introducing a line of hip techie gadgets called Virgin Pulse, Branson again took center stage, appearing at a New York City nightclub wearing a pair of flesh-colored tights and a strategically placed portable CD player.
Although he eschews traditional market research for a "screw it, let's do it" attitude, Branson stays in touch through constant customer contact. When he first set up Virgin Atlantic, he called 50 customers every month to chat and get their feedback. He appeared in airports to rub elbows with customers, and if a plane was delayed, he handed out gift certificates to a Virgin Megastore or discounts on future travel.
A nonprofit foundation called Virgin Unite has started to tackle global, social, and environmental problems with an entrepreneurial approach. A team of scientists, entrepreneurs, and environmental enthusiasts consult with Virgin about what it needs to do on a grassroots and global level. The goal is to change the way "businesses and the social sector work together-driving business as a force for good."
Clearly, Branson cares about Virgin's customers and the impact his companies have on people and the planet. That's why he recently made corporate responsibility and sustainable development (CR/SD) a key priority for every one of his companies. Each must act socially responsible and lower its carbon footprint. Branson stated, "I believe that in the future, we will be able to enjoy healthy and fulfilling lifestyles whilst minimizing the negative impact we have on the world."
Virgin categorizes its businesses into eight socially responsible and sustainable groups: Flying high, We're all going on a summer holiday, Staying in touch, Watching the pennies, Getting from A to B, My body is a temple, Out of this world, and Just get out and relax. Each is to do exceptionally good things in its industry as well as help to alleviate the bad things that come with the category. Virgin Wines strives to purchase only from small farms and pay fair prices while promoting responsible drinking. Virgin Games, an online gambling Web site, promotes responsible gambling and helps identify and alleviate gambling addiction. Virgin Money focuses on fair lending, and the list goes on.
Virgin Aviation is perhaps the toughest challenge; it represents 7 million of the 8 million tons of CO2 Virgin emits each year. Branson, however, has turned the problem into an opportunity. In 2006, he announced that all dividends from Virgin's rail and airline businesses "will be invested into renewable energy initiatives... to tackle emissions related to global warming." That effort has evolved into the Virgin Green Fund, which invests in renewable energy opportunities from solar energy to water purification and is estimated to reach $3 billion in value by 2016.
But Branson hasn't stopped there. In 2007, he established the Earth Challenge to award $25 million to any person or group who develops a safe, long-term, commercially viable way to remove greenhouse gases from the atmosphere. Submitted inventions are now being reviewed by a team of scientists, professors, and environment professionals.
Once known as the "hippie capitalist" and now knighted by the Queen of England, Sir Richard never does anything small and quiet. Whether looking for a new business, generating publicity in his characteristic style, or encouraging research to help the planet, Branson does it with a bang.
How is Virgin unique in its quest to be a socially responsible and sustainable company?
Virgin roared onto the British stage in the 1970s with the innovative Virgin Records, brainchild of Richard Branson, who signed unknown artists and began a marathon of publicity that continues to this day. The flamboyant Branson sold Virgin Records (to Thorn-EMI for nearly $1 billion in 1992) but went on to create over 200 companies worldwide whose combined revenues exceeded €11.5 billion (about $16.2 billion) in 2009.
The Virgin name-the third most respected brand in Britain-and the Branson personality help to sell such diverse products and services as planes, trains, finance, soft drinks, music, mobile phones, cars, wine, publishing, and even bridal wear. Branson can create interest in almost any business he wants by simply attaching the "Virgin" name to it. He supplies the brand and a small initial investment and takes a majority control, and big-name partners come up with the cash.
The Virgin Group looks for new opportunities in markets with underserved, overcharged customers and complacent competition. Branson explained, "Wherever we find them, there is a clear opportunity area for Virgin to do a much better job than the competition. We introduce trust, innovation, and customer friendliness where they don't exist."
Some marketing and financial critics point out that Branson is diluting the brand, that it covers too many businesses. There have been some fumbles: Virgin Cola, Virgin Cosmetics, and Virgin Vodka have all but disappeared. But despite the diversity, all the lines connote value for money, quality, innovation, fun, and a sense of competitive challenge. And then Virgin's vaunted marketing expertise kicks in.
A master of the strategic publicity stunt, Branson knew photographers have a job to do and they'd turn up at his events if he gave them a good reason. He took on stodgy, overpriced British Airways by wearing World War I-era flying gear to announce the formation of Virgin Atlantic in 1984. The first Virgin flight took off laden with celebrities and media and equipped with a brass band, waiters from Maxim's in white tie and tails, and free-flowing champagne. The airborne party enjoyed international press coverage and millions of dollars' worth of free publicity.
When Branson launched Virgin Cola in the United States in 1998, he steered an army tank down Fifth Avenue in New York, garnering interviews on each of the network morning TV shows. In 2002, he plunged into Times Square from a crane to announce his mobile phone business. In 2004, introducing a line of hip techie gadgets called Virgin Pulse, Branson again took center stage, appearing at a New York City nightclub wearing a pair of flesh-colored tights and a strategically placed portable CD player.
Although he eschews traditional market research for a "screw it, let's do it" attitude, Branson stays in touch through constant customer contact. When he first set up Virgin Atlantic, he called 50 customers every month to chat and get their feedback. He appeared in airports to rub elbows with customers, and if a plane was delayed, he handed out gift certificates to a Virgin Megastore or discounts on future travel.
A nonprofit foundation called Virgin Unite has started to tackle global, social, and environmental problems with an entrepreneurial approach. A team of scientists, entrepreneurs, and environmental enthusiasts consult with Virgin about what it needs to do on a grassroots and global level. The goal is to change the way "businesses and the social sector work together-driving business as a force for good."
Clearly, Branson cares about Virgin's customers and the impact his companies have on people and the planet. That's why he recently made corporate responsibility and sustainable development (CR/SD) a key priority for every one of his companies. Each must act socially responsible and lower its carbon footprint. Branson stated, "I believe that in the future, we will be able to enjoy healthy and fulfilling lifestyles whilst minimizing the negative impact we have on the world."
Virgin categorizes its businesses into eight socially responsible and sustainable groups: Flying high, We're all going on a summer holiday, Staying in touch, Watching the pennies, Getting from A to B, My body is a temple, Out of this world, and Just get out and relax. Each is to do exceptionally good things in its industry as well as help to alleviate the bad things that come with the category. Virgin Wines strives to purchase only from small farms and pay fair prices while promoting responsible drinking. Virgin Games, an online gambling Web site, promotes responsible gambling and helps identify and alleviate gambling addiction. Virgin Money focuses on fair lending, and the list goes on.
Virgin Aviation is perhaps the toughest challenge; it represents 7 million of the 8 million tons of CO2 Virgin emits each year. Branson, however, has turned the problem into an opportunity. In 2006, he announced that all dividends from Virgin's rail and airline businesses "will be invested into renewable energy initiatives... to tackle emissions related to global warming." That effort has evolved into the Virgin Green Fund, which invests in renewable energy opportunities from solar energy to water purification and is estimated to reach $3 billion in value by 2016.
But Branson hasn't stopped there. In 2007, he established the Earth Challenge to award $25 million to any person or group who develops a safe, long-term, commercially viable way to remove greenhouse gases from the atmosphere. Submitted inventions are now being reviewed by a team of scientists, professors, and environment professionals.
Once known as the "hippie capitalist" and now knighted by the Queen of England, Sir Richard never does anything small and quiet. Whether looking for a new business, generating publicity in his characteristic style, or encouraging research to help the planet, Branson does it with a bang.
How is Virgin unique in its quest to be a socially responsible and sustainable company?
Question
Starbucks
![Starbucks Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.) Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience. To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a personal treat for its customers, a Third Place-a comfortable, sociable gathering spot bridging the workplace and home. Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a hub strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits. Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success. Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet. Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work. Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide. Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge. Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also responsibly grown and ethically traded. Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests. The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, [Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services. Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world. Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company. Where does a company like Starbucks draw the line on supporting socially responsible programs? For example, how much of its annual budget should go toward these programs? How much time should employees focus on them? Which programs should it support?<div style=padding-top: 35px>](https://d2lvgg3v3hfg70.cloudfront.net/SM2977/11eb4f35_7cdf_4585_a4ce_f7f1749b9580_SM2977_00.jpg)
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
Where does a company like Starbucks draw the line on supporting socially responsible programs? For example, how much of its annual budget should go toward these programs? How much time should employees focus on them? Which programs should it support?
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
Where does a company like Starbucks draw the line on supporting socially responsible programs? For example, how much of its annual budget should go toward these programs? How much time should employees focus on them? Which programs should it support?
Question
Question
Starbucks
![Starbucks Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.) Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience. To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a personal treat for its customers, a Third Place-a comfortable, sociable gathering spot bridging the workplace and home. Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a hub strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits. Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success. Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet. Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work. Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide. Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge. Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also responsibly grown and ethically traded. Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests. The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, [Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services. Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world. Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company. How do you measure the results of Starbucks's socially responsible programs?<div style=padding-top: 35px>](https://d2lvgg3v3hfg70.cloudfront.net/SM2977/11eb4f35_7ce0_f336_a4ce_f3908b865f55_SM2977_00.jpg)
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
How do you measure the results of Starbucks's socially responsible programs?
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
How do you measure the results of Starbucks's socially responsible programs?
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Deck 23: Conducting Marketing Responsibly for Long-Term Success
1
Virgin Group
Virgin roared onto the British stage in the 1970s with the innovative Virgin Records, brainchild of Richard Branson, who signed unknown artists and began a marathon of publicity that continues to this day. The flamboyant Branson sold Virgin Records (to Thorn-EMI for nearly $1 billion in 1992) but went on to create over 200 companies worldwide whose combined revenues exceeded €11.5 billion (about $16.2 billion) in 2009.
The Virgin name-the third most respected brand in Britain-and the Branson personality help to sell such diverse products and services as planes, trains, finance, soft drinks, music, mobile phones, cars, wine, publishing, and even bridal wear. Branson can create interest in almost any business he wants by simply attaching the "Virgin" name to it. He supplies the brand and a small initial investment and takes a majority control, and big-name partners come up with the cash.
The Virgin Group looks for new opportunities in markets with underserved, overcharged customers and complacent competition. Branson explained, "Wherever we find them, there is a clear opportunity area for Virgin to do a much better job than the competition. We introduce trust, innovation, and customer friendliness where they don't exist."
Some marketing and financial critics point out that Branson is diluting the brand, that it covers too many businesses. There have been some fumbles: Virgin Cola, Virgin Cosmetics, and Virgin Vodka have all but disappeared. But despite the diversity, all the lines connote value for money, quality, innovation, fun, and a sense of competitive challenge. And then Virgin's vaunted marketing expertise kicks in.
A master of the strategic publicity stunt, Branson knew photographers have a job to do and they'd turn up at his events if he gave them a good reason. He took on stodgy, overpriced British Airways by wearing World War I-era flying gear to announce the formation of Virgin Atlantic in 1984. The first Virgin flight took off laden with celebrities and media and equipped with a brass band, waiters from Maxim's in white tie and tails, and free-flowing champagne. The airborne party enjoyed international press coverage and millions of dollars' worth of free publicity.
When Branson launched Virgin Cola in the United States in 1998, he steered an army tank down Fifth Avenue in New York, garnering interviews on each of the network morning TV shows. In 2002, he plunged into Times Square from a crane to announce his mobile phone business. In 2004, introducing a line of hip techie gadgets called Virgin Pulse, Branson again took center stage, appearing at a New York City nightclub wearing a pair of flesh-colored tights and a strategically placed portable CD player.
Although he eschews traditional market research for a "screw it, let's do it" attitude, Branson stays in touch through constant customer contact. When he first set up Virgin Atlantic, he called 50 customers every month to chat and get their feedback. He appeared in airports to rub elbows with customers, and if a plane was delayed, he handed out gift certificates to a Virgin Megastore or discounts on future travel.
A nonprofit foundation called Virgin Unite has started to tackle global, social, and environmental problems with an entrepreneurial approach. A team of scientists, entrepreneurs, and environmental enthusiasts consult with Virgin about what it needs to do on a grassroots and global level. The goal is to change the way "businesses and the social sector work together-driving business as a force for good."
Clearly, Branson cares about Virgin's customers and the impact his companies have on people and the planet. That's why he recently made corporate responsibility and sustainable development (CR/SD) a key priority for every one of his companies. Each must act socially responsible and lower its carbon footprint. Branson stated, "I believe that in the future, we will be able to enjoy healthy and fulfilling lifestyles whilst minimizing the negative impact we have on the world."
Virgin categorizes its businesses into eight socially responsible and sustainable groups: Flying high, We're all going on a summer holiday, Staying in touch, Watching the pennies, Getting from A to B, My body is a temple, Out of this world, and Just get out and relax. Each is to do exceptionally good things in its industry as well as help to alleviate the bad things that come with the category. Virgin Wines strives to purchase only from small farms and pay fair prices while promoting responsible drinking. Virgin Games, an online gambling Web site, promotes responsible gambling and helps identify and alleviate gambling addiction. Virgin Money focuses on fair lending, and the list goes on.
Virgin Aviation is perhaps the toughest challenge; it represents 7 million of the 8 million tons of CO2 Virgin emits each year. Branson, however, has turned the problem into an opportunity. In 2006, he announced that all dividends from Virgin's rail and airline businesses "will be invested into renewable energy initiatives... to tackle emissions related to global warming." That effort has evolved into the Virgin Green Fund, which invests in renewable energy opportunities from solar energy to water purification and is estimated to reach $3 billion in value by 2016.
But Branson hasn't stopped there. In 2007, he established the Earth Challenge to award $25 million to any person or group who develops a safe, long-term, commercially viable way to remove greenhouse gases from the atmosphere. Submitted inventions are now being reviewed by a team of scientists, professors, and environment professionals.
Once known as the "hippie capitalist" and now knighted by the Queen of England, Sir Richard never does anything small and quiet. Whether looking for a new business, generating publicity in his characteristic style, or encouraging research to help the planet, Branson does it with a bang.
How is Virgin unique in its quest to be a socially responsible and sustainable company?
Virgin roared onto the British stage in the 1970s with the innovative Virgin Records, brainchild of Richard Branson, who signed unknown artists and began a marathon of publicity that continues to this day. The flamboyant Branson sold Virgin Records (to Thorn-EMI for nearly $1 billion in 1992) but went on to create over 200 companies worldwide whose combined revenues exceeded €11.5 billion (about $16.2 billion) in 2009.
The Virgin name-the third most respected brand in Britain-and the Branson personality help to sell such diverse products and services as planes, trains, finance, soft drinks, music, mobile phones, cars, wine, publishing, and even bridal wear. Branson can create interest in almost any business he wants by simply attaching the "Virgin" name to it. He supplies the brand and a small initial investment and takes a majority control, and big-name partners come up with the cash.
The Virgin Group looks for new opportunities in markets with underserved, overcharged customers and complacent competition. Branson explained, "Wherever we find them, there is a clear opportunity area for Virgin to do a much better job than the competition. We introduce trust, innovation, and customer friendliness where they don't exist."
Some marketing and financial critics point out that Branson is diluting the brand, that it covers too many businesses. There have been some fumbles: Virgin Cola, Virgin Cosmetics, and Virgin Vodka have all but disappeared. But despite the diversity, all the lines connote value for money, quality, innovation, fun, and a sense of competitive challenge. And then Virgin's vaunted marketing expertise kicks in.
A master of the strategic publicity stunt, Branson knew photographers have a job to do and they'd turn up at his events if he gave them a good reason. He took on stodgy, overpriced British Airways by wearing World War I-era flying gear to announce the formation of Virgin Atlantic in 1984. The first Virgin flight took off laden with celebrities and media and equipped with a brass band, waiters from Maxim's in white tie and tails, and free-flowing champagne. The airborne party enjoyed international press coverage and millions of dollars' worth of free publicity.
When Branson launched Virgin Cola in the United States in 1998, he steered an army tank down Fifth Avenue in New York, garnering interviews on each of the network morning TV shows. In 2002, he plunged into Times Square from a crane to announce his mobile phone business. In 2004, introducing a line of hip techie gadgets called Virgin Pulse, Branson again took center stage, appearing at a New York City nightclub wearing a pair of flesh-colored tights and a strategically placed portable CD player.
Although he eschews traditional market research for a "screw it, let's do it" attitude, Branson stays in touch through constant customer contact. When he first set up Virgin Atlantic, he called 50 customers every month to chat and get their feedback. He appeared in airports to rub elbows with customers, and if a plane was delayed, he handed out gift certificates to a Virgin Megastore or discounts on future travel.
A nonprofit foundation called Virgin Unite has started to tackle global, social, and environmental problems with an entrepreneurial approach. A team of scientists, entrepreneurs, and environmental enthusiasts consult with Virgin about what it needs to do on a grassroots and global level. The goal is to change the way "businesses and the social sector work together-driving business as a force for good."
Clearly, Branson cares about Virgin's customers and the impact his companies have on people and the planet. That's why he recently made corporate responsibility and sustainable development (CR/SD) a key priority for every one of his companies. Each must act socially responsible and lower its carbon footprint. Branson stated, "I believe that in the future, we will be able to enjoy healthy and fulfilling lifestyles whilst minimizing the negative impact we have on the world."
Virgin categorizes its businesses into eight socially responsible and sustainable groups: Flying high, We're all going on a summer holiday, Staying in touch, Watching the pennies, Getting from A to B, My body is a temple, Out of this world, and Just get out and relax. Each is to do exceptionally good things in its industry as well as help to alleviate the bad things that come with the category. Virgin Wines strives to purchase only from small farms and pay fair prices while promoting responsible drinking. Virgin Games, an online gambling Web site, promotes responsible gambling and helps identify and alleviate gambling addiction. Virgin Money focuses on fair lending, and the list goes on.
Virgin Aviation is perhaps the toughest challenge; it represents 7 million of the 8 million tons of CO2 Virgin emits each year. Branson, however, has turned the problem into an opportunity. In 2006, he announced that all dividends from Virgin's rail and airline businesses "will be invested into renewable energy initiatives... to tackle emissions related to global warming." That effort has evolved into the Virgin Green Fund, which invests in renewable energy opportunities from solar energy to water purification and is estimated to reach $3 billion in value by 2016.
But Branson hasn't stopped there. In 2007, he established the Earth Challenge to award $25 million to any person or group who develops a safe, long-term, commercially viable way to remove greenhouse gases from the atmosphere. Submitted inventions are now being reviewed by a team of scientists, professors, and environment professionals.
Once known as the "hippie capitalist" and now knighted by the Queen of England, Sir Richard never does anything small and quiet. Whether looking for a new business, generating publicity in his characteristic style, or encouraging research to help the planet, Branson does it with a bang.
How is Virgin unique in its quest to be a socially responsible and sustainable company?
Company V stood unique in its ways to conduct socially responsible programs. Its uniqueness is due to following reasons.
• It developed a non profit foundation VU and faced global, social and environmental problems. It wanted to face problems in an entrepreneurial approach.
• It made the business and the social sector work together. He wanted each people to work together and reduces the carbon foot print.
• It categorized its business into eight socially responsible and sustainable groups. Each group worked to do good things and will help to reduce bad things.
• It purchased raw materials from small farms at fair prices while promoting responsible drinking.
• His social responsible programs became very popular that other entrepreneurs and nature lovers consulted with him to do more for the planet.
• He also took initiative to reduce green house effect by using renewable energy for its rail and airline businesses.
• He also put his efforts in reducing gambling addiction through VG and online gambling websites by promoting responsible gambling.
• It developed a non profit foundation VU and faced global, social and environmental problems. It wanted to face problems in an entrepreneurial approach.
• It made the business and the social sector work together. He wanted each people to work together and reduces the carbon foot print.
• It categorized its business into eight socially responsible and sustainable groups. Each group worked to do good things and will help to reduce bad things.
• It purchased raw materials from small farms at fair prices while promoting responsible drinking.
• His social responsible programs became very popular that other entrepreneurs and nature lovers consulted with him to do more for the planet.
• He also took initiative to reduce green house effect by using renewable energy for its rail and airline businesses.
• He also put his efforts in reducing gambling addiction through VG and online gambling websites by promoting responsible gambling.
2
Starbucks
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
Where does a company like Starbucks draw the line on supporting socially responsible programs? For example, how much of its annual budget should go toward these programs? How much time should employees focus on them? Which programs should it support?
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
Where does a company like Starbucks draw the line on supporting socially responsible programs? For example, how much of its annual budget should go toward these programs? How much time should employees focus on them? Which programs should it support?
Companies like SB focus on social responsible programs as apart of their global business. They are committed to the society and feels that they should do something good to it. Some companies are contributing all it profits after paying the tax for these types of charitable programs. But these companies will have to draw a line on supporting these charitable programs. Basically social marketing is mainly intended to create a good brand name which will benefit the company. It shouldn't create any negative impact to the company. This line can be drawn on the basis of its annual budget, time limit for the employees to become volunteers in social programs and then the types of social programs to be supported.
Through budgeting money required for business purposes will be planned and also the profit will also be estimated. From this company will be able to know how much he can spare for socially responsible programs. Company should give priority to its business needs and then to charitable needs. Only if the company is stable it can support socially responsible programs.
Some MNCs with a wide global reach will open firms like non profitable organizations. In such types of firms full profit will be intended for charitable purpose. These MNCs have other sources through which they can earn profits. Here SB donates a small amount of money from its every sale for these programs.
There are employees who are interested in becoming volunteers of these programs. For them company can provide some time limit like 5 days in a year. If such time limits are provided the company will not run out of employees and these social programs will not affect employee's performance.
The company can take part in socially responsible programs like
• Health care programs and disease prevention programs
• Programs which explains nutritional vales of foods.
• Campaigns to demotivate smoking and usage if drugs.
• Programs inspiring for blood donation.
Through budgeting money required for business purposes will be planned and also the profit will also be estimated. From this company will be able to know how much he can spare for socially responsible programs. Company should give priority to its business needs and then to charitable needs. Only if the company is stable it can support socially responsible programs.
Some MNCs with a wide global reach will open firms like non profitable organizations. In such types of firms full profit will be intended for charitable purpose. These MNCs have other sources through which they can earn profits. Here SB donates a small amount of money from its every sale for these programs.
There are employees who are interested in becoming volunteers of these programs. For them company can provide some time limit like 5 days in a year. If such time limits are provided the company will not run out of employees and these social programs will not affect employee's performance.
The company can take part in socially responsible programs like
• Health care programs and disease prevention programs
• Programs which explains nutritional vales of foods.
• Campaigns to demotivate smoking and usage if drugs.
• Programs inspiring for blood donation.
3
Discuss the contradiction between Virgin's negative environmental impact (via air and rail) and the green message and communication efforts behind endeavors such as the Earth Challenge.
Company V group was founded in the year 1970 by Richard Branson. Company V Group was the brainchild idea of entrepreneur Sir Richard Branson. This company is the third largest and known brand in Britain and deals with variety of businesses like branded air travel, rail-roads, financial services, music, mobile phones, cars, wine, publishing and medical devices.
With the involvement in so many businesses, Company V Group has also received some negative comments for its bad impact in the environment (via air and rail). Although this company has also launched Earth Challenge 2007, where suggestions were invited form individuals to a safe, long term, commercially viable way to remove greenhouse gases from the atmosphere. The submissions of this challenge are under review of scientists and environmentalists yet.
The contradiction between Company V's negative environmental impact (Via rail and air) and the green message and communication efforts behind endeavors such as Earth Challenge are the points that are seemingly to be against each other. To discuss over this it could be said that the environmental loss that Company V airlines and railways are creating in the atmosphere is because of its type of business they are involved with.
There is hardly anything that can be done for the pollution and other harmful impacts that are getting released in the environment due to air and rails. But the efforts they have put in the form of Earth Challenge should not be sidelined because it shows that the company is aware and wishes to contribute to the society and environment as a whole. It wants to find out ways to tackle environmental problems and is socially responsible.
With the involvement in so many businesses, Company V Group has also received some negative comments for its bad impact in the environment (via air and rail). Although this company has also launched Earth Challenge 2007, where suggestions were invited form individuals to a safe, long term, commercially viable way to remove greenhouse gases from the atmosphere. The submissions of this challenge are under review of scientists and environmentalists yet.
The contradiction between Company V's negative environmental impact (Via rail and air) and the green message and communication efforts behind endeavors such as Earth Challenge are the points that are seemingly to be against each other. To discuss over this it could be said that the environmental loss that Company V airlines and railways are creating in the atmosphere is because of its type of business they are involved with.
There is hardly anything that can be done for the pollution and other harmful impacts that are getting released in the environment due to air and rails. But the efforts they have put in the form of Earth Challenge should not be sidelined because it shows that the company is aware and wishes to contribute to the society and environment as a whole. It wants to find out ways to tackle environmental problems and is socially responsible.
4
Starbucks
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
How do you measure the results of Starbucks's socially responsible programs?
Starbucks opened in Seattle in 1971 at a time when coffee consumption in the United States had been declining for a decade and rival brands used cheaper coffee beans to compete on price. Starbucks's founders decided to experiment with a new concept: a store that would sell only the finest imported coffee beans and coffee-brewing equipment. (The original store didn't sell coffee by the cup, only beans.)
Howard Schultz came to Starbucks in 1982. While in Milan on business, he had walked into an Italian coffee bar and had an epiphany: "There was nothing like this in America. It was an extension of people's front porch. It was an emotional experience." To bring this concept to the United States, Schultz set about creating an environment for Starbucks coffeehouses that would reflect Italian elegance melded with U.S. informality. He envisioned Starbucks as a "personal treat" for its customers, a "Third Place"-a comfortable, sociable gathering spot bridging the workplace and home.
Starbucks's expansion throughout the United States was carefully planned. All stores were company-owned and operated, ensuring complete control over an unparalleled image of quality. In a "hub" strategy, coffeehouses entered a new market in a clustered group. Although this deliberate saturation often cannibalized 30 percent of one store's sales by introducing a store nearby, any drop in revenue was offset by efficiencies in marketing and distribution costs, and the enhanced image of convenience. A typical customer would stop by Starbucks 18 times a month. No U.S. retailer has had a higher frequency of customer visits.
Part of Starbucks's success undoubtedly lies in its products and services, and its relentless commitment to providing the richest possible sensory experiences. But another key is its enlightened sense of responsibility, manifested in a number of different ways. Schultz believed that to exceed customers' expectations it is first necessary to exceed employees'. Since 1990, Starbucks has provided comprehensive health care to all employees, including part-timers. Health insurance now costs the company more each year than coffee. A stock option plan called Bean Stock allows employees also to participate in its financial success.
Schultz also believed Starbucks's operations should run in a respectful, ethical manner, making decisions with a positive impact on communities and the planet.
Community: The Starbucks Foundation, created in 1997 with proceeds from the sale of Schultz's book, aims to "create hope, discovery, and opportunity in communities where Starbucks partners [employees] live and work." Its primary focus is supporting literacy programs for children and families in the United States and Canada; expanded, it has now donated millions of dollars to charities and communities worldwide.
Starbucks's employees volunteer community service hours for causes big and small-such as rebuilding New Orleans after Hurricane Katrina-and wants to have employees and customers volunteering over 1 million community service hours each year by the end of 2015. As described in the chapter, Starbucks is also a partner in PRODUCT(RED), an initiative to help fight and stop the spread of HIV in Africa, and so far has donated enough money to purchase 14 million days of medicine. It has also donated 5 cents from every sale of its Ethos bottled water to improving the quality of water in poor countries, part of a five-year, $10 million pledge.
Ethical Sourcing: Starbucks has partnered with Conservation International to ensure that coffee it purchases is not only of the highest quality but also "responsibly grown and ethically traded." Starbucks is the world's biggest buyer of fair-trade coffee and pays an average of 23 percent above market price for 40 million pounds a year. It works continuously with farmers on responsible methods such as planting trees along rivers and using shade-growing techniques to help preserve forests.
The Environment: It took Starbucks 10 years of development to create the world's first recycled beverage cup made of 10 percent postconsumer fiber, conserving 5 million pounds of paper or approximately 78,000 trees a year. Now the team is working to ensure that customers recycle. Jim Hanna, Starbucks's director of environmental impact, explained, "[Starbucks] defines a recyclable cup not by what the cup is made out of but by our customers actually having access to recycling services." Starbucks's goal: make 100 percent of its cups recycled or reused by 2015. The firm also emphasizes energy and water conservation and building green, LEED-certified buildings around the world.
Howard Schultz stepped down as CEO in 2000 but returned as CEO, president, and chairman in 2008 to help restore growth and excitement to the powerhouse chain. Today, Starbucks has over 16,700 stores worldwide, approximately 142,000 employees, $9.8 billion in revenue, and plans to expand worldwide. To achieve its international growth goals, Schultz believes Starbucks must retain a passion for coffee and a sense of humanity, to remain small even as it gets big, and to be a responsible company.
How do you measure the results of Starbucks's socially responsible programs?
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Starbucks makes business decisions that are both ethical and responsible. Has it done a good job communicating its efforts to consumers? Do consumers believe Starbucks is a socially responsible company? Why or why not?
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