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Starbucks competitive environment (us)

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Starbucks   competitive environment (us) Starbucks competitive environment (us) Presentation Transcript

  • Starbucks and the Competitive Environment 1
  • Executive Summary  Starbucks Corporation has been the most successful coffee chain in the past few decades using their aggressive expansion strategies to push out much of its competition.  Starbucks has focused on creating a dense network of stores all around America, while also opening up new locations all around the world.  They are currently leading the retail coffee market with selling their coffee for a premium price to increase their profitability. McCafee 2
  • Problem  Will the allure of gourmet Starbucks coffee be maintained or will more appealing options threaten the success of Starbuck‟s primary product?  Can advertising significantly help maintain Starbuck‟s image?  A good place to start involves evaluating the current market for coffee and do a competitive analysis to see the market performance and to determine the extent to which designer coffee appeals to current consumers. McCafee 3
  • Overview On Product Growth  Starbucks surpassed Wendy‟s and Burger King in becoming the number 3 restaurants chain posting $9.07 billion restaurant sales last year.  It is expected to gain in one of the fastest-growing day parts in restaurants for breakfast.  It‟s measured-media budget is a fraction of what come of the other top chains spend.  Starbucks only spent $94.4 million in media spending compared to McDonald‟s spent about $887.8 million in the United States only in 2010.  Starbuck‟s has worked with agencies such as Omnicom‟s Goodby Silverstein & Partners. “Breakfast is the final frontier of growth in this country and coffee is growing as well.” David Palmer UBS restaurant and packaged food analyst. AD Age 4
  • Major Competitors Dunkin' Donuts McDonald‟s Caribou Coffee 5
  • Store Locator  Has 12,500 coffee shops in the United States McDonald‟s McCafé Starbucks Dunkin‟ Donuts  Has 6,700 coffee shops in the United States Caribou Coffee  Has over 31,000 restaurants World Wide.  Has 415 coffee shops in 16 States in the United States 6
  • Starbucks vs. Dunkin‟ Donuts
  •  The taste-test advertisement directed towards Starbucks, actually naming the brand in the commercial, surveying coffee drinkers. More hardworking Americans preferred the taste of Dunkin‟ Donuts over Starbucks.  Within a week of the ad‟s launch about 50,000 people visited dunkinbeatsstarbucks.com  It is a site that communicates the hard-hitting competitive message with clarity and humor. Entering this site you can: Learn the Truth (presenting Dunkin‟s coffee story) or Spread the Truth (sending an e-card to your friends who drink Starbucks)  Weekly traffic to DunkinDonuts.com jumped 61% Starbucks vs. Dunkin‟ Donuts “Small is the New Tall.” AD AGE 8
  • Starbucks vs. Dunkin‟ Donuts  In March 2009, the company unveiled an alternative slogan, “You „Kin Do It!”, and launched a $100+ million ad campaign to promote it.  The campaign slated to run through 2009, includes radio, print and outdoor advertising, in addition to in-store point of purchase, special events, and sports marketing.  Online marketing, often leveraging the Boston Red Sox and the other New England icons. Dunkin‟ Donuts Press 9
  • Starbucks vs. McDonald‟s McDonald‟s Billboard in Seattle
  • Starbucks vs. McDonalds  McDonald‟s has offered breakfast for years, and over the last couple years has been heavily marketing its McCafé.  Lines of coffee drinks all while continually rolling out new drinks of both the coffee and non-coffee variety, such as smoothies and frappes, McDonald‟s version of the Starbucks frappuccinos.  Starbucks created their frappuccino for the summer season while McDonald‟s introduced their frozen strawberry lemonade, a non-coffee beverage under McCafé. AD AGE 11
  • Starbucks vs. McDonalds  Like Dunkin‟ Donuts, McDonald‟s took a stab at Starbucks during TV ads as well. The two television ads were titled “Intellectuals” and “Hipsters.”  Along with a TV ad McDonald‟s set up a website unsnobbycoffee.com to promote its Washington States McCafé Outlets.  To email their friends about how they feel about high priced coffee  In additional to the usual media, McDonalds makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games. AD AGE 12
  • Starbucks vs. Caribou Coffee
  • Starbucks vs. Caribou Coffee  Caribou Coffee spent $2 million on U.S. advertising in 2008, compared to the $300,000 it spent in 2007 according to Nielsen Monitor-Plus. (AD Week)  Analysis of visitor demographics reveals that Caribou Coffee could possibly have more online success if they pull-in some of the same types of online visitors as Starbucks does.  While Caribou Coffee attracts a respectable amount of young adults (32% between the ages of 18 and 34), this does not compare to the 42% that Starbucks attracts.  Paying for advertisements on social networking sites where educated young adults visit frequently, such as Facebook, may likely prove to be a wise strategic move for Caribou Coffee. Facebook refers 3.92% of Starbucks‟ traffic to the Starbucks Website, while Caribou coffee lacks in Facebook referrals. SEO Analysis 14
  • Television Campaigns  Dunkin‟ Donuts outspent McDonald‟s 60% on coffee- specific products in paid media $27 Million to $17 million.  Dunkin; Donuts spent 83% of its budget on TV: two-thirds of that on spot TV and a third on cable.  McDonald‟s spent 97% of its traditional media budget on spot TV to support its McCafé rollouts and on regional promotions in 74 local markets. AD AGE 15
  • Web Campaigns  Dunkin‟ Donuts spent 15% of its total media budget on paid internet. This is considered a significant amount compared to competitors in this category.  Ads were posted on a number of sites including: Yahoo, AOL, CNN, CNBC, MSNBC, Fox Sports, MLB.com, Good Housekeeping, Cosmopolitan, and Digg. AD AGE 16
  • Tactical Campaigns for Dunkin‟ Donuts  In 2008, Starbucks announced it was simultaneously shutting down all 7,100 U.S. stores for a restraining effort, Dunkin‟ Donuts was quick off the mark, offering 99-cent espressos.  On Tax Day, Dunkin‟ Donuts held a special promotion to offer a free doughnut with the purchase of a cup of coffee.  May 15, Dunkin‟ Donuts holds its annual Free Iced Coffee Day, giving away 4 million cups in 2008.  In June 2008, Dunkin‟ Donuts launched its “Bases Loaded” campaign, a summer iced-beverage promotion. Iced beverages came with peel-away sticker that revealed a one-time login code for participation in an instant-win game in conjunction with Major League Baseball. AD AGE 17
  • Tactical Campaigns for McDonald‟s  McDonald‟s promoted its national coffee promotions with special prices.  In 2008, it showed its ice teas in combination with its chicken sandwich and ice coffees over the summer in the buildup to the Olympics. AD AGE 18
  • Regional Campaigns  McDonald‟s drives a lot of promotion through outdoor and print buys in a number of markets: Louisville KY, Chicago, Detroit, Kansas City, MO, San Diego, and Seattle.  In December 2008, a TV campaign highlighted “McCafé Mondays,” a promotion that offered customers a free eight- ounce coffee of their choice.  Urban radio and TV ads in the Midwest regions feature jingles for McCafé.  Caribou Coffee is offering a limited edition mug that features Chicago landmark‟s such as Lakeshore Drive, Navy Pier, and the Chicago Theatre. (Biz Journals) AD AGE 19
  • Market  Starbucks built itself on being the world‟s most powerful and recognizable brands of high quality coffee and the unique “Starbucks Experience.”  They were the first to revolutionize the coffeehouse industry by marketing expensive, high-quality coffee as well as a “third” place between work and home for customers to go and escape the chaos of daily life.  As of 2011, Starbucks has a 32.6% market share a good portion of its industry.  Starbucks currently has over 11,500 stores in the United States alone. http://www.wikinvest.com/stock/Starbucks_(SBUX) 20
  • Competition  McDonald‟s introduced the McCafe to select stores, where customers can purchase espressos and cappuccinos priced in the $2-4 range.  In response, Starbucks teamed up with Burger King and began selling Starbucks‟ Seattle Best Coffee in about 7,250 U.S. outlets selling for $1-$2.79 replacing Burger King‟s BK Joe Brew.  Dunkin Donuts is another major competitor, with nearly 5,000 stores in the U,S. overlapping with Starbucks but their customer experience is more coffee-to-go model rather than the “third place to work and relax” model. http://www.wikinvest.com/stock/Starbucks_(SBUX) 21