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Starbuck Verismo

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Starbucks Verismo

Starbucks Verismo

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  • 1. Caleb Burton Leslie Lawson Shellie Vornhagen Paul Waller Karen Wellman December 2, 2013 © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 2. Starbucks Mission Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. Here are the principles of how we live that every day: Our Coffee It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done. Our Customers When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection. © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 3. Coffee Timeline       1971: The first Starbucks opens in Seattle’s historic Pike Place Market. 1982 Howard Schultz joins Starbucks Corp. 1998: Keurig’s first brewer, the B2000 made for office use launched. By 2003, there were more than 40,000 commercial brewers in American offices. 2004: Keurig’s B100 home brewer was introduced. 2011: Starbucks introduces k-cups 2012: the Keurig Vue brewer was offered, which allows choice of temperature, cup size, and brew strength. This was released to in order to increase the choices users have in brewing beverages.[ September 2012, Starbucks announced the Verismo, a consumer-grade singleserve coffee machine that uses sealed plastic cups of coffee grounds, and a "milk pod" for lattes. © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 4. The Dilemma for Starbucks  One touch brewers such as the Keurig system created a new market segment based on the convenience of home brewing  Single-cup category is growing 9 times faster than the overall coffee category.  The rapid growth of this market caused Starbucks to introduce a line of coffees compatible with the Keurig  Starbucks later creation of their own home brewer the Verismo poses an interesting question: ◦ How does Starbucks compete in a segment counter to their position as “the third place”, and in which they have already manufactured a product for their competition? © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 5. The Current Big Picture © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 6. Current Big Picture Commercial © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 7. Current © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 8. Verismo: Current STP Execution Segmentation Business Objective FE: Starbucks Marketing Objective Source of Volume Stimulate Demand Retention Dynamic: Need for Quality Credence Price Targeting Place Quadrant 2 Core Competence: Skill @ Coffee Beaning Skill @ Marketing Main: Need for Convenience Value Category: Luxury Brewing Benefit: Need for Quality Product Enjoys convenience, but still desires high quality Product Time (Speed) Promotion Positioning Image © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 9. The Verismo: What Went Wrong?  Current strategy is attempting to retain the Starbucks loyal customers by adding value and expanding their experience creation to the home.  By producing Starbucks branded K-cups they raised the importance of the Keurig and single-cup brewing at home.   This strategy abandons the successful positioning of Starbucks as the “third place” Has the potential of cannibalizing in-store sales. © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 10. The Proposed Big Picture Verismo © 2011 Starbucks Coffee Company. All Rights Reserved. Company
  • 11. Verismo: Proposed STP Execution Segmentation Business Objective Marketing Objective Source of Volume FE: Starbucks Verismo Acquisition Stimulate Demand Product Main: Need for Convenience Dynamic: Need for affordable luxury Emphasize Search Price Trial/Value Category: Luxury Home Brewing Targeting Benefit: Need for Convenience Requires convenience, bu t doesn’t want to be limited in choice Quadrant 1 Place Product Expertise Promotion Core Competence: Skill at Real Estate Skill at Logistics Skill at Coffee Beaning Positioning Awareness/ Information See 5 Box © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 12. Business Objective Benefit Convenience, without sacrificing quality Strategic Asset Stores, Distribution Channels Core Competencies Skills @ Real Estate Skills @ Logistics © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 13. While Starbucks has a solid, heart loyal customer base, this is a relatively new category, so their focus should be on acquiring customers into the luxury home brewing category. To compete in this category, Starbucks should look to be the leader and adopt a stimulate demand approach rather than try to steal shares from smaller competitors. Marketing Objective Stimulate Demand Steal Share Source of Volume Acquisition Retention Emphasize category variable Emphasize category variable Grow the category Focus on increased consumption Emphasize dynamic variable Emphasize dynamic variable Try to win users over to your brand Increase consumption of your brand © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 14. Coffee Industry Snapshot © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 15. Coffee Industry Snapshot © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 16. Starbucks Financial Performance © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 17. Segmentation MAIN VARIABLE DYNAMIC VARIABLE Need for convenience Need for affordable luxury Emphasis on Main Variable Same great Starbucks taste, in the comfort of your home! © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 18. Competitive Landscape Keurig SLOGAN: “Brewing excellence one cup at a time” ADVANTAGES:    Keurig was the first to market in single-cup brewing. Convenience and simplicity. Keurig systems fill the gap between lower end mass-market coffees in a can, and true high-end specialty coffee DISADVANTAGES:  Only brews coffee and lacks variety from other coffee based drinks AVILABILITY: Macy’s, $99 - $149 Kmart, JCP, Sears, Bed Bath & Beyond, Target, Meijer, Wal-Mart. $119 - $149 or $229 special edition $229 © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 19. Competitive Landscape Tassimo SLOGAN: “What makes a perfect cup of coffee? Tassimo knows.” ADVANTAGES: Ease of use. DISADVANTAGES:  Lower quality and bad press from recalls  On February 9, 2012 about 835,000 coffee makers were recalled in the United States after reports of the brewers spraying hot liquid, coffee grounds or tea leaves onto people.  AVAILABILITY: HSN, Bed Bath & Beyond, Target, Macy’s, and Wal-Mart. Tassimo MSRP $99 - $169 © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 20. Competitive Landscape Nespresso SLOGAN: “The perfect cup – every time” ADVANTAGES:   Provides the ultimate gourmet coffee experience from the use of premium coffee to the technology that brings out the coffees flavor. Unlike Keurig, the Nespresso machine is designed to create customized coffee drinks such as espressos and lattes DISADVANTAGES:  The priced as a high end brewer AVIALABILITY: Crate La Table. & Barrel, Bed Bath & Beyond, Target, Macy, William Sonoma, Sur $129 - $699 © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 21. Verismo  SLOGAN: “Impossible until now”  ADVANTAGES:  Affordably priced  Allows for customized drinks such as espresso and lattes  Starbucks is known for its quality coffees  DISADVANTAGES:  Competing with Starbuck’s K-cups for Keurig  Competes with in-store sales  AVAILABILITY: Starbucks, Walmart, Amazon, Bed Bath and Beyond, and Williams Sonoma $159 $99 © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 22. Need for Affordable Luxury Plot the Market Starbucks including Verismo N Nespresso Tassimo Keurig T Need for Convenience © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 23. Target Audience Description Kristen is 35 and works from home most days as an IS Portfolio Strategy Consultant. Because she works with customers all over the globe she sometimes has conference calls early in the morning or late at night. She is on call at any hour and is quite busy. She drives a Lexus CT 200 h Hybrid and her husband drives a Toyota Avalon Hybrid; both offer luxury and gas savings, which are important to her. Her husband travels during the week for work so the two of them enjoy their quality time at home. They have been married for one year. Recently they took an all-inclusive trip to a 5 Star Jamaican resort that they purchased on Groupon. She works out every day in the gym located in her building. She frequently shops for clothes at Target and Nordstrom Rack because she can to purchase the designer lines for less. She also shops on Amazon quite frequently as they will deliver right to the house. She buys her groceries at Whole Foods and Trader Joes because the quality ingredients and social responsibility are important to her. She frequently uses them to cater parties she hosts because it is convenient and offers superior taste. © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 24. Current Belief Value Proposition • I can’t make luxury coffee at home. • Now you can combine the convenience of home without compromising on taste Desired View • I can enjoy high quality coffee and espresso beverages at home. RTBs Starbucks knows quality coffee. Specialty drinks made easy with one touch. Refills located conveniently in all Starbucks shops Convenience of home © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 25. Proposed Big Picture Commercial © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
  • 26. 26 Questions? © 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.