Starbucks Case Study


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Starbucks Case Study

  1. 1. Digging to the bottom of the cup <ul><li>STARBUCKS NEW BUSINESS PITCH </li></ul><ul><li>DECEMBER 9, 2008 </li></ul><ul><li>TAYLOR FOLEY </li></ul><ul><li>BRITTANY NUGENT </li></ul><ul><li>SHANNON REED </li></ul><ul><li>MARIAM SHAHAB </li></ul><ul><li>LOUISA STELLE </li></ul>
  2. 2. Table of Contents Section Page Trove 3 The Market 9 The Competition 13 Starbucks 20 Research 23 Marketing Solutions 33 Fees 53 Presentation Endnotes 56 Business Paper 57
  4. 4. Mission We dig deep. We strive to find the gem in your brand.
  5. 5. Core Beliefs <ul><li>We believe in: </li></ul><ul><ul><li>hunting for the uniqueness in your brand </li></ul></ul><ul><ul><li>building brands that impact consumer lives </li></ul></ul><ul><ul><li>creating a treasure chest for every campaign </li></ul></ul>
  6. 6. Creative Philosophy We help brands become diamonds in the faceless clutter of today’s society. Just as a diamond starts out as coal, the process of making a brand valuable is our ultimate goal.
  7. 7. Industry Experience
  8. 8. The Team Mariam Shahab Art Director Ideal Drink: Tall caramel frappuccino, no whipped cream, extra syrup Taylor Foley Media Director Ideal Drink: Grande non-fat mocha with whipped cream Shannon Reed Interactive Director Ideal Drink: Tall mint hot chocolate with whipped cream and chocolate syrup Brittany Nugent Account Manager Ideal Drink: Venti soy chai Louisa Stelle Account Planner Ideal Drink: Tall non-fat cappuccino
  10. 10. Coffee Industry Overview Which coffeehouse or donut shop do you visit most frequently? All data collected from online surveys and in store intercepts. 43.3% 76.7% 43.3%
  11. 11. Coffee Industry Overview <ul><li>Starbucks and Dunkin Donuts - leaders in the category with 90.3% of sales </li></ul><ul><ul><li>Starbucks has seen sales decline and begun closing stores </li></ul></ul><ul><ul><li>Dunkin Donuts continued expanding in 2007 </li></ul></ul><ul><li>Coffee houses growth from 2005-2007 - 43.7% </li></ul><ul><li>Donut shops growth from 2005-2007 - 16.9% </li></ul><ul><li>Independent coffeehouses have the largest following of regulars </li></ul><ul><li>Starbucks and Dunkin Donuts have the most number of visits per month </li></ul><ul><li>Starbucks dominates the West </li></ul><ul><li>Dunkin Donuts dominates the Northeast </li></ul><ul><li>Quick Service Restaurants (QSR) are faster, cheaper and are beginning to </li></ul><ul><li>offer breakfast and coffee to budget conscious costumers </li></ul><ul><ul><li>Lack healthy options </li></ul></ul>Coffee houses and Donut shops 1 2 3 4 5 6
  12. 12. Coffee Industry Overview <ul><li>55% of United States adults consume coffee on a daily basis </li></ul><ul><ul><li>Loyal coffee culture </li></ul></ul><ul><li>Television advertising dominates for coffeehouses and donut shops </li></ul><ul><ul><li>Interactive marketing and product sampling used to increase sales </li></ul></ul><ul><li>Men are more likely to use coffeehouses as a workspace </li></ul><ul><li>Young customers (18-24 year olds) visit coffee houses for leisure time </li></ul><ul><li>For households with children a drive through is important </li></ul><ul><ul><li>Especially in suburban areas </li></ul></ul><ul><li>Most important features that attract potential costumers: </li></ul><ul><ul><li>Convenience </li></ul></ul><ul><ul><li>Price </li></ul></ul>The Consumers 7 8 9 10 11 12
  14. 14. Dunkin Donuts Unique Selling Proposition: Quality coffee for Americans on the run Number of Stores: 5,769 Gross Sales: $ 5.3 billion Historical Fact: World’s largest coffee and donut shop, serving more than 3 million coffees a day. Advertising Sample: The average Joe Insert company logo here 13
  15. 15. Tim Hortons Unique Selling Proposition: “Always fresh” coffee, baked goods and home-style breakfasts and lunches in a quick-service restaurant. Number of Stores: 424 Revenue: $ 1.9 billion Historical Fact: Started in Canada by a famous hockey player in 1964 and merged in 1995 with Wendy’s International. Advertising Sample: Canadian Craig 14
  16. 16. Krispy Kreme Unique Selling Proposition: Krispy Kreme makes all of its donuts in its store and they are served hot right off the line. Number of Stores: 420 Revenue: $ 461.2 million Historical Fact: Founded in 1937 in Winston-Salem, N.C. Advertising Sample: Insert company logo here Joe the Plumber 15
  17. 17. Caribou Coffee Unique Selling Proposition : Caribou Coffee uses the highest quality coffee beans no matter what they cost. Number of Stores: 464 Gross Sales: $ 256.8 million Historical Fact: In 1990 the founders journeyed to the top of Sable Mountain. The breathtaking views became the entrepreneurial vision for Caribou Coffee. Advertising Sample: The Adventure Seeker 16 17 18
  18. 18. Peet’s Coffee Unique Selling Proposition: A coffee style emphasizing superior quality beans and a darker roasting style that produces coffee with richness and complexity. Number of Stores: 165 Gross Sales: $ 184 Million Historical Fact: Founded in 1966 in Berkley, CA Advertising Sample: Peetniks 19
  19. 19. McCafé Unique Selling Proposition: All of the taste and quality of a coffeehouse with the convenience and price of McDonald’s. Number of Stores: 3,800 Gross Sales: TBA Historical Fact: Launched in 2008, their espresso beans come from the same place as Starbucks. Advertising Sample: “Unsnobby coffee” microsite and television campaign The Java Junky 20
  21. 21. Who You Are S.W.O.T Analysis <ul><li>Strengths </li></ul><ul><ul><li>Universally recognized </li></ul></ul><ul><ul><li>Customizable drinks </li></ul></ul><ul><ul><li>Partnerships with known brands </li></ul></ul><ul><ul><li>Ambiance – comfortable stores </li></ul></ul><ul><ul><li>Store placement </li></ul></ul><ul><ul><li>Introduction of drive-thrus </li></ul></ul><ul><ul><li>Community Involvement </li></ul></ul><ul><ul><li>Environmental reputation </li></ul></ul><ul><li>Weaknesses </li></ul><ul><ul><li>Prestigious reputation perceived as snobby </li></ul></ul><ul><ul><li>Inconsistency with store experience </li></ul></ul><ul><ul><li>Higher prices than main competitors </li></ul></ul><ul><ul><li>Do not brew organic coffee in stores </li></ul></ul><ul><ul><li>Confusing terminology in ordering </li></ul></ul><ul><li>Opportunities </li></ul><ul><ul><li>Product placement </li></ul></ul><ul><ul><li>Advertising to the digital consumer </li></ul></ul><ul><ul><li>Expand on fair trade </li></ul></ul><ul><ul><li>Strengthen awareness of partnerships </li></ul></ul><ul><ul><li>and sponsorship </li></ul></ul><ul><ul><li>Sell more ground coffee </li></ul></ul><ul><ul><li>Easily accessible nutritional information </li></ul></ul><ul><li>Threats </li></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Trend of coffee drinking may end </li></ul></ul><ul><ul><li>Rise in cost of coffee and dairy </li></ul></ul><ul><ul><li>products </li></ul></ul><ul><ul><li>Copy cat brands </li></ul></ul><ul><ul><li>Health conscious trend </li></ul></ul><ul><ul><li>Cannibalization of products </li></ul></ul>
  22. 22. Where You Want To Be <ul><li>Bring back the magic of the “Starbucks experience” </li></ul><ul><li>Reconnect with consumers </li></ul><ul><ul><li>strengthen the brand – consumer relationship </li></ul></ul><ul><li>Increase sales of drinks </li></ul><ul><li>Create a “community” feeling in Starbucks </li></ul><ul><ul><li>bring back the idea of a local coffeehouse </li></ul></ul>Marketing Objectives:
  24. 24. Methodology <ul><li>Field Research </li></ul><ul><ul><li>12 Store intercept interviews </li></ul></ul><ul><ul><li>2 Barista intercept interviews </li></ul></ul><ul><li>Online Survey </li></ul><ul><ul><li>60 respondents to multiple choice, fill in the blank survey </li></ul></ul><ul><ul><li>created using Survey Monkey </li></ul></ul><ul><li>Email Survey </li></ul><ul><ul><li>30 respondents to in-depth multiple choice, fill in the blank survey </li></ul></ul>Primary research conducted:
  25. 25. Consumer Insight Global Reliable Chain company Corporation Expensive Key Insight: Currently, when a consumer thinks about Starbucks they only think about coffee and not the experience. All data collected from online surveys and in store intercepts. What comes to mind when we say “Starbucks?” My paycheck Dark Rich Coffee Morning routine Bad service Caffeine Money Yuppie Comfy sofas High price Caffeine rush Nice atmosphere Not healthy Addiction
  26. 26. Consumer Insight Describe a typical Starbucks customer “ A female Starbucks customer wears a beret, scarf, Ugg boots, skinny jeans, and has an expensive pocketbook. A male Starbucks customer wears loafers, tight sweater to show he works out, a fancy watch, and uses a debit card because he never carries cash.” “ I think there are three main types. There is the person who works really hard all the time and needs a caffeine boost, you know the one who takes their coffee back when its not hot enough. Then there's the student who drinks one coffee and stays to study for hours and the indie moody person who likes poetry and the smell of coffee.” “ A young, urban, wannabe writer, who gets a large coffee and has time to sit in the big comfy chairs at Starbucks and write on his Mac laptop.” “ A professional in his mid 20’s on the way to work in the morning.” All data collected from online surveys and in store intercepts. Key Insight: There is a wide variety of types of people who visit Starbucks with varying reasons for visiting.
  27. 27. Consumer Insight Why do you drink coffee or coffee-related drinks? “ I drink coffee sometimes to socialize with my friends or husband or just to treat myself and relax after a long day. ” “ As a nice little pick me up.” “ Its a necessity on a work morning.” “ To escape from my hectic life and socialize in a relaxing environment.” “ To keep warm.” “ One to get through the morning and one to get through the night!” “ Because I'm addicted to caffeine!” Key Insight: Coffee is a vital part to a person’s routine. All data collected from online surveys and in store intercepts.
  28. 28. Consumer Insight How was your last Starbucks experience? “ Starbucks is always extremely crowded. I went there because a friend suggested we meet there. I went to Dunkin Donuts afterwards and got my coffee!” “ It was good but there were too many people around for me to relax. But still, somehow the atmosphere felt intellectual.” “ It’s my third home! I love the coziness.” “ Nice and quite.” All data collected from online surveys and in store intercepts. Key Insight: Every Starbucks store and experience is not the same.
  29. 29. Consumer Insight What do you consider coffee to be? All data collected from online surveys and in store intercepts. 33.3% 38.3% 36.7% 41.7% 6.7% 10% Key Insight: Respondents do not consider coffee to be a healthy option.
  30. 30. Consumer Insight Key Insight: People enjoy the experience of drinking coffee in a coffee shop. Where do you consume Coffee and Coffee-Related drinks? All data collected from online surveys and in store intercepts. 65.0% 31.7% 15% 58.3% 36.7% 38.3%
  31. 31. Consumer Insight Key Insight: Starbucks offers a lot of individualization which helps people create drinks to suit all taste palates. What is most important to you when visiting a coffeehouse or donut shop? All data collected from online surveys and in store intercepts. 26.7 % 40% 16.7% 10% 73.3% 35% 8.3%
  32. 32. Brand Essence <ul><li>Diverse, quality selection of specialty coffee </li></ul><ul><li>Clean store environment </li></ul><ul><li>Eco-conscious </li></ul><ul><li>Urban and suburban convenience </li></ul><ul><li>Consistent taste </li></ul><ul><li>Customizable drinks </li></ul><ul><li>Charitable </li></ul><ul><li>Active member in the community </li></ul><ul><li>Personable baristas </li></ul><ul><li>Comfortable atmosphere </li></ul><ul><li>Global brand awareness </li></ul><ul><li>Consumer intimacy </li></ul><ul><li>Cultural experience </li></ul>Rational Emotional
  34. 34. The Target <ul><li>Men and women ages 16 to 27 </li></ul><ul><li>Educated and cultured </li></ul><ul><li>Urban and suburban </li></ul><ul><li>Middle to upper class </li></ul><ul><li>Balance social life with responsibilities </li></ul>Cultured Millennials
  35. 35. Positioning Statement To cultured millennials, Starbucks is a premium coffee house that adds an intimate and valuable experience to a consumer’s lifestyle by integrating caffeine with a comfortable environment.
  36. 36. Creative Strategy Key insight: Cultured millennials actually value the coffee shop experience as much as they value the quality of coffee. What the consumer thinks now: I go to Starbucks and pay four dollars for my coffee, but sometimes I feel guilty about spending so much money on a cold corporation. I always feel comfortable at the coffee counter, but I wish Starbucks paid more attention to my needs as a caffeine lover. What we want the consumer to think: Starbucks is worth every penny because it offers the perfect coffee shop experience. Every time I buy a coffee, I feel like an important individual whom Starbucks cares about. The single most important thing we want to say to them: Starbucks offers more than just a cup of coffee. Tone: Friendly, warm, inviting, conversational, informal
  37. 37. Mood Board
  38. 38. Marketing Concepts Free Wi-fi in store <ul><li>When a user opens an internet browser, the landing page will be a microsite which will include: </li></ul><ul><ul><li>the music currently playing in the store and an option to purchase the songs through iTunes. </li></ul></ul><ul><ul><li>information about the local community </li></ul></ul><ul><ul><ul><li>charity the store supports </li></ul></ul></ul><ul><ul><ul><li>local happenings </li></ul></ul></ul>
  39. 39. Marketing Concepts Going Green <ul><li>Place recycling bins in stores. </li></ul><ul><li>Have baristas ask “for here or to go?” </li></ul><ul><ul><li>If customer is staying in store, they will have drink served in real </li></ul></ul><ul><ul><li>ceramic mug. </li></ul></ul><ul><li>To encourage reusing plastic gift cards, customers will receive a free tall “drink of the month” when they reload. </li></ul>
  40. 40. Marketing Concepts Community Atmosphere <ul><li>Require baristas to wear name tags </li></ul><ul><li>Have baristas write names on cups </li></ul><ul><li>Create plastic loyalty card </li></ul><ul><ul><li>After 15 visits, consumer will get one free tall “drink of the month” </li></ul></ul><ul><li>Create “drink of the month” </li></ul><ul><ul><li>offer sample sizes </li></ul></ul><ul><li>Put bigger tables and more electronic outlets in store </li></ul><ul><li>Create a separate line for drip coffee </li></ul><ul><li>Insert bookshelf with reading material and games </li></ul>
  41. 41. Marketing Concepts Health Consciousness <ul><li>Serve organic coffee in store </li></ul><ul><li>Implement the Swiss water process </li></ul><ul><li>Create more low fat drinks </li></ul><ul><ul><li>More sugar free syrups </li></ul></ul><ul><li>Have healthy food choices </li></ul>
  42. 42. New Tagline “ A bean is just the beginning”
  43. 43. Integrated Marketing Campaign Online <ul><li>Microsite for landing </li></ul><ul><li>page when connected to </li></ul><ul><li>Wi-Fi in store </li></ul><ul><li>Feed off of iTunes relationship </li></ul>
  44. 44. Integrated Marketing Campaign Newspaper <ul><li>inserts or advertisements about new plastic loyalty card program in relation with “drink of the month” promotion </li></ul><ul><ul><li>Regional and national newspapers </li></ul></ul><ul><ul><ul><li>New York Times </li></ul></ul></ul><ul><ul><ul><li>Chicago Tribune </li></ul></ul></ul><ul><ul><ul><li>LA Times </li></ul></ul></ul><ul><ul><ul><li>USA Today </li></ul></ul></ul><ul><ul><ul><li>Wall Street Journal </li></ul></ul></ul><ul><ul><li>Large college campus newspapers </li></ul></ul>
  45. 45. Integrated Marketing Campaign In store displays <ul><li>Register sign “For here or to go?” </li></ul><ul><li>Free Wi-Fi sign on tables </li></ul>
  46. 46. Integrated Marketing Campaign In store displays <ul><li>Barista name tags </li></ul><ul><li>Fast line for drip coffee </li></ul><ul><li>Nutritional information brochures </li></ul><ul><li>Tea choices on a ring at the register </li></ul>
  47. 47. Integrated Marketing Campaign In store displays <ul><li>Individual store charity poster </li></ul><ul><li>Monitor featuring music playing in store and visuals of “drink of the month” </li></ul>
  48. 48. Integrated Marketing Campaign Outdoor <ul><li>Non-traditional </li></ul><ul><ul><li>coffee beans leading to store </li></ul></ul>
  49. 49. Integrated Marketing Campaign Outdoor <ul><li>Billboards </li></ul><ul><ul><li>nearest drive-thru location </li></ul></ul><ul><li>Subway and bus shelters </li></ul><ul><ul><li>loyalty card information </li></ul></ul>
  50. 50. Integrated Marketing Campaign Television <ul><li>Spotlight the charities Starbucks supports and has partnerships with </li></ul><ul><ul><li>Get in touch with viewers emotions </li></ul></ul>
  51. 51. Media Plan <ul><li>Online </li></ul><ul><li>Outdoor </li></ul><ul><li>Television </li></ul><ul><li>Newspaper </li></ul><ul><li>In store </li></ul>How to reach our target audience:
  52. 52. Marketing Calendar JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER Wi-Fi Site                         Newspaper Advertisements                 Name Tags                         Nutritional Brochure                         Menu Extension                         Tea Rings                         Free Wi-Fi Sign                 Music Monitor                         Drip Coffee Sign                         Mug Sign                 Charity Poster                         Billboard     Bus Stop/Subway Advertisements                         Trail of Beans Outdoor Advertisement   Television Spots     Key Online   Newspaper   In Store   Outdoor  
  54. 54. Budget <ul><li>Starbucks 2007 ad spending: $ 60 million </li></ul><ul><li>Proposed 2009 ad spending: $ 55 million </li></ul><ul><ul><li>Allocated on media planning and buying </li></ul></ul>
  55. 55. Proposed Fee <ul><li>Trove agency fee: 25% of budget </li></ul><ul><ul><li>Includes entire process from consumer research to executing creative work </li></ul></ul>
  56. 56. Endnotes <ul><li>1 “Executive Summary.” Coffehouses and Donut shops-US-July (2008). Mintel . Boston University Libraries, Boston, MA. 1 December, 2008. </li></ul><ul><li><> </li></ul><ul><li>2 “Executive Summary.” Mintel. </li></ul><ul><li>3 “Executive Summary.” Mintel. </li></ul><ul><li>4 “Coffeehouse and Donut Shop Usage.” Mintel . </li></ul><ul><li>5 “Coffeehouse and Donut Shop Usage.” Mintel . </li></ul><ul><li>6 “Competitive Context.” Mintel. </li></ul><ul><li>7 “Competitive Context.” Mintel. </li></ul><ul><li>8 “Advertising and Promotion.” Mintel . </li></ul><ul><li>9 “How coffeehouses and donut shops are used.” Mintel. </li></ul><ul><li>10 “How coffeehouses and donut shops are used.” Mintel. </li></ul><ul><li>11 “How coffeehouses and donut shops are used.” Mintel. </li></ul><ul><li>12 “How coffeehouses and donut shops are used.” Mintel. </li></ul><ul><li>13 “About Us” Dunkin Donuts 2007 <> Viewed December 9, 2008. </li></ul><ul><li>Investor Relations Tim Hortons Inc. December 30, 2007. < > Viewed December 2, 2008. </li></ul><ul><li>“ Coffeehouse and Donut Shop Usage.” Mintel . </li></ul><ul><li>16 “Our Company” Caribou Coffee , 2008, 6 Dec. 2008 <>. </li></ul><ul><li>17 “Hoover’s Profile: Caribou Coffee Company, Inc.” Caribou Coffee , 2008, 6 Dec. 2008 < </li></ul><ul><li>caribou-coffee-company-inc>. </li></ul><ul><li>18 “Company Information” Caribou Coffee, 2008, 6 Dec. 2008 <> </li></ul><ul><li>19 “ Peet’s Coffee and Tea, Inc” Hoovers 6 Decemeber. 2008 < </li></ul><ul><li>freeuk-co-factsheet.xhtml> </li></ul><ul><li>20 “Introducing McCafe Coffees” McCafe 2008 <> Viewed December 9, 2008 </li></ul>