DiBella Coffee vs Starbucks - Consumer behavior, segmentation, positioning analysis
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This document provides an analysis comparing Di Bella Coffee and Starbucks. It includes sections on consumer behavior, market segmentation, positioning, and recommendations. Di Bella focuses on specialty coffee and the customer experience while Starbucks has expanded globally but diluted their brand. The document recommends Di Bella expand domestically and internationally to establish market leadership while continuing to innovate and build their brand.
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DiBella Coffee vs Starbucks - Consumer behavior, segmentation, positioning analysis
- 1. MKG701 Consumer Behavior Market Segmentation Positioning An analysis comparing Di Bella Coffee and Starbucks Master of Business Administration University of the Sunshine Coast Marcus Hølland Eikeland | Adam Humphrey | Dean 1 Saunder
- 2. Agenda for today Introduction 01 Consumer Behavior 02 Market Segmentation 03 Positioning 04 Recommendations 05 2
- 3. Introduction Company Backgrounds Starbucks • Established in 2002 by Phillip Di Bella. • Own 4 Roasting warehouses, 26 featured cafes • Supplies 1200 Cafes, 2,2 million cups per day • Expanded into China 2010 and India 2011 • Crop to Cup launched in 2010 Source: (Companies Websites 2013) • • • • • Worlds largest coffee chain Established 1971 20,000 stores worldwide 379 mill in revenue (2012) Entered Australia in 2000 with 81 stores • Only 22 shops continue trading 3
- 4. Market Segmentation Quality coffee, unparalleled service, competitive prices to create the ultimate coffee experience for all our customers. Vision Statement - Di Bella Coffee Source: (Di Bella Website 2013) 4
- 5. Introduction Industry at a glance $339.8m $1.3 bn $5.3 bn Annual Growth Rate 09-14 Annual Growth Rate 14-19 3.1% 3.5% Businesses REVENUE (Source: IBIS World 2013) WAGES PROFIT 6,613 5
- 6. Introduction Industry at a glance Industry Structure Revenue by State Lifecycle State Regulation level Growth Medium Barriers to entry Low Competition level High (Source: IBIS World 2013) 6
- 7. Introduction Industry at a glance NO MAJOR PLAYERS Hudsons Coffee(1%) Starbucks (1%) Gloria Jean's Coffees (4 %) Michel's Patisserie (3.5%) The Coffee Club (3%) Local coffee houses (87.5%) (Source: IBIS World 2013) 7
- 8. Introduction Quick survey 54% 64% People over 18 that drink coffee Total consumption during breakfast hrs Source: Fave coffee, coffee stats, viewed 20 December 2013, http://www.favecoffee.com.au/coffee-stats/ 60% Total percent of Australians that need coffee to start the day 8
- 9. Analysis Consumer behavior Need Recognition Info Search Emotional, energy, status, social, lifestyle Low degree of risk involved in purchase. Low cost item, easily changed if not satisfied Word of mouth, internet, foot traffic Evaluation Generic options: instant, plunger, home machines (nespresso) Competing coffee houses: Starbucks Other drink options: tea or soft drink, water Source: In store experience, Di Bella Coffee website and Starbucks website – Details in reference listing Purchase Decision Availability of local Di Bella coffee house compared to competitors, Atmosphere, Choice, People Post Purchase Eval Ranges from Delight to Cognitive Dissonance Di Bellas goal will be to have delighted customers who are more incline to make it a regular stop. 9
- 10. Analysis 4 Ps Price • • • • Promotion Coffee - $3.5 Cup and $4.0 Mug Whole Beans – Greater then $10.5 (250g) • Café owner operators – city CBD, wholesale – WA, VIC, NSW & QLD High control over consumer experience • Place (distribution) • • • • Word of mouth from trusted advisors (Café Goers), Social Media (FB 23.8K likes) News letter, blogs and Events Earns marketing voice Crop to Cup – Does the right thing Espresso coffee, whole beans, coffee education Wine like status – Reserve ranges Product Source: In store experience, Di Bella Coffee website and Starbucks website – Details in reference listing Price • • • • Promotion Coffee - $3.8 Cup and $4.2 Mug Whole Beans – Greater then $12 (250g) High foot traffic locations, majority city CBD Previously high saturation of stores Place (distribution) • • • • Buys advertising, strong loyalty card including mobile App Strong social media (FB 61K likes) Many coffee drink variations, light food, coffee drinking apparatus Low control consumer experience – United Airlines (no SB experience) Product 10
- 11. Analysis Market Segmentation Di Bella Quality, recognition and status Behavior Age +25, coffee connoisseurs, white collar workers Starbucks Value a familiar and comfortable experience, regular Age 16 – 34, white collar and students Demographics Psychographic Geographic Higher income, something better attitude High density or destination urban food locations Source: The Hudson Chronicle website, Di Bella Coffee website and Starbucks website – Details in reference listing Mid to higher income, young optimism mindset High density and or high foot traffic locations 11
- 12. Analysis Target Market • Primary – Café-goers, conscious coffee drinker, that appreciates quality • Secondary – Instant coffee drinkers, 70% of coffee consumed in Australia TORQ a ‘natural coffee concentrate’ • Primary 49% – Men and Women between 25-40. Attracted by the hip, contemporary store design. • Secondary 40% – Young adults between 18-24. Positioned as a place to hang out, study or write papers 12
- 13. Analysis Positioning Strategy Positioning map • DiBella was very clear about where they wanted to position them self in the market. • DiBella wanted to be Australias #1 specialty coffee distributor -> 'brand identity' focus on the top end (specialty) coffee drinkers. • Includes the whole value chain (crop to cup). Everything is in-house. • This target market is a conscious coffee drinker, well educated (taste, flavor, bitterness) who knows quality. • Marketing vs advertising = educating consumer rather than selling to consumer. Source: Direct observation and industry knowledge High perceived quality and status Extensive Personalized Service Limited Service Less Personal Low perceived quality and status 13
- 14. Sometimes you gotta get out of the library! - Indiana Jones 14
- 15. Conclusion Conclusion DiBella found an opening in the coffee specialty end, focusing on the experience of great coffee. Starbucks in a state where they are diluting, which confuses the customer. DiBella sticks to their vision and brand identity, (brand, marketing vs. ads, and the earning the voice). Starbucks chasing product optimization, and brute force in order to position themselves. Starbucks and DiBella have similar market segmentation but different approach (corporate cookie-cutting vs. building relations with owner operators via customer ambassadors) 15
- 16. Recommendatio n Recommendations • Domestic: expand current coffee houses e.g. Adelaide, Northern Territory (Darwin), potential for franchises. • Continue to build brand awareness through broad customer base. • Continue to innovate through product diversification (pods). • International: establish strong hold in Asia, look for opportunities into Europe and the US. 16
- 18. References References • • • • • • • • • • Athena Marketing International, What Starbucks Taught Us About Branding, viewed 14 January 2013, http://www.athenaintl.com/news/articles/what-starbucks-taught-us-aboutbranding/ Di Bella Coffee, Company overview Di Bella Coffee, viewed 6 January 2013, http://dibellacoffee.com.au/about/company-overview/#sthash.TsO6tQCp.dpbs Ferrell, OC & Hartline, MD 2011, Marketing strategy, 5th edn, South Western, USA Starbucks Australia, About us Starbucks Australia, viewed 6 January 2013, http://www.starbucks.com.au/About-Us.php The Hudson Chronicle, Who is Starbucks Target Audience, viewed 7 January 2013, http://smallbusiness.chron.com/starbucks-target-audience-10553.html What Starbucks Taught Us About Branding, viewed 20 January 2014, http://www.athenaintl.com/news/articles/what-starbucks-taught-us-about-branding/ IBISWorld Industry Report H4511b - Cafes and Coffee Shops in Australia, viewed 7 January 2013, http://clients1.ibisworld.com.au.ezproxy.usc.edu.au:2048/reports/au/industry/default.aspx?e ntid=2015 Interviews with DiBella CEO, Phillip DiBella on Youtube, viewed 7 January 2013, http://www.youtube.com/user/dibellaonline?feature=watch Starbuck Company Website, http://www.starbucks.com DiBella Website, http://www.dibellacoffee.com.au 18
Editor's Notes
- This Agenda directly reflects the assignment, see first slide.
- Crop to cup initiative:Di Bella believe it is their responsibility to support the communities2. The program builds skills, job security and growth opportunities3. Di Bella green bean specialist visits coffee growing regions to educate/assist local farmers highest quality beans4. Di Bella rewards farmers with prices that reflect the quality of the beans.I THINK WHY STARBUCKSSTUMBLED IN AUSTRALIA SHOULD BE REVEALED HERE ALREADY!. In 2002, Phillip Di Bella’s passion for coffee and entrepreneurial spirit led to the establishment of a small coffee-roasting operation in the suburbs of Brisbane.Phillips enthusiasm for both his product and customer service, resulted in Di Bella Coffee becoming a key player in the local coffee scene.
- Hands up, How many people drink coffee? Keep your hand up if you drink coffee at breakfast timeOf you holding your hand up, how many believe you cant start your day without coffee. Do you think this is accurate ?
- 1. Need recognition Di Bella is about status while Starbucks is about the social element in store.2. Info search is a low risk for both Di Bella and Starbucks given a low-cost item.Evaluation Di Bella now looking to compete against instant coffee with its new pork product while Starbucks is often confusing in-store with so many coffee options as well as many Tea and soft drink options.Purchase decision for Di Bella this is about availability which comes down to location and people (business owners caring about the customers)while for Starbucks it seems to relate to atmosphere Post purchase evaluation Di Bella consistently looks to delight customers thus the operator market being 90% of their business this assists in spreading word-of-mouth to help grow the business.
- Other high-level Starbucks is corporate and clean in contrast to the warm and friendly store environment. Di Bella coffee is more grass roots from the ground up and and its stripes rather than paying for. Surprise here was Di Bella coffee being cheaper than Starbucks. Philip is very much the figurehead of Di Bella Coffee and its use personality, enthusiasm and clever ideas that drive the business. In recent years Starbucks has lost its way losing control over the Starbucks experience an example of which was united airlines using Starbucks branded instant coffee another is the move for in-store no longer freshly grinding beans thus the stores losing the Coffee smell.
- Market segmentation is performed to divide large heterogeneous markets into smaller pieces that companies can reach with greater efficiency and more effectively
- Just as a sum up of the video: In 2002, Phillip Di Bella’s passion for coffee and entrepreneurial spirit led to the establishment of a small coffee-roasting operation in the suburbs of Brisbane.Phillips enthusiasm for both his product and customer service, resulted in Di Bella Coffee becoming a key player in the local coffee scene.
- In-house: legal, marketing, manufacturing, distribution. Target market: the wine drinker of coffee. Diluting their bramd
- How you’ve been to a DiaBella? What was your experience?First of all, one of the busiest coffee houses I visited in Freemantle. But holidays and newly opened. 15 minute wait for a seat. Personal experience – staff friendly, educating customer, targeting both consumers. Staff friendly: DiBella reckons the people are like the bait in fishing, the better the bait, the better the fish. Spends 2 miillion extra on staff. Educating the customer: There were bins of coffee, that you could try of different sorts. The staff actively ask me questions about my coffee habits, and told me about their products. There were different machines that you could try out and buy. Targeting both segements, B2B and B2C.
- Positioning, Segmentation,Consumer behaviour.
- Repeat the difference between DiBella and Starbucks and how their strategies have been different as outlined in the presentation. Based on this analysis our recommendations are….Building more awareness among consumers.