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starbucks

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  • 1. STARBUCKS COFFEE
    Presented by:
    ChinmayaVashishth
    Debendra Rout
    DewalJindal
    KapilDaga
    KapilSingla
    Karan Sood
    PranjalMehrotra
  • 2. STARBUCKS COFFEE
    We’re not in the coffee business serving people…
    We’re in the people business serving coffee.
    -Howard Behar,
    Director of Retail Operations
  • 3. Agenda
    History and Business growth strategy
    Problem Identification
    Starbucks and Market research
    SWOT analysis
    Recommendation
    Future prospect and conclusion
  • 4. STARBUCKS: THE HISTORY
    The original Starbucks store was started by ZeivSiegl, Jerry Baldwin and Gordon Bowker in 1971
    It was opened as a store that sold whole beans and premium-priced coffee beverages
    Howard Schultz’s joined with Starbucks in 1982 and his idea was to create a chain of coffee houses with a product differentiation of specialty “live coffee”, service or customer intimacy with an “experience”, and an atmosphere of a “third place” to add to their work and home alternatives.
    The stores targeted selling their coffee primarily to affluent, well educated, white-collar patrons between the ages of 25 and 44.
    In 1992 Howard Schultz , after opening Starbucks 140 stores, took the company public and by the end of 2002 Starbucks had opened more than 5000 stores across the globe.
  • 5. MARKET SHARE ACROSS USA
  • 6. PRODUCT MIX
    The company spent minimal dollars on advertising to promote a brand concept , still achieving phenomenal sales figures
    The majority of sales came from coffee based and other beverages and the rest from food items and whole bean coffee sales.
    Other- 15% Revenue Source
    Product Mix with % sales
  • 7. SALES FIGURES
  • 8. STARBUCKS: THE SUCCESS
    ‘Live Coffee’ Mantra
    Highest quality coffee offered
    Control the supply chain- Work with the growers, oversee the roasting and control the distribution
    Continuous product innovation
  • 9. Where does the problem lie?
    • Lacked a Strategic Marketing Group
    • 10. Changing Perception
    • 11. Unsatisfied Customers
    • 12. Increasing Competition
  • Lacked a Strategic Marketing Group
    • No Chief Marketing Officer
    • 13. Marketing Department functioned as
    three different groups :
    • Market Research Group
    • 14. Category Group
    • 15. Marketing Group
  • Changing Perception
  • 16. Dissatisfied Customers
    • Starbucks was not meeting expectations in terms of Customer Satisfaction and there was a direct link between Satisfaction and Customer Loyalty
  • Increasing Competition
    • Though Starbucks is still a dominating chain but its hold on coffee has loosened.
    • 17. Facing Competition not from newcomers but from older coffee chains that have increasing customer loyalty.
    • 18. Another threat are the established food chains that have altered their focus to incorporate the rising trend of coffee.
  • Increasing Competition
    Dunkin Donuts: Complementary pairing of Coffee & Donuts.
    2. Peet’s Coffee & Tea: Focus on Quality Coffee & Strategic Positioning of Stores nearby to Starbucks locations.
    3. Caribou Coffee: Differentiate themselves on the basis of Store Environment.
  • 19. Marketing Concepts Visited
    • Market Research/Survey
    • 20. Importance of Findings  Action  Impact
    • 21. Customer Values
    • 22. What as an organization we are doing for customers?
    • 23. Customer Satisfaction/Loyalty
    • 24. What does the customer perceive of our values and to what extent he/she is thrilled about it?
  • Target
    Consumer
    How
    aligned is
    your brand?
    Target
    Needs
    Target
    Value
    Target
    Message
    Aligning the Marketing Value Chain
    Who are they?
    • Psychographically
    • 25. Demographically
    • 26. Geographically
    What are their current needs?
    • Personal needs and usage occasions
    Tactics, mix, media, spend
    Why Buy (Brand)? (Essence of the brand)
    • Product line 1
    • 27. Product line 2…
    How do we communicate the “why”?
    • For the brand?
    • 28. By product line?
    16
  • 29. STARBUCKS and Market Research
    Strong Proactive culture @ STARBUCKS
  • 30. Strengths
    The Brand Starbucks
    Strong Financial Base
    Large number of locations
    3rd Party Tie-Ups
    Growth through Innovation
    Respected employer
  • 31. Weaknesses
    Undisciplined Marketing
    Inflexible Pricing
    Does not tailor its branches according to location
  • 32. Opportunities
    Tie-ups with other established
    businesses
    Developing international business
    Diversification into other drinks
  • 33. Threats
    New Entrants
    Competitive rivalry
    Substitution
    Bargaining power of Customers
  • 34. Recommendations
    Strategies to Renew Starbucks Brand Name
    (a) Advertising and Promotion:
    Market there brand more aggressively in order to convince people that Starbucks
    serves coffee that is superior to other coffee and beverages.
    (b) Product Differentiation:
    Starbucks  should  work  on  differentiating  its  coffee. They
    should invest in  extensive  research  and  development efforts
    to develop new flavors, blends or even roast fusions.
    (c) Coffee  Variety  and  Quality  Control:  
    In  catering  to  different  consumer  preferences, Starbucks needs to increase its
    variety  of  coffee  offered. Starbucks needs to ensure that the coffee offered  is
    of  the  highest  quality.
  • 35. 2)  Strategies  to  Build  and  Retain  Customer  Loyalty  
    a) Privilege Card and Rewards Program:
    Having  a  non‐distinct  rewards  program provides no incentive for coffee drinkers to choose Starbucks over other its competitors.
    b) Starbucks Drive‐Through:  
    • Although Starbucks’ strategy has been to open as many  stores  as possible, most of its stores are mid‐sized. As a result Starbucks loses potential customers.
    • 36. Starbucks has already started implementing drive ‐ throughsaround the country, and there is potential for them to expand.
  • Recommendations
    Strategies towards Cost Efficiency
    Effective Store Expansion Decisions
    Restrict its expansion in US
    Explore and Expand in new markets
  • 37. Development
    Growth
    Maturity
    Decline
    Europe
    USA
    Asia
    Life-cycle model of coffee consumption
    Latin America
    Latin America
  • 38. Strategies towards Future Growth
    Expansion into the Corporate Market
    • Ineffective Starbucks’s expansion
    strategy in the past
    • Mini Starbuck’s Stores
    • 39. Focus on Health Drinks
    • 40. Huge Infrastructure and Reach
  • CONCLUSION
    Invest $40 million to increase man-hour, however with certain guidelines
    Innovative Product Vs. Quick/Pleasant Sales
    Strong need for diversification
  • 41. Questions

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