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F. Jallat - CFVG - 2011Trouble Brews atStarbucks
1. When Howard Schultz launched Starbucks, who was the target market, how wasStarbucks positioned and what decisions about...
Starbucks: Creating A Third PlacePremiumCoffeePhysicalEnvironmentService PhilosophyConsumption Patternstendency to linger;...
JC Decaux – Enjeux et développement…de la vocation del’entrepriseUne stratégiedédiée àplusieurs ciblesLa MéfianceSe rappr...
The Profit Impact Equation:Profit Impact = (Margins x Volume) – Fixed CostsVolume = Number of Customers x Amount Purchased...
Margins Variable Costs Better bargaining position relative to competitors Coffee beans bought in advance through forwar...
$6.00$5.00$4.00$3.00$2.00$1.00Commodity Goods Service ExperienceFrom Coffee Beans to In-Store SensoryExperience
Margins Variable Costs Better bargaining position relative to competitors Coffee beans bought in advance through forwar...
The Competitive Landscape when Starbucks was IntroducedStarbucksDunkin’ DonutsCorner coffee shops
Volume Numbers of Customers Adding customers through new locations Increasing number of customers through store cluster...
LIFE TIME VALUE CALCULATIONSVisits/month (Ex.9)Visits/year$ per transaction (Ex.9)revs/yearUnsatisfied3.946.8$3.88$182Sati...
Volume Numbers of Customers Adding customers through new locations Increasing number of customers through store cluster...
Starbucks Customer Acquisition RoutesMassive storeexpansion(many morecoffeehouses)Non-coffeehousechannels(groceries, resta...
Fixed Costs Operational Costs Systems and processes Employee efficiencies Marketing Costs Promotion Leveraging partn...
Starbucks’ Balancing ActNewCustomersEstablishedCustomersSTARBUCKSGrowthEngine“Live Coffee”Culture,Brandauthenticity
The Consumption Patterns of Established Customersvs. New CustomersEstablished Customers New AcquisitionsDrinking Starbucks...
Starbucks PositioningStarbucks PositioningInconsistenciesInconsistenciesPremiumCoffeePhysicalEnvironmentService Philosophy...
Conflicting Definitions of “Service”Established Customers… New Acquisitions…Want a peaceful ambiance Crowd the store, crea...
Starbucks’ Service DeteriorationToo littleExperienced LaborBaristas Have NoTime to ChatGrumpyEmployeesEmployeeTurnoverLots...
 Costs (no significant contribution to the company’s bottom line) Implementation Ownership and Employee Relations (sust...
Starbucks’ Changing Brand Image / PositioningOld Image… New Image…the best quality coffee available good coffee on the run...
Starbucks New Competitive Landscape:Towards a ‘McDonaldization’ of the Third Place Experience?StarbucksDunkin’ DonutsCorne...
 Jim Donald’s Initiatives in 2007: Try to compete with McDonald’s orDunkin’ Donuts rather than strenghten the differentia...
Competitiveness of the Companyand Value CreationVALUECOMPETITIVENESSPRICEPROFITABILITYCOST
Comprehensive Value AnalysisAn objective componentA symbolic componentA relational component
 Recreating the Starbucks Experience Inspiring Partners Enhancing the Baristas’ contact with customers Emphasizing the...
 Location Trimming US expansion Closing of under-performing stores Increased sales in non-Starbucks outlets Entertain...
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Starbucks 09 final

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  • Une Politique d’Elargissement La gestion stratégique de JCD s’inscrit dans une politique d’ élargissement  : Consiste à élargir la cible autour du cœur de cible à partir d’une offre élargie. Et ce par deux démarches : Le complément de gamme : Concerne les attributs secondaires du produit afin de toucher des cibles périphériques pas totalement satisfaites par l’offre de base. Ex : Avoir rendu les vitrines d’abribus olfactives, tactiles… L’extension de gamme : Correspond à un accroissement de l’offre. C’est le cas de l’introduction du vélo libre service dans la gamme du mobilier urbain de JCD. II. Une Reponse adequate aux enjeux JCD doit d’abord répondre aux enjeux propres à son activité  : JCD est un des grands groupes envers lesquels le public développe une méfiance , une hostilité par peur d’être instrumentalisé .  JCD doit se rapprocher du citoyen pour lui proposer une offre innovante, pratique qui s’inscrit dans ses besoins quotidiens et lui rend service. A défaut, JCD va déclencher une méfiance du citoyen qui va nuire au message publicitaire propagé par l’annonceur. JCD diffuse des messages publicitaires qui participent à la pollution visuelle des villes. Afin de ne pas étouffer un citoyen exaspéré par la profusion de messages, JCD doit à la fois proposer un mobilier urbain esthétique et innovant qui embellit l’espace urbain.   JCD doit ensuite répondre aux enjeux conjoncturels contemporains . La citoyenneté  : Le public attend des grosses entreprises un comportement citoyen. La recherche du seul bénéfice n’est plus tolérée par le public. L’entreprise doit s’inscrire dans la vie sociétale. Ainsi, l’entreprise de traitement des déchets Veolia propose des jeux éducatifs aux enfants afin de les sensibiliser aux enjeux écologiques L’ écologie  : Face à un public de plus en plus au fait des risques environnementaux, les entreprises doivent s’inscrire dans une démarche de respect de l’environnement et proposer des solutions de lutte contre le réchauffement climatique.
  • Consider a true commodity: the coffee bean. Coffee beans = a little more than $1 a pound (= one or two cents per cup.) Turn them into good (grind, package and sell) at 5 – 25 cents a cup. Brew the ground beans in a corner coffee shop = 50 cents to a dollar per cup. Serve that same coffee in a nice dine-in restaurant = $ 1.5 – 2 per cup. Five-star restaurants or Starbucks = $2 – 5 per cup.
  • Transcript of "Starbucks 09 final"

    1. 1. F. Jallat - CFVG - 2011Trouble Brews atStarbucks
    2. 2. 1. When Howard Schultz launched Starbucks, who was the target market, how wasStarbucks positioned and what decisions about product, price, distribution andpromotion supported the positioning?2. Wall Street and Starbucks management placed great emphasis on the company’s abilityto continue its impressive growth rate. What were some of the initiatives undertakenby Starbucks and how did they fuel company growth?3. It’s clear that, in general, the company’s growth initiatives were sound in terms ofgenerating the growth expected by Wall Street. But which of Starbuck’s initiatives, inretrospect, were sound decisions for the brand and which were inconsistent with brandpositioning?4. What role should foreign expansion play in Starbuck’s strategy?5. How should Starbucks define its target market and positioning after its decline in 2007?6. Evaluate the actions taken to reinvigorate Starbucks.Assignment QuestionsAssignment Questions2
    3. 3. Starbucks: Creating A Third PlacePremiumCoffeePhysicalEnvironmentService PhilosophyConsumption Patternstendency to linger;ritualistic consumption;looking to self-indulgeTarget CustomerSophisticated, affluentcoffee lover, embracingthe “live coffee” lifestyleBrand Perceptionsbest coffee;classy, upscale;a “third place”
    4. 4. JC Decaux – Enjeux et développement…de la vocation del’entrepriseUne stratégiedédiée àplusieurs ciblesLa MéfianceSe rapprocher del’annonceur etrendre serviceLa Pollution VisuelleFournir un mobilieresthétique et bienentretenuLa CitoyennetéIntégrer le mobilierurbain dans la viecontemporaineL’EcologieRespecterl’environnement etla vie dans la cité…conjoncturels etcontemporainsUne réponseadéquate auxenjeux…+PolitiquesGarantir la qualité et lapropreté del’environnement urbainCitoyensRéduire l’hostilité vis àvis de l’affichagepublicitaireAnnonceursProposer des supports dequalité pour maximiserl’impact des messages
    5. 5. The Profit Impact Equation:Profit Impact = (Margins x Volume) – Fixed CostsVolume = Number of Customers x Amount Purchased x Frequency of Purchase1. Margins Variable Costs Selling Price2. Volume Numbers of Customers Frequency of Visits and Amount of Purchase3. Fixed Costs Operational Costs Marketing CostsThe Profit Impact of Starbucks Initiatives (1)The Profit Impact of Starbucks Initiatives (1)5
    6. 6. Margins Variable Costs Better bargaining position relative to competitors Coffee beans bought in advance through forward contracts Increased prices of beverages (e.g. 1997) Selling Price Value to customersThe Profit Impact of Starbucks Initiatives (2)The Profit Impact of Starbucks Initiatives (2)6
    7. 7. $6.00$5.00$4.00$3.00$2.00$1.00Commodity Goods Service ExperienceFrom Coffee Beans to In-Store SensoryExperience
    8. 8. Margins Variable Costs Better bargaining position relative to competitors Coffee beans bought in advance through forward contracts Increased prices of beverages (e.g. 1997) Selling Price Value to customers Limited Price CompetitionThe Profit Impact of Starbucks Initiatives (2)The Profit Impact of Starbucks Initiatives (2)8
    9. 9. The Competitive Landscape when Starbucks was IntroducedStarbucksDunkin’ DonutsCorner coffee shops
    10. 10. Volume Numbers of Customers Adding customers through new locations Increasing number of customers through store clusters Increasing number of customers through market response, policies andprocedures Frequency of Visits and Amount of Purchase Creating opportunities for incremental sales Increasing loyalty with the Starbucks experienceThe Profit Impact of Starbucks Initiatives (3)The Profit Impact of Starbucks Initiatives (3)10
    11. 11. LIFE TIME VALUE CALCULATIONSVisits/month (Ex.9)Visits/year$ per transaction (Ex.9)revs/yearUnsatisfied3.946.8$3.88$182Satisfied4.351.6$4.06$210Highly Satisfied7.286.4$4.42$382Avg life (Ex.9)Revs/lifeUnsatisfied1.1 years$200Satisfied4.4 years$922Highly Satisfied8.3 years$3170Difference = $28/yr Difference = $172/yrDifference = $722 Difference = $2248
    12. 12. Volume Numbers of Customers Adding customers through new locations Increasing number of customers through store clusters Increasing number of customers through market response, policies andprocedures Frequency of Visits and Amount of Purchase Creating opportunities for incremental sales Increasing loyalty with the Starbucks experience Managing non-peak periods (new products and services)The Profit Impact of Starbucks Initiatives (3)The Profit Impact of Starbucks Initiatives (3)12
    13. 13. Starbucks Customer Acquisition RoutesMassive storeexpansion(many morecoffeehouses)Non-coffeehousechannels(groceries, restaurants,airplanes, etc.)Non-coffee products(ice cream, frappucino,etc.)Other feedermechanisms(gift cards, etc.)New Customer Acquisitions
    14. 14. Fixed Costs Operational Costs Systems and processes Employee efficiencies Marketing Costs Promotion Leveraging partnershipsThe Profit Impact of Starbucks Initiatives (4)The Profit Impact of Starbucks Initiatives (4)14
    15. 15. Starbucks’ Balancing ActNewCustomersEstablishedCustomersSTARBUCKSGrowthEngine“Live Coffee”Culture,Brandauthenticity
    16. 16. The Consumption Patterns of Established Customersvs. New CustomersEstablished Customers New AcquisitionsDrinking Starbucks is part of a self-indulgent ritual Drinking Starbucks is part of a pragmatic routineA tendency to linger A tendency to be in a rushStarbucks is a sanctuary to escape from the realworldStarbucks is a place to pass through on the way to workStarbucks is desirable for its friendliness, its socialambienceStarbucks is desirable for its convenience
    17. 17. Starbucks PositioningStarbucks PositioningInconsistenciesInconsistenciesPremiumCoffeePhysicalEnvironmentService PhilosophySTARBUCKSDifferentConsumptionPatternsEstablished CustomersSophisticated, affluentcoffee lover, embracingthe “live coffee” lifestyleDifferentBrandPerceptionsNew AcquisitionsLess sophisticated, in ahurry, more pragmatic
    18. 18. Conflicting Definitions of “Service”Established Customers… New Acquisitions…Want a peaceful ambiance Crowd the store, create a rushed environmentWant friendly employees Make the employees grumpyWant their customized beverages prepared just right Put pressure on the baristas to rush
    19. 19. Starbucks’ Service DeteriorationToo littleExperienced LaborBaristas Have NoTime to ChatGrumpyEmployeesEmployeeTurnoverLots of NewCustomerAcquisitionsTendency to orderHand-Crafted Drinks+ Desire forCustomizationLong LinesGrumpyCustomersDon’t rememberme or my orderNew ProductComplexityComplex ordersLeave before orderingDon’t come back(as often)Less of a “Third Place”attachment (diminishedbrand loyalty)Order something simplerather than complex(lower ticket value)
    20. 20.  Costs (no significant contribution to the company’s bottom line) Implementation Ownership and Employee Relations (sustainable ‘uncompromised quality’?) Site Selections (without in-depth understanding of local markets?) Product Assortment (able to play a role of potential ‘cultural arbiter’ abroad?) Branding Issues Public Relations Missteps (e.g. location in the Forbidden City) Increasing Symbol of Encroaching US Capitalism and Culture?The Role of Foreign ExpansionThe Role of Foreign Expansion20
    21. 21. Starbucks’ Changing Brand Image / PositioningOld Image… New Image…the best quality coffee available good coffee on the runa third place place to meet and move ona sanctuary from the real world convenient, accessible, and consistent
    22. 22. Starbucks New Competitive Landscape:Towards a ‘McDonaldization’ of the Third Place Experience?StarbucksDunkin’ DonutsCorner coffee shopsConvenient, high-quality coffeein a clean, comfortable settingAn increasing number offlavored coffee alternatives
    23. 23.  Jim Donald’s Initiatives in 2007: Try to compete with McDonald’s orDunkin’ Donuts rather than strenghten the differentiation ofStarbucks 1$ Coffee and Free Refills (further dilute Starbucks positioning?) National TV Advertising (advertise and remain ‘cool’?) Howard Schultz’s Initiatives: Reevaluate the company’s strategy forthe long haul?Actions Taken to Reinvigorate the CompanyActions Taken to Reinvigorate the Company23
    24. 24. Competitiveness of the Companyand Value CreationVALUECOMPETITIVENESSPRICEPROFITABILITYCOST
    25. 25. Comprehensive Value AnalysisAn objective componentA symbolic componentA relational component
    26. 26.  Recreating the Starbucks Experience Inspiring Partners Enhancing the Baristas’ contact with customers Emphasizing the ‘Romance’ of Coffee Enhancing dialog with customers New Products Breakfast sandwiches without the smell New, milder coffee roasts SmoothiesHHoowwaarrdd SScchhuullttzz’s Initiatives (1)’s Initiatives (1)26
    27. 27.  Location Trimming US expansion Closing of under-performing stores Increased sales in non-Starbucks outlets Entertainment Options Reorganizing the entertainment segment Moving away from movies Enhanced Marketing Communication Sales promotion AdvertisingHHoowwaarrdd SScchhuullttzz’s Initiatives (2)’s Initiatives (2)27
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