From Beanto Cup- Starbucks Channel Strategy


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From Bean to Cup
Starbucks Channel Strategy

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From Beanto Cup- Starbucks Channel Strategy

  1. 1. From Bean to Cup<br />Starbucks Channel Strategy<br />Jennifer Brinkman<br />Donnych Diaz<br />Rian Miller<br />Yelena Tupitsyna<br />Greg Welch<br />
  2. 2. Bean<br /><ul><li> Arabica Beans
  3. 3. C.A.F.E. certified growers</li></ul><br />
  4. 4. Roasting <br /><ul><li>Roasts beans in 3 domestic roasting plants and 1 in Amsterdam</li></ul><br />
  5. 5. Tasters<br /><ul><li>Starbucks’ professional coffee tasters may taste up to 800 cups of coffee a day. </li></ul><br />
  6. 6. Distribution <br /><ul><li> Packaged Coffee is then stored in Distribution Centers
  7. 7. Then picked up by Partners filling store orders</li></ul><br />
  8. 8. Stores<br /><ul><li>Starbucks Partner or Barista is the company’s contact with the customer
  9. 9. The process ends at the store where customers enjoy freshly prepared coffee drinks</li></li></ul><li>Intermediate Functions<br />INTERMEDIARIES<br /><ul><li>Starbucks depends upon both outside brokers and its direct contact with exporters for the supply of green coffee
  10. 10. Channel Members are part of a “Dependent channel arrangement”
  11. 11. Starbucks operates its own distribution system
  12. 12. Coffee is traded on a negotiated basis, usually quite a bit higher in price
  13. 13. Reduce risk of unpredictability of coffee price and supply, Starbucks enters into long-term fixed price contracts with its suppliers </li></li></ul><li>Intermediate Functions<br />INTERMEDIARIES<br /><ul><li>Starbucks sells a wide variety of whole and ground bean coffees in grocery and warehouse club stores as well as Frappucinos and coffee-flavored ice creams
  14. 14. Other channel of delivering coffee is through direct distribution, the selling and distributing product to account members in airports, hotels, schools, restaurants and hospitals</li></li></ul><li>Channel Strategy Factors<br />Customer/Market Served<br />Focus Market Region: United States<br /><ul><li> In the United States, some 78% of consumers drink coffee7
  15. 15. Of that percentage, females are more likely to be the consumers rather than males
  16. 16. The higher frequency of consumption tends to be older people</li></ul>Focus Market Region: China<br /><ul><li>Coffee consumption in China is highly concentrated in large cities
  17. 17. Coffee appeals to adventurous, open-minded, young, affluent, urban consumers
  18. 18. Many of these returnees have lived in Western countries for a decade and they have become accustomed to the coffee culture</li></li></ul><li>Channel Strategy Factors<br />Product Service Characteristics<br /><ul><li>Starbucks’ whole business is driven by their strong brand image
  19. 19. They strive to have a knowledgeable staff and unique, recognizable packaging
  20. 20. Starbucks also has the image of being known for $5 cups of coffee but you’re also getting some image for your $5, too
  21. 21. Starbucks also uses an intensive distribution strategy to make their logo and coffee ubiquitous around the world</li></li></ul><li>Channel Strategy Factors<br />Product Life Cycle<br /><ul><li>Most items Starbucks sells are consumables, representing their core business (77%) Coffees, teas, Frappacino’s, etc.
  22. 22. They also distribute at-home coffee in-store as well as through convenience and grocery stores
  23. 23. Starbucks strives to keep its coffee drinks fresh by changing menu
  24. 24. Many drinks are cash cows, while others are seasonal with limited life</li></li></ul><li>Channel Strategy Factors<br />Competition<br /><ul><li>Biggest threat MacDonalds threat to market share
  25. 25. Dunkin Donuts
  26. 26. Competes with both direct channel and retailer channel through website, their stores and grocery stores
  27. 27. Multiple distribution gives competitive advantage over smaller coffee chains and at-home coffee companies</li></li></ul><li>Channel Strategy Factors<br />Environmental Factors<br /><ul><li>Eliminates competition via Cluster bombing tactics, buyouts and cannibalization
  28. 28. Open several stores next to competition
  29. 29. Aggressive advances increased revenue by 24% in one year alone</li></li></ul><li>Channel Strategy Factors<br />Human Resource Considerations<br /><ul><li>Employees offered stock
  30. 30. Health Benefit (including part time)
  31. 31. 1 LB free coffee per week
  32. 32. Special/Continuous Training
  33. 33. Turnover Rate
  34. 34. 50% Starbucks vs 400% Coffee Industry
  35. 35. 401k</li></li></ul><li>Distribution Strategy<br /><ul><li>Starbucks’ level of distribution is intensive via retail stores
  36. 36. Starbucks has Direct Retail System through operation of its own Retail outlets
  37. 37. Accomplishes direct marketing of product while maintaining marketing strategy and mission statement
  38. 38. Maintains high level of customer service via product offerings and vast number of locations</li></li></ul><li>Distribution Strategy<br /><ul><li> S.B. has control/power over channels of distribution
  39. 39. S.B. imports high quality coffee beans
  40. 40. S.B. developed socially responsible coffee buying guidelines called C.A.F.E.
  41. 41. Exclusive contracts from growers usually 5 years out
  42. 42. High level of cooperation amongst growers/suppliers leads to rapid inventory replenishment
  43. 43. Reduces total costs of marketing channel and improves customer service
  44. 44. Roasts beans in its roasting plants
  45. 45. Stores beans in warehouse for distribution to retail outlets. </li></li></ul><li>Distribution Strategy<br /><ul><li>S.B. has Corporate Dependent Channel Arrangement
  46. 46. Operates its own distribution system in a manor that produces an integrated channel
  47. 47. S.B. imports and processes coffee then sells it under their own brand name in their own stores
  48. 48. Has other ways to distribute products via groceries stores and mail order using a multi-channel structure to market products
  49. 49. Channel relationships are increasingly important in creating market value; maintain brand image and a sustainable competitive advantage </li></li></ul><li>Distribution Strategy<br />Channel Strategy Assessment<br /><ul><li>Are the distribution decisions in order to facilitate an effective and efficient distribution system accomplishing this and are the results in line with the marketing strategy?
  50. 50. At the direct retail system level yes, the current channel strategy and decisions are facilitating the marketing at the retail level delivering a high quality product to the customers.
  51. 51. S.B. also accomplishes integration of marketing and distribution via mail order as well as grocery stores.
  52. 52. Other partner relationship dependent on a multi-channel strategy have been successful i.e. PepsiCo – Frappucino product.</li></li></ul><li>Distribution Strategy<br /><ul><li>Is marketing strategy supported by the channel strategy?
  53. 53. The marketing strategy of offering a differentiated product is supported by the purchase of high quality coffee along with high quality controls/standards applied to growers/suppliers.
  54. 54. Expansion of retail outlets promotes further marketing and brand image
  55. 55. S.B. has seen extensive growth in the international markets. Developing retail units as well as licensed units abroad. This again strengthens the company’s position as a global purveyor of quality coffee drinks.</li></li></ul><li>Distribution Strategy<br />RECOMMENDATIONS<br /><ul><li>Specialty Coffee Segment
  56. 56. Expand and re-strategize how it markets and brands specialty coffees.
  57. 57. Expand Multi-channel Relationships
  58. 58. Expand and develop new domestic channels focus on Specialty soft drinks, energy drinks, and ready-to-drink products
  59. 59. Nutritional and Health drink segment. Acquire company whose product lines offer nutritional/health drinks and ascribe to principles of sustainability and environmental stewardships re-enforcing the company’s mission statement, brand image and positioning. </li></li></ul><li>THANK YOU!<br />