The Starbucks vs. Peets Story

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Comparing two bests Starbucks and Peets. The team conducated a market, industry and competitive analysis. In addition the project included a comprehensive focus group and online survey for both the firms. Duration of the project was 10 weeks.

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  • Starbucks stock price dropped $40 -> $8, Starbucks closed 600 stores this year
    Peet’s stock price is solid $20-28 a share, Peet’s profits increased 25%, Peet’s opened 23 new stores
  • Grinders / Brewers: early grinders used stones to mash the beans. Now grinders are so sophisticated they measure everything from grind density to temperature specifications. Recently, Starbucks unveiled an $11,000 coffee maker. It
  • 3-6 % for marketing in other industries
  • Post 911 – when other retailers were reeling from the recession, Starbucks was enjoying its 11th consecutive year of sales growth, making them think they were recession proof. They had few sales promotions and relied purely on customer loyalty. This is no longer the case. Starbucks has really upped the number and types of sales promotions they offer. They have coupons, both on-shelf and on-line, loyalty programs, where you can buy a starbucks card that gives you discounts the more you use it. More recently they started introducing price deals. On their ready to drink products. And finally one of the ore popular promotions was Starbucks’s “Summer Hot Relief tour” where A fleet of Starbucks Chill Patrol vehicles went to festivals, beaches and city streets offering samples refreshing blended drinks, including Frappuccinos and Tazo Ice Blended Tea.
  • Peet’s Coffee and Tea has a different philosophy. They too offer on shelf coupons – catering to their established clientele, and just like Starbucks, they have loyalty programs. What’s unique to Peet’s is that they do free standing inserts, which is similar to a direct mail campaign. You can see from these two companies that Peet’s is not trying to sell to the masses. Peet’s is mostly interested in keeping it’s customer, so these programs are tailored to them.
  • The Starbucks vs. Peets Story

    1. 1. Starbucks vs. Peets UC, Irvine – Merage School of Business Group Six Brian Landau, Ethan Luu, Lawrence Mier, Vikram Moorjani and Mirka Wlochal MARKETING MANAGEMENT PROFESSOR IMRAN CURRIM
    2. 2. STILL LOOKING FOR HAPPINESS IN NEW YORK CITY? Starbucks StoryStarbucks Story
    3. 3. GOT FOUR BUCKS? Starbucks StoryStarbucks Story
    4. 4. SMALL IS TALL Starbucks StoryStarbucks Story
    5. 5. VENTI IN ITALIAN MEANS TWENTY Starbucks StoryStarbucks Story
    6. 6. JOHN, RINGO, PAUL AND GEORGE ARE THE NEW COMPANY SPOKESPERSONS? Starbucks StoryStarbucks Story
    7. 7. OMG, REALLY?… Starbucks StoryStarbucks Story
    8. 8. NAH….JUST KIDDING Starbucks StoryStarbucks Story
    9. 9. SHUTTLE ATLANTIS WILL SOON LAUNCH FOUR BUCKS ON THE MOON Starbucks StoryStarbucks Story
    10. 10. ORANGE MOCHA FRAPPUCCINO!! Starbucks StoryStarbucks Story
    11. 11. HOMELESS, WILL ACCEPT STARBUCKS INSTEAD OF FOOD Starbucks StoryStarbucks Story
    12. 12. ITS GREAT TO BE ON TOP BUT THINGS CHANGE…. MemoriesMemories
    13. 13. Alfred Peet : “Grandfather “of Specialty Coffee Founded in 1968 in Berkeley Nearly 200 Stores Today 3 2 1 Who’s Your Daddy?Who’s Your Daddy?
    14. 14. Jerry Baldwin, Zev Siegal, Gordon Bowker Founded in 1971 in Seattle Nearly 17,000 stores today 3 2 1 Humble Beginnings….Humble Beginnings….
    15. 15. • Worldwide coffee - $48 billion • Specialty coffee - $12 billion EvolutionEvolution • Increasing consumer coffee drinking • Consumer preference for premium coffees • Competition - soda - energy drinks • Economic Conditions Our World….Our World….
    16. 16. Over the last few years: Who is MoreWho is More Successful?Successful?
    17. 17. Quality Variety Convenience Price Your Text Your Text Your Text Value Proposition Artisan Roasting Independent Feel Bean Selectivity Freshness Differentiation Loyalty What we stand for…What we stand for…
    18. 18. Consistency Service Atmosphere Your Text Your Text Your Text Value Proposition Ambiance Loyalty Quality Freshness Differentiation What we stand for….What we stand for…. Customer Intimacy
    19. 19. Peet’s Starbucks Peet’s is MorePeet’s is More SuccessfulSuccessful Core Values Customer Feedback
    20. 20. The customer experience….The customer experience….
    21. 21. - Average Coffee -Specialty - Super Specialty Coffee Segment Convenience - Low - Medium - High - Medium - Low Customer Visit Frequency - High Type: Specialty Convenience: High Frequency: Low-Med-High Type: Specialty to Super Convenience: Low Frequency: Low-Med-High The customer….The customer….
    22. 22. Coffee Beans Food Tea T PEETS Coffee Coffee Food Tea STARBUCKS Gift Cards MEDIUM FREQUENCY VISITOR (5-8 VISITS) What do you buy?What do you buy?
    23. 23. Convenience Wi-Fi Access Ambiance T PEET’S Customer Service Convenience Ambiance Customer Service STARBUCKS Price MEDIUM FREQUENCY VISITOR (5-8 VISITS) Why do you visit?Why do you visit?
    24. 24. STARBUCKS PEET’S 15 MINS OR MORE 40.3% 9.7 % STARBUCKS PEET’S MEDIUM FREQUENCY VISITOR (5-8 VISITS) The RendezvousThe Rendezvous
    25. 25. PEET’S PEET’S MENU FAMILIARITY 80.6% 60 % STARBUCKS PEET’S MEDIUM FREQUENCY VISITOR (5-8 VISITS) Intimacy a la Peet’sIntimacy a la Peet’s
    26. 26. STARBUCKS STARBUCKS MENU FAMILIARITY 56.9% 9 % STARBUCKS PEET’S MEDIUM FREQUENCY VISITIOR (5-8 VISITS) Intimacy a la StarbucksIntimacy a la Starbucks
    27. 27. PEET’S STARBUCKS CHOSE A COMPETITOR 40% 25% Starbucks Coffee Bean You chose somebody else?You chose somebody else? KEY FACTORS IN CHOOSING COMPETITION TASTE AND CONVENIENCE
    28. 28. STARBUCKS COFFEE BEAN CHOSE A COMPETITOR 48% 13 % COFFEE BEAN Non-Branded KEY FACTORS IN CHOOSING COMPETITION TASTE AND CONVENIENCE You chose somebody else?You chose somebody else?
    29. 29. STARBUCKS PEETS Exceeds Expectations 80% 6.3 % PEET’S STARBUCKS MEDIUM FREQUENCY VISITOR (5-8 VISITS) Where is the love?Where is the love?
    30. 30. PEET’S STARBUCKS 75 % 61 % 55 % GO TO STARBUCKS CORPORATE IMAGE Non-coffee purchase Peet’s views on Starbucks The customer speaks…The customer speaks…
    31. 31. STARBUCKS PEET’S 65 % 49 % 7 % GO TO PEET’S HOW FAMILIAR Non-coffee purchase Starbucks views on Peet’s The customer speaks….The customer speaks….
    32. 32. increase locations Your Text STARBUCKS TO PEET’S PEET’S TO STARBUCKS increase advertising decrease pricing Less corporate feel Tea quality Non-coffee items The switch factorThe switch factor
    33. 33. Delonghi Perfecta Home Appliances Dryers Ingredients Grinders / Brewers Solar DryingMilkThe Clover The Grind….The Grind….
    34. 34. Both: • Unique Approach to advertising • Very little traditional advertising • Point-of-sale materials and local-store marketing Peet’s: • Peet’s depends on word-of-mouth advertising How they learn about usHow they learn about us
    35. 35. Mission Message Media Money Measurement • Call to action • Try New Products • Increase User Activity The Whole EnchiladaThe Whole Enchilada • Call to action • Try New Products • Increase User Activity • We Care • Ambiance • Internet • Product Placement • Magazines • 129 Million in 2008 • Website Usage • Foot Traffic • Product placement • Radio • Word of mouth • Internet • 4.5 Million in 2008 • Website Usage • Foot Traffic • Quality is key • Wide Variety • Low Shipping Costs
    36. 36. The www of Peet’sThe www of Peet’s
    37. 37. The www of StarbucksThe www of Starbucks
    38. 38. STARBUCKS PEET’S Retail stores Licensing Grocery/Club stores Online Food Service Companies Grocery Stores Retail Stores Home delivery Food Service Companies Online Different routesDifferent routes to the customer….to the customer….
    39. 39. Coupons Loyalty Programs Price Deals Freebies 4 3 2 1 How we get them hooked….How we get them hooked….
    40. 40. On-shelf coupons Loyalty Programs Internet 3 2 1 How we get them hooked….How we get them hooked….
    41. 41. The road travelled…new beginningsThe road travelled…new beginnings
    42. 42. The road travelled…new beginningsThe road travelled…new beginnings

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