Starbucks: Store Brands Threat Analysis
Framing              Framing	                   Overview	  of	  store	  brands	  threat	                    Consumer	  ins...
Overview of Store Brands              Private	  Label	  represents	  $155M	  sales	  vs.	  Starbucks’	  $400M	            ...
Demographic Segmentation Area	  Type	   Suburban	  area	   Education	   High	  school	  graduate,	  some	  college	  but	 ...
 Analysis	  1	   Perception comparison across brands  A"ribute	  Performance	                                           St...
ANALYSIS	  2:	  FREE	  TEXT	  	     	  Analysis	  2	               Free TextAnalysis	  3	   Why do people who prefer Starb...
 Analysis	  4	   COMPARISONS OF ATTRIBUTE IMPORTANCE ACROSS SEGMENTS      MulH-­‐a"ribute	  Items	  by	  level	  of	      ...
Strategies by Retailers        Consumer	  Price	  Expectation	                          	                     Optimal	    ...
Strategies by Retailers	  	  	  	  	  	  Kroger:	                          Kroger	                           •  Price	  mo...
Strategies by Retailers	  	  	  	  	  Safeway	                      Safeway	                       •  Price	  not	  as	  i...
Strategies by Retailers                Target	  	  	  	  	  Target:	                          •  Price	  is	  not	  as	  i...
Executive Summaryv Starbucks	  and	  Store	  Brand	  consumers	  are	  very	  similar:	                Ø Describe…	     ...
Thank you                        Q&A11/2/12	     MKT	  412:	  Market	  Research	  |	  Starbucks	  Packaged	  Coffee	  Anal...
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Starbucks Store Brand Threat Analysis

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Starbucks Store Brand Threat Analysis

  1. 1. Starbucks: Store Brands Threat Analysis
  2. 2. Framing Framing   Overview  of  store  brands  threat   Consumer  insights  analysis   Retailer  pricing  strategy  analysis   Summary  and  recommendation    11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   2  
  3. 3. Overview of Store Brands Private  Label  represents  $155M  sales  vs.  Starbucks’  $400M   • Volume  share  decreased  by  0.7%  vs.  Starbucks’  increase  by  1.7%  vs.  Year  Ago   Kroger   • Not  likely  to  be  a  threat   • Volume  share  decreased    by  -­‐2.42%  mainly  due  to  price  increase   Publix   • Lowest  price  at  $4.59  among  the  major  store  brands   • Not  likely  to  be  a  threat   • Similar  price  position:  $7.44  vs.  Starbucks’  $8.36  Safeway   • Base  volume  increase  22.5%  vs.  Starbucks’  3.2%   • Likely  to  be  a  threat   • Similar  price  position:  $7.68  vs  Starbucks’  $6.60   Target   • Base  volume  increase  by  only  11.4%  vs  Starbucks’  1.6%   • Likely  to  be  a  threat  11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   3  
  4. 4. Demographic Segmentation Area  Type   Suburban  area   Education   High  school  graduate,  some  college  but  no  degree,  bachelor  degree   Ethnicity   Caucasian   Income   $15,000-­‐$99,999   Gender    Female   Age   35-­‐64  
  5. 5.  Analysis  1   Perception comparison across brands A"ribute  Performance   Starbucks   Store  Brands   Differences   Scale  1-­‐7   Mean   Mean   (Significance)  Taste   6.31   5.02   1.29**  Price   4.84   5.62   -­‐.78**  Variety  of  flavors   6.07   5.04   1.02**  Is  all  natural     5.64   4.42   1.22**  Brand  reputaHon   6.29   4.80   1.48**  Ingredient  quality   6.16   4.84   1.31**  Packaging     5.84   5.27   .58**  Availability  in  store   5.93   5.62   .31  Size  of  packages   5.78   5.47   .31  Is  fair  traded   5.67   4.71   .96**  Ease  of  preparaHon   6.24   5.56   .69**  Item  is  on  promoHon   5.04   5.38   -­‐.33  Is  organic   5.42   4.35   1.07**  T-­‐test  of  Signi-icance  for  the  Product  Attributes  **  is  p  value  <  .05  and  *  is  p  value  <.  1  
  6. 6. ANALYSIS  2:  FREE  TEXT      Analysis  2   Free TextAnalysis  3   Why do people who prefer Starbucks buy Store Brands as well Reason   Frequency   %  Like  variety   18   72  Price  leads  me  to  switch   12   48  A"racted  to  new  brand   11   44  MulHple  tastes  in  household   10   40  Switch  because  dissaHsfied   2   8  See  li"le  difference  in  brands   2   8  
  7. 7.  Analysis  4   COMPARISONS OF ATTRIBUTE IMPORTANCE ACROSS SEGMENTS MulH-­‐a"ribute  Items  by  level  of   Starbucks   Store  Brands   Differences  importance  (1,  not  at  all  important  -­‐  7,   very  important)   (Significance)  Taste   6.7   6.4                  0.3*  Price   5.8   6.3                -­‐0.5**  Variety  of  flavors   5.4   3.8                  1.6**  Is  all  natural     5.4   4.3                  1.1**  Brand  reputaHon   5.7   4.1                  1.6**  Ingredient  quality   6.3   5.6                  0.7**  Packaging     4.8   3.6      1.2**  Availability  in  store   6.0   5.8                  0.2  Size  of  packages   5.5   4.9                  0.6  Is  fair  traded   5.2   4.4    0.8*  Ease  of  preparaHon   5.8   5.8                    0  Item  is  on  promoHon   5.4   4.5        0.9**  Is  organic   4.6   3.4      1.2**   T-­‐test  of  Signi-icance  for  the  Product  Attributes  **  is  p  value  <  .05  and  *  is  p  value  <.  1  
  8. 8. Strategies by Retailers Consumer  Price  Expectation     Optimal   Competitive   Optimal   Competitive   Price  for  12   Price  for  12  oz   Price  for  20   Price  for  20  oz   oz  Bag   bag   oz  Bag   Bag   Overall  Brand   $6.99   [$5.99,$7.49]   $8.19   [$7.49.$9.99]   Starbucks   $7.69   [$6.09,$7.99]   $9.99   [$8.99,$10.99]   Current  Price  Setting  by  Retailer   Starbucks Store %  Change   %  Change   52wks-­‐ vs.  Prior   52wks-­‐ vs.  Prior   Store Current Year Current Year Kroger $8.10   5.60% $5.83   13.10% Publix $8.53   7.80% $4.59   24.30% Not  much  threat   Safeway $8.36   7.00% $7.44   4.50% Target $7.68   8.60% $6.60   5.70% More  premium  position  and   potentially  more  threat  1Data  Source:  Starbucks  Packaged  Coffee  Pricing  Threshold  Survey  conducted  by  Acosta  in  2011   11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   8  
  9. 9. Strategies by Retailers            Kroger:   Kroger   •  Price  more  important  to  Kroger  brand  purchaser   •  Price  not  as  important  to  Starbucks  and  Kroger  purchasers   Purchased Kroger only Purchased SBUX & at least once   N   Mean   Kroger only at least once   N   Mean   Price   21   6.62   Price   15   6.13              Pub   Publix   •  Price  not  as  important   •  Availability  is  more  important   Purchased Publix only Purchased SBUX & at least once   N   Mean   Publix only at least once   N   Mean   Price   5   5.60   Price   3   5.33  •  Starbucks  should  maintain  its  Premium  Pricing  Strategy  in  these   retailers  while  continue  providing  high  availability  and  variety  of   products.  11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   9  
  10. 10. Strategies by Retailers          Safeway   Safeway   •  Price  not  as  important  to  Safeway  brand  purchaser   •  Price  is  more  important  to  Starbucks  and  Safeway  purchasers   Purchased Safeway Purchased SBUX & only at least once   N   Mean   Safeway only at least once   N   Mean   Price   6   5.17   Price   10   6.20   •  Placed  highest  importance  on  taste  and  aroma  (“Drinking  coffee  is   mostly  about  enjoying  the  taste  and  aroma”)   •  Flavor  is  important     Strategy            s   •  Reduce  price  little  by  little  to  further  gauge  consumer’s  price   expectation   •  Increase  hlavor  variety  of  products  carried  in  Safeway  11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   10  
  11. 11. Strategies by Retailers Target          Target:   •  Price  is  not  as  important  to  Target  brand  purchaser   •  Price  is  more  important  to  Starbucks  and  Target  purchasers   Purchased Target only Purchased SBUX & at least once   N   Mean   Target only at least once   N   Mean   Price 5 5.80 Price 10 6.50 Item is on promotion 5 6.40 Item is on promotion 10 6.50 •  Buying  item  on  promotion  also  comes  up  as  an  important  attribute   •  Starbucks  and  Target  purchasers  also  place  importance  on  promotion  (“I   tend  to  buy  coffee  on  promotion  or  discount”  is  second  highest  sentiment   at  average  score  of  6.2)   Strategy              :   •  Starbucks  already  priced  lowest  in  Target  (amongst  the  four  retailers)   •  Keep  pricing  strategy  to  keep  premium  position   •  Increase  promotions  (especially  Display  and  Feat  &  Disp)   •  Improve  product  variety  on  shelves  11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   11  
  12. 12. Executive Summaryv Starbucks  and  Store  Brand  consumers  are  very  similar:   Ø Describe…   Ø Possible  reasons  of  switching  v   Safeway  is  positioned  closest  to  Starbucks  and  represents   the  biggest  threat   Ø Reduce  price  little  by  little  to  further  gauge  consumer’s  price   expectation   Ø Increase  hlavor  variety  of  products  carried  in  Safeway  v Target  may  be  some  threat  due  to  price  position   Ø Keep  pricing  strategy  to  keep  premium  position   Ø Increase  promotions  (especially  Display  and  Feat  &  Disp)   Ø Improve  product  variety  on  shelves  11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   12  
  13. 13. Thank you Q&A11/2/12   MKT  412:  Market  Research  |  Starbucks  Packaged  Coffee  Analysis   13  

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