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Strategic Marketing: A Case Study of Starbucks

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Strategic Marketing: A Case Study of Starbucks

  1. 1. Group Presentation: Starbucks Presentation By: Ng Yee Jie Damian Lim Kwi Hoong Chin Siow Lyn Dr. Abdul Razak Rahman Hamzah
  2. 2. Group Members Chin Siow Lyn (2752505) Damian Lim Kwi Hoong (2752508) Dr. Razak Abdul Rahman Hamzah (2752464) Ng Yee Jie (2821942)
  3. 3. Objective of Report • Product levels • Classification of products • Individual product decisions • Brand & customer equity • Brand positioning • Service marketing at Starbucks • International marketing issues • Recommendations for continuous international expansion To discuss and analyze Starbucks’:
  4. 4. Starbucks… Growth of an Empire
  5. 5. Starbucks’ Global Expansion 1971 1982 1987 1993 1996 1998 1999 2001 2002 2004 Now? ↑ 1st Starbucks in Seattle by Jerry Baldwin, Gordon Bowker & Zev Siegl Howard Schultz recruited as Marketing Director ↓ ↑ Schultz became President of Starbucks – Reshaped image Starbucks is worth $13.5 billion ↓ ↑ Ventured into Japan & Singapore Purchased the Seattle Coffee Company in London, UK ↓ ↑ Starbucks is worth $18 billion Opened coffeehouses in Zurich, Switzerland & Vienna, Austria (late 2001) ↓ ↑ Total stores worldwide is 5,405 stores with 1,153 stores outside US More than 2,000 stores in 34 international markets ↓
  6. 6. About Starbucks A Global Coffee Brand Offering The “Starbucks Experience” – A coffee drinking experience which combines the ‘community’ ambience, background music, freshly brewed premium coffee, friendly baristas, free wi-fi and plush seats. A variety of related products Gourmet Coffee
  7. 7. Product Levels
  8. 8. Starbucks’ Product Levels Questions to ponder…  What is Starbucks’ core product?  What are the actual and augmented levels of that product?
  9. 9. Starbucks’ Product Levels (Cont.) Core Product Level • The “Starbucks lifestyle” • Sophisticated, trendy, community Actual Product Level • Physical goods: premium coffees & teas, sandwiches, desserts, CDs, packaged coffees & teas, coffee-making equipment, collectibles, ice cream, etc. • Starbucks Brand • Elegant yet comfortable store layout Augmented Product Level • Free wireless internet • Prepaid Starbucks card • Starbucks Duetto Visa (credit card & rewards card) • In-store music download
  10. 10. Starbucks’ Product Levels (Cont.) Augmented Product Actual Product Core Product Starbucks Lifestyle Wi-fi Prepaid Starbucks card Duetto Visa Starbucks Brand Premium coffees, teas, etc. Coffee- making equipment Collectibles (eg. mugs, thermos) Elegant yet comfortable store layout (plush sofas, etc.) In-store music download
  11. 11. Product Classification
  12. 12. Starbucks’ Product Classification Question to ponder…  What is the classification of Starbucks’ product, based on consumer marketing concepts?
  13. 13. Starbucks’ Product Classification (Cont.) ConvenienceProduct Frequent and immediate purchase Minimal effort to purchase Widely available with ‘clustered’ Starbucks stores StapleProduct Regular frequency of purchase
  14. 14. Individual Product Decisions
  15. 15. Question to ponder…  What individual product decisions has Starbucks made?
  16. 16. Individual Product Decisions (Cont.) Product Attributes Branding Packaging and Labeling Product-Support Services
  17. 17. Product Attributes Premium quality coffee beans • Arabica beans are chosen instead of Robusta beans • Sources: Sumatra, Kenya, Ethiopia, Costa Rica, etc. • Example of premium coffee: Brazil Ipanema BourbonTM
  18. 18. Product Attributes (Cont.) Categories • Starbucks beverages are divided into 11 categories: Brewed coffees Espresso-Hot Espresso-Iced Frappuccino Blended Coffee Frappuccino Light Blended Coffee Frappuccino Blended Crème Frappuccino Juice Blends Tazo Tea Classic Favourites Drink Extras Vivanno Nourishing Blends
  19. 19. Product Attributes (Cont.) Cup sizes • Tall Small • Grande Big or Medium • Venti Large
  20. 20. Branding ♦ Positioned based on strong values & beliefs ♦ Premium coffee ♦ Relaxed ambience ♦ Origin of brand name: Old mining camp: “Starbo”, “Starbuck” character from Moby-Dick Higher Brand Loyalty, Higher Brand Equity
  21. 21. Branding (Cont.) • Bottled Frappuccino drinks • DoubleShot espresso can drinks Co-branding with PepsiCo • Starbucks ice cream Joint-ventured with Dreyer’s • New flavours of coffees. E.g. Toffee Nut Latté during ChristmasLine Extension • Starbucks moon cakes Brand Extension
  22. 22. Packaging & Labeling Cold Drinks •Clear Plastic Cups Hot drinks •Opaque Paper Cups
  23. 23. Product-Support Services Customer feedback “Lifestyle” Web Portal Coffee education, Store locations, New products, Nutrition information
  24. 24. Brand Equity, Customer Equity & Brand Positioning
  25. 25. Brand Equity, Customer Equity & Brand Positioning Question to ponder…  How does Starbucks deal with: – Brand equity? – Customer equity? – Brand positioning?
  26. 26. Brand Equity Premium Coffee Stylish Conducive Environment Standardization of Services Delivering on Promises Increases Brand Equity
  27. 27. Customer Equity  Customer Equity: value derived from customer relationship Free Wi-fi Customer feedback mechanism Expanding outlets to offer convenience Increases Customer Equity
  28. 28. Brand Positioning “Experience”, offering emotions, self- expressive and functional benefits to customers. Also known as “Starbucks Experience” Community feeling Cool, stylish, active, healthy Gourmet coffee Brand Positioning Strategy Emotions Benefits Self- Expressive Benefits Functional Benefits
  29. 29. Brand Positioning (Cont.) •Use of high technology •Prepaid card system •Cashless system •Wireless internet Maturing brand – Gen-Y Green corporate colour scheme
  30. 30. Services Marketing at Starbucks
  31. 31. Services Marketing at Starbucks Questions to ponder…  Is Starbucks a product or a service?  How are services marketing concepts important to Starbucks?
  32. 32. Services Marketing at Starbucks (Cont.)  Starbucks: Product or Service? Equipment- based People- based Almost pure service Almost pure physical goods Starbucks
  33. 33. Services Marketing at Starbucks (Cont.) Top-notch services play a pivotal role in providing the “Starbucks Experience” Starbucks leveraged on emotions by creating a multi-sensory atmosphere Inherent services characteristics: variability, perishability, inseparability, intangibility
  34. 34. Services Marketing Mix at Starbucks • Comfortable chairs, store design, cozy corners Physical Evidence as Visual Representation • Employees including baristas • Training to inculcate Starbucks culture • Customers People • Standardized yet allows room for customization by customersProcesses • High quality beverages • Higher price • “Clustered” stores • Promotion through direct employee- customer contact, sponsor parties, etc. Product, Price, Place & Promotion
  35. 35. International Marketing Issues
  36. 36. International Marketing Issues Question to ponder…  How has Starbucks dealt with international marketing issues?
  37. 37. International Marketing Issues (Cont.) Standardizing the marketing mix International supply chain management
  38. 38. Standardizing the Marketing Mix Why? • Creates homogeneity of customers’ tastes & wants • Strong global brand How? • Marketing mix: product attributes, positioning, brand, packaging/labeling, price, placement at retail outlets, promotions, processes, and services • ‘Standardized’ internationally
  39. 39. International Supply Chain Management Why? • Support high growth rate & ensure continuous supply of premium-quality coffee beans How? • Societal marketing: Coffee and Farmer Equity (C.A.F.E.) Practices • Preferred supplier program • New coffee suppliers. E.g. China
  40. 40. Recommendations for Continuous Global Expansion
  41. 41. International Expansion: Recommendations Standardization – Vs – Adaptation Marketing in fast- paced societies
  42. 42. Standardization – Vs – Adaptation Adaptation • Make changes to products & services to fulfill requirements of customers from specific markets Food menu • Include local foods Different levels of ability to afford • Reduce costs & lower prices
  43. 43. Marketing in Fast-paced Societies Fast-paced societies: Hong Kong, Singapore Demand for quick & efficient service with same high quality, minimal waiting time Re-introduce Starbucks Express • Order coffee through phone, online web portals, SMS • Drinks ready upon arrival at store
  44. 44. Conclusion
  45. 45. Conclusion  Reviewing branding and positioning strategy to ensure relevance to current markets  Corporate social responsibility  Staying relevant to the current generation: Generation –Y
  46. 46. Thank You… Q&A