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Strategic Marketing: A Case Study of Starbucks
The document discusses Starbucks' global expansion and marketing strategies. It covers Starbucks' product levels including their core, actual and augmented products. It also discusses their product classification, individual product decisions around attributes, branding, packaging and services. It analyzes how Starbucks builds brand equity, customer equity and positions its brand. Finally, it discusses Starbucks' approach to international marketing issues and recommendations for continuous global expansion.
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Strategic Marketing: A Case Study of Starbucks
- 1. Group Presentation: Starbucks PresentationBy: Ng Yee Jie Damian Lim Kwi Hoong Chin Siow Lyn Dr. Abdul Razak Rahman Hamzah
- 2. Group Members Chin SiowLyn (2752505) Damian Lim Kwi Hoong (2752508) Dr. Razak Abdul Rahman Hamzah (2752464) Ng Yee Jie (2821942)
- 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. Starbucks… Growth of anEmpire
- 5. Starbucks’ Global Expansion 19711982 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. 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
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- 8. Starbucks’ Product Levels Questionsto ponder… What is Starbucks’ core product? What are the actual and augmented levels of that product?
- 9. Starbucks’ Product Levels (Cont.) CoreProduct 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. 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
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- 12. Starbucks’ Product Classification Question toponder… What is the classification of Starbucks’ product, based on consumer marketing concepts?
- 13. Starbucks’ Product Classification (Cont.) ConvenienceProduct Frequentand immediate purchase Minimal effort to purchase Widely available with ‘clustered’ Starbucks stores StapleProduct Regular frequency of purchase
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- 15. Question to ponder… What individual product decisions has Starbucks made?
- 16. Individual Product Decisions (Cont.) ProductAttributes Branding Packaging and Labeling Product-Support Services
- 17. Product Attributes Premium qualitycoffee beans • Arabica beans are chosen instead of Robusta beans • Sources: Sumatra, Kenya, Ethiopia, Costa Rica, etc. • Example of premium coffee: Brazil Ipanema BourbonTM
- 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. Product Attributes (Cont.) Cupsizes • Tall Small • Grande Big or Medium • Venti Large
- 20. Branding ♦ Positioned basedon 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. Branding (Cont.) • BottledFrappuccino 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. Packaging & Labeling ColdDrinks •Clear Plastic Cups Hot drinks •Opaque Paper Cups
- 23. Product-Support Services Customer feedback “Lifestyle”Web Portal Coffee education, Store locations, New products, Nutrition information
- 24. Brand Equity, Customer Equity& Brand Positioning
- 25. Brand Equity, Customer Equity& Brand Positioning Question to ponder… How does Starbucks deal with: – Brand equity? – Customer equity? – Brand positioning?
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- 27. Customer Equity CustomerEquity: value derived from customer relationship Free Wi-fi Customer feedback mechanism Expanding outlets to offer convenience Increases Customer Equity
- 28. Brand Positioning “Experience”, offering emotions, self- expressiveand 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. Brand Positioning (Cont.) •Useof high technology •Prepaid card system •Cashless system •Wireless internet Maturing brand – Gen-Y Green corporate colour scheme
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- 31. Services Marketing at Starbucks Questionsto ponder… Is Starbucks a product or a service? How are services marketing concepts important to Starbucks?
- 32. Services Marketing at Starbucks(Cont.) Starbucks: Product or Service? Equipment- based People- based Almost pure service Almost pure physical goods Starbucks
- 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. Services Marketing Mixat 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
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- 36. International Marketing Issues Question toponder… How has Starbucks dealt with international marketing issues?
- 37. International Marketing Issues (Cont.) Standardizing themarketing mix International supply chain management
- 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. 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
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- 41. International Expansion: Recommendations Standardization – Vs– Adaptation Marketing in fast- paced societies
- 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. Marketing in Fast-paced Societies Fast-pacedsocieties: 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
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- 45. Conclusion Reviewing brandingand positioning strategy to ensure relevance to current markets Corporate social responsibility Staying relevant to the current generation: Generation –Y
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