1. Starbucks
It's bigger than coffee
Presented by:
Group 3

2. Introduction to
Starbucks
 Company started in 1971 in Seattle, Washington named
“Starbucks Coffee, Tea, and Spice”
by Jerry Baldwin, Zev Siegel & writer Gordon Bowker.
 Starbucks offered exceptional coffee drinks and dark-
roasted coffee beans and coffee-making equipment .
 A dominant retailer with over 1500 stores in North
America and new ones opening at a rate of more than
one per day.

3. Introduction to
Starbucks
 Went public in 1992 and its stock price increased nearly nine fold.
 The company had the best real estate team in the coffee-bar
industry and thus acquired the best retailing sites for its stores.
 Company's retail sales mix came from food items, coffee
equipments and music cd’s apart from coffee beverages which
formed the major chunk of the mix.
 At present, Starbucks is the largest coffeehouse company in the
world, with 19,972 stores in 60 countries.

4. Starbucks- Way Ahead
 PRODUCT SUPPLY
– Special efforts were made to secure top-notch coffee i.e.
building relationships , checking on agricultural conditions .
 ROASTING COFFEE BEANS
– Experienced personnel monitored the process.
– If standards not match the whole batch was rejected.
 MAIL ORDER SALES
– Distributed six times a year.
– Electronic store on the Internet

5. Building a Top Management
Team & Employee Training
Workforce composition
• 80 % white
• 85 % high school graduates with average age of 26
Training of Baristas
• At least 24 hours training in the first two to four
weeks.
• Coffee history & knowledge, drink preparation,
customer service and retail skills
Training of Baristas
• "Brewing the Perfect Cup."
• Dissatisfied customers with a Starbucks coupon
that entitles them to a free drink.

6. Management trainees attended classes for 8 to 12
weeks. Their training went much deeper.
8 to 10 weeks before opening a new store in new
market, the company placed ads to hire baristas
and begin their training.
A Star team is used for providing store-opening
effort, one-on-one training and orientation sessions
at Starbucks Coffee School in San Francisco.

7. Other Insights
 Stores did about half of their business by
11 am.
 Baristas became familiar with regular
customers, learning their names and their
favorite drinks.

8. STARBUCKS- Personality
 STARBUCKS demonstrates a “persona” that extends
well beyond their brand’s functional benefits.
 Starbucks is outgoing, youthful, personable, and
friendly…a refreshing escape, freshness, warmth, and
comfort.
 It is demonstrated through their service interactions,
their packaging, their décor, their product offerings,
and their corporate culture.

9. Personality Dimensions
Sophistication
Excitement
Sincerity

10. Brand Personality
 Starbucks’ signature music cues a
multicultural personality … one that
doesn’t just fade into the background.
You hear it you’re aware of it.
 Additionally, their merchandise drives
both their brand identity and the unique
flair.
‘Interesting Inviting Personable’

11. Brand Personality-
Role of COLOURS in
Logo
 GREEN
Secure, Natural, easygoing, relaxing
 WHITE
Goodness, Purity,
Refined,
Sophistication

13. Starbucks Brand
Positioning
Brand positioning is about
how we want target
customers to think about a
brand with respect to
competitors

14. Components of Brand
Positioning
 Competitive frames of Reference
– Nature of Competition
– Target Market
 Develop unique brand points-of-difference
(POD’s)
 Establish shared brand points-of-parity(POP’s)
 Brand mantras
– Short 3-to-5 word phrases that capture key POD’s & the
irrefutable essence or spirit of the brand.

15. Competitive frames of
Reference
Nature of Competition
– Earlier with local coffee houses.
– Direct competition: Caribou,
Dunkin' Donuts
– Indirect Competition: Mc Donald
(McCafe`) and Burger King.
– “The third place is the other place you want
to hang out besides your first place
(your home) and your second place
(your work)”

16. Perceptual Map
Starbucks
Caribou
Experience
Mc Donald’s
Dunkin’ Donuts
7 Eleven
Cost

17. Competitive frames of
Reference
 Target Market
– People who live
somewhat hectic lives
– Who believe in only
getting the best in taste
and quality.
– Target audience is between the ages of eighteen and
forty-five
– “Discerning Coffee Drinker”
– Desire for better coffee and a better consumption
experience

18. Points of Parity
 Great-tasting coffee
 Reliability
 Speed
 Convenience
 Cleanliness
 Community

19. Points of Difference
 Quality: Exacting standards of quality
and flavor
 Variety: Varied and exotic coffee
drinks
 Customization: Over hundred
different coffee drinks
 Experience: Rich and Sensory Aroma
and Ambience
 Image: Friendly Service
 Freshness: Top-notch coffee beans
(Back-end Collaboration)
 Rules: “Aroma First Rule”

20. Brand Mantra
“Rich, rewarding coffee experience”
 A third place
 Best of Class
 The Human
Connection
 Rewarding
Everyday Moments
 A Great Cup of
Coffee
 A consistent, inviting, stimulating environment

21. Will Starbucks Succeed
in
India ???

22. A story of Ifs and Buts
 Right Partner!!!
 Market Opportunity
21%
 A traditionally tea-drinking Organized
nation 79%
Unorganized
Market Size: $ 667 Mn
Expected CAGR: 30%
 The growing middle class
“Coffee is perceived as a western, cosmopolitan luxury in many parts of India”

23. The China Story
 Sustainable Model of:
“Low Sales Volume;
High Profitability”
 “Lifestyle Coffee
Drinking“
 Need to maintain the
image of
“An Aspirational Brand”
Costa Coffee India Head: “Does not believe they need to offer Indian food,
rather Western food tailored for Indian pallets”

24. Some Additional
Thoughts…
 Problem of a plenty in India
•1200 outlets, a new outlet every third day
•Over 200 cafes
•95 outlets, aims opening 300 more in next 3 years
 “Perceived Price Effectiveness”

25. Pricing - Factors to
Consider
 Strategy in China: Profitability
– Only 550 stores in 13 years
– Designed for Longer Stays
 Indians ready to spend Rs.39 at McCafe to
upwards of Rs.300 at Coffee Bean & Tea
Leaf
 Starbucks seen as an Aspirational Brand in
developing countries

26. Pricing for India
Price Range in USA Price Range in India
Brand
($) (Rs.)
Coffee – 70 to 90
Regular Joe - 1.92
Cold Coffee – 90 - 120
$3 – $5.50 150 to 300
Frappe - $2.29 to $3.29 39-45
Coffee – 52 to 78
NA Cold Coffee – upto
120
Regular Joe - 2.25
Frappuccino – ~$5.50 ????

27. Strategy so Far
 According to John Culver:
– Price according to where the market sits and
the premium experience Starbucks offers
– Not restrict to five star locations but
considering Railway Stations and University
Campuses too
 To launch a new premium brand of tea
“Tata Tazo”
 Expected to start operations in Mumbai
from October end

28. Strategy So Far
 Will source most of its coffee
through Tata and save on 100%
duty
 Coffee accounts for about 40-45%
of the costs
 Experts expect an average price of
Rs.125 (Forbes)
 Deal with Tata for food expertise
through TajSats (the airline
catering arm)

29. Thank You!