Market Segment and Consumer Behavior Case Study - Starbucks: Just Who is their customer?
This Presentation has case included insided it and also the answers are included.
An interesting analysis of Starbucks's SWOT, 4Ps, Strategy, Marketing, Finance etc. Hope you will enjoy this presentation. Go through the slides and don't forget to hit like and share buttons. All the best.
The ppt descibes the the Branding and marketing strategies of Starbucks Under 8 functional Bracket like Logo, Standardisation, expansion, Globalisation, Co-branding, Augmented Services, Facing Competition and Pricing Strategies.
Starbucks: A Story of Growth - case study presentation for EBS/DBSBrandon J. Murray, PMP
For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at Northwestern University. I then had to write a handful of essays and give a 1-hour presentation consisting of 30 min of briefing and 30 min of Q/A from the EBS faculty audience.
Starbucks Corporation is known world-wide for their specialty coffee innovation and creative business design. Over time Starbucks has built a business around a relaxing, somewhat romantic atmosphere that brings to the customer a European feel and thus provides a strong user experience for its customers. In Starbucks’ earliest days, coffee consumption in the United States (US) was considered nothing special. Most US coffee offered a similar taste and wasn’t offered in a special “European” environment. With this absence of uniqueness, convenience was the dominant criteria used by US consumers to choose their coffee.
Enter Starbucks.
STARBUCKS: DELIVERING CUSTOMER EXPERIENCE.
This report consists of various analysis frameworks / models used to analyse the customer experience at Starbucks.
An interesting analysis of Starbucks's SWOT, 4Ps, Strategy, Marketing, Finance etc. Hope you will enjoy this presentation. Go through the slides and don't forget to hit like and share buttons. All the best.
The ppt descibes the the Branding and marketing strategies of Starbucks Under 8 functional Bracket like Logo, Standardisation, expansion, Globalisation, Co-branding, Augmented Services, Facing Competition and Pricing Strategies.
Starbucks: A Story of Growth - case study presentation for EBS/DBSBrandon J. Murray, PMP
For entry into the EBS European Business School / DBS Durham University Business School - dual Executive MBA programme, I was asked to analyze a case study from Kellogg School of Management at Northwestern University. I then had to write a handful of essays and give a 1-hour presentation consisting of 30 min of briefing and 30 min of Q/A from the EBS faculty audience.
Starbucks Corporation is known world-wide for their specialty coffee innovation and creative business design. Over time Starbucks has built a business around a relaxing, somewhat romantic atmosphere that brings to the customer a European feel and thus provides a strong user experience for its customers. In Starbucks’ earliest days, coffee consumption in the United States (US) was considered nothing special. Most US coffee offered a similar taste and wasn’t offered in a special “European” environment. With this absence of uniqueness, convenience was the dominant criteria used by US consumers to choose their coffee.
Enter Starbucks.
STARBUCKS: DELIVERING CUSTOMER EXPERIENCE.
This report consists of various analysis frameworks / models used to analyse the customer experience at Starbucks.
This slide is the solution to the Starbucks Case. The case is available in Google Docs. the solutions are well discussed , in case you have doubts check in the footnotes.
All aspect of strategic management of Stabucks.
If you would like to download these slides, send me via: nguyenpuyen91@gmail.com with your purpose of download.
This slide is the solution to the Starbucks Case. The case is available in Google Docs. the solutions are well discussed , in case you have doubts check in the footnotes.
All aspect of strategic management of Stabucks.
If you would like to download these slides, send me via: nguyenpuyen91@gmail.com with your purpose of download.
CS1−2Starbucks—Going Global FastCASE 1-1The Starbucks coMargenePurnell14
CS1−2
Starbucks—Going Global FastCASE 1-1
The Starbucks coffee shop on Sixth Avenue and Pine Street in
downtown Seattle sits serene and orderly, as unremarkable as
any other in the chain bought years ago by entrepreneur Howard
Schultz. A few years ago, however, the quiet storefront made front
pages around the world. During the World Trade Organization talks
in November 1999, protesters flooded Seattle’s streets, and among
their targets was Starbucks, a symbol, to them, of free-market capi-
talism run amok, another multinational out to blanket the earth.
Amid the crowds of protesters and riot police were black-masked
anarchists who trashed the store, leaving its windows smashed and
its tasteful green-and-white decor smelling of tear gas instead of
espresso. Says an angry Schultz: “It’s hurtful. I think people are
ill-informed. It’s very difficult to protest against a can of Coke, a
bottle of Pepsi, or a can of Folgers. Starbucks is both this ubiqui-
tous brand and a place where you can go and break a window. You
can’t break a can of Coke.”
The store was quickly repaired, and the protesters scattered to
other cities. Yet, cup by cup, Starbucks really is caffeinating the
world, its green-and-white emblem beckoning to consumers on
three continents. In 1999, Starbucks Corp. had 281 stores abroad.
Today, it has about 7,000—and it’s still in the early stages of a plan to
colonize the globe. If the protesters were wrong in their tactics, they
weren’t wrong about Starbucks’ ambitions. They were just early.
The story of how Schultz & Co. transformed a pedestrian com-
modity into an upscale consumer accessory has a fairy-tale quality.
Starbucks grew from 17 coffee shops in Seattle to over 19,000 outlets
in 58 countries. Sales have climbed an average of 20 percent annu-
ally since the company went public, peaking at $10.4 billion in 2008
before falling to $9.8 billion in 2009. Profits bounded ahead an aver-
age of 30 percent per year through 2007, peaking at $673 million,
then dropping to $582 million and $494 million in 2008 and 2009,
respectively. The firm closed 475 stores in the U.S. in 2009 to reduce
costs. But more recently, 2017 revenues rebounded to $22.4 billion
profits with an operating profit of $4.1 billion.
Still, the Starbucks name and image connect with millions of
consumers around the globe. Up until recently, it was one of the
fastest-growing brands in annual BusinessWeek surveys of the top
100 global brands. On Wall Street, Starbucks was one of the last
great growth stories. Its stock, including four splits, soared more
than 2,200 percent over a decade, surpassing Walmart, General
Electric, PepsiCo, Coca-Cola, Microsoft, and IBM in total returns.
In 2006 the stock price peaked at over $40, after which it fell to just
$4, and then again rebounded to more than $50 per share.
Schultz’s team is hard-pressed to grind out new profits in a
home market that is quickly becoming saturated. The firm’s 12,000 ...
there could be room for even more stores. Given such concen-.docxrelaine1
there could be room for even more stores. Given such concen-
tration, it is likely to take annual same-store sales increases of
10 percent or more if the company is going to match its historic
overall sales growth. That, as they might say at Starbucks, is a tall
order to fi ll.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Rest-
room of Existing Starbucks.” And even the company admits that
while its practice of blanketing an area with stores helps achieve
market dominance, it can cut sales at existing outlets. “We prob-
ably self-cannibalize our stores at a rate of 30 percent a year,”
Schultz says. Adds Lehman Brothers Inc. analyst Mitchell Speiser:
“Starbucks is at a defi ning point in its growth. It’s reaching a level
that makes it harder and harder to grow, just due to the law of large
numbers.”
To duplicate the staggering returns of its fi rst decade, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates 5,507 international out-
lets, from Beijing to Bristol. That leaves plenty of room to grow.
Most of its planned new stores will be built overseas, represent-
ing a 35 percent increase in its foreign base. Most recently, the
chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profi ts to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s,
the company faces an ominously hostile reception from its future
consumers, the twenty- or thirty-somethings of Generation X. Not
only are the activists among them turned off by the power and
image of the well-known brand, but many others say that Star-
bucks’ latte-sipping sophisticates and piped-in Kenny G music are
a real turnoff. They don’t feel wanted in a place that sells designer
coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be taken
for granted. Starbucks’ growth over the early part of the past de-
cade coincided with a remarkable surge in the economy. Consumer
spending tanked in the downturn, and those $3 lattes were an easy
place for people on a budget to cut back.
Starbucks also faces slumping morale and employee burnout
among its store managers and its once-cheery army of baristas.
Stock options for .
overall sales growth. That, as they might say at Starbucks, is.docxkarlhennesey
overall sales growth. That, as they might say at Starbucks, is a tall
order to fill.
Indeed, the crowding of so many stores so close together has
become a national joke, eliciting quips such as this headline in The
Onion , a satirical publication: “A New Starbucks Opens in Restroom
of Existing Starbucks.” And even the company admits that while
its practice of blanketing an area with stores helps achieve market
dominance, it can cut sales at existing outlets. “We probably self-
cannibalize our stores at a rate of 30 percent a year,” Schultz says.
Adds Lehman Brothers Inc. analyst Mitchell Speiser: “Starbucks is
at a defining point in its growth. It’s reaching a level that makes it
harder and harder to grow, just due to the law of large numbers.”
To duplicate the staggering returns of its first decades, Starbucks
has no choice but to export its concept aggressively. Indeed, some
analysts gave Starbucks only two years at most before it saturates
the U.S. market. The chain now operates more than 7,000 interna-
tional outlets, from Beijing to Bristol. That leaves plenty of room
to grow. Most of its planned new stores will be built overseas, rep-
resenting a 35 percent increase in its foreign base. Most recently,
the chain has opened stores in Vienna, Zurich, Madrid, Berlin, and
even in far-off Jakarta. Athens comes next. And within the next
year, Starbucks plans to move into Mexico and Puerto Rico. But
global expansion poses huge risks for Starbucks. For one thing, it
makes less money on each overseas store because most of them are
operated with local partners. While that makes it easier to start up
on foreign turf, it reduces the company’s share of the profits to only
20 percent to 50 percent.
Moreover, Starbucks must cope with some predictable chal-
lenges of becoming a mature company in the United States. After
riding the wave of successful baby boomers through the 1990s, the
company faces an ominously hostile reception from its future con-
sumers, the twenty- or thirty-somethings. Not only are the activists
among them turned off by the power and image of the well-known
brand, but many others say that Starbucks’ latte-sipping sophisti-
cates and piped-in Kenny G music are a real turnoff. They don’t
feel wanted in a place that sells designer coffee at $3 a cup.
Even the thirst of loyalists for high-price coffee cannot be
taken for granted. Starbucks’ growth over the early part of the past
decade coincided with a remarkable surge in the economy. Con-
sumer spending tanked in the downturn, and those $3 lattes were
an easy place for people on a budget to cut back.
To be sure, Starbucks has a lot going for it as it confronts the chal-
lenge of regaining its fast and steady growth. Nearly free of debt, it
fuels expansion with internal cash flow. And Starbucks can maintain
a tight grip on its image because most stores are company-owned:
There are no franchisees to get sloppy about running things. By re-
...
1Alcoholic Coffee BrewhousesMBA 560 Final Project- Comprehen.docxdrennanmicah
1
Alcoholic Coffee Brewhouses
MBA 560 Final Project- Comprehensive Business Plan
Alcoholic Coffee Brew Houses Exclusively at Starbucks
Carmen Hendrickson
02/19/2019
Executive Summary
This business plan will outline an integration of alcoholic beverages mixed with coffee to be exclusively offered at flagship Starbucks locations both foreign and domestic. Through test markets and extensive research into this niche area, the success of this product will rely heavily on meeting the demands of an ever-changing market. The management team is charged with the responsibility of becoming more efficient, staying ahead of current trends, and meeting the demands of the market. In order to do so and reach the full potential, Starbucks will need to employ key top level executives that are prepared to face the scrutiny of public opinion, keep up with the challenges of the market, gain knowledge of the new trends and innovations, offer appropriate prices and always be different from the rival companies. The goal is not only to be unique, but also to offer interesting and desirable products that support expanding the current customer base in which the company will have a voluntary monopoly and be an absolute favorite of the customers. This paper offers an in-depth insight to the introduction of alcoholic coffee brew houses. The company is Starbucks and this niche product will mainly be marketed to major cities with sufficient number of tourists. The paper below will discuss the branding of the product along with the context of the idea, the main features of the brew houses, the marketing, the ways to compete with the rivals, the definition of the service and the pricing - along with the comparison with the rival companies.
Context
Starbucks' main corporate mission, values, goals and vision are to create a culture which is valuable to the clients on a personal level, offer a culture of warmth and belonging in order to make each customer feel welcome (Harju, et al., 2015). The company aspires to challenge the status quo and constantly keep up with the process of finding new ways to grow. The alcoholic coffee brewhouses perfectly align with the terminal values of the corporation - since it is indeed innovating and in accordance with the customer needs.
The alcoholic coffee is generally not sold in Starbucks but is created as an add on to its already famous drink menu. Creating an alcohol-related service between the hours of 12pm til close will be appealing to a wide range of populations. Even though the age limit may become a problem, the alcoholic coffee brewhouses can also attract customers, especially in the zones and cities that are famous tourist destinations. Its main feature would be the alcohol content.
The brew houses will be branded with the Starbucks logo, but they should also present an environment that will be different from the classic Starbucks coffeehouses in order to attract new types of customers. Since the brewing was, initially.
Starbuck Returns To Its Roots You are probably use to seei.docxjonghollingberry
"Starbuck Returns To It's Roots"
You are probably use to seeing starbucks coffee shops everywhere that you might not realize that the
company went from 11 stores in 1987 to 2,600 in the year of 2000. This incredibly rapid growth sprang form the company's ability to create a unique experience for customers who wanted to buy this dietint brand of lattes and mochas where ever they found themselves. At Starbucks' core, there was alo a culture of treating each customer as a valued guest who should feel comfortable relaxing and taking in the ambience of the stre. Whether toy were in the company;s founding location in Seattle, Washington, or at the other end of the country in Miami, Flordia, you knew what to espect when you went to a Starbucks. This uniform culture was truly put to the test in the face of massive expansion, however, and by 2006 Starbucks chairman and former CEO Howard Schultz knew something had gone wrong. He noted that "As I visit hundreds of Starbucks store in the cities around the world, the enterpreneurial merchant in me sensed that something intrinsic to Starbucks' brand was missing. An aura. A sprit. The stores were lacking a certain soul." Starbucks' performance has become lackluster, with hundreds of planned store opening being cnacled and hundreds more store being closed.
So, Schultz too the dramatic step of coming back as CEO and engaging ina companywide effort to chnage the corporate culture back to what it had been before its expansion. All 7,000 Starbucks store were closed for a single afternoon as part of training effort of 135,000 baristas. Quality control was a primany mission; baristas were instructed to pour every glass od espresso like honey from a spoon, to preserve the flavor. This emphasis on quality over speed ran counter to the principles of mass production, but it was just what the company needed to ensure ot could retain its culture. Espresso machines that obscured the customers' view were replaced with lower profile machines that allowed baristas to look directly at the guest while making beverages. And " assembly-line production," like making several drinks at once, was discouraged in favor of slowly making each drink for each customer.
Schultz is convinced his efforts to take culture back to its roots as a neighborhood coffee shop-one ebtrabced with the :romabce of coffee" and treating every customer as an old friend- has saved the company. Today, Starbucks earns more than $3.6 billion in quarterly revenue and operates more than 18,000 store in 60 countires around the globe.
Prompt: Respond to the following questions based on the case study “Incident One: Starbucks Returns to Its Roots,” in Chapter 18 of Organizational Behavior.
a. What are the impacts of change to both the internal and external culture?
b. As an organization such as Starbucks shifts from a pre-modern theoretical model where tasks are valued highly and people are viewed as small piece parts to the large wheel of progress .
For their final project, second semester Northern Virginia Community College Composition students (ENG 112) work in groups to create presentations that introduce, analyze, and draw a conclusion about a significant American cultural artifact, (a trend, a celebrity, or anything that significantly impacts American culture). Students work together to build a persuasive argument using a combination of text, multimedia, and visual design. Students develop a claim about the negative or positive impact of the artifact on the demographic of American culture it affects. Alternatively, students may discuss what the artifact says about our culture.
These students are asked to explore a cultural artifact and determine its significance and/or role in our society. Students are encouraged to present their findings using any media they wish to implement.
What are Starbucks’ past and present target markets and how has it t.pdfanaxeetech
What are Starbucks’ past and present target markets and how has it tried to appeal to these
markets? What problems are they likely to face in the future?
Solution
The success of Starbucks is not hidden to any one. It is the largest coffee house in the world, that
holds around 33% of the total market share of coffee. All its success Starbucks owes to a well
defined and well served market.
At its launched, Starbucks at first targetted only Youth. Young College students, with slightly
higher than average income, were the centre of all the marketing strategies of Starcuks. To target
this market, it positioned itself, in the beginning, as a place where young college students can
hang out, study, discuss and write term papers and meet friends. Starbucks appeals to this
consumer directly through introducing technology as soon as it comes available, focusing on
social networking and actively cultivating a “cool” image. The young adult audience grows 4.6
percent each year.
Now Starbucks has realized that they could target specific neighbor hoods of the initial target as
well. It then tried to attract specific upward social classes. Different customers are more willing
to pay for luxury good now more than ever. With that in mind, through Starbucks aggressive
expansion techniques they have begun targeting almost every demographic.
Adults, Youth, Kids and Teens, obviously with slightly higher than average income, have now
become several groups that the company now target.
Starbucks’ primary target market is men and women aged 25 to 40. They account for almost half
of its total business. Starbucks’ appeal to this consumer age group through hip, contemporary
design that is consistent in its advertising and decor, and working to keep its products current as
status symbols. Customers tend to be urbanites with relatively high income, professional careers
and a focus on social welfare. This target audience grows at a rate of 3 percent annually.
A small share is also contributed by kids and teens in the revenue of Starbucks. They provide
steamed milk that Starbucks refer to as “babyccinos” . It is whipped cream topped coffee drinks
that are so popular with teenagers, kids and teens form a large part of Starbucks business. Kids
go there with their parents; both mother and child leave with cup in hand.
It is the change in target market that has made them to change their Mission Statement:
Previous: Establish Starbucks as the premeir purveyor of the finest coffee in the world while
maintaing our uncompromising principles while we grow.
Now: To inspire and nurture the human spirit- One person, One cup and ONe neighbor hood at a
time.
Despite such a strong launch and a big success story, it has started witnessing fall. In the recent
years, the market has shown Starbucks to be in constant decline, as their stock has dropped about
$15/share, a value they have been above since 2004. Starbucks consider itself as a premium
coffee provider and this could be the main probl.
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
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How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Ethnobotany and Ethnopharmacology:
Ethnobotany in herbal drug evaluation,
Impact of Ethnobotany in traditional medicine,
New development in herbals,
Bio-prospecting tools for drug discovery,
Role of Ethnopharmacology in drug evaluation,
Reverse Pharmacology.
6. By now, you should be familiar with the Starbucks story.
After a trip to Italy in the early 1980s, Howard Schultz was
inspired to transform Starbucks — then just a handful of
coffee shops in Seattle — into a chain of European-style
coffeehouses. His vision wasn't based on selling only
gourmet coffees, espressos, and lattes, however. He
wanted to provide customers with what he called a 'third
place' — a place away from home and work As CEO of
Starbucks, Schultz developed what became known as the
Starbucks Experience, built around great coffee, personal
service, and an inviting ambiance.
6Introduction
7. What Goes
Up...
It wasn't long before Starbucks became a household word—a powerhouse
premium brand in a category that previously consisted of only cheaper
commodity products. In 20 years’ time, Schultz grew the company to
almost 17,000 stores in dozens of countries. From1995 to 2005 Starbucks
added U.S. stores at an annual rate of 27 percent, far than the 17 per cent
annual growth of McDonald's in its heyday. At one point, Starbucks opened
over 3,300 locations in single year—an average of 9 per day. In one stretch of
Crowded Manhattan, a person could get their caffeine fix at any of five
Starbucks outlets in less than a block and a half. In fact, cramming so many
stores so close together caused one satirical publication to run this
headline: 'A New Starbucks Opens in the Restroom of Existing Starbucks.'
For many years, new store growth was what kept Starbucks Percolating. As
it grew, company sales and profits rose like steam from a mug of hot java.
Growth routinely averaged 20 per cent or more each year. And Starbucks
made investors happy with a 25 per cent annual increase in the value of its
stock for more than a decade. Schultz confidently predicted that there was
no end in sight for the Starbucks boom. Just a few years ago, he announced
his intentions to open 10,000 new stores in just four years and then push
Starbucks to 40,000 stores. But not long after Schultz shocked Wall Street
and the industry with his projections, Starbucks' steam engine of growth
started to slow.
7
8. Continued
8 Then it started running in reverse. By the end of 2008, the 20 per
cent annual growth had dropped to 10 percent, with existing-store
sales decreasing by 3 per cent. Total company profits dropped by a
scalding by 53 per cent for the year. And for a second year in a row,
Starbucks' stock value dropped by 50 percent around $10 a share.
The weakened economy certainly played a role. But for years, many
Industry observers had worried that the company was growing too
fast. Revenue and traffic at Starbucks began slowing more than a
year before anyone uttered the word recession. In a sign of
recognising a problem, Schultz cut back on the number of new store
openings. Then he did what had previously seemed unthinkable. In
2008, he announced store closures—first 600, then 300 more. In fact,
as Starbucks trimmed its 2009 forecast for new store openings to
310, it projected a decrease in its number of outlets for the first time
ever.
9. The evaluation
of the
starbucks
customer.
There was no shortage of armchair CEOs willing to give their Opinions as
to what had gone wrong that led to Starbucks' fall from perpetual growth.
One issue often mentioned was that Starbucks had developed an identity
crisis with respect to its target customer. In its early years, the Starbucks
customer profile was clearly defined. The typical customer was wealthier,
better educated, and more professional than the average American. The
customer was far more likely to be female than male, predominantly
Caucasian, and between the ages of 24 and 44. It was this customer who
fell in love with the Starbucks Experience. She was very loyal, often
visiting a store every day or even more than once a day. She loved the
fact that the barista greeted her by name when she came in and chatted
with her while making her custom coffee drink, not caring if it took a
while. She lounged on the comfy furniture, enjoying the perfect mix of
music that always seemed to fit her mood. She met friends or just hung
out by herself reading a good book. But the more Starbucks grew, the
more the Starbucks Experience began to change. With more stores, the
place wasn't quite so special. As each location filled with more customers,
baristas had more names to put with faces. As the menu expanded with
more options, the number of combinations for coffee drinks grew into the
hundreds, leaving baristas less time to chat with customers.
9
10. Contd…….
10
As the atmosphere in each store turned to 'hustle and bustle,' it became
a less attractive place to hang out. With all these changes, Starbucks
progressively appealed less to the traditional customer and more to a
new customer. This customer shift was inevitable; there simply were not
enough traditional customers around to fuel the kind of growth that
Schultz sought. The new breed of customer was less affluent, less
educated, and less professional. Not only was Starbucks drawing in
different customers in places where stores already existed, but it was
also putting stores in different neighbourhoods, cities, and countries. As
the customer profile evolved, the Starbucks Experience grew to mean
something different. To the new breed of customer, it meant good
coffee on the run. It was a place to meet and then move on. The more
accessible Starbucks was, the better. Speed of service was more
important than a barista who wanted to talk current events. This new
customer came in much less frequently than the traditional customer, as
seldom as once a month. As a sign of just how much this shift in
customer was affecting its business, by 2007, 80 per cent of all Starbucks
coffee purchased was consumed outside the store.
11. Soul
Seraching
When Starbucks growth first started
tapering off, the executives took notice .In
a now famous memo to management,
Schultz lamented that in order to achieve
the growth, development, and scale
necessary to go from less than 1,000
stores to 15,000 stores and beyond,
Starbucks had made decisions that may
have led to the watering down of the
Starbucks experience. Stores no longer
have the soul of the past and reflect a
chain of stores versus the feeling of a
neighbourhood store. Starbucks
management believed that efforts to
recapture soul would get the company
back on track. At first, however, Starbucks
was caught between the conflicting goals
of re-establishing its image as the provider
of a holistic experience and offering better
value to the cash-strapped consumer.
Starbucks set out to put some water on
the fire and get some of its customers
back.
11
12. Continued
But none of these actions seemed to address the core problem:
Although Starbucks still charged a premium price; it was no longer a
special place. As the recession tightened its grip and more people cut
back on discretionary purchases, the problem grew worse.
Compounding the problem was an increase in competition. For years, if
you wanted a latte, Starbucks was about the only option. Not only were
Dunkin' Donuts and McDonald's selling premium coffee drinks to the
masses, but just about every mini-mart in the country boasted about the
quality of its coffee. All of these competitors has prices considerably
lower than those of Starbucks, which made the most well-known coffee
bar much less justifiable to the 'grab and go' crowd. As much as Schultz
denied being in direct competition with the lower status coffee pourers,
many critics seemed to be thinking the same thing: Starbucks had
shifted from a warm and intimate coffee house to little more than a
filling station, battling fast-food outlets for some of the same customer
dollars.
12
13. “Value” to
the rescue
Throughout 2009, Schultz continued to direct activities aimed at
increasing growth.Starbucks launched a campaign designed to educate
consumers that Starbucks really wasn’t as expensive as they thought it
was. That was followed by something Schultz held back for as long as
possible: price reductions. ‘Breakfast pairing’ – coffee cake, Oatmeal, and
an egg sandwich- soon followed. All these tactics helped. By the end of
2009, Starbucks was regaining ground. With the same store sales up 4
percent and profits up 24 percent for the year, Starbuck’s stock price
doubled versus the previous year. But Schultz made it clear that he was
just getting started. ‘What a difference a year makes. We’re going to
radically reframe Starbucks growth strategy’. He outlined a three-
pronged growth strategy to illustrate that Starbucks might have a grip on
defining segments of coffee customers after all .In searching for
Starbucks roots and recreating the Starbucks store experience, Schultz
also aimed to reach customers outside the store.The first prong of the
new strategy centres on Via , an instant coffee that Starbucks introduced
last year. It is available in single-serve packets at all Starbucks' stores and
in grocery, at $1 each or $9.95 for 12 packs.
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14. Continued
Via lets Starbucks promote genuine cup of Starbucks coffee for under a
buck. Promotions for the new instant have made it clear that Starbucks
isn't moving downscale; instant coffee is moving upscale. At a New York
taste testing, Schultz told a group of analysts, journalists, and retailer that
he was ready for the critics who say, 'This is desperate, this is a Hail Mary
pass, and this is off-brand for Starbucks. We are going to reinvent the
category. This is not your mother's instant coffee 'Via is off to a good
start, having surpassed company's expectations. In fact Via accounted for
more than half of the 4 per cent increase in Starbucks 2009 same-store
sales. According to Annie Young- Scrivner, global chief marketing officer
for Starbucks, half of all Via serving occasions are at home, 25 percent are
in the office, and 25 percent are ‘on the go’. Many Via customers aren’t
just out for a cheap coffee. (You can mix up a cup of Folger’s for about 25
cents.) They are people who want premium coffee but are in situations
where they don’t have access to a store or brewing their own. An ad
campaign supporting Via is the first concerted advertising push aimed at
grocery customers, who are now accessible through 37,000 retail
locations. The second prong of Starbucks strategy also focuses on the
grocery business but through ground –flavoured coffees.
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15. Continued
According to NPD Group, four out of five cups of coffee are consumed at
home. Starbucks has a very small share of that market. Via will certainly
help. But aiming more directly at the ‘brew it at home customer,
Starbucks is partnering with Kraft to launch flavoured coffees you can
brew yourself. Sixty percent bagged coffee buyers are either drinking
flavoured coffee or adding flavoured creamer. Seventy- five percent of
those customer said they would buy a flavoured product at a grocery
store if Starbucks made one. So after more than two years of testing,
this substantial segment of grocery-store buying customers can now get
Starbucks Natural Fusions in vanilla, caramel and cinnamon.The third
prong of Starbucks strategy is its ace in the hole- Seattle’s Best Coffee.
Starbucks purchased the brand back in 2003 but is just now doing
something with it. Rebranding efforts have given Seattle’s Best a new
look and tagline. ‘Great Coffee Everywhere’. As with Via and Natural
Fusions, and now with Seattle’s Best, Starbucks is going after customers
who don’t normally buy Starbucks coffee. It is placing Seattle’s Best
where Starbucks customers aren’t – in vending machines, coffee carts,
fast-food restaurants ( Burger King and Subway, among others),
theatres, and convenience stores.
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16. Continued
These are places that Starbucks has avoided for fear of eroding its
upscale image. With prices ranging from $1 to just over $2, Seattle’s Best
also reaches customers who perceive Starbucks as too expensive. Gap
has Old Navy, BMW has Mini. Now, Seattle’s Best allows Starbucks to go
head-to-head with competitors like McDonald’s without putting the
Starbucks name in the same sentence as downscale competitors.
Michelle Gass, Seattle’s Best president, clearly defines the difference
versus Starbucks: ‘Starbucks is a destination coffee experience and an
active choice made by the customer. Seattle’s Best will instead be
brought to the consumer when they make other retail choices.’ Gass is
going to make sure that she has as many of those other retail choices
covered as possible. She is taking the brand from 3,000 of distribution in
2009 to more than 30,000 by the end of 2010. The three pronged
strategy provides three good reasons to believe that Starbucks growth
story will return, even without opening nine stores per day. As icing on
the coffee cake, only one- fifth of Starbuck’s sales come from outside
the United States. The company sees huge potential growth abroad. But
perhaps the greatest strength in Starbucks new strategy is that it will
allow the company to go after new customer segments while also
restoring the essence of the Starbucks Experience.
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19. Question - 1
Using the full spectrum of segmentation variables, describe
how Starbucks initially segmented and targeted the coffee
market?
Starbucks targeted the customer who fell in love with the
Starbucks Experience who was:
-Wealthier, better educated, and more professional than the
average American.
-More likely to be female than male.
-Most likely between the ages of 24 and 44.
Starbucks had a goal and their initial segment was a
Demographic segmentation. They had the intention to open
10,000 new stores in just four years and then push the
Starbucks to 40,000 stores. In 20 years, Schultz grew the
company to almost 17,000 stores in dozens of countries.
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20. Question - 2
What changed first- the Starbucks customer or the
Starbucks Experience? Explain your response by discussing
the principles of market targeting?
The Starbucks customer changed first. There simply were
not enough traditional customers around to fuel the kind of
growth Schultz sought. Starbucks became a less attractive
place to hang out. The new breed of customer was less
affluent, less educated, and less professional. As the
customer profile evolved, the Starbucks Experience grew to
mean something different. To the new breed of customer, it
meant good coffee on the run. It was a place to meet and
move on. The new customer came in much less frequently
than the traditional customer, as seldom as once a month.
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21. Question - 3
Based on the segmentation variables, how is
Starbucks now segmenting and targeting the coffee
market?
Starbucks segmenting now would be typically built
around:
-Demographics (age, gender, income, and etc.)
-Psychographics (Lifestyle, Personality, and values)
-Geography (city, neighborhood, zip code) and other
personal attribute.
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22. Question - 4
Will Starbucks ever return to the revenue and profit
growth that it once enjoyed? Why or why not?
Our guess is yes, because they have a new good
segmentation and targeting strategy. They are
targeting new segments that they didn’t target
before. Trying to regain the traditional Starbucks
customer via trying to restore the Starbucks
Experience. Only one fifth of Starbucks’ sales come
from outside the United States which means huge
potential growth outside the United States.
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