Starbucks user is willing to pay the highest, followed by Highland, The coffee house and Trung Nguyen.

2. 1a) What is the core product
that Starbucks offers?
b) What are the actual and
augmented levels of that
product?

3. Core Product
Coffee

4. Actual Level
-Brand Name
- Features
- Quality Level
- Design
- Packaging
Reference Kotler (Page 222)

5. Brand Name
Starbucks was named after a
character in the novel Moby Dick
The seafaring name seems
appropriate to adopt the name for
a store that imports the world’s
finest coffees
Easily translated in other
languages
Chinese 星巴克 (xīng bā kè)
Japanese - スターバックス (sutaabakkusu)
Korean - 스타벅스 (seu-ta-beok-seu)

6. Design
The logo was changed over the years to appease members of the
public due to it controversial image
INITIAL LOGO
SECOND LOGO
CURRENT LOGO

7. Features
Starbucks has a ‘You-Call-It' culture
allowing the customer to specify all
modifications to the drink.
Packaging
• In view of their recycling efforts,
Starbucks uses recyclable cups
• Starbucks logo is printed on cups for
easy recognition

8. Quality Level
Uses the finest beans from across the
world to satisfy the taste and preference
of different consumers.
Ranging from
- Latin America
- Asia/Pacific
- Africa/Arabia
- Dark Roast Blend
- Multi-region blends
The coffee from the around the world
comes in different tastes and
characteristics providing various choices
for Starbucks’ consumers

9. Augmented
Product
- After-sale service
- Delivery and credit
- Installation
- Warranty
- After-sale Service
- Delivery & Credit
Reference Kotler Page 222

10. After-sale Service
• Wireless connections in all outlets
• Adding atmosphere to their
coffeehouses
Delivery & Credit
• Free delivery
• Starbucks card

11. 2a)How would you classify
the Starbucks product using
the marketing considerations
for a Consumer Product?
b) What Individual Product
Decisions has Starbucks
made?

12. Consumer Product
Convenience
Shopping Specialty
Unsought
2a)
Reference: Kotler Textbook Page 223

13. Convenience
Product
1. Distribution:
Widespread at convenient
locations
 In Developed Markets
e.g.: Singapore / USA / Japan
• Majority of Starbucks sales (72.98%)
 from Developed Markets
►perceive Starbucks products as
Convenience Product

14. 2. Consumer Buying Behaviour:
Frequent purchase; Little
Planning
 Loyal Starbucks customers
3. Price:
Low (relative)
4. Promotion:
Mass promotion by the
producer
 Promotional Banner outside
every outlet
 e.g.: Starbucks & Salvation
Army (Singapore)
Convenience
Product c’td
S$1.00 S$5.50 S$11.90

15. 2b) Individual Product Decisions
(i) Product
Attributes
(ii) Branding
(iii) Packaging
(iv) Labeling
(v) Product
Support Services
Reference: Kotler Textbook Page 225 - 229

16. 1. Quality – Quality consistency
 Training period
 Quality Control
2. Features – tools that differentiate
product from competitors’
 Make It Your Own
 Customology 101
3. Style – Pleasing Aesthetics
 Colourful / Simple
4. Design – Aesthetics: contribute to
product usefulness & looks
 Stainless Steel Mug
 Extreme Tumbler
 Handy

17. For the BUYER:
 adds value to the product
 helps identify the product
 hints about product quality
For the PRODUCER:
 Offers legal protection for
unique product features
(a) trademark / patent laws
(b) license

18.  Designing & producing:
cup, mug, glass bottle, sleeves
- Environmentally friendly
 Creates instant consumer
recognition

19.  Simple tags / complex
graphics – aids in product
identification
 Same as brand logo

20.  Offers support services that augment
actual product
1. Interactive Website
2. Delivery Service
3. Starbucks Visa / Card
(v) Product Support
Services

21. 3) How has Starbucks dealt
with issues of brand equity,
customer equity, and brand
positioning?

22. Definition : The positive differential effect that knowing the brand
name has on customer response to product or service.
The World’s Best Coffee
- High quality coffee
- Rich, good taste
- Variety of choices
Setting
- Comfortable and modern
- Perfect place to hang out for most occasions
Corporate Social Commitment
- Communities
- Environment
- “Partners” (Employees)

23. Definition: The total combined customer lifetime values of all the
company’s customers.
In order to achieve high customer equity, it is necessary for
Starbucks to increase its customer perceived value and loyalty.
Customer
Perceived Value =
- “ Make It Your Drink” personalized service
- High quality & Modern image
- Wide & Innovative Variety
- Comfortable Environment
- Excellent Customer Service
- Delivery Service
- Convenience
Total customer Value
– Total customer Cost

24. Loyalty
- Highly Competitive Zone
- High Customer Satisfaction
- Delivering above
expectation
- Starbucks Card

25. Attributes
World’s Best Coffee Beans
Benefits
Rich and high quality coffee produced
Beliefs and Values
Extraordinary and finest coffee drinking
experience
Past
- Attributes and Benefits
Recent years
- Focus on beliefs and values

26. 4a) Is Starbucks a product
or service?
b) How are the concepts of
service marketing important
to Starbucks, particularly in
a region like Asia?

27. STARBUCKS: A PRODUCT OR SERVICE?
Physical Product Service
Experience

28. Services Marketing
Intangibility Inseparability Variability Perishability

29. Service Intangibility:
• “Signals” of service quality
• Making the service “tangible” in a way
Starbucks - “Third Place”
- Position themselves strongly
- Creating superior value during service encounters
- China: consumers rely more on word-of-mouth
when purchasing services
How is it important to Starbucks in Asia

30. Service Inseparability:
• Simultaneously produced and consumed
• Provider-customer interactions
Starbucks - employees to show professionalism
- market the service successfully
Service Variability:
• Who provides the services, When, Where and How they are
provided
Starbucks
- Comprehensive health benefits
- "First Impressions."
- Retail management courses
•Satisfied employees translates into greater profits in the
long run.

31. Service Perishability:
• Cannot be saved, stored for reuse on a later date,
resold, or returned
• Demand manipulated
Starbucks - Price Incentives
- Developing non-peak demand
- Creating reservation systems

32. 5) From its Japanese
experience, how has
Starbucks dealt with the
issues it faces in
international marketing?

33. Q5) From its Japanese experience, how
has Starbucks dealt with the issues it
faces in international marketing?
 What happened in Japan?
 Issues faced in international marketing
 How has Starbucks dealt with these issues?

34. What happened?
Same store
sales fell by
17% in 2003
Stock lost 2/3 of
its value
between 2002-
2003
WHY??
Too many
stores
Fussy
consumers
Fierce &
Cheaper
competition
Image problem
relating to its
food
Local
rivals

35. What issues it faced in international
marketing??
 International marketing : application of marketing
principles across different countries
 Diverse cultures
 Different lifestyles and situations
 Different tastes and preferences
(India VS Europe)
 affect their willingness to pay and
their sensitivity to prices

36. How has Starbucks dealt
with these issues?
Stores designed to be
architecturally friendly
to the local landscape
Introduction of
Starbucks Card
( serve as a ‘cash card’
internationally & a
loyalty card : to improve
consumer equity &
hopefully increase their
willingness to pay
Forms joint
ventures or
licenses other
companies to own
and operate
Starbucks stores

37. 6) From the Japanese
experience, what marketing
recommendations would you
make to Starbucks as it
continues its Asian
expansion?

38. - 2nd most populous country in the world
- Indians generally prefer tea & plain milk to coffee.
- Per capita consumption of coffee is 0.33 cups
against 1.77 cups for tea
- However, coffee performs well in the south,
recording a share of 18%, the highest after tea at 45%

39. - Currently, there is no Starbucks outlet in India
- Starbucks has planned to enter India’s market by
December this year but has deferred its entry in July
due to FDI regulations.

40. Marketing Recommendations:
- India is a potential market since the population is large.
-Relevant market research to be done to understand the
taste and preference of consumers.
- Indians’ preference of tea has been long standing,
Starbucks can cater to them by blending tea and coffee.
- Expanding product width

41. - Create the homely atmosphere in Starbucks cafe
- Advertisement should also try to convey to the Indian
consumers that Starbucks is the ideal place for family
get together.
- Focus expansion in the more developed states of
India

42. Limitations
- Difficulty in changing consumers’ mindset
- Competition from tea and various cold drinks in
India

43. -World’s largest population
- Similar to India, China is also a predominantly tea-drinking
country
-Average coffee consumption is 0.8kg per capita
-There are over 200 outlets in 21 states of China
-Various coffee chain houses in China, like Blenz Coffee (Canadian
coffee house) , Coffee Bean and Pacific Coffee

44. Marketing Recommendations
From the Japanese experience, we learnt that Starbucks
should not open too many stores at one go. Instead, it should
first determine if the market is saturated.
-Mobile coffee service can be provided in Beijing which offers
free sample of Starbucks coffee.
-Serves as a mean of advertising
-If outlets in Beijing or other parts of China experienced an
increase in sales, Starbucks should then decide if expansion is
viable.

45. From the Japanese experience, Starbucks also learnt
that competitors often pose a major threat to them.
To gain market shares, Starbucks may differentiate
itself from its competitors in the following ways:
-Building a positive brand image by committing to
social responsibility
-Collaboration with Chinese property developers
-Smoking segregation

46. Limitations
-Not possible to station mobile coffee service men
everywhere
-Funds involved when carrying out such extensive
projects