Star Bucks Insight

Wana have a cuppa Coffee?? Presented by Anuranjan

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STARBUCKS CORPORATION • NASDAQ LISTED COMPANY (SBUX) • Multinational coffee and coffeehouse chain • 15,011 stores in 42 countries • Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks and items such as mugs and coffee beans. • Outlet is called as "the third place"

HISTORY • 1971:Started by 3 partners jerry Baldwin, Gordon Bowker, Alfred Peet. • 1982: Adapted Italian principles to resemble strong bar culture • 1995: Established its name with the opening of the 676th store as well as increasing the products in store

GROWTH PATTERN • 1990s, The company was opening a new store every workday • 2000s Company continues to expand in foreign markets and is opening 7 stores a day worldwide • Starbucks had 8,505 company-owned outlets worldwide • 6,506 Joint-Venture and licensed outlets

CURRENT SCENARIO • More than 14,396 stores spread across 42 countries • Revenue: $2.01 billion. • Accounts for 73% market share of U.S. Coffeehouse • Sales

FOUR P’s Analysis • Product • Price • Place (Location) • Promotion

Products (in store) • Starbucks sells brewed coffees, espresso beverages, cold blended beverages, food items, teas, branded coffee drinks, a line of ice creams, and a line of compact discs through its retail stores • Also offers pastries, sodas, juices, games, seasonal novelty items, and coffee-related accessories and equipment

Products • Starbucks also engages in purchasing, roasting, and selling whole bean coffees worldwide to grocery stores and large hotels

Price • Prices range from $1.00-$4.20 for drinks • Surprisingly, this is lower than its rivals, although not by much • Starbucks regular coffee was 4% less expensive and its iced blended drinks were as much as 30% less expensive when compared with specialty competition • When compared to quick-service restaurants, however, Starbucks was more expensive. Dunkin’ Donuts’ 16-ounce latte is an average of 17% cheaper

Prices on the Rise • Starbucks is planning to raise prices this year because of an increase in milk and green coffee bean prices • This could also be due to the fact that specialty

More on Locations • Starbucks retail stores are typically located in high-traffic, high-visibility locations. • Because the Company can vary the size and format, its stores are located in or near a variety of settings, including downtown and suburban retail centers, office buildings and university campuses. • The Company can also locate retail stores in select rural and off-highway locations to serve a broader array of customers outside major metropolitan markets and further expand brand awareness.

More on Locations • While the Company selectively locates stores in shopping malls, it focuses on locations that provide convenient access for pedestrians and drivers. • To provide a greater degree of access and convenience for non-pedestrian customers, the Company has increased focus on drive-thru retail stores. • At the end of fiscal 2004, the Company had approximately 700

Promotions • Starbucks has been able to use a standardized advertisement theme around the world in order to incorporate different cultures.

• Currently they are promoting their new Tazo green tea Frappuccino Blended crème. (Inspired by Japanese tradition)

Extended 3 P’s

SEGMENTATION DEMOGRAPHIC SEGMENTATION  All Genders

 Youth Segment (54%)

Contd…  Between Age Group Of 15 years- 34 years

 Couples, Students, Employed Youth (Double Income No Kids)

Contd… Income Factor Rs 2000 + Pocket Money Per Month Income >20000 Per Month

Geographic Factors Urban

TARGET Points of Difference: Starbucks cannot expect to grow by offering the same products as its competitors Starbucks must offer “points of difference” that will make customers want to come to Starbucks rather than competitor. The “points of difference” that make Starbucks new Frappuccinos distinctive relative to competitors fall into four

•Brand Experience: At Starbucks you aren’t just drinking a beverage, but are undertaking in an emotional experience by the surroundings. •Brand Quality: Starbucks has been recognized for exceeding expectations by the quality of their products and their service. This is what will create their loyal customers. •Perceived Health: People that are active are perceived to be healthier then those not active. According to the survey, Figure 6, aside from the coffee, Starbucks is perceived as a healthy establishment, which makes the new coffee-free Frappuccino appear healthy as well. •Convenient Access: Starbucks is everywhere and easily accessible. In many locations Starbucks offers drive-thru

Small Random Survey Figure 6 Besides the coffee aspect, do you view Starbucks as a healthy establishment?

Yes

12

No

4

This survey was taken on the streets of Seattle around Pike Place Market. Sixteen random individuals were asked, “Besides the coffee aspect do you view Starbucks as a healthy establishment,” twelve answered yes, and four answered no. According to this survey we conclude that America’s view Starbucks as a healthy establishment.

Positioning Starbucks products always have been perceived with a prestigious image. With their high quality products, unique tastes, friendly environment, conveniences, customers are willing to pay a premium price for its products. As Starbucks extends their product line with the new Frappuccino flavors, it faced against competitors like Jamba Juice. Therefore, to retain a position in the customers’ minds as high quality, Starbucks needs to enhance its position by making it appear as nutritional. This can be achieved by lowering the calories or by adding real fruit to the product. As the product’s nutritional and taste increase, their perceive quality will also increase. .

MAJOR COMPETITORS

V/ & S

KNOW OUR COMPETITORSBARISTA • Espresso bars is across India, Sri Lanka & the Middle East • Founded in India in 1999 • Major supplier of coffee bean is from TATA Group • To offer the best coffee in town, at reasonable prices with unlimited helpings of the Barista ambience • Introduced WI-FI- To connect the world at the

KNOW OUR COMPETITORSCAFÉ COFEE DAY • A division of Amalgamated Bean Coffee Trading Company Ltd (ABCTCL) • USP of the Brand-: Affordable Price • Pioneered the cafe concept in India in 1996 • Largest cafe retail chain in India - with 436 cafes in 69 cities • Promotions- Ticket sales in quite a few Live events- Enrique, Elton John, & Bryan Adams • Tie up with petroleum companies like BPCL & HPCL for opening thier coffee outlets

COMPARATIVE STUDY

ATTRIBUTE INDIAN MARKET

STARBUCKS 2007

NUMBER OF OUTLETS IN INDIA

DELHI,MUMBAI & CHENNAI

STAKE WITH COMPANIES

MAXIM CATERERS LTD

BARISTA 1999

1996

170 ESPRESSO BARS AND 7 BARISTA CRÈMES IN OVER 29 LOCATIONS

700 IN 100 CITIES 42 IN MUMBAI

LAVAZZA

ABCTCL

FAMOUS FOR

QUALITY & BRAND BRAND IMAGE

TIE UPS FOR BRAND AWARENESS

MCDONALDS

PRODUCTS OFFERED

ESPRESSO ROAST,CAFFE AMERICANO ETC

CAFÉ COFEE DAY

PLANET M & CORNER BOOK STORE (CBS)

CAFFE LATTE,CAFFE CARAMEL,CAFFE MOCHA ETC

VALUE FOR MONEY, TASTY & QUALITY PRODUCT LEVIS,SCOOTY, ZEE ENGLISH TV SHOW Friends ESPRESSO, CAPPUCCINO, CHOCOCINNO ETC

PERCEPTUAL mapping

BRAND

PRICE

2

4

6

8

OUTLETS IN INDIA

STARBUCKS

BARISTA TASTE

LAYOUT OF STARBUCKS OUTLET

BOWLING ALLEY

STARBUCKS OUTLET

SWOT ANALYSIS

STRENGTHS • Starbucks Corp is a very profitable organization earning $ 600 million and generating revenue of $ 5 billion - Accounts for 73% market share of US Coffee house • Ad Week Magazine recognized the company as one of the “ Most Trusted Brands” – A global coffee brand built upon a reputation for fine products and services. • Strongly distributed network – 8500 stores in over 30 countries.

Contd…….. • Starbucks – One of the Fortune Top 100 companies to work for in 2005. The company is a respected employer that values its workforce. • Great Customer Relations + Good Coffee = Starbucks!!!  • Superior quality •  Good training and Management System • Strong Marketing Strategy and • Corporate Strategy.

WEAKNESSES • Growth of Starbucks – Dependent on the main competitive advantage, the retail of coffee. • With an existing strong presence in USA – They need to explore a portfolio of countries, in order to spread business risks.

Contd…… • Difficulties in some international operations. • India,predominantly a “ Chai ” drinking nation – Starbucks will have to fight hard to brew coffee for Indian middle class consumers. • Starbucks still remains very bulish on India.

OPPORTUNITIES • Entering into a Joint Venture with an Indian Company • Innovation : Introducing RTD’s & IceCreams, Breakfast & Snacks Bar

Contd…. • After caffenating China & Euorope – Its set to enter the Indian market.

• Co – branding with other manufacturers of food & drink. • Sudden change in trends – coffee becoming popular especially among young population

THREATS • Exposed to rises in the cost of coffee and dairy products.

• Entry or existence of competitors.

Data interpretation & analysis

1) Amongst the following which one do you prefer as a refreshing drink? Attributes

Coffee

Tea

Juice

Milk

Total

No. of person

19

13

12

6

50

2) How frequently do you visit a coffee shop in a week? Attributes

Once

Twice

Thrice

More than 3 times

Total

No. of person

39

4

4

3

50

3) Where would you like to have your cup of coffee? Attributes

Home

Coffee shop

No. of person

10

33

Shopping mall 0

College campus 7

Total 50

4) Why do you like to have your coffee at a coffee shop? Attributes

Meeting

Pass time

Addiction

Business meeting

Total

No. of person

3

43

0

4

50

5) Which factors influence you to have your coffee at coffee shop? Attributes No. of person

Ambience & Décor 35

Taste

Status

15

0

Least delivery time 0

Total 50

6) Would you prefer to have something with the coffee? Attributes

Yes

No

Total

No. of person

39

11

50

7)Are you aware of star bucks? Attributes

Yes

No

Total

No. of person

23

27

50

8)Would you prefer to drink star bucks coffee if they enter Aamchi Mumbai? Attributes

Yes

No

Total

No. of person

46

4

50

9)What facilities would you like to enjoy in the star bucks coffee shop?

Attributes

Wi-Fi

Bowling alley

Song dedication

Readers corner

Total

No. of person

16

8

12

14

50

10) Would you prefer to have star bucks coffee at home if the offer home delivery service?

Attributes

Yes

No

Total

No. of person

13

37

50

Suggestions & conclusions 1) Price 2) Advertisements and Promotional Activities 3) Focus on II tiers cities 4) Tie-ups with various Corporate and Institutes 5) Schemes and services 6) Variety of tea products 7) Brand Ambassador