Starbucks Rev 2 - Latest

MARKETING PLAN : STARBUCKS CORPORATION Presented by: JULIYATI RUHIYATI IDAYU NURULHAFIZAH

Presentation Outline  About Starbucks Overview Timeline of Starbucks Starbucks Values Starbucks Mission Statement Starbucks Environmental Mission Statement  Starbucks 6 Guiding Principles  Corporate Social Responsibility     

 Malaysia Industry Analysis

 Macro-Environmental Analysis     

Economics Political/Legal Demographics Social/Cultural Technological

 SWOT Analysis  Competitive Analysis  Internal Analysis      

Target Market Segment Product Life-Cycle & Sales Trend Analysis The Starbuck Model Marketing Strategies Placement Strategies Promotion Campaign Plan

 Conclusion  Recommendation

ABOUT STARBUCKS

OVERVIEW  Established in 1971 at Seattle, Washington  Famous for its quality fresh-roasted coffee beans and stylish atmosphere.  Over 9,000 stores worldwide  Product lines include :  beverages (coffee, Tazo tea, soda, juices)  pastries  whole coffee beans  coffee-related hardware and equipment  merchandise (mug, CDs)

TIMELINE OF STARBUCKS

TIMELINE OF STARBUCKS (cont’d)

Starbucks Values STARBUCKS VALUES     

Passion for Everything We Do Integrity Entrepreneurial Spirit & Drive Pride & Success Respect for Our Partner

STARBUCKS MISSION STATEMENT “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”

STARBUCKS ENVIRONMENTAL MISSION STATEMENT “Starbucks is committed to a role of environmental leadership in all facets of our business.”

CORPORATE SOCIAL RESPONSIBILITY  Focuses its efforts on: Improving social and economics conditions for coffee farmers  Minimizing environmental impact;  Making a positive contribution in the communities where they do business; and  Providing a great work environment for their partners (employees).

 Established the Starbucks Foundation in 1997

Corporate Social CORPORATE SOCIAL Responsibility RESPONSIBILITY (cont’d) of CARE, worldwide relief and  A major contributor development organization (Health, Education, and Humanitarian aid)  Provides financial support to community literacy organizations  Participate in local charitable projects  2004 EnviroStars Recognized Leader Award – for its community service and environmental activities

MALAYSIA INDUSTRY ANALYSIS

MALAYSIA INDUSTRY ANALYSIS The coffeehouse business has grown every year. Lifestyle factors converge to make the coffee industry strong at all times. Coffeehouse provides calm, invigorating ambiance for people to socialize, relax or catch up on work. Coffee drinking is now an all-day activity. Not unusual for a well located coffeehouse to exceed a daily average of 900 customers. The business of coffeehouse definitely will continue to grow intensely.

FINANCIAL REVIEW 2008  Starbucks Malaysia, which became a 50% associated company of the Berjaya Group during the financial year, registered a 26.2% and 4% increase in revenue and pretax profit respectively as compared to the previous year.  This is mainly due to the growth of new stores and growing popularity of the brand and its products.

FINANCIAL REVIEW 2008 (cont’d)

 Thus led to  More new customers visiting the stores  Increased frequency of visits by existing customers as the company expands its stores to new states and towns in Malaysia.  Opening 21 stores  Bringing the total number of Starbucks Coffee stores to 109 stores nationwide.  Consistency in introduction of new and innovative food and beverage products.

FINANCIAL REVIEW 2008 (cont’d)  Complimentary WIFI service offered at all Starbucks stores nationwide continued to be well received by customers who used the facility for both business and leisure.  The company launched a strategic coffee knowledge program in all its stores, called “Coffee Seminars” conducted by certified coffee masters.  Starbucks is committed to opening more stores as well as introducing new store designs and programs to cater to the various needs of its customers.

MACRO-ENVIRONMENTAL ANALYSIS

MACRO-ENVIRONMENTAL ANALYSIS

 In a time of inflation when the purchase of non-essential items is down, Starbucks is feeling the effects.  600 Starbucks locations will close by mid-year 2009  12,000 employees will lose their jobs. Offer relocation packages to many employees, severances to others.  In response to competition and imitators, Starbucks now offers the “bottomless” $1.00 coffee.  Fewer than 200 new US locations will be opened in 2009 in comparison to 900 new US locations projected to be opened in 2008.

 Economic growth in countries where Starbucks operates, such as USA, Pacific Asia and Europe, stipulates the firm’s growth strategies.  The Starbucks business depends on economic factors in developing countries, where it buys the coffee beans.

 As Starbucks is expanding internationally, trade restrictions, tariffs, tax policies and employment laws of related to their business countries have influence upon Starbucks.  Starbucks has to take into account very different political situations in countries from which it buys coffee and countries the company expands to: from extensive poverty and deep social inequality (Latin America) to the fast growing economy of Asia.

 As predicted, by 2010 60% of the world’s population will live in the Asia Pacific region  Starbucks had two class action suits pending since 2001: Carr vs. Starbucks and Sheilds vs. Starbucks  Possible threats on a change in import laws for its imported coffee beans could greatly affect numerous areas of production for the company

 People ages 15-64 make up the largest percentage of the US population  Starbucks targets both males and females, mainly 18-30 year olds, but really does cater for everybody's needs  Starbucks customers are mainly in their final years of high school, in university or just starting to work.  All these customers have had a good education

Principles Towards Environment  Understand environmental issues & share information with partners,  Develop innovative & flexible solutions to bring about change,  striving to buy, sell & use environmentally friendly products,  Recognize that fiscal responsibility is essential to our environmental future,  Instill environmental responsibility as a corporate value, measure & monitor progress for each project, and  Encourage all partners to share in the mission

Participating and organizing activities such as neighborhood clean-ups and walk-a-thons Recycling and reusing of resources Buying policies Waste reduction “Green Team” to install the environmental views into trainees  Consumer preferences could shift from coffee to other beverages

 In line with the launching of Starbucks “Shared Planet” recently, Starbucks Malaysia has planned to achieve the following goals by 2010:  Reaching 5,000 volunteer hours in 2009 across Malaysia.  Achieving 2% target of customers using Starbucks reusable mug over paper or plastic cup in 2009.  Conducting at least two community activities in support of local neighbourhood causes per district per year.  Implementing in-store recycling starting from stores in the Klang Valley in 2009.

 Organizing the first Starbucks™ Shared Planet™ Store Award Program in 2009.  Establishing the first Starbucks Social Entrepreneurs project in 2009.  Increasing energy conservation by 5% in 2009

 Technologies allow Starbucks to offer the higher standard quality products  Introduction of the Starbucks Card  Most if not all Starbucks location have WI-FI for consumer needs  Its computerized roasters allow the company to create unique computerized curves in roasting coffee beans.

 Starbucks invests in research to obtain even better quality of roasting and various blending.  Starbucks uses the Internet as a distribution mechanism and implement Internet cafes to attract customers.  New methods of working such as mobile communication, intranet gives enables prompt communication .

SWOT ANALYSIS

SWOT ANALYSIS

STRENGT HS  Product diversification  Established logo, developed brand, copyrights, trademarks, website and patents  Company operated retail stores, International stores (no franchise)  High visibility locations to attract customers  Valued and motivated employees, good work environment

 Good relationships with suppliers  Industry market leader  Globalized  Customer base loyalty  Product is the last socially accepted addiction  Widespread and consistent  Knowledge based  Strong financial foundation  It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.

WEAKNE SSES  Lack of internal focus (too much focus on expansion)  Ever increasing number of competitors in a rowing market  Cross functional management  Product pricing (expensive)

 Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.  Dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

OPPORTUN ITIES  Expansion into retail operations  Technological advances  New distribution channels (delivery)  New products  Distribution agreements  Brand extension

 Emerging international markets  Continued domestic expansion / domination of segment  Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

THREATS  Competition (restaurants, street carts, supermarkets, other coffee shops, other caffeine based products)  US market saturation  Coffee price volatility in developing countries  Negative publicity from poorly treated farmers in supplying countries

 Consumer trends toward more healthy ways and away from caffeine  Fragile state of worldwide production of specialty coffees  Alienation of younger, domestic market segments  Cultural and Political issues in foreign countries  Starbucks are exposed to rises in the cost of coffee and dairy products.

COMPETITIVE ANALYSIS

COMPETITIVE ANALYSIS COMPETITO RS  Starbucks faces competition from a number of international, national, regional, and even local coffee bars and houses.  The more well known international ones would be : Coffee Bean San Francisco Coffee Gloria Jeans  The local Competitors would be : Secret Recipe Oldtown White Coffee

COMPETITIVE ANALYSIS COMPETITO RS

 Starbucks competitors are primarily in the Restaurants & Cafes industry.  Starbucks also competes in the Nonalcoholic Beverages, Candy & Confections, and Consumer Electronics & Appliances Retail sectors.  Is comfortable facing Coffee Bean and Tea Leaf as its major competitor but, with the upcoming and modernized kopitiams, it is now quite an issue for Starbucks.

COMPETITIVE ANALYSIS COMPETITO RS

 Fortune ranked Starbucks number one in innovation, quality of management, people management and quality of products or services in the food industry 2007.  According to The Star online, in Malaysia, Starbucks currently holds 45% to 50% of local gourmet coffee market.  Starbucks is still the world and Malaysia leader in its industry.  Starbucks is constantly innovating and showing strong product differentiation in their industry.  Is aware of the threats to potential entrants since the profit is attractiveness.

COMPETITIVE ANALYSIS PORTER’S FIVE FORCES MODEL  The main technique used to analyse competition in the industry environment is Porter’s (1980)  The stronger each force, the more competitive is the industry and the lower is the rate of return that can be earned. (Goudaskas, 2002)

COMPETITIVE ANALYSIS PORTER’S FIVE FORCES MODEL (cont’d) THREATS OF NEW ENTRANTS

BARGAINING POWER OF SUPPLIERS COMPETITIVE RIVALERY WITHIN THE INDU

THREAT OF SUBSTITUTES

THREAT OF ENTRANTS

 Starbucks operates in highly competitive industry where there are strong brands among competitors  However, the entry in the retail specialty coffee market is low as the capital requirement for purchasing or renting one store is not high.  New entrants have to compete with respected brands. Most of these were one-store establishments with no real plan for growth.

THREAT OF ENTRANTS (cont’d)  Coffee bulk purchasing offers Starbucks significant economies of scale.  Outlets, stores, grocery chain, kiosks, Internet, mail delivery allow Starbucks to have access to a wide range of distribution services.

BARGAINING POWER OF CUSTOMERS  The force is high, because customers are large and provide a large proportion of company profits.  Easy to switch between competitors, as the competition on brand recognition is very high in the coffee industry.  To neutralize the threat of powerful buyers, Starbucks could reduce buyer uniqueness by product differentiation, cooperation, diversification, and forward vertical integration.

BARGAINING POWER OF SUPPLIERS  Supplier power is high for Starbucks.  there are a few suppliers and increasing volumes of purchasing by Starbucks leading to difficulties in finding beans that meet the company’s quality requirements.  To neutralize the threat, Starbucks could reduce supplier uniqueness and look into development of second sources.  To develop second sources, Starbucks should invest in coffee industry where there are a number of coffee farms that can be increased.

THREAT OF SUBSTITUTES  This threat can be generated by competition among non-coffee related products such as teas, and soft drinks.  Technological innovations in roasting also give the opportunity to roast Soya beans.  The threat is however quite low since there are no natural substitutes for coffee beans.

COMPETITIVE RIVALERY WITHIN THE INDUSTRY

 The competition intensifies as the specialty coffee market is growing.  There is little difference between products, which makes the competition fiercer.  Starbucks can take an advantage of the recognition of its brand in countries where it has its name.  Comprehensive Internet site allows Starbucks to attract more stakeholders. Gaining the market share by store clustering, Starbucks depletes its rivals.

INTERNAL ANALYSIS

INTERNAL ANALYSIS

Target Market Segment  Starbucks positions itself as a specialty premium coffee retailer, which sells a wide variety of coffees and other beverages, both hot and cold, together with snacks and sandwiches.  However, intense competition in the retail beverage segment could adversely affect the company’s profit margins, and the company is currently still strongly dependent on the US market for the majority of its revenue and profits.  As Starbucks is a premium coffee brand, it generally relies on its target market having a significant number of middle and high earners with disposable income to frequent its coffee houses.

Product Life-Cycle & Sales Trend Analysis

The Starbucks Model

The Green Apron Book Creating the experience that keeps people coming back relies on the magical combination of three things : Our products, our places and our people. They come for coffee, stay for the inviting warmth , and return for the very human connection

Attention to Detail Occurs by Design, Not by Default  Creating an Environment for the Starbucks Experience  Details converge into a “Felt Sense” about the business  Never cut corners on quality  Prioritizing objectives and keeping them in front of your people  Creating a playful corporate culture  All that and so much more  Everyone matters-Uniqueness of customers and employee

The Expectation Effect  Creating the familiar : Predictability in product  Creating predictability in experience  Delighting the customers even when things go wrong

Macro Resistance  Never try to beat them ; always join them  Errant perceptions and taking valid responsibilities  Example of challenges ; We don’t want you here Beware the naysayers When customers say No Resistance inside the store

The View from 30,000 Feet  Building trust  Triple shot of Socially responsible business practices  Benefits for partners  C.A.F.E practices  Partnerships with environmentally conscious and socially diverse company  Giving back : Writing checks and igniting service  Corporate giving  Community volunteerism  Future leadership

Marketing Strategies, Action Plan and Assessment

Prior Strategies

Domestic & International Expansion  Domestic  Blanket an area completely, even if the stores cannibalize one another’s business  Starbucks-everywhere approach  Clustering stores increases total revenue and market share  International  Starbucks Coffee International Inc  Company-owned or company operated store or licensing  Partner first, country second  First 3 years of store opening is concentrating on building the brand in the country

Employee system & Location  Employee Training and Recognition  Systems to recruit, hire and train baristas and store managers  Screening  training programs  awards for partners  Real Estate, Store Design, Planning, and Construction  A broad range of store formats (the right image and character)  A “stores of the future” project team  High-traffic, high-visibility store locations  Control of average store opening costs  Wi-Fi availability at stores

Product Line  Wide range of products choices  Special product promotion  Selling music CDs  Joint ventures  Acquisitions  Starbucks Reward Cards

Coffee Purchasing  Coffee and Farmer Equity (C.A.F.E.)  The guidelines address coffee quality, financial transparency, and social and environmental responsibility.  All suppliers that become members of CAFÉ must undergo a third party review to assess their adherence to the quality and sustainability guidelines established by CAFÉ.  CAFÉ members must provide a living wage, protect workers rights and provide a safe humane workplace and living environment.

Current Strategies  A proprietary and revolutionary in-store Clover® brewing system that delivers the best cup of brewed coffee available anywhere A complete reinvention of brewed coffee in-store, that will be brought to life by baristas across the globe, who will scoop and grind a new unique coffee blend, connecting customers to the early days of Starbucks The introduction of new state-of-the-art espresso system that provides the perfect shot every time and helps facilitate the critical connection between barista and customer; The launch of MyStarbucksIdea.com, Starbucks first online community, that takes the Starbucks Experience outside the store and enables customers to play a role in shaping the company’s future; and

Retail Strategy

Retail Mix

People Strategy

Human Resource Strategy

Quality Control Training Strategy

Product Strategies

Product & Brand Consideration

Leveraging the Brand

Packaging Consideration

Service Policy

Pricing Strategies

Pricing Objective and External Environmental Influences

Impact of the Other 5 Ps  Customers are willing to pay the premium price that’s being charge by Starbucks base on their perception of Starbucks as a high quality coffee.  The price is not as important as quality and it was found that customers understood that they’re not only paying the price for the coffee also for them to experience “The Starbucks Experience”.

Competitor Price Analysis Competitor

Beverages

Price

San Francisco Coffee House

Ice-Blended Mocha RM14.50

Coffee Beans & Leafs

Ice-Blended Mocha RM13.50

Gloria Jeans Coffee

Ice-Blended Mocha RM13.50

Old town White Coffee Ice-Blended Mocha RM 6.50 Secret Recipe

Ice-Blended Mocha RM 7.50

Criteria for Planned Price Adjustments  There are two main pricing strategies available to Starbucks when entering the market:  Skimming  Market Penetration  Both of these strategies can be combined with promotion and placement strategies to provide an overall marketing strategy.  Skimming strategy is usually seen as the best entry strategy, with the company leveraging its brand and setting a high price to attract the most affluent customers.  In contrast, market penetration would involve offering initial discounts and low prices with the aim of attracting as much market share as possible. The aim would then be to convert this market share into repeat and loyal customers, and gradually remove the promotional and discount prices to produce a consistently profitable operation

Potential Competitor Action/Reaction

 They will start to emulate several Starbucks strategies, including holding a free coffee day a week after Starbucks held its free coffee giveaway.  Differentiating strategy by being true to its core as a coffee shop that sells quality coffee such as never resteaming milk, roasting beans in small batches, and maintaining a large variety of coffees for customers to choose from.  Starbucks has strong competition from other coffee shops, but surprisingly, the other main competitors rising in the coffee market are prominent fast food chains. Corporations such as McDonald’s and Burger King have been around much longer and have a much bigger establishment than Starbucks does. They already have the infrastructure in place to sell coffee, and these fast food chains have recently been promoting what they assert is coffee that’s of similar quality to Starbucks for a cheaper price.

Placement Strategies, Action Plan and Assessment

Placement Strategies Company -operated retail store Research & Development

Specialty operations

Placement Strategies Patens, trademark, copyright & domain names

Licensing

Food services

Strategies (Rank Order)

Action Plans Per Strategies

 increase its market share by selectively operating additional Company – operated stores in existing retail store markets  operating stores in new markets to support its long term strategic objectives.

Evaluation Method (s)

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 Company can vary Company – operated  Starbucks retail the size and format; retail store stores are typically located in high- its stores are located traffic, high visibility in or near variety locations. settings.

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 Company selectivelyAt the end of Fiscal located stores in2008, the Company shopping malls. operated approximately Company – operated 2,800 drives thru  The company alsolocations, compared to retail store locates retail storesapproximately 2,300 at in select rural andthe end of fiscal 2007, off-highway representing locations. approximately 35 % and 31%.

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 To reach customers where they work,During Fiscal 2008, travel, shop and dinespecialty revenues Specialty operations by establishingaccounted for 16% of relationships withtotal net revenues. prominent third parties that share the company’s values and commitment to quality.

Strategies (Rank Order)

Licensing Stores

–

Action Plans Per Strategies

Evaluation Method (s)

 Shares Starbucks operating and storeDuring fiscal 2008, 438 development Starbuck licensed retail experience. stores were opened in Retail Employees working inthe United States and, licensed retailas of September 28, locations are2008, the Company’s required to followInternational operating Starbucks detailedsegments had a total of store operating3134 licensed retail procedures andstores. attend training classes similar to those given to employees in Company-operated stores.

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 With Kraft Foods, Inc (“Kraft”), theBy the end of Fiscal Company sells a2008, the company’s Licensing – Packages selection of Starbuckcoffee and teas were coffee and tea and Seattle’s Bestavailable in Coffee in grocery andapproximately 37,000 warehouse clubgrocery and warehouse stores club stores  The Company sells packages coffee and tea internationally both directly to warehouse club customers

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 The North AmericanCollectively the Licensing – through Coffee Partnership, arevenues from these several partnerships joint venture with thebranded product both Domestically and Pepsi-Cola companyaccounted for 4% of Internationally. in which Starbuck is aspecialty revenues in 50% equity investor,fiscal 2008. manufactures and markets ready-todrink beverages.

Strategies (Rank Order) Licensing – through several partnerships both Domestically and Internationally.

Action Plans Per Strategies

Evaluation Method (s)

Licensing agreementsCollectively the for the manufacturing,revenues from these marketing andbranded product distribution of Starbuckaccounted for 4% of discoveries, a ready-to-specialty revenues in drink chilled cup coffeefiscal 2008. beverage, in Japan and South Korea.

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 August 2008 with Licensing – through Unilever and Pepsi-Collectively the several partnerships Cola Company for therevenues from these both Domestically and manufacturing, branded product Internationally. marketing andaccounted for 4% of distribution ofspecialty revenues in Starbucks super-fiscal 2008. premium Tazo Tea ready-to-drink beverages in the US and Canada.

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 Another joint venture Licensing – through with the Pepsi-ColaCollectively the several partnerships Company, torevenues from these both Domestically and manufacturer, branded product Internationally. market andaccounted for 4% of distribute ready-to-specialty revenues in drink beveragesfiscal 2008. internationally which currently includes bottled Frappucino beverages in china and Mexico.

Strategies (Rank Order)

Foodservice

Action Plans Per Strategies

Evaluation Method (s)

 Sells whole bean and ground coffees, toThe Company’s total institutional foodservicefoodservice operations companies that serviceshad over 19,000 accounts, business and industry,primarily in the US, at education, healthcare,fiscal year end 2008. airlines and otherRevenues from retailers. foodservice accounts  The majority of thecomprised 25% of total Company’s directspecialty revenues in accounts are throughfiscal 2008. national broad line distribution networks with SYSCO Corporation and US Foodservice.

Strategies (Rank Order)

Action Plans Per Strategies

Evaluation Method (s)

 The Company ownsThe Company owns and /or has applied tonumerous copyrights Patents, trademarks, numerousfor items product Copyright and domain register trademarks andpackaging, promotional Names service marks in thematerials, in-store United States and ingraphics and training many additionalmaterials, certain countries throughoutproducts, systems and the world. design the Company has registered and maintains numerous Internet domain names,

PLACEMENT STRATEGIES, ACTION PLANS AND ASSESSMENTS (cont’d) Strategies (Rank Order) Research and development

Action Plans Per Strategies

Evaluation Method (s)

 responsible for theThe Company spent technical approximately $7.2 development of Foodmillion, $7.0 million and beverageand $6.5 million during products and newfiscal 2008, 2007 and equipment. 2006, respectively, on technical research and development activities.

PRODUCT PLACEMENT TASKS NEEDED AND THE ABILITY TO BE PROVIDED BY STARBUCKS AND/OR BY OTHER ORGANIZATIONS Level Needed

Ability to be provided by

High

Starbuck

Task needed Low

Marketing Activities: Forecasting and Market Intelligence

YES

YES

Sales Activity Sales force training and management

YES

YES

Missionary Sales

YES

YES

Others

PRODUCT PLACEMENT TASKS NEEDED AND THE ABILITY TO BE PROVIDED BY STARBUCKS AND/OR BY OTHER ORGANIZATIONS Task needed

Level Needed High

Low

Ability to be provided by Starbuck Others

Stock-based Compensation

YES

YES

Material Handling Systems

YES

YES

PRODUCT PLACEMENT TASKS NEEDED AND THE ABILITY TO BE PROVIDED BY STARBUCKS AND/OR BY OTHER ORGANIZATIONS Task needed

Level Needed High

Low

Ability to be provided by Starbuck

Promotion Activities Advertising

YES

YES

Coop ads with retailer

YES

YES

Sales Promotion

YES

YES

Public Relation (Publicity)

YES

YES

Specialty operations

YES

YES

Risk Factors

YES

YES

Others

PLACE OPTION SELECTION AND EVALUATION CRITERIA Criteria Managerial Assessment Factors Reputation with clients for :

Degree of Important

Minimum level of Acceptance

Management

Very Important

High

Prices /Negotiating

Medium Important

Average

Office Operations

Very Important

High

Retailers Operation

Very Important

High

Delivery commitments met

Very important

High

PLACE OPTION SELECTION AND EVALUATION CRITERIA Criteria

Degree of Important

Minimum level of Acceptance

Sales force professionalism: Training and retaining

Very Important

High

Knowledge about the product

Medium Important

Average

Assistance provided to retail customers

Very Important

High

Stock outs and back orders

Very Important

High

Management Expertise Indicators: Knowledge about end-users

ANALYSIS OF CHANNELS CURRENTLY BEING USED Evaluation Criteria

Wholesal e

Retail

Management Assistance / Services Provided to

Very Committed

Cooperative Advertising / promotion Provided to

Very Committed

Sales force assistance/training Provided by

Very Committed

PROMOTION CAMPAIGN PLAN FOR STARBUCKS

STARBUCKS PROMOTION PLAN To provide convenient access for both pedestrians and drivers

Direct response advertising

Promotion Plan

Focus more on the food service.

To reach customers where they work, travel, shop and dine

Shares Starbucks operating and store development experience.

OBJECTIVE

TASK

COST

To provide convenient  Stores are located inThe company has access for both or near a varietycontinued to expand pedestrians and drivers settings, includingdevelopment of drivedowntown andthru retail stores. suburban retail centers, office buildings and university campuses.  It also locates retail stores in shopping malls, and in select rural and off-highway locations.

OBJECTIVE

TASK

COST

 Establishing relationships To reach customers During fiscal 2008, including licensingspecialty where they work, revenues arrangements, foodaccounted for 16% of travel, shop and dine service accounts andtotal net revenues. other initiatives related to the company core business.

OBJECTIVE

Shares Starbucks operating and store development experience.

TASK

COST

 Employees working in licensed retailAt the fiscal year end locations are2008, Starbucks total required to followlicensed retail in stores Starbucks detail storethat operated similar operating procedureslike the Companyand attend trainingoperated stores in classes similar toMalaysia was 113. those given to employees in company-operated stores.

OBJECTIVE

TASK

COST

 Sells the product to institutionalThe company’s total Focus more on the food the service. The company foodservice services operations had companies thatover 19,000 accounts. sells whole bean and service business and ground coffees, industry, education, healthcare, office coffee distributors, hotels, restaurants, airlines and other retailers.

OBJECTIVE

TASK

COST

Total advertising expenses, Direct response Consists primarily ofrecorded in “store operating advertising customer acquisitionexpenses”, “other operating expenses includingexpenses” and “general and applications foradministrative expenses” on customers to applythe consolidated statements of for the Starbucksearning, totaled $129.0 million, $103.5 million and $107.5 million Card Duetto Visa. in fiscal 2008, 2007 and 2006, respectively, as of September 28, 2008 and September 30, 2007 , $8.8 million and $12.0 million,

CONCLUSION

CONCLUSION  From a single privately-owned coffee shop to becoming a publicly-owned corporation with over 10,000 stores in 37 countries worldwide, Starbucks has been through some growing pains to where the Company stands now, all because of the vision of its founder Howard Schultz.  The Company has been very successful in achieving its goal to become the world's leading coffee brand.  As the Company's full efforts has been focused on store expansion and new market discovery, Starbucks may have neglected some consumers' concern that Starbucks brand is too pricy.

CONCLUSION (cont’d)  It appears that Starbucks' main marketing segment is the young adults with its coffee shop setting and music service additions. There does not seem to be any special services being offered to older adult retirees.  Since the Company has been concentrating on developing more blends of coffee drinks, Starbucks may have over looked the potential market of different healthy tea drinks.  Although Starbucks maintains a top-notch management team, the Company does not seem to have a wellorganized consumer relations department.

RECOMMENDATION

RECOMMENDATION  Starbucks should consider the general demand and work a price reduction strategy into the Company's overall pricing strategies.  Price reduction strategies may include a rebate or coupon promotion program as the increase in sales will offset the costs of these price reduction programs.  Starbucks should consider tailoring some of its coffee shops to accommodate these older adults, perhaps another line of special drink products and services.

RECOMMENDATION (cont’d)  Starbucks should also consider researching into the tea specialty drinks market. Tea drinks will increase popularity because their perceived value of healthy benefits.  Starbucks may need to review its company policies to see if updates are needed to address different consumer relation situations.  Starbucks may consider locality pay to compensate employees who are working in Starbucks store where the local living cost is much higher compared to other towns.

THANK YOU - Question and answer session -