NAME- SUBHRABARAN SANYAL Reg.no-1006247049 MBA(2010-12)* Sec A REGIONAL COLLEGE OF MANAGEMENT(A) ,

Starbucks World leader in Coffee Shops, but still potential for more

Starbucks Market Penetration Strategy

INTRODUCTION Almost 8200 tones of coffee produced in India each

year. Indian coffee is the finest in the world India produces only 4.5% of the total production in

the world. Almost 80% of the countrys coffee production is

exported

Coffee consumption in INDIA

Coffee market in INDIA

Potential for new coffee outlets in India

Coffee consumption in India on the rise. More than 3500 outlets in the organized sector

today. Retail brands say that more 3000 to 5000 outlets

needed. Huge demand in India needing higher

penetration.

Porters Five ForcesNew Entrants

The competition on the coffee market is quite high A unique strategy is important to attract customer

Threaths of New Entry + High economies of scale (coffee import) + Brand awareness - No special knowledge needed (using coffee machine) - Low capital requirement

Established Rivals - Mature market - Many competitors with little differentiation (CCD, Barista etc.)

SuppliersSupplier power + Low bargaining power cause many coffee bean producer (Indonesia, Brasil ,India etc.) Threat of Substitution - Tea, Hot Chocolate

Intensity of rivalry

BuyersBuyer power + Buying power of a single person is low, buy only little quantity - Low switching cost

Substitutes

Industry leader perspectives50% believe that branded chains will gain over independent operators.

62% of industry players observe decreasing spend per visit as consumers cut back on spending.

How can Starbucks profit from this growing market and the perspectives? In which direction does Starbucks have to go to Expand in India?

STARBUCKS

The Perfect Blend

Starbucks The brandCompany started in 1971 in Seattle in Washington, U.S. Leading retailer, roaster and brand of specialty coffee in the world Sells drip brewed coffee, expresso-based hot drinks, snacks, mugs and coffee beans. Made alliance with TATA to start operation in India in 2011.

SWOT-StarbucksStrength Famous brand which is associated with high quality People like Starbucks atmosphere Starbucks has many outlets and often is in high class locations Well trained and treated employees Weakness: High price products Coffee quality is not as good as reputation Aggressive expansion Unhealthy products

Opportunities: Launching new products/product extension (e.g. tea, healthy, premium, co-branding) Capturing new markets (retailing) and new consumer groups Selling more whole coffee beans and equipment Develop in non high street areas

Threats: Growing competition within the Coffee Outlet industry and new competition from Fast Food restaurants Lack of ownership of coffee farms Global crisis/financial resources

SegmentingSegments in Coffee Market India Age Coffee Starters Young Adults Middle Age Higher Age Gender Male Female (sweet, low calorine) Income Low Income Medium Income Higher Income Psychographic (coffee) Coffee as lifestyle product Coffee Lovers Coffee as drink Coffee as caffeine donor Psychographic (place) Coffee Outlet as a good place to be Atmosphere lovers Coffee outlet as a place to buy a a coffee and consume it

TargetingTargeted segmentsAge: Young adults

Customer NeedsNice place to relax, chat, chill music Trendy coffees which present their lifestyle

Age: Middle age

Place to calm down, relax, chat, read a book Possibility for a small (healthy) snack with a great coffee

Psychographic: Coffee lovers

Trendy, fresh, high quality, new developed coffee (some: fairtrade) A great third place

Psychographic: Atmosphere lovers

PositioningTargeted segment Young adults Customer Needs Nice place to relax, chat, chilly music Marketing Strategy

Trendy coffees which present their lifestyleMiddle age Place to calm down, relax, chat, read a book Possibility for a small (healthy) snack with a great coffee Coffee lovers Trendy, fresh, high quality, new developed coffee (some: fairtrade) A great third place

Starbucks The Perfect Blend

Atmosphere lovers

Possible strategic choicesReduce priceBut: Conflict with high quality standard that people expect when they buy a Starbucks coffee.

Market Development and Diversification Starbucks is already a global player and active in 44 countries worldwide9Produce more Indian flavours.

Starbucks is famous for its overall quality. The Perfect Blend is the right answer!

Goals and how to measure themShort termGoals Introduce in Indian market How to measure? Comparison with other brands

Goals

How to measure? Revenue/profit per product

Medium term

Launching new products

People stay longer at StarbucksPurchase by customer raise Reduced waiting time and better service

Average in store timeAverage purchase by customer Average waiting time at counter + survey

Long term

Goals Keep & dominate position in India Quality leader in all points

How to measure? Number 1 in market share Through Survey

RisksStarbucks as a Franchiser Can all shops serve the high standards? Will the development of coffee as a lifestyle product go on?

Will people accept to pay an adequte price for high quality products?Will actual users like the new concept or stay away?

CONCLUSIONStarbucks, its brand and products are at the Introduction stage of the PLC Change in a more and more competive market is essential. The Perfect Blend will give Starbucks a new, unique and future orientated brand image

Thank You