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MANAGING A HIGHGROWTH BRAND
Presented By-Mohit GoyalNiveditaSamrendraVipul Gupta
From Bean to Cup
•In early years– Founded by Jerry Baldwin, Gordon Bowker, & Zev Siegel in
1971, in Seattle
– Early name was Starbucks Coffee Tea and Spice
– Sold only whole-bean coffee and coffee brewing machine
• In 1980’s– Howard Schultz became CEO and renamed it as Starbucks
– Re-image from only selling beans to be a coffeehouse
Starbucks in the Cup
•From 1990’s till now– 13168 retail outlets worldwide
– Business expansion into food, ice-cream, tea, RTD business, credit cards, music and film
Starbucks mission statement
“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.”
Starbucks’ Culture
•Great work environment
•Embrace diversity as an essential component
•Apply the highest standards of excellence
•Develop enthusiastically satisfied customers•Contribute positively to community and environment
Case About
•Managing the rapid expansions of the brand
•Sustaining the core values in the face of this
expansion
Rivalry:Dunkin Donuts, Caribou coffee, Tully’s Coffee, Wal-Mart etc.
Rivalry:Dunkin Donuts, Caribou coffee, Tully’s Coffee, Wal-Mart etc.
New entrants :Low & medium entry barrier
New entrants :Low & medium entry barrier
Buyer’s:People with different age group
Substitutes:Tea, juice, soft drink, milk, Alcoholic drink,
Supplier:Farmer-collector-miller-importer-Specialty coffee
seller,
5 Forces Model
Story/Event
•Low barriers facilitating new entrants
•Medium bargaining power of suppliers
•Lot of substitutes like tea, ice-cream, juices
etc
Symptoms
•Lifestyle classification bases (Psychographics)
•Saturated domestic market
•High cost of new expansion & internet
process
Problems
•Deviation from the core values
•Difficult to maintain balance between various objectives
•Failure of diversified products
Issues
•Sustaining the core values
•Finding out a right balance between product, people, values and sales
•Closely monitoring the relationship with employees and customers
Actions Taken
•Constant innovation•Strategic alliances•Vertical integration•Corporate social responsibility•Following the Brand Mantra•Creation of a “third place
Ultimate Starbucks Experience
Actions To Be Taken
•Pull out unrelated diversification•Focus on being on top in coffee business•Semi- automated coffee machines
Brand
•Was inspired by Starbuck, Classic American Novel “Moby Dick”
•Logo included a mermaid in woodcutting style
Value
•Quality-1st preference
•Premium European coffee experience to USA
•Value simplicity over technology
•Investing in innovation•Employees as partners and the most important assets
Brand Equity
BrandKnowledge
BrandImage
BrandAwareness
BrandRecall
BrandRecognition
Favorability of brand association
Uniqueness of brand association
Strength of brand association
Types of brand association
Attributes
Attitude
Benefits
Non product related
Product related
Functional
Experiential
Symbolic
Price
User Image
Brand Personality
Feelings & Experience
Awareness
•Word Of Mouth
•Partnerships
•New channels
Image
•Premium coffee beans
•Brewing techniques
•Store design
•Italian elegance and American informality
•Artwork and Music
Associations
•Type of Brand Associations
– Premium coffee
– Consistently good customer service– A classy romantic atmosphere that meets the 5
senses
Associations
•Strength- To be a lifestyle brand
•Favorability- Coffee enthusiastic
•Uniqueness- Not entirely unique
Why is so successful?
•1st to introduce Italian coffee house with premium coffee to the American market
•Organic growth
•Partnerships
Drivers to Future Growth
•Expanding core retail opportunity worldwide
•Continued to innovate
•Expanded customer base
•Increased average unit volumes
•Leveraged Starbucks brand in other products and channels
•Didn’t use advertising at all
Growth Strategies
Ansoff’s Matrix
Market Penetration
Market Penetration
DiversificationDiversification
Product/ service Development
Product/ service Development
Market Development
Market Development
Product
Mar
ket
NewCurrent
New
Curr
ent
Growth Strategies
Market Development– Introduction of automatic espresso machine
Disadvantages•Physical barrier b/w Barista and customers•Coffee taste is not traditional•Coffee machine blocks sightline
Advantages•Convenient for Barista•Less time consuming•Less human error
Brand Strategies
Diversification
Line Extension
Line Extension
NewBrandsNew
Brands
Brand ExtensionBrand Extension
Multi BrandsMulti Brands
Product
Bra
nd
NewCurrent
New
Curr
ent
Brand Strategies
New brands– Barista– Ethos water– Frappuccino– Tazo– Joe Magazene
Brand Strategies
•Frappuccino– RTD coffee in can and bottle– Partnership with Pepsi– First Starbucks’ product in supermarkets
• Tazo– 3 types of teas- black, green & herbal– Attracted new customers who look for alternatives
to coffee
Brand Strategies
•Barista– Variety of coffee machines-espresso and
grinders– Sold online and in retail stores
•Ethos Water– Social mission– Clean water advantage to customers
Brand Strategies
Brand Extensions
•Espresso Coffee– Come in light & normal espresso
•Ice-cream– Come in containers and bars with different
flavors
Brand Strategies
•Coffee Blend– Mild, medium, bold & extra bold– Sold in Starbucks stores & supermarkets
•Coffee Liquor– Combination of Starbucks coffee & premium
spirit– Sold at restaurants, bars & liquor shops only
Brand Strategies
•Credit Cards– Make it easier for customers to purchase– Combined Starbucks card and credit card
•Starbucks Entertainment– Investment in film industry– Custom-made CDs in stores
Non Coffee Related Business
•Advantages– Increased brand awareness– Improved brand image– Enhanced parent brand
•Disadvantages– Lost brand identity– Lost core value– Frustrated customers
Partnerships
•United Airlines (to provide best services to the passengers)– 3600 flights a day, 855 destinations in 155 countries– 14% Starbucks customers had their 1st Starbucks
coffee in UA flight
•Kraft (for distribution network)– Starbucks coffee beans are distributed by Kraft in
North America
Partnerships
•Pepsi (to increase brand awareness & innovative product
development)– Created ready to drink coffee in cans & bottles– Under Frappuccino trademark
•Marriot (to increase brand awareness)– Airport concessions– Hotel lobbies & Malls
World Class Global Brand
Judgment
Resonance
Feelings
Performance Imagery
Salience
•What about you and me?
•What about you?
•What are you?
•Who are you?
Starbucks- Global Brand
•Production and distribution
•Marketing costs
•Power and scope
•Consistency in brand image
•Sustainability of core competencies
•Uniformity in controlling and co-ordination
Obstacles
•International Starbucks stores were not profitable
•Consumer needs and wants in various cultures
•Consumer response of marketing mix
•Different stage of brand life cycle
•Legal environment
•Administrative procedures
In American Market
•Increasing of direct competitors
– Dunkin Donuts, McCafe, Gloria Jean’s, Carbon Coffee
•Aggressive global marketing strategies
•Focus on overseas growth & brand development
The Biggest Threat
•Dunkin DonutsThe world largest coffee and baked goods chain
7000 shops worldwide
5300 stores in 34 states of America
Thank You
Starbucks Corporation