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Financial

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“The third place”

“The Starbucks experience.”

“Sense of connection.”

“A Starbucks you call you own.”

“We built our company in a different way. We built it on

trust.”

Positioning

Product

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Coffee House Market Analysis

MARKET FACTOR DESCRIPTION Evaluation of Attractiveness

Size $ 13.6 billion (-)Large market but dominate

by big brand

Growth -46% (-)(Negative growth rate in

USA)

Cyclicity high (-) High influence from

recessions

Seasonality None/Low (+/0) Low influence from

holiday spending

Life Cycle State Decline (-)Decline to $13.6 billion from

$25 billion last year

Five Forces Analysis

MARKET FACTOR DESCRIPTION Attractiveness

Power of customer Buyer aware of competitive offering (-)

Power of Supplier Starbucks has a degree of control over

its suppliers

(+)

Rivalry Intense; Heavy competition (-)

Threat of New Entrants High; Low barriers to entry (-)

Power of Substitutes High (-)

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Competitor Analysis

Analysis Starbucks Peet’s Coffee McCafe Dunkin Donuts

Objectives Increase lead Get foothold Overtake

Starbucks

Get foothold

Strategies Experience Quality Low price Extend coffee

Differential A Starbucks

you call you

own

Hand made

coffee

Global Brand Early-morning

coffee

SWOT Analysis

1.Brand establishment, high-end

atmosphere with an affluent

customer base.

2.Its fundamental business is

lucrative (300% on investment)

3.It generally provides quick service

4.Has strong customer loyalty

5.The organization espouses strong

ethical value.

6.Has a strong sophisticate and

highly develop supply chain.

1pricing/utility, Starbucks are

overpriced when we consider the

difference between the cost of a

cup of coffee and what Starbucks

sells it for.

2 Its ubiquity challenge the

exclusivity of the brand image.

3.Lack of quality control.

4.Seats is hard to find in city's area

store.

5.Food offer in store are not

attractive outside U.S store.

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SWOT Analysis

1. Opportunity to branch out

beyond coffee, due to favorable

brand image

2.International growth market such

as China UK India Brazil Japan

3.Opportunity to success in instant

coffee market and capture

significant market share from the

competition

4.hard working life style is a factor

that drive people drink more coffee

1. Increased competition

2. Recession

3. Financial crises, lone, dept

4. Further price rise can influence

customer to consider the Latte

Factor

5 Rising in milk, coffee beans

and other supply

6. Copy-cat stores

7. Healthy food and organic

trend

Should Starbucks try to meet market and

shareholder expectations by

continuing to expand or by reconsidering more immediate concerns ?

Had the company reached a crisis in

branding, its ubiquity and over-exposure

challenged its down-home appeal ?

Lost in customer loyalty?

Problem Statement

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Continue to Expand?Focus on more immediate

concerns?

Decision Time: Market Expectations are High,

Should Starbucks…

Is this world half-full of Starbucks

or half-empty? Unhappy Baristas and

Recruiting Difficulties

$$$$

Major financial

restructuring, global

recession and rising

commodity prices

Threat of competition

OR

Alternative Strategies

World Domination

• Continued Domestic and International Expansion

Licensed to Thrive

• Limited International Expansion: China, India, Russia, SE Asia

• Licensing model

No Place Like “Third Home”

• No Expansion

• Focus on customer experience

Tea Time

• No Expansion

• Focus on expanding high-margin tea business in Asia, Europe and Americas

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Critical Issues

• Brand Affinity: Brand is recognized and respected as a Best Place to Work,

―Starbucks Family,‖ environmentally friendly, ethical.

• Competitive Advantage: In-store/coffee-house experience, consistency and

customer loyalty.

• Financial Impact: Revenue potential, operational costs, need for additional

working capital.

• Alignment With Organization Mission: ―To inspire and nurture the human

spirit— one person, one cup, and one neighborhood at a time.‖

• Ease of Expansion: Market access, hiring good talent, finding licensees.

Alternative Analysis

Critical Issue Weight World

Domination

Licensed to Thrive “Third

Home”

Tea Time

Brand and

Reputation

0.3 4 (1.2) 9 (2.7) 10 (3) 8 (2.4)

Competitive

Advantage

0.25 7 (1.75) 7 (1.75) 10 (2.5) 9.5 (2.38)

Financial

Impact

0.25 4 (1.0) 7 (1.75) 4 (1) 6 (1.5)

Mission 0.1 3 (0.3) 3 (0.3) 6(0.6) 4 (0.4)

Ease of

Expansion

0.1 2 (0.2) 6 (0.6) 5 (0.5) 5 (0.5)

Total 1 (4.45) (7.1) (7.6) 7.18

Scale: 1=Negative Impact, 5 = Neutral Impact, 10 = Positive Impact

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Recommendation: Restore Starbucks as the

―Third Home‖ of Choice (Stores)

Store Interior Design Contest ―What Does YOUR Starbucks

Look Like? (test ideas like ―flagship‖ stores, family style seating)

Brighter, ―Green‖ Lighting: energy savings, easier to work and read.

―Customer DJ‖: Customer requests play over store PA.

(Overt – i.e. VIA) Marketing Free Zone in store. Create

direct marketing campaign.

Recommendation: Restore Starbucks as the

―Third Place‖ of Choice (Partners)

Engage: “Hear from Howard” employee webcasts with ―live‖ Q&A.

Equip: Regular virtual and in-store training.

Recognize: ―Employee of the Month‖ pictured for each store location

online.

Involve and Reward: Partners can submit product ideas to win cash

and charity donation.

Referral Bonuses: Increases recruiting pool and gives employees

(trusted source) reason to spread image of ―Best Place to Work.‖$$$$

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Recommendation: Restore Starbucks as the

―Third Place‖ of Choice (Customers)

Stay Awhile: Happy Hour from 4-6 with specials on coffee drinks

and selected food items.

Let Us Serve (With) You: All Expense Paid Service Trip opt-in

promotion based on annual card spend.

Donate Points: Donate points to Starbucks supported charities for

yourself or as a gift.

Recommendation: Restore Starbucks as the

―Third Home‖ of Choice

• Brand Affinity: Central focus is on brand restoration as a neighborhood locale and

―your home,‖ not an ubiquitous chain. Enhances brand recognition and respect as a

Best Place to Work, ―Starbucks Family,‖ environmentally friendly, ethical.

• Competitive Advantage: Return to the roots of a consistent ―Starbuck’s Experience‖ –

which helped drive the now infamous customer loyalty.

• Financial Impact: Increase in revenues and cash flow from store closings vs. financial

outlay to refurbish store environments. Spend money on environment now to retain

customers and attract new when recession ends.

• Ease of Expansion: No need to access new markets (find real estate, foreign legal

issues), focus on attracting and retaining smaller, more committed talent pool.

• Alignment With Organization Mission: Getting back to inspiring the human spirit by

centering on customers and employees and returning to a more of a local feel.

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Example

• to retain loyal customers and create new ones.Goals

• Increase traffic to the stores and improve sales by 10%

• Generate sale of 50,000 Starbuck cardObjective

The Objective and Goals of this direct marketing plan are to solve the main problem:

decrease in sale and customer loyalty issue.

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College student and

Urban professional

Existing Starbucks Card holder

Target and Media

Face

bookTwitter

Direct Mail

Offer: Happy hours 15% discount (between 2-4 p.m. or 4-6 p.m. ) ; random

tweet and post 3 days a week

+

Offer: Free dink for Card holder and 5 of their friend who purchase Starbucks Card

New product

information and

coupon with

unique No. for

each member

Thank you for support

Starbucks

1 FREE drink for you

With Starbucks Card purchased

1 FREE drink for friend

With Starbucks Card purchased

1 FREE drink for friend

1 FREE drink for friend 1 FREE drink for friend 1 FREE drink for friend

With Starbucks Card purchased With Starbucks Card purchased With Starbucks Card purchased

Customer code: xxxx1 Customer code: xxxx1 Customer code: xxxx1

Customer code: xxxx1 Customer code: xxxx1 Customer code: xxxx1

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Direct Mail (in the back)

The more you come in to

Starbucks, the more we’ll

reward you.

We want to say “thanks” for coming into

our stores and using a registered

Starbucks Card. With My Starbucks

Rewards, you'll earn 1 Star every time

you pay with your Card. And as you

collect Stars, you move up to bigger

benefits

Starbucks card Benefits

A Free Drink on your

Birthday

Free Wi-Fi – Up to 2

Continuous Hours a Day

Starbucks card Benefits

A Free Drink on your

Birthday

Free Wi-Fi – Up to 2

Continuous Hours a Day

Starbucks card Benefits

A Free Drink on your

Birthday

Free Wi-Fi – Up to 2

Continuous Hours a Day

Starbucks card Benefits

A Free Drink on your

Birthday

Free Wi-Fi – Up to 2

Continuous Hours a Day

Starbucks card Benefits

A Free Drink on your

Birthday

Free Wi-Fi – Up to 2

Continuous Hours a Day

100,000 pieces of direct mail customer share with 5 people

Direct Mail

=

500,000 offer

+

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Twitter and Facebook

Happy Wednesday, Today our Happy hours is

between 2-4 p.m. 15% discount on specialty

espresso just mention “Twitter Promo”

random tweet and post 3 days a week

Happy Monday 15% discount

start between 4-6 p.m.

Facebook Only

Happy Monday, Today our Happy hours 15%

discount on our satisfying Frappuccino started

between 4-6 p.m. just mention “Facebook

Promo”

Sharing content that showcases Starbuck

expertise to create value for followers

There’s No Place Like Home…Except

Starbucks.

+ + =

Return to the

Starbucks

Experience

Engaged,

Equipped

Partners

Loyal, Satisfied

Customers

$$$$

$$$$

$$$$

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