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Group 3
StarbucksPresented by:
It's bigger than coffee
Introduction to Starbucks
Company started in 1971 in Seattle, Washington named “Starbucks Coffee, Tea, and Spice”
by Jerry Baldwin, Zev Siegel & writer Gordon Bowker.
Starbucks offered exceptional coffee drinks and dark-roasted coffee beans and coffee-making equipment .
A dominant retailer with over 1500 stores in North America and new ones opening at a rate of more than one per day.
Introduction to Starbucks
Went public in 1992 and its stock price increased nearly nine fold.
The company had the best real estate team in the coffee-bar industry and thus acquired the best retailing sites for its stores.
Company's retail sales mix came from food items, coffee equipments and music cd’s apart from coffee beverages which formed the major chunk of the mix.
At present, Starbucks is the largest coffeehouse company in the world, with 19,972 stores in 60 countries.
Starbucks- Way Ahead
PRODUCT SUPPLY– Special efforts were made to secure top-notch coffee
i.e. building relationships , checking on agricultural conditions .
ROASTING COFFEE BEANS– Experienced personnel monitored the process.– If standards not match the whole batch was rejected.
MAIL ORDER SALES– Distributed six times a year.– Electronic store on the Internet
Building a Top Management Team & Employee Training
Workforce composition
• 80 % white• 85 % high school graduates with average age of
26
Training of Baristas• At least 24 hours training in the first two to four weeks.• Coffee history & knowledge, drink preparation, customer service
and retail skills
Training of Baristas• "Brewing the Perfect Cup."• Dissatisfied customers with a Starbucks coupon that entitles them
to a free drink.
Management trainees attended classes for 8 to 12 weeks. Their training went much deeper.
8 to 10 weeks before opening a new store in new market, the company placed ads to hire baristas and begin their training.
A Star team is used for providing store-opening effort, one-on-one training and orientation sessions at Starbucks Coffee School in San Francisco.
Other Insights Stores did about half of their
business by 11 am. Baristas became familiar with
regular customers, learning their names and their favorite drinks.
STARBUCKS- Personality
STARBUCKS demonstrates a “persona” that extends well beyond their brand’s functional benefits.
Starbucks is outgoing, youthful, personable, and friendly…a refreshing escape, freshness, warmth, and comfort.
It is demonstrated through their service interactions, their packaging, their décor, their product offerings, and their corporate culture.
Sophistication
Excitement
Sincerity
Personality Dimensions
Brand Personality
Starbucks’ signature music cues a multicultural personality … one that doesn’t just fade into the background. You hear it you’re aware of it.
Additionally, their merchandise drives both their brand identity and the unique flair.
‘Interesting Inviting Personable’
Brand Personality-Role of COLOURS in Logo
GREENSecure, Natural, easygoing, relaxing WHITEGoodness, Purity,Refined,Sophistication
Starbucks Brand Positioning
Brand positioning is about how we want target customers to think about a brand with respect to competitors
Components of Brand Positioning
Competitive frames of Reference– Nature of Competition– Target Market
Develop unique brand points-of-difference (POD’s)
Establish shared brand points-of-parity(POP’s)
Brand mantras– Short 3-to-5 word phrases that capture key POD’s &
the irrefutable essence or spirit of the brand.
Competitive frames of Reference
Nature of Competition– Earlier with local coffee houses.– Direct competition: Caribou,
Dunkin' Donuts – Indirect Competition: Mc Donald
(McCafe`) and Burger King.– “The third place is the other place you
wantto hang out besides your first place(your home) and your second place (your work)”
Perceptual MapExperience
Cost
7 Eleven
Dunkin’ Donuts
Mc Donald’s
Starbucks
Caribou
Competitive frames of Reference
Target Market– People who live
somewhat hectic lives– Who believe in only
getting the best in tasteand quality.
– Target audience is between the ages of eighteen and forty-five
– “Discerning Coffee Drinker”– Desire for better coffee and a better
consumption experience
Points of Parity
Great-tasting coffee Reliability Speed Convenience Cleanliness Community
Points of Difference Quality: Exacting standards of
quality and flavor Variety: Varied and exotic
coffee drinks Customization: Over hundred
different coffee drinks Experience: Rich and Sensory
Aroma and Ambience Image: Friendly Service Freshness: Top-notch coffee
beans (Back-end Collaboration)
Rules: “Aroma First Rule”
Brand Mantra
“Rich, rewarding coffee experience” A third place Best of Class The Human
Connection Rewarding
Everyday Moments A Great Cup of
Coffee A consistent, inviting, stimulating
environment
Will Starbucks Succeed in
India ???
A story of Ifs and Buts
Right Partner!!!
Market Opportunity
A traditionally tea-drinking nation
The growing middle class
21%
79%
Organized
Unorgan-ized
“Coffee is perceived as a western, cosmopolitan luxury in many parts of India”
Market Size: $ 667 MnExpected CAGR: 30%
The China Story
Sustainable Model of: “Low Sales Volume; High Profitability”
“Lifestyle Coffee Drinking“
Need to maintain theimage of“An Aspirational Brand”
Costa Coffee India Head: “Does not believe they need to offer Indian food, rather Western food tailored for Indian pallets”
Some Additional Thoughts…
Problem of a plenty in India• 1200 outlets, a new outlet every third
day• Over 200 cafes• 95 outlets, aims opening 300 more in
next 3 years
“Perceived Price Effectiveness”
Pricing - Factors to Consider
Strategy in China: Profitability– Only 550 stores in 13 years– Designed for Longer Stays
Indians ready to spend Rs.39 at McCafe to upwards of Rs.300 at Coffee Bean & Tea Leaf
Starbucks seen as an Aspirational Brand in developing countries
Pricing for India
BrandPrice Range in USA
($)
Price Range in India (Rs.)
Regular Joe - 1.92Coffee – 70 to 90Cold Coffee – 90 - 120
$3 – $5.50 150 to 300
Frappe - $2.29 to $3.29
39-45
NACoffee – 52 to 78Cold Coffee – upto 120
Regular Joe - 2.25Frappuccino – ~$5.50 ????
Strategy so Far According to John Culver:
– Price according to where the market sits and the premium experience Starbucks offers
– Not restrict to five star locations but considering Railway Stations and University Campuses too
To launch a new premium brand of tea “Tata Tazo”
Expected to start operations in Mumbai from October end
Strategy So Far Will source most of its coffee
through Tata and save on 100% duty
Coffee accounts for about 40-45% of the costs
Experts expect an average price of Rs.125 (Forbes)
Deal with Tata for food expertise through TajSats (the airline catering arm)
Thank You!