STARBUCKS

AAKASH ARUN HARITHA PRASANTH PRAVEEN PUSHPENDER RITOBAN SUHAS VIGNESH

Quote Were not in the coffee business serving people Were in the people business serving coffee -Howard Behar Director of Retail Operations

Company Background
Founded by Jerry Baldwin, Zev Siegel and Gordon Bowker in 1971 in Seattles Pike Place Market Purchased by Howard Schultz in March 1987 and transformed into what we see today Intention to create a business that does the right things for the right reasons and is financially successful

Guiding Principles
To support their mission statement the following six guiding principles help guide the appropriateness of decisions
:

Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment.

Corporate Strategic Goals Growth

Number of stores Increase Net Revenue

Preserve the Starbucks Experience Be a Leader in Corporate & Social Responsibility

FACTORS ACCOUNTING FOR THE EXTRAORDINARY SUCCESS OF STARBUCKS

THE CONCEPT - A private retreat between work & home - A sanctuary - A place to gather & connect - Safe & comfortable

 THE FEELING - Customers get to know each barista - Share a common affection for the place - Employees are intuitive & sometimes sit with customers & solve their problems
QUALITY - Highest Quality fresh roasted whole bean coffee

 THE PRODUCT
- They purchase the best green beans in the world - Careful Selection process for coffee - Coffee buying team evaluates over a 1000 samples each year

 THE RELATIONSHIP - Coffee buyers travel 18 weeks / year to countries of origin - To strengthen relationships with growers & suppliers - They continue to learn about coffee - They get the first pick of best crops worldwide

 THE IN STORE EXPERIENCE - A combination of People Product Place Brand - Fosters repeat purchase & loyalty - Served with a smile

 EXPLORE NEW OPPORTUNITIES - Always on the look out - Mail brochure - Catalogue for demographic groups - Toll free number

 THE MARKET - Creating & Adapting to new market places it enters without tampering with the basic product - Opening additional stores to increase its market share
THE STORES - Culturally sensitive store designs

 THE PEOPLE - The company culture that cared about its employees - Value relations employees have with customers - Value trust staff have built with customers - Superior customer service - High degree of customer loyalty

 THE SALES - It is necessary to assume intelligence - It is necessary to assume sophistication - It is necessary to inform the eager to learn - This appeals to far more people

 THE AMBIENCE
- Clean - Well maintained TECHNOLOGY - Flavor Lock Bags to maintain freshness INTERNATIONAL EXPANSION STRATEGY - Joint ventures with local retailers

What was the value proposition that Starbucks offers to its customers/it has created for the customers??

The Starbucks Value Proposition 1. Ambience 2. Customer intimacy 3. Coffee quality 4. Service 5. Partner satisfaction

Ambience
Starbucks Americas third place Starbucks idea changed the norm from buying coffee as a drink to the experience of enjoying coffee. a place where people can enjoy their social interactions, relax, or just spent some time by themselves.

Customer intimacy Starbucks really offers is your coffee a product made just for you. Starbucks employee takes the time to ask you about all the custom features you want in your coffee (type, size, milk-type, addins, etc.)

Coffee Quality companyowned stores No franchising. Full control of quality of its products and services. Control over Supply chain for high quality.

Service Employees were trained on both hard skills and soft skills. created a friendly environment for customers who felt special. customer satisfaction.

Employee/ Partner Satisfaction highest paid hourly workers. stock options lowest employee turnover high employee satisfaction rate

Starbucks value proposition is not about coffee, it is about the experience of drinking coffee in a Starbucks store integrating the product with the emotional benefits.

Can the mix of product, place and experience work in India?

Mix of Product Product-mix expanded Coffee is not consumed alone, it goes with food Product offerings have also expanded beyond pastries and coffee

Tea offerings high consumption like, Full Leaf Tazo Tea Lattes Tazo Tea Infusion

Place Any neighborhood where there is a perceived high traffic for its stores Be found in-store of various large chains Individuals that are on the go and for those who enjoy reading or listening to music. Stealth outlets

Experience Starbucks is a company that has differentiated itself by convincing consumers that it is selling more than a cup of coffee. like, public relationship, community activities and climate change. Coffee has gradually moved to be a social drink Keenness to indulge in the western culture

Pre Launch Road Map

Pre launch

Research Phase
Promotion Phase

Research Phase
The research phase will include
Defining the Target Groups Selection of a suitable location

Youth

16-35

Upper Class/Upper Middle Class

Tourists

Defining the Target Groups

Location
Location
Delhi
Connaught Place Shopping area Near to IT firms Tourist Pace

Mumbai
Nariman Point Near to gateway of India Hub for IT & Call Centers Presence of Colaba region

Bangalore
Cunningham road Posh area Presence of malls & branded stores Garden city

Promotion
Promotion
Mystery Ad Creation the emphasis will be on generating a curiosity among the public that a new product is coming. The message will contain the brands values as well as testimonials of customers across the world, the main feature that we will not disclose the name of the brand Disclosure of the name will take place in accordance to the opening of stores, so that people can enjoy and cherish at starbucks. The whole campaign will be for a 30 days tenure

Road Map

Post Launch

Features That Need To Be Developed After Pre-Launch Perfect Cup Of Coffee Third Place Customer Satisfaction Creating a Community Smart Partnerships Innovation

The Cutting-Edge Program Launch of the StarBucks Prepaid Card Innovative Strategy Such a Program Launched in India will ensure an immediate Connect with people

Road Map Future Prospects Launching Starbucks in Tier-2 Cities Tie-ups Franchising

Major Forces that determine Indian Coffee Industry Attractiveness

Porters Five Forces Model
Rivalry among Present Competitors-Indian Coffee Industrys attractiveness primarily based on competitors like Barista, Caffee Coffee Day and Qwikys Threat of New Entrants-Fast food Retailers like Mcdonalds are trying to enter the market by serving coffee along with milk-shakes and ice-creams.

Contd..
Bargaining Power of Suppliers and BuyersSignificant negative growth in the urban low income class and salaried middle class contributing to growth of consumer market Dramatic change being noticed in a primarily teadrinking nation By 2005 India would be home to 5000 coffee houses

Starbucks
Industry attractiveness of Starbucks mainly based on
1)Product 2)Location/Place 3)The People

International Expansion-Already expanded into Japan

Now setting sights on China and India which are not major coffee consumers

Opportunities in developing market

Japan market
Star bucks has started in searching new areas of growth following a deep retrenchment in the US in the past year.
Japan is Starbucks's biggest market after the U.S. and Canada Overall sales in Japan for the current fiscal year that ended on March 31 is forecast to have stayed flat at 96.4 billion yen ($1.03 billion) from the year before

In Japan , where coffee drinking is long popular a coffee cost 100 yen which is a challenge for star bucks to retain customer as the cost is three times as much.
Star bucks Japan , which is a joint venture with sazeby league , a Japanese retailer launched a promotion offering customer a 2nd cup for 100 yen if they purchase a coffee beverage earlier in that day

China market
Star bucks china is counting on selecting high-visibility , high traffic , caf locations that they market themselves. Sales per customer higher in china than in US In china coffee is not consumed alone , it must go with food. Patterns are shifting in India and china due in part to the changing consumer aspirations and to indulge in western experience Star bucks have captured a niche market early in china

Indian market
In India the high income class have been growing at the rate of 19 % Middle income class have been increasing in size Double income household are expected to increase from 13% to 35% which is an indication of tremendous spending power Branded coffee retailing in India its at the beginning stage of growth Coffee as gradually moved to a social drink

Consumer spending patterns have changed giving rise to large opportunity in retailing branded hot beverage Indian coffee board has estimated 2015 India would be home to 15000 coffee houses Key players like barista , cafe coffee day and Qwikys have to be taken onto account on issues like pricing, customer loyalty, quality of products etc

Controversies
Marketing strategy : They are accused of various anti-competitive practices like buying out of competitors leases at loss and clustering it in a small geographical area Labor disputes : Notorious for violating labor laws. Accused of not being employee friendly Opening stores without persmission : Starbucks has been accused by local authorities of opening several stores in the United Kingdom in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks therefore encounters the difficult scenario whereby local authorities interpret the guidance in different ways Alleged relationship with Israeli Military : Howard Schultz, was awarded The Israel 50th anniversary Tribute award and the controversies followed

Quotes by artists, writers, scientists and others have appeared on Starbucks cups since 2005 in a campaign called "The Way I See It. Some of the quotes have caused controversy, including one by writer Armistead Maupin and another by Jonathan Wells that linked 'Darwinism' to eugenics, abortion and racism. Coffee quality: The March 2007 issue of Consumer Reports of American fast-food chain coffee called McDonalds Premium Roast coffee to be "cheapest and best", beating Starbucks, Burger King and Dunkin Donuts coffee. The magazine called Starbucks coffee "strong, but burnt and bitter enough to make your eyes water instead of open. Starbucks was wasting millions of liters of water daily, through a policy that mandated a constantly running tap in each store worldwide. Starbucks claimed the "dipper well" with the running tap was there for sanitary reasons. This dipper well has since been removed from most stores worldwide in favor of a model that does not require constantly running water