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Starbucks Coffee Company

:
An Integrated Marketing Communications Plan

April 2006

Prepared for:
Starbucks Coffee Company
W. H. Evans

Prepared by:
Sophie van der Vecht
Neni Pogarcic
Hidde van der Dussen
Tim Ensing
Dan Mackinnon
Lucia Suchankova

Table of Contents

Executive Summary .................................................................................................................3
Introduction ...............................................................................................................................4
Mission ......................................................................................................................................4
Product ......................................................................................................................................5
Price...........................................................................................................................................7
Place ..........................................................................................................................................7
Promotion ..................................................................................................................................9
Competitive Analysis ...............................................................................................................9
Customer Profile .................................................................................................................... 17
SWOT Analysis ..................................................................................................................... 18
Segmentation ......................................................................................................................... 22
Targeting ................................................................................................................................ 23
Positioning ............................................................................................................................. 23
Financial Analysis ................................................................................................................. 23
Advertising Plan .................................................................................................................... 26
Definition of the Problem/Challenge ............................................................................... 26
Research results ................................................................................................................. 27
Advertising Objectives .......................................................................................................... 29
Strategy: Media Plan ............................................................................................................. 30
Mix ..................................................................................................................................... 30
Frequency........................................................................................................................... 31
Cost insertion ..................................................................................................................... 32
Flighting ............................................................................................................................. 32
Strategy: Creative .................................................................................................................. 32
Creative platform............................................................................................................... 32
Big Idea .............................................................................................................................. 33
Appendix A:Price of a Starbucks tall latte........................................................................... 34
Appendix B: Map of Downtown Amsterdam...................................................................... 35
Appendix C:‘Marketing to Youth’ exerpt............................................................................ 36
Appendix D: Average Statement of Earnings ..................................................................... 37
Appendix E: Amsterdam Pro Forma Statement of Earnings .............................................. 38
Appendix F: Pro Forma Balance Sheet ................................................................................ 39
Appendix G: Amsterdam high and low forecast Statement of Earnings ........................... 40
Appendix H: Advertising Pyramid ....................................................................................... 41
Appendix I: Creative Series 1 ............................................................................................... 42
Appendix J: Creative Series 2............................................................................................... 44

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen, April 2006
Tim Ensing, Dan Mackinnon, Lucia Suchankova

Executive Summary

We have investigated the possible launch of the Starbucks Coffee Company
in the Netherlands, where we tried to combine the Starbucks’ ‘way of doing’
with the local Dutch market. Our mission therefore is to successfully
introduce while paying attention to the Dutch needs and expectations.

The standardized Starbucks products will be used such as coffee, tea, and
merchandise, except for the pastries, where we strive to localize to better
integrate with the local market. The products will be premium priced,
according to the Starbucks strategy. As a result, Starbucks will be
established as a premium brand. The first store will be opened in Amsterdam
in a promising and popular area under the local community. After this we
want to expand in Amsterdam and other major cities in the Netherlands.
Although Starbucks will have to compete with several other coffee
companies, our research shows that Starbucks has a strong affection with
the potential customers, even though the competition scores better in some
aspects. Through our premium name, we want to secure this preferred
position.

The target market, and therefore the customers that will visit Starbucks
Amsterdam, fit the profile of traditional Starbucks customers in other cities.
The Netherlands are very diversified as are the Starbucks customers and
therefore we expect a quick acceptance in the Dutch market, even from
potential customers who still do not know Starbucks.

Starbucks should segment the market in the future through demographic and
behavioral segmentation, and apply differing strategies to appeal to each
segment.

The financial expectations are positive, Starbucks Amsterdam expects a
profit in its second year, and it should take around 4 years to pay off the
investments and losses which will be generated in the first year.

In terms of an advertising plan, the main initial goal is to gain awareness
throughout the primary and secondary target markets. This will be achieved
through a variety of mediums, including posters and billboards, newspaper
ads and the internet. The creative strategy aims to create awareness through
excitement and pride about living in Amsterdam, a ‘city on the map.’

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen, April 2006
Tim Ensing, Dan Mackinnon, Lucia Suchankova

Introduction

This marketing plan is going to investigate the possible launch of Starbucks
Coffee Company in the Netherlands. We will focus primarily on marketing and
advertising, in which we want to develop a possible plan and try to forecast
the success of this store.

We want to state clearly that this plan will be based on existing Starbucks
information, combined with our observations and knowledge of the
Netherlands. We think that the Starbucks strategy, mission and action plan
are very good. Otherwise there is no way that a coffee company would be
this well-known and this popular. That is why we will change small aspects of
the whole existing strategy and adapt this to the Dutch market. The Dutch
market has some special characteristics which will not accept the ‘American
way of Starbucks’. Although somewhat exaggerated, the following can give a
clearer understanding of the Dutch culture:

The Dutch care very much about the environment and see social
responsibility as an important factor. The Dutch do not have a
coffee-house culture, even though they like coffee a lot. This is
translated in our opening hours of bars and coffee places, that
go from late in the morning, until late in the evening. The Dutch
do not usually spend money very easily on food and beverages.
The Dutch respect good service, and they love special discounts
even if it’s just for a specific group (the students for instance),
and they do not see as a negative aspect.

Mission

Our mission is to introduce Starbucks to the Netherlands by opening a test
store in Amsterdam. We will focus on making our Amsterdam store
successful by adapting to the needs of the local customers while keeping the
core Starbucks strengths intact. This store will set a positive example of
corporate social responsibility by adhering to our high environmental
standards and create a positive experience for customers to create repeat
business.

Objectives

• To have first year revenues of €450,000
• To keep first year operating expenses below €300,000
• To earn a profit in the second operational year
• To have an average occupancy rate of 75% in the first year
• To have a first year market share of 15%
• To have first year average invoice of €5

Sophie van der Vecht, Neni Pogarcic, Hidde van der Dussen, April 2006
Tim Ensing, Dan Mackinnon, Lucia Suchankova

these snacks are for some American Starbucks customers actual breakfast products. are also direct consumption products. Product The Starbucks ‘product’ can be divided into actual tangible products (which can be further divided into direct consumption products and merchandise products) and an intangible service part. Other drinks. one should never change a winning formula. For instance. because then Starbucks would run the risk of becoming like ‘others’. Dutch people are known to be a bit closed and breakfast and lunch moments are seen as private moments of quality time. In other words Starbucks should keep its identity and make slight adjustments to serve the Dutch market best. as they are very popular in the Netherlands to go with a cup of coffee or tea. Sweet products should never be promoted as lunch products as they are normally seen in the Netherlands as snacks as opposed to lunch food. the situation in Amsterdam. the Netherlands is quite different than in the United States due to cultural and behavioural differences. The products will be described first. Neni Pogarcic. later on the service aspects of Starbucks will be explained. In other words. April 2006 Tim Ensing. Products that could be served as lunch could be healthy sandwiches and salads. Hidde van der Dussen. Moreover. That is what the chain is known for. Different sorts of cakes could also be added. cake and other snacks that are alike. It is wise to slightly adapt the Starbucks formula to fit the Dutch market. Evidently. Donuts and muffins could easily stay in the product portfolio. Sophie van der Vecht. Dan Mackinnon. However. These products are quite popular and frequently ordered by customers to go with a cup of Starbucks coffee. One of the reasons for the success of these side snacks is the American culture of having breakfast and lunch outdoors. without adapting anything. this group of Starbucks products should remain the same as they (especially the coffees) carry the absolute essence of Starbucks. but this should not be overdone. When launching Starbucks in Amsterdam. On the other hand. snack products could become a bottleneck as sales could be disappointing. the main product of Starbucks is coffee. also for business people. an adaptation within this snack product category should be made to fit Dutch quality standards. like tea and soft drinks. but they should not be characterized as breakfast or lunch products. Needless to say. this product category poses a challenge as the objective is to launch Starbucks in the Netherlands and serious decreases in any of the product categories could seriously harm this ambitious goal. When launching the Starbucks location in Amsterdam. Lucia Suchankova . All different coffee variations are part of their product portfolio. behaviour and culture. Another important group of products that are directly consumed within Starbucks are small snacks. muffins. Starbucks chains in the United States for instance are known for the fact that they also serve donuts. the side. They should be seen and promoted as side snacks.

This intangible atmosphere is supported by certain tangibles like comfortable couches and big lounging chairs. give customers that frequently order coffee at Starbucks the opportunity to save certain saving units (for instance ‘Bucks’) in order to get free merchandise (for instance a free coffee mug). like coffee mugs. Ironically.Another product category consists of the products that are not immediately consumed at the spot. home-like atmosphere that invokes social interaction (which is beautifully characterized by the American hit television series ‘Friends’). all ‘customization’ of the coffee and tea is done by the customers themselves at specially designed corners with sugar. April 2006 Tim Ensing. This link is given shape by the possibility of launching a saving and bonus system. Maybe there lies an opportunity (an alliance with for instance Max Havelaar or other well-known fair trade coffee producers) within this area for Starbucks. This creation of tangibles is very important as it makes the intangible atmosphere ‘tangible’. Hidde van der Dussen. The ordering system does not look extremely streamlined and therefore sends out a comfortable and relaxed atmosphere. and coffee in packages are important products here. products. Evidently. Also. Lucia Suchankova . direct consumption. This service would also enhance consumption at Starbucks within certain targeted segments (mainly young to middle-aged people and business people) and it could gently help keeping other customer groups out of the Starbucks location (youth hanging on the streets). milk and other products. Another aspect of the Starbucks ‘product’ is the service part. Fair trade products are quite popular in the Netherlands and one of the most consumed fair trade products is coffee. Another opportunity within this product category is formed by a link with the other. Neni Pogarcic. A regular Starbucks customer can purchase his or her own coffee mug or buy the real Starbucks coffee to create the same kind of coffee at home to get a consumption experience that matches the one at Starbucks. this service should be launched later on and only if the coffee mugs prove to be a commercial success. Therefore it could help Starbucks create more of a sophisticated image as WiFi wireless internet connections are not yet a common service at lunch places and chains in the Netherlands as opposed to other countries. This possible service thus provides Starbucks Sophie van der Vecht. Starbucks merchandise. Starbucks could. Maybe the biggest part of the Starbucks service is the creation of a very cosy. A possibility when launching Starbucks in Amsterdam could be providing a free WiFi wireless internet connection. Almost every popular Dutch chain uses a saving and bonus system. This relaxed and friendly atmosphere is also enhanced by the way customers are treated by Starbucks personnel. to fit the notion of servitization: the adding of services to make a product a more complete one. This customer ‘freedom’ contributes to the relaxed and cosy atmosphere while it also helps Starbucks to reduce personnel tasks and handle/serve more customers than otherwise would be possible. one could be given to opportunity to customize his/her own coffee mug. for instance. Dan Mackinnon.

We quote the Starbucks Marketing policy:1 “Starbucks customers are people of diverse ethnic.75. This rather high price will be approved by the customers through our clear statement of corporate social responsibility. It is too big. 2004 This New-York based story is exactly what we want to achieve in Amsterdam. Premium pricing combined with a premium name. a coffee what is not going to be popular in Holland because of the size. Oct.starbucks. I passed a half-dozen other coffee vendors. income and age groups with varying tastes and interests”. Dan Mackinnon. We’ve chosen to pursue a premium pricing strategy because that is in line with the Starbucks’ ideology. We can illustrate this best with the next anecdote: What's more. what could result in a price round € 2.) This choice is rather obvious for several reasons. where a java chip Frappuccino runs $4. where a latte costs $3.Amsterdam with a valuable opportunity. Details with regard to this service opportunity aspects will be clarified in the SWOT analysis part. Starbucks already has a reputation for having the most expensive coffee in the marketplace. There's the guy with the cart who sells the little Greek diner cups for 50 cents. Lucia Suchankova . Only after running this gantlet could I enter Starbucks. We already mentioned a high rate of potential customers who already know Starbucks and want a Starbucks in the Netherlands. Hidde van der Dussen. Our suggestion is to use this price. We have several reasons for this. When I left Moneybox's New York headquarters to conduct research at the closest Starbucks (a block away).asp Sophie van der Vecht. First of all. Place The first Starbucks in the Netherlands will be opened in Amsterdam. April 2006 Tim Ensing.com/aboutus/marketingPolicy. Gross. this is a Tall latte. compared to the competition. So a smaller coffee would be a fraction cheaper.10 (Please see Appendix A).00 faux gourmet stuff. It is still premium pricing.72. and Cosi. the convenience store with $1. Neni Pogarcic. (Please see Appendix B for a city centre map. This is a reasonable price for a such a location in Amsterdam. the deli with the scalding 75-cent generic joe and the thin paper cup. D. Price According to the Economist and CNN/Money a Tall Latte in Starbucks (one of the most ordered coffees) costs in Europe around $3. 5. or € 3. 11 http://www.59.75. the capital city.

This also explains why there are a few coffee places like Starbucks in the center. businessmen. Dan Mackinnon. ethnic groups. Where as the decision of first city in the Netherlands to launch Starbucks was not a problem. As you already may know. with the four big squares around. this area has a lot of potential. ‘The nine streets’ are nine small streets with cozy shops. As in the center. At first sight. with also a big potential customer group. We see Amsterdam as a opportunity for Starbucks. Lucia Suchankova . April 2006 Tim Ensing. Museumplein. These groups are well-known and last thing a shop wants is such a group inside. The last potential area is called ‘the nine streets’. tourists. and the characteristics of Amsterdam. our first location in Amsterdam should be in ‘the nine streets’. The east and far west side have a rather negative image in Amsterdam. Hidde van der Dussen. Where the two big shopping streets. But it is also an area with a lot of problems. lunch cafés. Amsterdam is a segregated city in which different customer groups are divided throughout the city. 100 ethnicities. This is especially important for coffee places such as Starbucks. so Starbucks could have a very strong appeal if it would locate it self at the island. thousands of small firms. Leidsestraat and Kalverstraat. and Rembrandtplein…. and this could create a negative image for Starbucks. because of the striking similarity between the marketing policy of Starbucks. students. you will find a map of Amsterdam so. and therefore a large amount of potential customers. The place to be. We think that ‘the nine streets’ have the most similarities with the Starbucks marketing policy. The last two locations are both very good and promising.. and therefore it is not appealing for a great part of potential Starbucks customers. Java island is at this moment the hippest place in Amsterdam.Amsterdam is a very diverse. and a city without Starbucks.000 students. Of course this low penetration offers a lot of possibilities and potentials. On the last page. Neni Pogarcic. and to develop a strong customer base because of our location. Sophie van der Vecht. the city with approximately 60. and lots of people. ten million tourists per year. it is a lot harder to decide where in the city we can place the first Starbucks. We expect to have a large diverse potential customer base. the Damsquare. this looks the best area to place the first Starbucks. The city where history and future meet each other. dynamic and busy city. like said before. we need something different. There are three potential places left. but this will be discussed in the SWOT analysis. the Leidseplein. Small (sometimes even criminal) groups create a lot of trouble here. because there is a strong chance these groups will tend to go inside. This is a very nice part of the town. lots of global firms. It is the most popular area. but for the introduction of a new brand. That is why Starbucks should not open their first coffee place in this area. Another possibility is the business area. The problem with this island is that it is too far from the center of Amsterdam. Therefore. The public here is very diverse. due the strong segregation there are areas with specific customers. with a large amount of people. The large amount of the tourists can of course be found in the center of Amsterdam. this part of the story can me made clearer.

Competitive Analysis Big cities like Amsterdam will always be crowded with diverse people. Promotion Please see Advertising Plan. April 2006 Tim Ensing. Dan Mackinnon. Sophie van der Vecht. cafés and pubs can be defined as places where all the different kind of people will go to.The next locations can be located throughout the Netherlands. These cities possess like Amsterdam all the necessary characteristics for a successful launch of Starbucks. This is the area with the four biggest cities of the Netherlands: Amsterdam. This diversity will always attract a lot of businesses that will compete to serve all the different kinds of people. The expansion in Amsterdam could of course continue with some of the locations already mentioned above such as the Business area at the Beethovenstraat and at Java Island. have a break and sometimes have breakfast/dinner. as is clear in the Starbucks strategy. Neni Pogarcic. eat snacks. Hidde van der Dussen. Two companies will be describe in further detail. Other locations in the Netherlands would be of course in the big cities. Students. ethnic groups and businessmen are examples of the diversity that one can notice in the city as a whole. the other three cities are very diverse with an own local culture. Restaurants. tourists. academical and economical heart of the Netherlands. Lucia Suchankova . Like Amsterdam. small bars. De Randstad is the political. The public places that have been mentioned here are very abstract and include a lot of different companies. because they are considered as big coffee chains that will be strong competitors of Starbucks. These four cities should be the main focus of Starbucks in the first period. The highly developed area in the Netherlands is called de Randstad. so they can drink coffee. Rotterdam and the Hague. Utrecht.

Dan Mackinnon. The quality of the coffee is very good at the Bagels Sophie van der Vecht. The Coffee Company serves every corner of town. accompanied by "irresistible sweet things" and rather less remarkable sandwiches. The branch on the Beethovenstraat is the most recent addition to the family. despite the fact they’ve been trained the same way. According to the Bagels & Beans website the quality of the service is more important than the quantity.Coffee Company The Coffee Company is a chain of 'fast-drink' coffee houses in Amsterdam. ‘A strong ristretto is the best start to a hectic day. Hidde van der Dussen. flavours and sizes all day. April 2006 Tim Ensing. Much like the world famous Starbucks Family. The Bagels & Beans company is located in fifteen places in the Netherlands and in Amsterdam there are nine locations. a cool décor and nice atmospheric music. They serve fresh coffee of all sorts. Lucia Suchankova . It offers a modern concept with bright shades.’ The different outlets barrista’s (bar operators) have a different way of ‘working the espresso machine’. Bagels & Beans key features are a place of rest and harmony. Bagels & Beans The Bagels & Beans company started in Amsterdam in 1995. where the customers can easy read their newspapers. Neni Pogarcic. situated in the lobby of Hotel Beethoven. this one is expanding "slowly but surely".

there are differences between those public places. First we will compare the quality of the product of Starbucks with the quality of the product offered by the other public places that have been mentioned before. Although. Africa Arabia.& Beans company. Therefore. The most important feature that has to be compared will be the product and the service that will be offered. We will also consider what the combination effect is of the primary product and this additional product. Neni Pogarcic. as we concluded in the product analysis. because those are most of the time bought in combination with coffee. At the website regions and tastes are defined. those several restaurants. That is why they do not have to be defined as competitors. Lucia Suchankova . however they do not offer a very wide product line of different kinds of coffee. Studies. in the form of questionnaires. Sophie van der Vecht. Like Starbucks. multi-region blends. as we defined in the product analysis. Some providers of small snacks. Regions that have been defined are Latin America. The places that have been mentioned above offer the primary product of Starbucks. do not offer this combination of products. little bars. The customers are therefore able to use the internet at their laptops. In this paper will try to map out which companies are the strongest competitors that has to be dealt with. the idea of launching Starbucks in the Netherlands has potential. so one can choose the coffee he or she likes the most. Hidde van der Dussen. actually have shown that possible Dutch customers have a positive stance when it comes to the possible launch of a Starbucks establishment in the Netherlands. Dan Mackinnon. the Bagels & Beans company do offer a wireless internet facility. like bakeries. dark roast blends. April 2006 Tim Ensing. That will be done by comparing the features of the several companies. like coffee mugs. Analysis Starbucks is a well known chain in the Netherlands although it does not exist in the Netherlands. are the small snacks that are offered at Starbucks. The secondary product. The product line of Starbucks is much more developed. The last Starbucks categories of product are Starbucks merchandise. Asia Pacific. At the website of Starbucks there is a lot of information available that refers to the quality and taste of the coffees one can buy. cafés and pubs try to serve the same customers. Those products are defined as secondary products. the coffee that will be consumed at Starbucks. while drinking their cup of coffee in a very nice environment. and coffee in packages. That is. The analysis of this product category will make clear the reason this additional product category is offered by the providers of the primary product.

however Coffee Company should be considered as one Bars/ restaurants also. The width of the product line points out that the quality of the product defined by Starbucks is very important. As already pointed out in the product and service analyses. An other aspect of the primary product is the service that is offered by Starbucks. The coffee is served in regular mugs in stead of carton cups. Compared to the Starbucks. it is being perceived by customers as being qualitatively less than the ‘normal’ cups being used in restaurants and bars. Sophie van der Vecht. one can conclude there is no company that describes it’s coffee as detailed.primarily through its company-operated retail stores. The sentence above is a quotation that can be found at the website of Starbucks. The two quality aspects of the product has been combined in the graph below. Italian style espresso beverages. rich-brewed. the coffee is served is big carton cups. Although the carton cups are rather good. but at the Quality cups Coffee Company the coffee is served in cups of better quality than at Starbucks. a variety of pastries and confections. At Starbucks. there are relatively less comfortable chairs. Dan Mackinnon. At the Coffee Company it is also possible to choose your coffee from a width range of products. Hidde van der Dussen. and coffee-related accessories and equipment -.In comparison with the other competitors of Starbucks. Starbucks customers are served in a friendly atmosphere and one can make use of the wireless internet connection. Starbucks purchases and roasts high-quality whole bean coffees and sells them along with fresh. From this graph it can be concluded Quality coffee that the products of Starbucks are not seen as a high quality product as a whole. it has to be considered as a very differentiated way of serving the customers. Although. However. High-quality whole bean coffees is an other example of being a more high quality provider than the competitors. Lucia Suchankova . they do serve the coffee in cups of good quality like the Coffee Company does. the product line of Bagels & Beans is rather limited. Bagels & Beans do not offer a width range of coffee products. Most of the customers considered Starbucks as a high quality provider of coffee. Neni Pogarcic. April 2006 Tim Ensing. while sitting in comfortable couches and big lounging chairs.

Lucia Suchankova . because it provides the possibility to serve new customers that enter the Starbucks. On the contrary. Customers have to order additional cups of coffee at the pay-desk. Most of the times people can order extra drinks at the waiters ones can find there. This is not considered as a problem. Customers get a rather big cup of coffee and therefore most of the times reordering is not necessary. The Coffee Company does not see the absence of the waiter as a problem also. April 2006 Tim Ensing. In conclusion ones can say that the quality of the staff and of the environment are both qualified as good. The staff includes the service they provide and the environment is affected by additional services or other aspects that increase the value of the service for the customer. This is the feature that Starbucks and the Coffee Company have in common. Neni Pogarcic. This is not considered as a really goods service to generate additional orders from customers. little bars. Those facilities are not offered at the Coffee Company and therefore the quality of the environment of Starbucks is considered better than of the Coffee Company. bars and restaurant provide better service to do so. They have to pay there and afterwards they can get there coffee. The two quality Quality environment Sophie van der Vecht. One can define the quality of the Quality Staff Bars/ service by examining the quality of restaurants the staff and the environment. but the quality of the environment is improved by creating a very relaxing environment as one can see at the pictures available above at the introduction of the Bagels & Beans company. Still there are some differences between the Coffee Company and Starbucks. Hidde van der Dussen. It is not possible to order anything by a waiter. Most of the customers leave after have drunk their coffee. The comfortable chairs one can find in Starbucks will not be available at Bagels & Beans. however they might not be able to use them due to the fact that they are in use by other customers. Dan Mackinnon. cafés and pubs. The availability of waiters in Starbucks is not considered as important by Starbucks. In Starbucks ones can use the wireless internet connection and comfortable chairs. Bagels & Beans do offer a wireless internet connection and the quality of the environment is considered as very important to compete with competitors. The friendly environment. The facilities offered by Starbucks are qualitatively better than the facilities offered by most restaurants. wireless internet connation and comfortable chairs are the most important aspects for this conclusion. The staff in Starbucks is not considered as being customer centered.Customers that are served in Starbucks will always notice the availability of the chair.

Lucia Suchankova . Starbucks can be defined as a coffee restaurant with a high quality coffee and a friendly atmosphere. The combination effect of the primary product and this additional product is that the coffee must be drunk in a comfortable and homelike environment. The comfortable chairs give the customer the feeling of being in their home environment and not being in a public place. April 2006 Tim Ensing. The last Starbucks categories of product that we have defined are Starbucks merchandise. Nonetheless. they are product leader when it comes to the quality of coffee and the environment. Neni Pogarcic. We can conclude that the coffee company does not provide a good quality of cups and staff. This combination is the key to success for Starbucks as a whole and should be considered a unique selling point. Hidde van der Dussen. The mugs are a useful tool for creating this environment. The mugs provide the feeling of ‘being one of them’ and therefore create some kind of a Starbucks community. like coffee mugs. and coffee in packages. The analysis of this product category will make clear the reason this additional product category is offered by the providers of the primary product.aspects of the service has been combined in the graph left. Sophie van der Vecht. Quality coffee Quality Staff CC Bars/ restaurants Bars/ CC restaurants Quality cups Quality environment The two graphs that where created during the analysis are shown above again. Dan Mackinnon.

Besides those direct competitors. It has been concluded that there are two strong competitors in the market: Bagels & Beans and Coffee Company.Five forces model A very suitable model to explore the competition in a market is the five forces model of Porter. This model is visualized in figure 1. Bagels and Beans should be defined as main substitute. The success of the farmers with whom we do business is a critical component of Sophie van der Vecht. a company should be aware of substitutes. Starbucks strongly believes in the importance of building mutually-beneficial relationships with coffee farmers and coffee communities with which we work. First of all there is a market with direct competitors that a specific player is influenced by. The main essence of the model is that competition does not only come from one side. Nonetheless. but from several directions. suppliers. It can be separated in several kinds of threats and risks. Both do have several stores located in Amsterdam and already have a loyal customer group. April 2006 Tim Ensing. it has also been concluded that Bagels and Beans does not offer a wide product line of coffee and therefore in the coffee market the Coffee Company should be considered as the main competitor. Coffee market competitors – Intensity of rivalry The main competitors have been pointed out in last chapter ‘competitors’. “Our connection with coffee farmers Purveying quality coffees means much more than selecting the finest beans on the market. buyers and potential entrants. Neni Pogarcic. Dan Mackinnon. Suppliers The suppliers of Starbucks can be found in many part of the world. Hidde van der Dussen. Lucia Suchankova .

April 2006 Tim Ensing. America SCORES continues to provide partners with rich and meaningful opportunities to help youth in their neighborhoods Threat of new entrants It is necessary to have a good network of suppliers if one wants to participate in the coffee market. Buyers Customers that buy from Starbucks do have little influence on the profitability. but a good quality and supply of coffee can only be provided by a selected number of trusted suppliers. Bagels and Beans has already been defined as the main substitute. sometimes it is rather easy to switch between suppliers within a region. but there are a lot of companies that offer Sophie van der Vecht. Hidde van der Dussen. When they group together. In conclusion one can say that the treat of entrance of new competitors rather small is. All the suppliers have to be carefully selected in all the different parts of the world. America SCORES serves nearly 4. The quality of the coffee is very important to Starbucks and therefore the bargaining power of good and big suppliers is rather big. Suppliers of Starbucks come from regions like Latin America. We are taking an integrated approach to building relationships with coffee communities” The sentence above is a quotation that can be found at the website of Starbucks. What makes this nonprofit a national phenomenon is that it gets to the heart of what motivates kids: teamwork. Substitutes Although the treat of entrance of new competitors is rather small. However. D. the number of substitutes is rather big. As an example Starbucks has launched the ‘Starbucks Foundation’. Today. Starbucks wants to generate loyal customers by providing a lot of advantages for the environment. sportsmanship. creativity. Africa. It will take special skills to build a network of suppliers like Starbucks. Lucia Suchankova . Asia and the Pacific. our own success. Dan Mackinnon. Arabia. However. The sentence below is a quotation that can be found at the website of Starbucks and will provide some insight in the activities of the foundation: Introducing soccer and sonnets America SCORES was founded ten years ago by a Starbucks barista in Washington. and growing.C. this is not something that will happen very quickly. their bargain power will increase. Neni Pogarcic. It will take years to build a network like this and therefore one can say that there is a big entrance barrier. and performance.000 poetry-performing soccer players in 13 Starbucks cities. who loved soccer and poetry. at least as an individual. One can conclude from this sentence that Starbucks put a lot of effort in retaining a good relationship with it’s suppliers.

is an applicable tool when trying to fit the Starbucks concept with the Dutch customers and habits. Although remaining a wide focus is crucial in order to establish share of mind within all kinds of different customer segments. The ‘normal’ coffee that one can order in restaurants. Lucia Suchankova . it is assumed that customers in this last group are also part of one or two of the first two groups. Although direct actions in this area are of more importance for the marketing and advertising department. It is thus important to keep the area to focus on wide.products that are a substitutes for the width coffee product line of Starbucks. Every customer that drinks coffee at Starbucks. Various combinations are therefore also possible. Customer Profile Starbucks customers constitute mainly of customers that consume Starbucks coffee and side products within the Starbucks establishment. Youth (including so called ‘young urban professionals’ and ‘double income. chocolate milk or soft drinks are substitutes for the coffee that Starbucks provides. like tea. another ‘parallel’ narrowed marketing effort to appeal to a certain particularly important group of customers can also be useful. Having a considerable market share in youthful customer segments holds the key to future growth and Starbucks has always been Sophie van der Vecht. Dan Mackinnon. Hidde van der Dussen. and can be seen in Appendix C. without all the special tastes and options are the biggest substitute for the ‘special’ coffee of Starbucks. customers that take Starbucks coffee and other products to go and customers that come to Starbucks for the special Starbucks merchandise. Introducing a bonus saving system (allowing customers to safe for free coffee mugs and Starbucks coffee). April 2006 Tim Ensing. Evidently. This will be appealing to frequent customers across all customer groups and therefore strengthen the overall Starbucks position in the Dutch market. Neni Pogarcic. certain aspects are closely linked to the desired target segment and therefore worth mentioning in this customer section. The availability of other drinks. Restaurants. which is very common in Holland. takes coffee-to-go and spends money on Starbucks merchandise (mugs and coffee packages) is a valuable one. A statement directly copied from the Starbucks marketing policy clarifies this notion. without excluding valuable customer segments. cafés and pubs offer these kinds of products and that is why those organizations can be seen as the main substitute for Starbucks. just like every competitor. Starbucks should focus on customers within a wide variety of segments. no kids’-households) has always been a very important customer group for Starbucks. little bars. However.

Sophie van der Vecht. Examples of tools to facilitate this tendency could be the sponsoring of certain Dutch youth events (there are lots of them in Amsterdam). But bearing in mind that certain customer groups and segments are of extra importance (youth) and adopting ‘parallel’ marketing strategies and accompanying tools. Hidde van der Dussen.very keen on stimulating certain activities in this particular area. people are familiar with the American Starbucks concept. fuelled by an extra marketing effort within these customer segments. This has been done by sponsoring certain youth events worldwide. Strengths One of the most important strengths of Starbucks. Dan Mackinnon. Share of mind among potential Dutch customers is already achieved. Neni Pogarcic. as every customer is a valuable and potentially profitable one. A Dutch Starbucks location in Amsterdam should adopt the same strategy. Concluding. because Starbucks should not rule out certain customer groups. in the form of a SWOT analysis. Although there are some drawbacks of a simple SWOT analysis that are generally agreed upon. to expand market share among these customer segments may be a wise corporate customer strategy for Starbucks. April 2006 Tim Ensing. and this counts for every Starbucks location. Share of heart is the next step. People also know that celebrities like Britney Spears even fly back to the States to get a cup of real Starbucks coffee during their busy schedules. as mentioned before offering a (free) WiFi Internet connection service to appeal to young ‘mobile’ customers. remaining a wide focus when it comes to customer segments is of great importance. for instance the lack of financial implications and clear future scenario recommendations based on the analyzed environment. is its worldwide image. when launched in Amsterdam. Lucia Suchankova . All these tools could be helpful when trying to gain ground in the important young customer segments in the Dutch market rapidly. All across the world. and maybe introducing special reduced student pricing systems that are also very common in Holland. The Dutch market is no exception here. SWOT Analysis This part is devoted to the analysis of the internal and external environment of Starbucks. There has even been some research with the possibilities of Starbucks survival in Holland (see Appendix). public relations and contracting celebrities that are appealing to youthful Starbucks customers. Especially when trying to enter a foreign and thus new market. it always is a helpful tool in making the first step to explore the environment of an organization. The Dutch market is no exception in that matter and people even have a positive stance with regard to a potential launch of Starbucks in Holland.

After ordering a drink the customer has the possibility to customize the drink with a whole range of essences. outperforming competitors and rapidly grasping market share. to make a flying start. This is also an example of ‘prosuming’ (combination of production and consuming). April 2006 Tim Ensing. powders and other products. flavours. 2004) of service value ( this combination of product and service quality. Goud & Goud . like the one in Amsterdam. but none of them is so specialized and advanced when it comes to quality coffee. however they do not offer a comfortable and cosy environment like Starbucks does. cream. Being able to customize your own drink (and maybe one day even your own Starbucks coffee mug) fits the recent customization trend and sends out a certain atmosphere of freedom that blends in perfectly with the relaxed and cosy ambience that is supported by the interior of the Starbucks chain. high financial fee and self service is something strange and could be seen as being ‘stuck in the middle’: Service value = (Service result * Service delivery)/(Financial fee * Consuming effort) Sophie van der Vecht. according to the Treacy & Wiersema model (De Vries. One might say that Starbucks holds the key formula and owns best of both (competitive) worlds in Amsterdam which could be considered a sizeable strength. which is a consumer effort to engage in the production process which in its turn generates a certain bonding with the product/service provider (in this case a bonding between the customer and Starbucks). Nevertheless a considerable part of the service a customer receives at Starbucks is actually self service. Also. sugar. Lucia Suchankova . However. All of the aforementioned generates a valuable kind of database which could help ‘young’ Starbucks locations. consumer behaviour and quality expectations. Offering a nice atmosphere to consume in has been point of focus for many lunch areas in Amsterdam.Another strength of Starbucks is the fact that it combines certain aspects that have not yet been combined by others. This self service is not exactly in line with the value proposition Starbucks communicates with its quality coffee and accompanying premium price to potential customers outside and could be seen as an odd aspect. especially in Holland where certain customers groups are seen as cautious and quality demanding when it comes to (relatively high) expenditures. A considerable range of different quality coffees has been a major selling point for the Coffee Company. Dan Mackinnon. this self service freedom could also be seen as a weakness as it is contrasting with the high prices charged at Starbucks. Yet another strength of Starbucks lies in its expanded worldwide network and community along with close relationships with its suppliers. Hidde van der Dussen. This generates a certain level of know-how with regard to different markets all over the world. Weaknesses Starbucks sells moderate to good quality coffee against a premium price. Neni Pogarcic.

since a high price and premium product do not go together with paper cups (in Holland). Amsterdam. has found its way around this problem and serves its drinks in a type of glass cups that is very common in Holland. When visiting locations like Starbucks in countries like the United States and France (business) customers surfing the Internet while drinking a cup of coffee is a common sight. Paper cups are very common in chains in America and do not have a direct link with inferior quality contents. Starbucks should think about this problem and maybe even choose to serve its drinks in mugs instead of paper cups. The Coffee Company. In Holland however. Paper cups for coffee-to-go is acceptable. but this problem could be tackled by introducing something very common in Holland: a bonus system. Lucia Suchankova . Serving Starbucks drinks in original Starbucks mugs could be a way to tackle the ‘paper cup-inferior quality problem’ and communicate a more luxurious feeling together with creating more logo and brand awareness with the eventual goal of creating customers’ share of heart instead of a mere share of mind and establishing customer bonding. this WiFi connection possibilities are virtually nonexistent. which allows the customer to collect bonus units in order to safe for free gifts. Once again. Starbucks has a rare mix of those two and this could be seen as a weakness since Dutch customers known to be quite critical when it comes to expenses and accompanying service expectations. even in Amsterdam. However. this link does exist. An additional weakness could be found in the way Starbucks coffee is served: paper cups. one of the key competitors of Starbucks. Of course then there is the problem of extra tasks like collecting the mugs and cleaning them. So in a way the possible countermove to bypass a Starbucks weakness holds the key to an actual opportunity. April 2006 Tim Ensing. In Holland however. there is a contradiction within the Starbucks modus operandi here. Here lies a substantial opportunity for Starbucks. Together with this way of serving Starbucks drinks goes the notion of a bonus system which allows frequent customers to save for free gifts: for instance the original Starbucks coffee mug or Starbucks coffee. the high price as charged for Starbucks coffee. Opportunities The first opportunity comes forth out of the previously described weakness. Dan Mackinnon. but for consumers who decide to stay and consume their product within the Starbucks location this could prove to become a problem. Bycoming problem could be the possibility of people stealing original Starbucks coffee mugs. Providing customers with Sophie van der Vecht. Neni Pogarcic. Hidde van der Dussen.Self service fits in with an operational excellence strategy accompanied by a low financial fee. goes together with a product leader value position. This allows the customer to also experience the Starbucks coffee at home and once again creates customer bonding and brand loyalty.

Threats Ethnic minority groups of youngsters hanging around in Amsterdam have been a problem for a few years now. Neni Pogarcic. Entrepreneurs in the major streets in Amsterdam (the Kalverstraat the Leidsestraat) have already encountered these problems. it also targets a segment that has not yet been targeted before and it makes Starbucks particularly interesting for all kinds of business people. Luckily the Starbucks location thought of lies in another area of Amsterdam which is relatively free from this problem. The area can be characterised by a high density of young urban professionals. another American company that is at least just as well-known in Holland as the Starbucks chain. Nevertheless. Hidde van der Dussen. This summer (June 2006) a coffee corner in this Nike building becomes available. Once again. Dan Mackinnon. Nike. Needless to say. this could have a positive influence on the image of Starbucks. providing Starbucks with a more mature and contemporary image than a lot of other competitors. this Internet connection possibility is also appealing to other customer segments. Sophie van der Vecht. Customers within these segments will only improve the contemporary image of Starbucks and thereby increase the entry barrier for these so-called ethnic problem groups. Having these groups in your store. Starbucks should keep track of developments in this area and realize that a possible threat could occur. One of the candidates is Starbucks (according to website www. An interesting fact is that ever since 2002 Starbucks’ head office in Europe is situated in Amsterdam. also has its head office of Europe situated in Amsterdam. upper class residents and sophisticated tourists.kookjij. which in its turn fuels business alliance possibilities). especially younger people. Once again proof that the international Starbucks community is finally working its way into Amsterdam and has faith in the possibilities of survival there. Aside from the fact that active Internet usage within Starbucks has a lot of commercially interesting business possibilities (through ‘cookies’ and other commercial digital devices.a (free) WiFi Internet connection service.nl). April 2006 Tim Ensing. Business lobbying and politics should therefore be considerably easier when focusing on the aforementioned fact. shop or Starbucks location could seriously harm the experience of other customers and eventually your image. The launching of a Starbucks location in Amsterdam is therefore a logical next step. Therefore this WiFi Internet service opportunity is closely interwoven with the desired target customer segments as it ‘lures’ certain groups into Starbucks and discourages others. Those discouraged groups would mainly be the elderly and groups of youngsters hanging around on the street (a problem in Amsterdam). One could say that the link between Starbucks and Amsterdam already exists and that the Americans had a reason for choosing this head office location in Europe. Lucia Suchankova . This opportunity thus serves two closely related purposes.

a substantial task lies here for the promotion. The difference between the groups is also that the first group will probably use the sitting space whereas the second will most likely be customers who make purchases and consume them outside of the store. We Sophie van der Vecht. psychographic and behavioral segments. So the segmentation here will be (again similar to the demographic and psychographic) the people who prefer to sit down and enjoy their product and the buy & go customers. Hidde van der Dussen. and the group 25-40. April 2006 Tim Ensing. and probably be students. we will segment customers with respect to benefit and usage. The behavioral segment is the most interesting one. medium and heavy users.Competitors copying the Starbucks concept is another possible threat. Lucia Suchankova . Another lifestyle segment will be the people who drink coffee. Luckily. Segmentation The segmentation part will be similar to the standard Starbuck segmentation. This is a crucial segment. the demographic segmentation will focus on age. The group 15-25. Dan Mackinnon. The first group will have a lower income. Evidently. We see the 15-40 group as our main customer. A way to do this is by making a pre-emptive strike and launching Starbucks in such a clear and differentiated way (focusing on the originality of the Starbucks brand and image) that it is hardly possible for others to compete with or copy this whole Starbucks notion. In the psychographic segment we have focused primarily on lifestyles segmentation. advertising and branding department. This group can be divided in two other groups. Copying behaviour and stealing winning formulas has always been a problem for entrepreneurs. The students will have another lifestyle than the working group. The other group is probably working and has a higher income. and those who do not drink coffee. We will use demographic. This is very similar to the demographic segment above. It may be sometimes difficult to endure and differentiate the initial product unless the product has such a big widespread name that it can survive these imitators. This correlates with our own observations in French and Swiss Starbucks’. and for this segment Starbucks has to be hip and modern. Starbucks has that kind of name and image and should be able to withstand imitating behaviour by (upcoming) competition. Neni Pogarcic. This is the youngest generation. income and occupation. Offence is the best defence here and Starbucks should enter the Dutch market making a lot of ‘noise’. The usage can be divided into light. First of all. because Starbucks has to have an image that you don’t have to be a coffee drinker to enjoy Starbucks. It is strong because we can create new segments. and also the segment that can be the most influenced. First of all. Benefit segmentation is for the customers who go to Starbucks because of the Starbucks products or Starbucks service.

This type of marketing will be beneficial to us in that it is less expensive than attempting to market each product to each product segment. in another bigger segment. because of the creation of benefits driven segments. Europe. Targeting The main targeting activity will be undifferentiated marketing. as well as what a possible balance sheet may look like for Starbucks Amsterdam.recommend focusing primarily on the high usage segment. We have analyzed Starbucks most recent financial statements for the company as a whole and Sophie van der Vecht. Financial Analysis Through the use of several analyses we have made an estimate of the possible revenues and expenses we will incur in the first three years of operation. The advantage of this type of segmentation. mentioned before. As Starbucks becomes more established. April 2006 Tim Ensing. however. This is an extra incentive to go to Starbucks. the products are not being differentiated for specific customer groups. Hidde van der Dussen. This can be achieved through segmenting customers based on their desired benefits. Lucia Suchankova . These projections have been derived from several different methods to arrive at the final projection. We will instead take our market as a whole and market our primary product. to them. customers who use wireless internet. but there is not a clear targeting in this because Starbucks is not going to change its product mix specifically for these segments. the Netherlands are a specific segment. coffee. Of course. and trendy segment and also the business segment. hip. new customers. The main goal will be to create a generate awareness of the brand so we can attract our customers. in this example. A very recent example of this. we will focus more on positioning the products to our different segments. This is rather logical because. Neni Pogarcic. the young. the non coffee drinker will have a possibility to choose from several non coffee products. Dan Mackinnon. This will focus on two main segments. is that Starbucks can create a new behavioral segment group and through this. It should be clear though that on international basis. introduced in several Starbucks’ through the world is wireless internet. Positioning When we begin our marketing campaign we will focus primarily on building the Starbucks brand and therefore we will position Starbucks quite generally with respect to our market. and is there also non caffeine products for the youngest customers.

This is the data for an average Starbucks. Of course it is impossible and also not realistic to account all those people as potential customers. Another method we have used to calculate expected revenue was by calculating the size of the coffee market in Amsterdam and multiplying by Starbucks expected market share. if the Amsterdam Starbucks would perform at an average level. First of all. however. If we combine this with a part of the 45% of the young people who didn’t know Starbucks. We used this data to predict average sales and costs by exchanging the prices to the Euro. Around 40% of the young people say they would like a Starbucks. This population base can be divided in two equal groups in the population distribution. This also has to do with the fact that Dutch people will tend not to go to a place like Starbucks early in the morning as we have already explained in our customers paragraph. we do not expect significant changes. Firstly. This we conclude after a (not representative) research on the biggest internet forum in the Netherlands. Starbucks had a more positive image in the young group then in the older group. Also because of our location and the mentioned segmentation in Amsterdam. Everyday there are around 800. we can expect that around a quarter of these people for certain will use the Starbucks. Hidde van der Dussen. This leaves us with approximately 425. Secondly. average sale and average customer frequency in a year. or very young) in the population distribution fall out of the Starbucks’ client market. and will therefore be able to visit Starbucks more frequently. 1/3 of the population will not be on a regular basis in the part where our store is located and therefore cannot be accounted as potential customers. This has two results. we cannot expect to perform as well as the average store that has been open for several years because revenues are likely to be lower and we will occur several one time costs associated with opening a new store. Neni Pogarcic. This results in a drop of around 20% in the total population of Amsterdam. (just 15% is against). the tourists that populate Amsterdam will change this population. this would be the result. So if we know that 40% would like a Starbucks. The other segment will consist mostly of the working population. Lucia Suchankova . where this percentage is twice as low with the older generations.000 persons in Amsterdam. April 2006 Tim Ensing. The Dutch population has a normal onion-population distribution.000 persons. So. or didn’t Sophie van der Vecht. We are opening our store. Please refer to Statement of Earnings in Appendix D. Dan Mackinnon. We are dividing our target market into two parts for different reasons.divided these results by the amount of stores worldwide to get a sense of average store performance. so. Of course this is not realistic because there are many unpredictable factors that will arise. the younger part will consist of students and other young adults. We can argue that the highest and lowest parts (very old. students have more free time.

the two groups are almost equal. this would generate a yearly revenue of 425. 106. we expect on a daily basis to occupy around 75% of the seats. In the mornings the Starbucks will be rather empty. This will add another 157. so this results in 25% of 425. If this group would spend around 4 euro (a achievable expectation). high in afternoon) who will spend around 3 euro. we expect to have a realistic expectation if we say that around 20% of the young people will use Starbucks and 5% of the older group. Because of our location. So. A Dutchmen has to ‘earn’ his money back through using the facility. the price will be lower than in Paris or other European city. average sale and occupancy rates. This resulted in the next: On the average.500 euro to the revenue. At least not in the first year.000 Persons can be accounted as not only potential customers. The total revenue will be around 487. Sophie van der Vecht. As said. For a Starbucks which will be open for 350 days. Due to the several factors (not known. we are not able to have more than 25 places to sit. and in the afternoon and evening it will be full. That is why we expect the sitting customers to spend around 5 euro. April 2006 Tim Ensing. So we can better take advantage of the evening rush of customers. Lucia Suchankova . in a Parisian Starbucks. So a combination of a lower rate and a low number of seats will result in an expected occupancy rate about 75%. We expect this to be more in Amsterdam because of the Dutch culture.5 sitting customers everyday.have either a positive or negative feeling with Starbucks. Our team also spent considerable time observing customer behavior within several Starbucks in Paris to get a sense of average length of stay. different culture) we cannot expect this rate in Amsterdam. Hidde van der Dussen.000 persons. This data would result in 187.000 euro.000 euro. except that we would open it later in the morning and keep it longer open in the evening. and therefore we can expect an average stay of one hour. low number in the morning. but as very likely customers. The average stay in a Parisian Starbucks was around 45-50 minutes. Dan Mackinnon. Neni Pogarcic. We propose opening hours similar to the French. there is an occupancy rate about 80%. but still on a premium level. this has a revenue of almost 330. As said earlier. We expect around 15 buy & go customers every hour (again.500 euro. We also observed that the sitting customers spend more than customers who take away their purchases.

000 net profit. In the next two years theses store operating costs will drop down closer to average levels. Neni Pogarcic.000 and third year revenues of €650.000. As a population.000. Our cost of sales are in line with the average Starbucks store as are depreciation expenses. they are familiar with them and they know where to find them. they are open to trying new things. We are projecting first year sales revenues of €450. That is why the focus of Starbucks should be on the good. and business people) will like the idea of something new. For starters. However. there are already a few coffee places in Amsterdam like Bagels & Beans and Coffee Company. we believe a city like Amsterdam.000 and just over € 35. April 2006 Tim Ensing.000. visitors.000 in the first year and a best case scenario of about a € 30.Our final projections factored these different methods and reduced expected sales to correspond with the opening of a new store. Dan Mackinnon. Hidde van der Dussen. The results can be found in the Statement of Earnings in Appendix E.000 in the third. People already experienced the services and products of these coffee places. this is reflected in the increasing expected sales revenues for the second and third year of operation. quality. With all considered we are forecasting a first year net loss of approximately € 70. the Netherlands.000. We expect to make a profit in the second year of just under € 6. however as this only an estimate and there are many uncontrollable factors at play that may affect the actual sales revenue we are also providing a high and low estimate for the sake of analysis. Our best case analysis predicts €600. they are not going to be cheaper than the rest of the coffee places around. During the first year of operations we will have several one time costs associated with opening the store. Another challenge of implementing Starbucks in Amsterdam is the prices of the coffees of Starbucks. Sophie van der Vecht. Advertising Plan Definition of the Problem/Challenge There are a few challenges in introducing and implementing Starbucks in Amsterdam.000.000 and our worst case analysis predicts €300. tailor-made service and the whole Starbucks experience. with its diverse crowd of people (tourists. As the company becomes better known in Amsterdam and we develop a positive reputation. Our worst case scenario predicts a net loss of approximately € 360. Lucia Suchankova . This explains the higher than average expected store operating costs of €300. We are predicting second year revenues of €550. sales will rise. These coffee places are going to create a competitive atmosphere. students.

Neni Pogarcic. the possibility to use the internet to work on school. the 85% of students are really enthusiastic that a Starbucks will be introduced in Amsterdam. etc. they were curious about Starbucks and said they would definitely go there to try it out. but still. In this way. We focused on students. a loyalty program. As it turns out. We also want to provide them with comfortable chairs. Others were really happy with Starbucks because they already knew all the places in Amsterdam and would like to try something new. so the advantage will also be in the fact that customers can customize their drinks to taste. you can get a free coffee / discount on your next coffee or buy. the general assumption was that the costs were higher. we believe Starbucks will be more easily adopted by the target group. We believe Starbucks should provide all the things a student (our primary target group) needs. Most students were ok with this. Some really liked the coffee places Amsterdam offered now. which are a little bit higher than other coffee places. The whole experience of getting coffee at Starbucks should be different from the possibilities you have at the other coffee stores. Research results We have done some research to find out how people in Amsterdam would think about a Starbucks opening in their city. Why? That will be the first Starbucks in the Netherlands and they are proud that it is going to be in their city. Another possible problem is that some coffee places offer a savings card and when it’s full. Lucia Suchankova . When we asked them about their current experiences with the coffee places. adequate light. and foreign. In the long term of course. like different tastes or different sizes. Therefore. This is a great way to built up relationships with your customers and to make them want to come back – in essence. for example by offering special coffees everyday. Hidde van der Dussen. there were a lot of different answers.Starbucks will have the widest selection of coffees around. April 2006 Tim Ensing. The first thing that needs to be done is to make sure the services and products of Starbucks appeal to them. friendly personnel etc. Starbucks does not offer this sort of service so they really have to make an effort in maintaining their customers and making it attractive for them to keep coming back. and interviewed a total of 100 people between the ages of 15 and 30 to be able to generalize the results. them being our primary target group. by creating a good atmosphere. because it was new. good music. Dan Mackinnon. but it can also fit into Dutch culture. We also researched their opinion on the prices of Starbucks. They should offer different things than other coffee places. they wanted to see something Sophie van der Vecht. It is foreign.

This group will probably really appreciate the take-out service of Starbucks. Starbucks would be the perfect place! This target group will use the take-out service from Starbucks right before or after school or on their way somewhere. in other words. value for their money. which is usually done somewhere in the city. This indicates that drinking coffee is a part of the Amsterdam students’ lifestyle. mentioned that Starbucks does have a lot of variety in its products and it offers extra things like ceramic mugs. ranging from different schools. We believe this target group should be the main focus. Numerous big companies are established in Amsterdam. 27% while relaxing and 33% as a reason to get together with friends. They can get a quick coffee before they go to work or after their work. Therefore. the quick turnaround time at Starbucks fits the Sophie van der Vecht. there are also a lot of student societies based in Amsterdam. Lucia Suchankova . chat and have a drink somewhere outside of their primary residence because many of them live in small. some of the respondents. However. and value spending time with other people. The secondary target group is business people. who already knew Starbucks from other cities in other countries.extra in Starbucks. To get a more general idea of when students planned to visit Starbucks. The success of Starbucks with the secondary target group is based on time poverty – business people are generally doing what they can to optimize every minute. Targets The first target group and they will be our main focus. They are social people and like to hang out. Amsterdam is a social city. so many students are in the city during the day or they travel through the city to go to the station to go somewhere else. 40% of students say they like to drink coffee most while studying. It also gives insight to how to reach each segment of the target specifically. often with roommates and sometimes still with parents. before they get into the train and go back home. a reason why it is more expensive than other places. so there is a lot of traffic from business people coming into the city everyday. Amsterdam is a real student’s city. is students. high school) and different directions. in addition to lunch breaks. Hidde van der Dussen. practical school. they will sit down and talk while consuming the coffee and / or snacks. people don’t live a very fast paced life. Dan Mackinnon. Next to this. They might need to talk about a presentation for class or they might have a meeting for their student’s society. to different educational levels (university. cramped apartments. A lot of different sorts of education is offered there. the iced and blended coffees and the coffee beans. April 2006 Tim Ensing. Neni Pogarcic. but most commonly. we asked about habits.

we have to take into account the consumer perception process. Because Starbucks has the advantage of being able to offer a lot of different products. Advertising Objectives We have one main advertising objective and that is to create awareness.lifestyle. Lucia Suchankova . there is something for everyone. Cognition 5. Physical date 2. The central location can also be of benefit to this market for business meetings. (See Strategies) In doing so. We want to make Starbucks a place where people feel good. we first have to educate our target group about Starbucks. Starbucks should focus on the last three. curious and interested so that they will follow the whole process of the introduction and implementation of the new store. We want to make the people anxious. because they are the most important in Starbucks objective to be noticed and to be appreciated by the target group. Perception files We believe. We have to let them now what Starbucks stands for and what they can offer the clients. which consists of five steps: 1. Whether for breakfast. emotional) To create awareness. where they are treated with respect by friendly personnel and where they can enjoy and relax. Dan Mackinnon. There is a new store opening in Amsterdam and we want everybody to know that! To accomplish this. we first want to make the people curious of what is going to happen. Neni Pogarcic. a lunch break or after work. Physiological screens (emotional) 4. (Cognition) Sophie van der Vecht. We want to make consumers feel good being in Starbucks and experiencing their services and products. which will make them more willing to go there when it is actually established there. We want to communicate to the target group where we will be located and what they can expect from the Starbucks concern. We want to do this with an advertising campaign. (Physiological screens. Hidde van der Dussen. April 2006 Tim Ensing. tailor-made service / product. Physiological screens (sensory) 3. business people will appreciate the value of the product in that it saves time without compromising quality. We will not right away reveal that there is a Starbucks coming in Amsterdam. as it is a neutral place with a wide variety of product offerings.

Hyves. as said before. Amsterdam Muiderpoort. which is basically the main activity.nl . We will focus on the public transportation system as the vast majority of students has to use this in going to school. . It should raise everybody’s expectations and it should clearly state that they can offer everything to everybody. Starbucks has never done this because it is not effective in reaching the market at the right time and place. April 2006 Tim Ensing. We will place big posters in the train stations in Amsterdam (Amsterdam Amstel. There are many substitutes available there. we will make use of the possibility to hang up posters in the metro and in the trams. That is why Starbucks should not be perceived as ‘just another coffee place’ but as something more than that.University websites Sophie van der Vecht.Hotmail. First. Strategy: Media Plan Mix In accomplishing the advertising objectives stated above. Dan Mackinnon. listened to radio station in the Netherlands by students. We want to make ‘awareness process’ so strong. We also want to make use of the internet. These stations are used for people coming in to Amsterdam.Last but not least. Amsterdam Lelylaan. we want to make people aware of the new Starbucks store. Lucia Suchankova . we want to use posters. We want to approach the companies with internet sites which are popular and frequently used among students. Starbucks is entering a highly competitive market in Amsterdam. . Neni Pogarcic. their position right next to direction signs ensures that they will be seen by everybody. we want to use different sorts of advertising. (Perception files) We can also look at the advertising pyramid (please see appendix H) First. Hidde van der Dussen. which is a site to find old friends and to keep in touch with them. We will also put posters in the metro stations and at the stops of the trams. It is mostly used by students and research shows that more that 75% of the students use this site. Amsterdam Sloterdijk and Schiphol Airport). Although these posters are smaller.Radio 538. Next to this. We are thinking about the following opportunities: . Amsterdam Bijlmer. that the consumers are almost willing to go on to action right away and skip the other three steps in the pyramid. We will not use the tv ads as a medium. so we won’t use it here either. which is the most and best. Amsterdam Centraal. All the focus should be on that. Starbucks puts people first and adjusts the products they offer to them.

we will reveal the opening of the new Starbucks store. the billboards along the side of the main roadways and highways will be utilized also. and to increase retention among the primary and secondary target markets.Last but not least. rather than confusing consumers with varying messages. This ensures the strength of one single message. Hotmail is a popular service with the age group and allows segmentation in terms of marketing. only in a different format. To reach the secondary market. The next 2 to 4 weeks. the ads will be altered slightly to include more information. Lucia Suchankova . Frequency Posters We want to start the advertising campaign 4 to 6 weeks before the Starbucks store actually opens. The first 2 weeks. the samepage) of the paper. Therefore. or Phase 2. April 2006 Tim Ensing. and effectively targets the primary target market. and once they are interested. Dan Mackinnon. Ads Advertisements placed in school newspapers and other student publications will also be synchronized with the other mediums. they enter their full address. When users sign up. give away the rest. which individually would be more difficult to remember. Neni Pogarcic. it is possible only to place banners on Amsterdam students sites. This will be internally referred to as Phase 1. We will announce the exact location. such as the date of the grand opening and perhaps a general location. We want to involve them in the whole implementing process. The banner ads used online will follow the same timeline and look as billboards. Every university or school in Amsterdam has its own newspaper where we can place ads in. We want to make this opening really important so we want to build up curiousity throughout the first part of the campaign. Internet The internet is a good medium to use because the primary target market has proven to be almost completely computer literate. The goal is to place an ad in the same part (ideally. Hidde van der Dussen. we want to make the target groups curious. We want to draw their attention and we want to make them wonder and think about what is going to happen. Sophie van der Vecht. changing the insertion based on the phase of the campaign. This lowers the CPM (cost per thousand). The campaigns will be unified throughout Amsterdam to send a stronger message. In Phase 3. which will take place 2 weeks before the grand opening. we want to place advertisements in school papers or in magazines distributed to schools or students. we want to approach the biggest students’ societies (the societies with the biggest and largest reach of students in Amsterdam) and place ads in their magazines. Next to this.

Print ads will be reaching a much more specific.’ Creative platform The artwork selected for the background of the ads was purposely chosen not to focus on a specific continent. These will be placed in the same types of locations as the other ads. It is a contemporary look at the world. address. By the time Phase 2 comes around. as cities come closer with globalization. and continue to look back throughout the second phase to see what the completion of the ad will look like.000 will go towards print ads. To see the ads. is what creates the excitement. This evokes the feeling of pride that is part of the creative strategy. the consumer will realize it is a series. Due to the nature of the campaigns. targeted audience. successful company is about to open in Amsterdam. an additional advertisement will be used with only the relevant information: a logo. April 2006 Tim Ensing. with the cities floating above and around the globe. whereas they are three phases of the same ads. and pride because Amsterdam now joins hundreds of other cities around the world in the ‘Starbucks family. and print ads. During the third phase. and the remaining $10. Flighting For all three mediums. Sophie van der Vecht. Billboards will receive the highest portion of the budget as a result of its wide reach. but refocuses the audience on the important ‘when and where’ information. approximately $25. Dan Mackinnon. among the world’s greatest cities. or about 9% of the total budget.000. The internet ads will have a budget of $5.000. The mysterious structure of the campaign. and an announcement about the grand opening party. and to get them thinking. The campaign puts Starbucks Amsterdam in the centre of the map. The mystery of seeing an ad and not knowing what it is for is what will make it easier to remember. internet. These two allocations are based on cost of insertion (internet is much cheaper than print ads).but also based on reach. Lucia Suchankova . Phase 3 is meant to create excitement and pride – excitement that a well known. Phase 1 ads focus on posing a question in the consumer’s minds. The view of the world is unusual. Hidde van der Dussen. the flighting will be the same. Neni Pogarcic. and geography becomes less important in the world of business. with its triphasal approach. please see Appendix I for Series 1 and Appendix J for Series 2. posters. This is to be distributed among the three media that have been selected. Strategy: Creative The creative is split up into two series within the same campaign. it is necessary to maintain even flighting throughout the campaign.000.Cost insertion The advertising portion of the marketing plan has a budget of $40.

Sophie van der Vecht. with the familiarity of a friendly atmosphere that students and business people are enjoying around the world – a world that Amsterdam is now joining. April 2006 Tim Ensing. The copy works well with the visual to create that mystery. while incorporating Starbucks colours and in Phase 3. Lucia Suchankova . Hidde van der Dussen. important information about the grand opening. the composition is well harmonized. Big Idea Starbucks is a cool place to study. without costing a penny. Neni Pogarcic. and reaches the advertising objectives that were defined. or just run in and out for coffee the way you like it. Overall. meet new friends or talk to old ones.The strategy has been proven in other campaigns to get people talking and eventually produce word of mouth. Dan Mackinnon. which can be the strongest way to advertise.

Hidde van der Dussen. Neni Pogarcic. Appendix A:Price of a Starbucks tall latte Sophie van der Vecht. Lucia Suchankova . April 2006 Tim Ensing. Dan Mackinnon.

April 2006 Tim Ensing. Dan Mackinnon. Neni Pogarcic. Hidde van der Dussen. Lucia Suchankova . Appendix B: Map of Downtown Amsterdam Sophie van der Vecht.

income and age groups with varying tastes and interests. April 2006 Tim Ensing. led by Marketing. and Legal -. advertising and event sponsorship efforts are not directed at children or youth. involves a panel of Starbucks employees from key parts of the organization -. Corporate Social Responsibility. widely contentious or culturally insensitive. Appendix C: ‘Marketing to Youth’ exerpt Marketing to Youth Starbucks customers are people of diverse ethnic. Hidde van der Dussen. the Marketing team adjusts the materials or campaigns to alleviate the issue. Review and Enforcement Appropriate measures and best efforts are taken so that Starbucks advertising and marketing is not specifically aimed at reaching young consumers. We embrace their diversity and strive to provide excellent customer service to those we serve by offering products that are relevant to our customer base and their varying interests and tastes. Internal Communications. including young people. Lucia Suchankova . Dan Mackinnon. Starbucks has a long history of supporting community activities and events important to our customers.who review marketing elements and provide input verbally and in writing. Public Affairs. The purpose of the panel is to identify in advance and avoid distributing marketing materials that could be inadvertently appealing to youth. racially offensive. Sophie van der Vecht. Neni Pogarcic. Campaign and Sensitivity Review: Starbucks marketing materials and promotional campaigns undergo a formal “sensitivity review” process prior to their approval and distribution. If consistent feedback is provided from members of the panel about a potential issue. This process. To help ensure all of our marketing efforts remain consistent with these principles. Diversity. including some products which may appeal to young people. Media Buying: When planning and executing marketing campaigns in which paid advertising media is used.such as Customer Relations. we have formalized our long-standing practices by implementing new review policies for all our marketing and communications activities. Starbucks has instructed its advertising agency to select media vehicles whose audience composition is closely aligned with Starbucks adult customer base. While the Company’s overall marketing. Communication of the policy: Starbucks policy on marketing to youth is shared with all staff within the marketing function.

000.468.916.400. Neni Pogarcic.92 Sophie van der Vecht.666.00 € 200.800.00 € 533.00 € 218. Dan Mackinnon.00 € 32.00 € - Depreciation and amortization expenses $ 38.67 Income taxes $ 23.67 Store operating expenses $ 240.000.250.000.00 € 1.75 Net earnings $ 38.00 Subtotal operating expenses $ 579.67 € - Operating income $ 60.50 € 19.500.000.00 € - General and administrative expenses $ 38.000.937.00 € 50.400.00 net EBIT $ 62.362.400.666.00 € 482.00 € 51.447.33 Cost of sales including occupancy costs $ 262.00 € 32.50 € 32.200. April 2006 Tim Ensing.333. Lucia Suchankova . Appendix D: Average Statement of Earnings Average Starbucks Average Starbucks in € STATEMENTS OF EARNINGS DATA Total revenues $ 640.666. Hidde van der Dussen.300.67 Interest and other income $ 1.

00 Operating income $ 60.00 Subtotal operating expenses $ 579.000.000.000.50 € 42. Neni Pogarcic.800.00 € 114.200.00 € 112. Appendix E: Amsterdam Pro Forma Statement of Earnings Average Starbucks Amsterdam Expectation STATEMENTS OF EARNINGS year 1 DATA Total revenues $ 640.250. Lucia Suchankova .400.000.400. April 2006 Tim Ensing.300.000.00 € 1.000.000.500.00 € 300.25- Net earnings $ 38.00 net EBIT $ 62.00 Cost of sales including occupancy costs $ 262.400.00 Depreciation and amortization expenses $ 38.50 € `155.000.00 € 32. Hidde van der Dussen.00- Interest and other income $ 1.00 € 32.75- Sophie van der Vecht.000.750.281. Dan Mackinnon.00 General and administrative expenses $ 38.362.00 € 564.937.00 € 450.00 Store operating expenses $ 240.00- Income taxes $ 23.00 € 200.131.

00 Total current liabilities € 33.20 Other long-term liabilities Shareholders' equity: € 9.419.167.90 Short-term borrowings € 18.241.432. net of allowances € 7.989.00 Retained earnings € - Other additional paid-in-capital € 3.419.00 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable € 15. April 2006 Tim Ensing.348.564.232.00 Property.243.00 TOTAL ASSETS € 152.474.00 Inventories € 53. Appendix F: Pro Forma Balance Sheet ASSETS Current assets: Cash and cash equivalents € 9.00 Other intangible assets € 5. Hidde van der Dussen. Lucia Suchankova .484.00 Long-term investments € - Equity and other investments € 10. Neni Pogarcic.00 Total current assets € 69.00 Sophie van der Vecht.00 Total shareholders' equity € - TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY € 152.004.667. Dan Mackinnon.90 Long-term debt € 73.767.00 Accounts receivable.00 Other assets € 6.213. plant and equipment € 59.

82 € € € € 363.00 32.00 600.397.00 39.963.00 Depreciation and € € € € amortization 33.03 29.24 Net earnings 5.000.00 expenses General and administrat.13 21.000.500.500.00 594.00 250.54 35.00 39.000.123.00 664.00 350. Lucia Suchankova .000.000.000.38 - € € € € 136.18 net EBIT 9.000.000.723.00 Cost of sales & occupancy € € € € costs 225.00 250. € € € € expenses 33.00 € € € € 364.000.00 300.00 € € € € Store operating expenses 250.000.000.38 602. Dan Mackinnon.000.00 554.Appendix G: Amsterdam high and low forecast Statement of Earnings high Amsterdam Amsterdam forecast low forecast Expectation yrExpectation yr STATEMENTS OF EARNINGS 2 3 year 1 year 1 DATA € € € € Total net revenues 550.500.041.202.000.000.00 Operating income 8.00 300.06 46.368.00 266.000.00 32.230.00 46.94 Income taxes 3. Hidde van der Dussen.273.00 55.000. April 2006 Tim Ensing. Neni Pogarcic.500.00 - € € € € Interest and other income 1.000.11 - Sophie van der Vecht.541.67 56.000.00 650.578.00 32.138.02 17.27 - € € € € 227.000.67 868.000.500.500.06 723.00 190.000.000.00 32.00 € € € € Subtotal operating expenses 541.521.

Lucia Suchankova . Hidde van der Dussen. Appendix H: Advertising Pyramid Sophie van der Vecht. Dan Mackinnon. April 2006 Tim Ensing. Neni Pogarcic.

Neni Pogarcic. Lucia Suchankova . Appendix I: Creative Series 1 Phase 1 Phase 2 Sophie van der Vecht. Dan Mackinnon. Hidde van der Dussen. April 2006 Tim Ensing.

April 2006 Tim Ensing. Dan Mackinnon. Lucia Suchankova . Hidde van der Dussen. Neni Pogarcic. Phase 3 Sophie van der Vecht.

Lucia Suchankova . Dan Mackinnon. April 2006 Tim Ensing. Appendix J: Creative Series 2 Phase 1 Phase 2 Sophie van der Vecht. Hidde van der Dussen. Neni Pogarcic.

Hidde van der Dussen. Dan Mackinnon. Phase 3 Sophie van der Vecht. Lucia Suchankova . Neni Pogarcic. April 2006 Tim Ensing.