Professional Documents
Culture Documents
Starbucks Marketing Plan
Starbucks Marketing Plan
1) Provide a great work environment and treat each other with respect
and dignity.
2) Embrace diversity as an essential component in the way we do
business.
3) Apply the highest standards of excellence to the purchasing, roasting
and fresh delivery of our coffee.
4) Develop enthusiastically satisfied customers all of the time
5) Contribute positively to our communities and our environment
6) Recognize that profitability is essential to our future success.
Vision: To inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.
Objectives:
Our Coffee- It has always been, and will always be, about quality. We’re
passionate about ethically sourcing the finest coffee beans, roasting them
with great care, and improving the lives of people who grow them. We
care deeply about all of this; our work is never done.
Our Partners- We’re called partners, because it’s not just a job, it’s our
passion. Together, we embrace diversity to create a place where each of
us can be ourselves. We always treat each other with respect and dignity.
And we hold each other to that standard.
Our Customers- When we are fully engaged, we connect with, laugh
with, and uplift the lives of our customers – even if just for a few moments.
Sure, it starts with the promise of a perfectly made beverage, but our work
goes far beyond that. It’s really about human connection.
Our Stores- When our customers feel this sense of belonging, our stores
become a haven, a break from the worries outside, a place where you can
meet with friends. It’s about enjoyment at the speed of life – sometimes
slow and savored, sometimes faster. Always full of humanity.
Our Neighborhood- Every store is part of a community, and we take our
responsibility to be good neighbors seriously. We want to be invited in
wherever we do business. We can be a force for positive action – bringing
together our partners, customers, and the community to contribute every
day. Now we see that our responsibility – and our potential for good – is
even larger. The world is looking to Starbucks to set the new standard, yet
again. We will lead.
Our Shareholders- We know that as we deliver in each of these areas,
we enjoy the kind of success that rewards our shareholders. We are fully
accountable to get each of these elements right so that Starbucks – and
everyone it touches – can endure and thrive.
anytime and not feel bad about it,” Rhinehart says. Chicago-based market
research firm Technomic reports that consumption of hot specialty coffee has
grown 14 percent in each of the past three years. Some 82 percent of American
adults are coffee drinkers, up from 79 percent in 2004. The SCAA reports the
specialty market topped $12 billion at the end of 2008. Additionally, the number
of coffee shops in the United States has grown from 1,640 in 1991 to nearly
24,000 at the end of 2008. The bulk of those, about 11,000, belong to the
Seattle-based company that coffee-watchers agree almost single-handedly
brought specialty coffee to the masses.
“Starbucks capitalized on the trend to better coffee by offering a unique
new presentation of that coffee,” Rhinehart says. “Americans weren’t used to
espresso-type drinks. We were starting to take more meals and beverages out of
the home. Starbucks was in that perfect spot of having a unique product, they
offered great value, there was a new consumer pattern…and they were
cognizant of their place in the social fabric, as a third place for people to gather.”
World coffee exports totaled 7.75 million bags in July 2008, an increase of
1% compared with the volume of 7.67 million bags recorded in July last year.
Total exports in the first 10 months of coffee year 2008-09 (Oct-06 to Jul-07)
were up by 13.3% from the same period last year, totaling 81.52 million bags
compared to 71.94 million bags in the prior year.
Brazil 35
Vietnam 18
Columbia 12
Indonesia 6
Ethiopia 5
Coffee consumption in the United States has increased steadily since the
1960’s. Through the recent recession, coffee was essentially recession-proof.
Daily consumption of coffee beverages among consumers remained unchanged
as compared to 2009, with 56% of adults partaking. 84% of consumers have not
changed their consumption habits despite the economic environment.
Today, consumers enjoy having a coffee place that's right around the
corner and worth the price. Unfortunately, it is common belief that, Starbucks
took the demand of the consumer a step too far, by over saturating the market
with stores.
One of the best examples of over saturation can be found in a strip mall in
Colorado. Exactly three Starbucks locations can be found; no more than 750 ft
away from one another, and two of the three stores are only 200 ft away from
each other. By flooding the market with spots for coffee, Starbucks has been
wasting growth potential, and opting for current market optimization.
Unfortunately, the optimization is becoming wasteful and hurting the brand
image.
In a number of press releases, Howard Schultz, Chairman and Founder of
Starbucks, has mentioned the loss of original roots associated with becoming a
chain store. The focus on coffee shop ambiance was the root to Starbucks'
success, but somewhere along the line the company lost the entrepreneurial
spirit. It is not just the fact that Starbucks is now on every block that has hurt the
company; it is the loss of the entrepreneurial spirit that has affected the public
opinion. At one point in their history, Starbucks was seen as a coffee shop
dedicated to customer satisfaction. After rapid expansion and growth Starbucks
is now seen as a corporate giant concerned with one thing; profit. This problem
was quickly addressed with the return of Howard Shultz, and the effects are
starting to be noticed by the change in public opinion.
of every age. The company targeted small towns, rural communities, ethnic
neighborhoods, highway rest stops, and even markets already saturated with
various coffee shops ("Starbucks Corp: Long-Term Growth Goal Raised To
30,000 Stores World-Wide"). What began as a niche target market eventually
came to include consumers from all facets of life.
Starbucks is often considered an affordable luxury, enabling the Company
to broaden its demographic reach in recent years. Five years ago, the typical
Starbucks customer was older, had an advanced degree and more disposable
income. Today's Starbucks customer has expanded to include a younger (13
percent 18-24 years old), more diverse (37 percent multi-cultural), and slightly
lower average income ($55,000 per year).
"We are reaching more and more new customers by introducing innovative food
and beverage products with broad appeal and by taking our stores into
increasingly diverse markets," said Jim Alling, president, Starbucks Coffee U.S.
"By connecting with customers, serving the highest quality coffee and striving to
consistently deliver legendary service, our store partners are at the core of the
Starbucks Experience."
operated 7,238 retail stores in North America and 1,979 stores internationally. Its
retail-operated stores generated 84% of its total revenue.
Specialty Operations
Starbucks’ specialty operations segment tries to develop the company's
brand through third parties outside the traditional coffeehouse. Specialty retail
operations accounted for 16% of Starbucks’ total revenue in 2008.
Italian Roast, and later with a sweetened version called "iced" (even though all
VIA varieties can be made directly as an iced drink). In October 2010, Starbucks
expanded the VIA selection by introducing four new presweetened flavored
versions: Vanilla, Caramel, Cinnamon Spice and Mocha.
3.1.4 Others
In terms of perception, 7-Eleven and Dunkin Donuts provide coffee in a
For example, ice coffees, frappuccinos, smoothies, tea, and holiday specialty
drinks in different seasons.
Advantages of Starbucks include the atmosphere that going into a
Starbucks portrays. Many people go to Starbucks for the surroundings and to
“hang out”, not just to enjoy their coffee. The employees or “baristas” have been
trained not only about the Starbucks Corporation, but about the coffee market as
a whole. Starbucks continues to higher people that enjoy there type of
surroundings and love what they do. It is an advantage to see a happy employee
who enjoys their job; it makes the consumer’s experience that more enjoyable.
Benefits of Starbucks are the free Wi-Fi service so the business
professionals can come in and work on a lunch break or in the evenings. This is
also beneficial for college students to study during finals week. Starbucks is all
about the experience and being able to provide their consumers a high quality
coffee. I believe that is also a benefit; they only provide the best coffee, which is
why they charge a higher price.
3.4 Perceptual Map of Starbucks and its Competitors (Coffee Shop Market)
3.5.1 Product
The company has also been constantly introducing new products, such as
"Instant via Ready" and "Full Leaf Tazo Tea Lattes" and "Tazo Tea Infusions".
The Instant via Ready is an instant coffee that the company claims is
indistinguishable from its regular brewed coffee (Jargon). Full Leaf Tazo Tea
Lattes and Tazo Tea Infusions are the company's new tea offerings through
which it hopes to attract tea drinkers. The company also offers Starbucks coffee
and cappuccino makers for consumers who wish to replace their existing home
coffee makers.
3.5.2 Price
paired with a coffee, and highlights $2 brewed coffees instead of the more
expensive specialty drinks.
3.5.3 Place
3.5.4 Promotion
This section will explain in detail what differentiates Starbucks from its
competitors. The evaluation will consist of analyzing the marketing concepts,
principles, and strategic tools that Starbucks utilizes in differentiating themselves.
the customers is what Starbucks wants to be known for. Starbucks wants its
customers, and potential customers to perceive them as a company that has a
positive impact on the world. This is one of the ways Starbucks is using
marketing concepts to strengthen its marketing strategy of a differentiator.
- It is a global coffee brand built upon a reputation for fine products and
services
Starbucks also sells coffee and tea products and licenses its trademark through
other channels such as licensed retail stores. Starbucks operated 8,832
company operated stores and 7,803 licensed retail stores worldwide as of
September 2009. Such an extensive product offering enabled the company to
enhance its reach, cater to a wider customer base and meet their diverse needs
efficiently.
The core strength behind Starbucks's brand is the quality of its products.
The company has a strong research and development team which is responsible
for the technical development of food and beverage products and new
equipment. Starbucks's strong research and development capabilities enable it to
focus on relevant product innovation, expansion and leveraging of its existing
products and sales channels. For instance, in FY2009, the company launched
Starbucks VIA ready brew coffee to capture a significant share of both the $21
billion global instant coffee category and the single-serve market and further
expanding its coffee expertise and leadership in local and international markets.
Starbucks VIA is made with a proprietary, US patent-pending microgrind
technology to preserve the coffee’s taste, quality and freshness. Additionally in
September 2009, the company’s brand Seattle’s best coffee introduced “Just
Pure Flavor”, an innovation for fresh brewed coffee that offers customizable
flavor by the cup. The new flavors use no dairy, sugar or artificial sweeteners,
and add less than 50 calories to a 12 fl. oz. (5 calories) beverage.
Starbucks invests substantial amount of resources on technical research
and development activities including customary product testing and product and
process improvements. For instance, Starbucks spent approximately $6.5 million,
$7.2 million and $7.0 million during FY2009, 2008 and 2007, respectively on its
research and development activities. Starbucks's focus on quality and product
innovation help sustain the brand value of the company and introduction of new
products at regular intervals helps them to stay competitive.
Starbucks is well positioned to increase its revenues, customer’s base,
and profit margins through its expanded presence in international markets.
Starbucks currently operates in more than 50 countries.The company’s
credit ratings to stable from negative based on improved credit metrics and
stabilizing performance. It also affirmed the BBB corporate credit rating on the
company and raised the short-term rating to A-2 from A-3. Strong financial
performance and improved cash flows were the main reason for Starbucks’s
improved ratings. The stable credits of the company increase stakeholder
confidence and also provide an opportunity to raise finances to meet any
expansion plans in the future.
4.4 Threats
- Increased minimum wages affect operating margins
people interviewed ranged from Starbucks fanatics, average Joes, and anti-
Starbucks activists. We looked at every survey and suggestions submitted,
(almost 500,000 surveys in total) and picked out the ones that represented what
most customers were saying.
“Personalization is Key”
“The coffee is still as good as ever, the flaw is in the ambiance. The interior
of each Starbucks location is growing more and more placid; meaning it needs
SOUL. I recall a Starbucks in Kent, Ohio where students from the nearby
university would gather on all nights of the week to reminisce, relax, and enjoy
coziness away from school life. The employees were students as well and they
joined their classmates in discussions while still doing their job. The atmosphere
at this Starbucks was warm in the winter and vibrantly cool in the summer.
Being a college student who has recently moved to New York City, I have noticed
a slight similarity in the Starbucks locations here—the interiors are all the SAME.
It could be that the general method of Manhattan-ites is “In quick to get my coffee
and go”, but I am not always in a rush and would like some identity as a
consumer. I want to be able to say, “It’s MY Starbucks and they are MY
Baristas.” –Kristopher Patel, St. Johns University
It was OK when there were some. Not now. Just today I noticed a new
Starbucks on my work com- mute. Hmm, let me count the number of Starbucks
or other Starbucks-branded locations on my eight mile commute to work: there’s
one Drive-thru location, three in Albertson’s, one 24-hour Starbucks (2 blocks
from Albertson’s), one inside target, and two more standalone Starbucks within a
4 block radius of each other and the target outpost. And there are no large office
parks on my drive! In fact only a handful of people work on this route! Clearly this
is far too many Starbucks! They are starting to be to concerned with the quantity
of stores than the quality. Every Starbucks is the same and the flooding of the
market is starting to get frustrating. –Jane-Ann Ervine, Dallas, Texas
“Slow down!!”
Everything needs to slow down at Starbucks. It’s becoming a fast food
restaurant because the employees are letting it. There needs to be more of a
welcoming in-store feeling where people can enjoy a coffee without a lineup of 30
people and employees yelling “triple skinny latte!” Perhaps offering a few select
dine-in coffee services? I know this is bold and very different, but I feel like it
reflects the luxury Starbucks is trying to convey. Having a full-service coffee
place also allows for people who go to meet up for a coffee somewhere a little
special to relax and chat without all the hustle and bustle. It’ll give a little revamp
to the image, and hopefully upgrade it a bit. –Rob Stevens, New York, New York
drink? I think it’ll be something non-coffee. Our generation loves energy drinks—
so how can we get a similar kick in a better tasting WARM drink without coffee
flavoring. Starbucks does this well in the summer, but poorly the rest of the year,
with their only real non-coffee offering being tea and the popular Chai Latte.
#3) Treat each store as its own entity. I don’t mean with store layout design.
Create buzz around each store if you want a local feel. Stores near college
campuses should be open 24 hours during finals week, or at least offer free drip
coffee during those weeks for anyone with a Student ID. Many small business
meetings occur at Starbucks. What are their needs? Wi-Fi, of course. But maybe
they also need to be able to reserve space to meet. Let them call in advance to
reserve a small, comfort- able area in the corner for a set price. Does the area
mostly cater to families? Have toys for children to play with while the moms grab
a Chai tea, or free treats if you bring in your dog. Cater to your local crowd, and
they’ll keep coming back for more.- Eric Cassilious, ChangeThis.com
people want to be identified. The tastes, the scents, and the theatre—these are
now all costs of entry. The question is—can Starbucks create a ‘cool’ community
out of ubiquity? –Len Herstein, Charlotte, North Carolina
6.0 Objectives
6.1 Expansion of specialty branch “15th Avenue”
It could certainly pass as a stand-alone Seattle neighborhood coffee
house. There is an eclectic mixture of old wooden tables to sit at, and pictures by
local artists adorn the walls. Wine and beer are on sale, too, along with cheese
and meat plates. It feels cozy and not at all corporate. The only clue to the true
identity of 15th Avenue Coffee and Tea is the small print on the door: “inspired by
Starbucks”. For “inspired by”, read “owned and operated by”. Our goal is to
design new specialty sub-brands in order to capture more of the coffee market.
This will effectively enable us to compete with small town, individual coffee
shops, rather than being seen as a corporate entity.
The objective is to have more than 200 locations in the United States by
year 2020.
7.0 Strategies
7.1 Expansion of Specialty branches “15th Avenue”
We are going to research and develop an in-home, single cup coffee brewer
that is similar to the new Keurig machine. It will be the Starbucks brand machine
and each single cup coffee cartridges will also be Starbucks brand. We believe
this will be a great success for Starbucks in the home brewing market. An
example of a similar product being a success is the Margaretville brand named
blender. The name of the blender has high brand recognition, which has made it
a great success. Starbucks has tremendous brand recognition; that is strictly
their competitive advantage over the Keurig machine, the name says it all.
Starbucks plans to eventually phase out their espresso machine and replace it
with the Starbucks in-home brewing system. This strategy will greatly help
Starbucks compete, if not take over the in-home brewing. This will now make
them a competitor of the in-home brewers, for example Folgers.
7.3 Launch ad campaign with a focus on in-home/VIA coffee
The strategies in conducting a new ad campaign on the in-home coffee and
the new VIA instant coffee is the motto, “You can take the luxury of Starbucks to
your home.” Starbucks is known to have the best tasting coffee because they pay
a higher price for such a high quality. The high quality, luxurious coffee will now
be available in the single cup, in-home brewing machine or the VIA instant coffee
packets that have been taste tested with great success. We will have one page
ads in a handful of magazines that Starbucks has always ran in the past which
are: Rolling Stone, ESPN, Maxim, Lucky, Cosmo, US Weekly and Entertainment
Weekly. Starbucks has never done a large amount of advertising compared to
competitor, McDonalds who saturates the advertising market. There will be a
select few commercials that will be launched in the ad campaign. The
commercials will be informative of the new in-home brewing systems, (Starbucks
single cup maker & the VIA) but also focusing on the ‘bring the luxury coffee
home’ factor. The ad campaign will be a large hit towards Folgers, who is a big
leader in the in-home brewing coffee segment. Starbucks will be in every aspect
of the coffee market. Each Starbucks will have a drive threw, for the ‘grab a
coffee and go drinkers’, they will still keep the same environment throughout the
Starbucks stores, for the college student and business professional target
market, and they now will have the in-home brewing system along with a grab
and go from home instant coffee.
7.4 Starbucks change in focus – from Quantity of locations to Quality
We felt that the continuation of openings of Starbucks on every corner was
not in Starbucks best for future profits, the quantity shouldn’t be the focus. The
focus of Starbucks is in the quality, not just the coffee, which has already been
established, but also the quality of the businesses. This strategy is more focused
on the launch of the “15th Avenue” stores. We will conduct an undercover
Starbucks board that continuously listens to the customer’s opinions throughout
the current Starbucks locations and the new “15th Avenue” locations that will be
built. We want the quality of each “15th Avenue” to be sincere. Each “15th
Avenue” will be a different experience that adapts to that location. These coffee
shops will not have a corporate feel like Starbucks tends to have. There will be
large amounts of market research done in each particular location that a store
may be desired. We want to know the location, environment, demographics,
culture, and everything that has to do with the city to be able to portray the “third
place”, from work and home, as these new “15th Avenue” coffee shops.
8.0 Tactics
8.1 Expansion of specialty branch “15th Avenue”
In order to create an effective, customized specialty sub-brand, we are
going to expand on our 15th Avenue Coffee and Tea locations. However, we are
going to take an extremely different expansion approach than we have in the
past. We are going to open a new R&D department dedicated to developing six
different experiences customized to particular markets. For example, a 15 th
Avenue in a suburb of L.A. may operate completely differently than one in
Topeka, Kansas. The goal is to do enough market research to design six
different customized experiences that we can then expand with a more personal
approach to each location. After the six experiences are established, potential
franchisees will have the option of applying to open a 15th Avenue in their town.
After an application for a franchise is submitted, the R&D department will analyze
the potential market and decide which experience would be best for that
particular location. This will enable Starbucks to start penetrating the local
markets with a personal touch rather than the blanket approach of the past.
Allowing private owners to own and operate a 15th Avenue will allow the stores to
maintain their local, hometown, and personal environment while offering the
same great tasting coffee already produced at current Starbucks locations. The
thinking behind this approach is that the current Starbucks stores are best in the
metropolitan settings; however, lack the environment to compete in smaller, less
populated settings. This will allow Starbucks to directly compete with small town
coffee shops and create a wider platform for Starbucks to penetrate the smaller
markets.
Dividends per Share - Common Stock Primary 0.36 0.0 0.0 0.0 0.0
Issue
Gross Dividends - Common Stock 267.6 0.0 0.0 0.0 0.0
Interest Expense, Supplemental 32.7 39.1 53.4 38.2 8.4
Depreciation, Supplemental 509.2 533.0 547.8 466.16 386.01
10.0 Metrics
11.0 Contingency Plan
11.1 Expansion of Specialty branches “15th Avenue”
We have read a few articles regarding the new 15th avenue coffee store
and they have raised the ‘What If these people are right’ questions, “15th Ave
Coffee & Tea is an experiment doomed to failure, because there's no way a
corporate coffee chain can create an authentic neighborhood coffeehouse
experience. Your favorite local coffeehouse is the product of someone's passion,
dedication, and probable borderline craziness. 15th Ave is the product of
corporate product design and development.” If this were to come true we would
need to continue our focus on the current Starbucks branches and the in-home
brewing market. If the “15th Avenue” ends up being unsuccessful a large amount
of money would be lost, but we would be able to recover through the continued
business in the existing Starbucks stores. We believe that this will be a great
addition under the Starbucks name.
that is may not be something the consumer really feels the need to purchase.
These are all aspects that would be considered in the ‘what if’ analysis.