STARBUCKS MARKET ENTRY AND EXPANSION STRATEGY

INTO INDIA

REPORT MADE BY GROUP 1

Aditi Gupta Abhijit Bhowmik

1311281 1311347

Akanksha Mittal Ramnarayan

1311282 Atirek Kumar Subudhi 1311320
Akshat Sinha
1311283 1311291
 Group 1 Report

STARBUCK’S STRATEGY RECAP FROM PREVIOUS REPORT

Key Excerpts from Previous Report by conducting 4 in-depth interviews. The

results of the in-depth interviews have been
In the previous report we had analyzed the summarized in Fig 2.
5Cs for Starbucks’ Entry in India. It was shown
how the Indian café industry has a high
Hangout
growth potential but is marred by fierce with
Friends
competition and barriers to entry. Develop
team Dating
bonding

100%
import duty
Needs/
Rising Triggers
Relax/ Busineess
Coffee High Real
Culture in Estate Cost Chillout meetings
youth
Cafe
Have
Emergence
Industry Alternative
Reading
books
readymade
food and
of a large products coffee
number of like tea,
QSRs/Chains soda
Liberalised
FDI caps

Figure 2: Needs/Triggers of Café Visitors

(Source: In Depth Interviews)
Figure 1 Market Force Analysis of Indian Cafe
Coffee Industry
But still the growth potential in Indian coffee
According to our findings, chilling out,
industry has been a point of attraction for
bonding with friends & colleagues, having
foreign players.
readymade food and beverages, scheduling
We had analyzed different competitors and business meetings, dating and reading books
the competitive landscapes in which we were amongst the key triggers of customer
concluded that Starbucks faces tough needs.
competition from CCD and premium players in
Then we studied the parameters on which
India.
people evaluate a café. We asked a group of
We studied about the distribution channels 35 students at IIM Bangalore to
available for Starbucks and concluded that
“Please mention 10 most important attributes
TATA-Starbucks alliance has a considerable
that you consider while going to a café”
edge in distribution channels due to TATA’s
infrastructure in India. As the results came out Ambience, Quality of
Service, Taste, Price and Service Time are
Consumer Buying Behavior - Recap
amongst the 5 most important attributes that
We analyzed consumer buying behavior and café visitors look at while evaluating which
concluded that 52% of people go to a café on café to go to.
suggestion from friends and family. We also
Regression analysis along with Correlation
analyzed what goes in the mind of customers
Matrix helped us conclude that Price is highly
while deciding whether to go to a café or not
correlated with Taste, Discount and Location.

2
This implies that someone with high degree of
satisfaction in Taste, Location and Discount
will be willing to pay higher price and Price is
highly correlated with Ambience and Taste
and thus could be a major heuristic that is
being considered during Café selection
process and thus good ambience and nice
taste might command a higher price.
Moreover, when asked to rate the different
café, the consumer results were slightly
surprising. Despite holding the highest market
share, CCD came second to Barista in almost
all attributes according to Expectancy Value
Model. This necessitated the presence of a
heuristic method of evaluation. Correlation
analysis indicated that Price and Easy
Accessibility is highly correlated to other key
attributes and could thus be a lexicographic
unit of evaluation.
So from Starbucks perspective, even though
Ambience, Taste, Service Time and Quality are
rated above Price when looked from a
compensative evaluation point of view,
however, when it comes to making a choice
between brands, consumers most likely follow
a lexicographic approach based on Price.

MYTHBUSTERS:

From our analysis on consumer behavior we found out some interesting facts. These facts nullified
some common perceptions which are reported as myths below and our findings as facts.

Myth Fact
Quality of coffee drives people to coffee Quality of coffee ranks fifth when it comes to
café important attributes of café. It is not even in top three

Price is very important attribute that Price is not even in top 5 attributes. People don’t mind
people consider before going to a café paying more for better experience

People go to CCD because it’s the best Barista and Costa surpassed CCD in almost all
attributes when ranked by customers

STARBUCK’S STRATEGY
Introduction
During Depth Interviews, we realized that the
coffee consumer cannot necessarily be
divided on the basis of income or age. Higher
income consumers do not necessarily prefer
better tasting coffee if they are used to
drinking tea. Similarly, younger educated
population need not look for good quality
coffee but is more attracted to a better
ambience. Based on the survey and secondary
research conducted by us, we have divided
the coffee consumer market into six
segments, primarily on the basis of
psychographics.
The Consumer personas have been developed
keeping in mind their preference for clothes,
their liking for social media, coffee habits,
upbringing and personality traits like
introvertedness, extrovertedness, loudness,
etc. People in a particular segment need not
have the same occupation as our primary data
showed that coffee preferences are not
necessarily linked to the profession of a
person. A well - traveled businessman may
admire good coffee more than a stylish
corporate. The choice of a café and
consequently a coffee is primarily based on
the lifestyle of a person. The consumer
personas as developed by us are as follows:
Coffee Experts
Arindham is an experienced 38 year old coffee
lover is a socialite who feels comfortable in his
Fab India linen clothes. Because he loves his
coffee so much, he is very picky about it.
Owing to the lack of availability of good coffee
in his vicinity, he recently purchased a coffee
vending machine for himself, after a long
search for good quality coffee at the nearby
cafes. He is well settled in life and his work
requires him to travel a lot. This has exposed
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Group 1 Report
Segmentation
him to various kinds of coffees and now he
can tell a coffee bean by its aroma.
He is not very active on social media as he
doesn’t see the point of talking about his
personal life to strangers. Any day willing to
pay a higher price for good quality espresso,
macchiato or risotto, he likes his coffee
without milk or sugar. He has a limited set of
close friends but is very well networked,
mostly with coffee lovers like him that he met
during his travels. If only he could find just the
right kind of coffee, he would be happy
spending his evenings at the same place
serving it.
The Trendy Lot
Gauri loves to travel, make new friends, and
stay connected to them through social media.
Usually high on life, she is 28 and has strong
world views that she is quite vocal about on
her personal blog. She doesn’t leave home
without her Gucci shoes and Vera Moda
dresses. Her work requires her to interact
with people from all walks of life and she
makes it a point to follow up on all the trends
in the market. Her large group of friends often
start projects that become famous and are
taken up by people around them.
She likes to “flirt with life” and try out
different places where she can sit with her
friends and just spend some quality time in an
aesthetically appealing environment. She likes
variety in her food and beverages and doesn’t
mind leaving a good tip for a charming service
at a restaurant. Her charismatic personality
enhanced by her wide choice of books draws
people towards her and when she speaks,
they usually listen to her and follow.
 Group 1 Report

Status Opportunist Value Filterers

Ramesh is 24, a hardcore Punjabi who
recently had a Big Fat Indian Wedding. He is
proud of a foreign education that his parents
were able to afford for him. Though he finds it
a little difficult to speak in English, he hangs
out with his bunch of “cool” American friends
because he can spend on them. He has lots of
Facebook friends, most of whom he doesn’t
really know. He doesn’t think it is important
to keep the environment clean but during
outings he throws the garbage in the bin
because people around him say that he
should.
He is easily spotted with spiky gelled hair,
Louis Vuitton formal/semi-formal attire and a
cappuccino by the side. He holds his corporate
meetings with clients in large cafes and likes
to sit there working on his laptop for hours,
just the way they show in the English movies
he saw. He likes setting meetings online
because it is quick and requires limited face to
face contact, something that he is not very
comfortable with.
Rani just turned 20 and moved from the
suburbs to the city. The daughter of a primary
govt. school teacher, she likes going out with
friends but usually operates on a tight budget.
She doesn’t think it is cool to spend too much
money if one can get the same value at a
lower price. Her parents instilled qualities of
honesty and dedication in her since the
beginning. Though she likes to “go wild” with
friends, she wants to “do wit with her own
money”. As a kid she would force her parents
to go to high end restaurants. Though they
weren’t very fond of them, they would still go
for the kids. Lajpat Nagar and Sarojini Nagar in
Delhi are her favorite shopping hubs. She can
spend hours bargaining the price of a kurta
and finally not buy it if it doesn’t suit her
budget. She likes restaurants that give
complimentary breads along with food. She
looks for the function al benefits of
everything, be it clothes, food or beverages.
Though not very fond of coffee, she doesn’t
mind trying it with friends and might get used
to it if she likes it. Lajpat Nagar and Sarojini
Nagar in Delhi are her favorite shopping hubs

Table 1 Consumer Personas

Status
Coffee Experts The Trendy Lot Value Filterers Traditionalists Easy Goers
Opportunists

35-49 years of 25- 35 years of 25- 40 years of 16 – 30 years 25- 40 years of

50 onwards
age age age of age age

Looking for Looking for

Looking for Looking for Looking for old Looking for
good quality value for
good ambience good crowd times nothing
coffee money

Shop from Fab Shop from Shop from Luis Shop from Usually gifted Variety of
India Gucci Vuitton Lajpat, Sarojini clothes clothes

Smells like
Govt Artists,
Anna Wintour Teen Spirit, Expats, Retired
Employees, academicians,
Latte Kitty Party Corporates personal
Teenagers intellectuals
Ladies

5

She can spend hours bargaining the price of a
kurta and finally not buy it if it doesn’t suit her
budget. She likes restaurants that give
complimentary breads along with food. She
looks for the functional benefits of everything,
be it clothes, food or beverages. Though not
very fond of coffee, she doesn’t mind trying it
with friends and might get used to it if she
likes it.
Traditionalists
Gangadhar is looking forward to his 51st
birthday because he will get to meet his entire
family once again. Having lived alone all these
years, he likes going to the nearby café and
order his favorite “Chai Latte”. Lately, because
of the advent of coffee, he is not too happy.
He misses the days when he would sit at the
table for hours, sipping his masala tea with
friends and colleagues. He usually prefers a
samosa with his tea but has recently started
taking to the western egg puff because it is
STARBUCK’S STRATEGY
Introduction
Now that we have segmented the Indian
coffee drinking population into different
groups and created consumer personas for
each of them, we now need to decide which
segment Starbucks should target.
In order to help us design an effective
targeting strategy, we have created a metric,
containing 4 parameters, for the same.
Since, Starbucks wants and actually should
position itself as a “Premium Quality Coffee
Provider”, thus it’s important that the
consumer segments the company attacks
should not only have the ability to pay but
also be able to appreciate good coffee and
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Group 1 Report
soft for his teeth to bite on. Though he prefers
wearing the traditional safari suits, his clothes
are usually gifted to him by relatives and kids.
Easy Goers
Robert is a mostly silent observer who doesn’t
mind being all by himself. He likes to spend his
time walking around in an exhibition,
discussing the social relevance of the pieces of
art with the painter. He has a diverse circle of
friends ranging from social activists, painters,
musicians, academicians etc. He likes doing
things that are intellectually stimulating, even
if it is just talking to a Doctor about his
profession for long hours at the coffee table.
He doesn’t necessarily buy too many things
when he goes to eat because he is usually too
engrossed in his conversations. He also likes
spending time with his fiancé outside the
constraints of a family home and try to
understand her better over long hours of
conversation.
Targeting
able to excite others (they should be trend
setters). Apart from this, it’s essential that the
targeted segment should have a significant
base and provide growth opportunities for the
Willingness
to Pay
Appreciate
Quality
Bases of Can they
spread or
excite
Coffee
Targeting others ?
Likeability
for social
image
Figure 3 Bases of Targeting
 Group 1 Report

company. In order to evaluate our consumer

segments on these fronts, we have created a
Targeting Grid to assess the suitability of a
segment based on the aforementioned
criteria.

As we can clearly see from Table 2, the Trendy

Lot, the Coffee Experts (i.e the taste
connoisseurs) and the Status Opportunists
score the highest on our Targeting Grid,
indicating their highest compatibility with our
targeting requirements. It is our
understanding that these personas co-exist in
different competitive reference frames, which
we shall discuss in detail in the next section. if Starbucks is able to successfully market to
the Trendy Lot, who essentially are the style
Amongst these three consumer segments, our experientialists and the trend setters.
team believes that Starbucks should primarily
target the Coffee Experts and the Trendy Lot, Now that we have pinned down on the most
with the Status Opportunists falling in the plausible consumer segments to attack, we
Secondary Target Market. need to next identify “From where will we get
these customers?” According to the India
As we can clearly see from Table below, the Coffee Board Report, nearly 40% of the
Trendy Lot, the Coffee Experts (i.e the taste people drink coffee out-of-home, and around
connoisseurs) and the Status Opportunists
score the highest on our Targeting Grid,
indicating their highest compatibility with our
targeting requirements. It is our
understanding that these personas co-exist in
different competitive reference frames, which
we shall discuss in detail in the next section.
The rationale behind this segregation, as can
be seen from the figure above is that as per
the persona definition, the Status
Opportunists are actually trend followers and
20% consume coffee only outside home.
would thus, be automatically/easily targeted
Amongst the out-of-home consumers, who

Likeability for Can they

Willingness Appreciate
Persona Social spread or Total
To Pay Quality Coffee
Image/Status excite others?
Coffee Experts 2.5
The Trendy Lot 3.5
Status
2.5
Opportunists
Value Filterers 0.5
Traditionalists 0.5
Easy Goers 1.5
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are essentially our target segments, the

majority of the consumers go to restaurants &
hotels for drinking coffee, while only 4% go to
cafes. This not only reflects restaurant goers
as a huge “untapped” market for café coffee
consumers but also falls in line with our
primary targeted consumer segment viz.

Where do people consume

Cafe coffee
4%
Vending Canteen
m/c 13%
6%
Coffee
Restaur
Stall
ants/Ho
33% Figure 7 Targeting Map - Flow of Customer
tels
44% Finally, the price insensitive segment of the
CCD consumer base should also be targeted.
Figure 6 Where do consumers drink coffee o/o home
Figure 7 aptly captures the targeting strategy
Trendy Lot (or the Style Experientialists), who
Having identified our key consumer segments
visit hotels/restaurants such as Hyatt, Dewan,
and also the competitive frames of reference,
Ashoka etc. Moreover, there is a part of these
we shall next discuss how Starbucks should
style experientialists who primarily visit the
position itself to each of the consumer
International Coffee Brands such as Costa,
segments and with respect to its possible
Mocha, Barista etc. This is the second
segment from where we believe we can get competitive frames.
current users.

STARBUCK’S STRATEGY Positioning

Introduction

Developing an effective positioning strategy is Reference Frame 1: International Brands

essential for ensuring a brand’s recognition
and recall. In our analysis, we have considered
4 different competitive frames of reference
taking into account Starbuck’s immediate
competitors as well as other noteworthy
players who have the potential to act as a
spoilsport in penetrating the Indian market.
We will discuss on Starbuck’s perceived
points-of-parity and points-of-difference with
respect to these frames of reference one by
one below.
Established international brands like Barista,
Costa Coffee, Lavazza, etc. have the
advantage of having entered the Indian
market much earlier. These cafes have an
advantage of having entered the Indian
market earlier than Starbucks but they still
haven’t been successful enough in expanding
their network of outlets. The perceived
benefits of Starbucks with respect to these
brands are shown in the figure 8.

8

International
High Quality Coffee Cafe Brands
Customer
Starbucks
Needs
Brand Equity
Customer Service
Larger Outlets
Product Range and Variety
Figure 8 POPs and PODs of Starbucks with International
Café Brands
Reference Frame 2: Local Café Brands
This category of café brands poses the
greatest challenge to Starbucks in terms of
customer acquisition and market share. Café
Coffee Day being a dominant player is the
biggest threat but the category is also
populated with several other tea servicing
brands like Chai Point. They have the
distinctive advantage of having a better
understanding of local tastes and preferences
and thus provide better value to Indian
consumers. Affordable prices and wider
network of outlets make them a preferred
choice for the Indian consumers.
Starbucks, in turn, can leverage on its stronger
brand image and experience in delivery an
excellent overall customer experience to
attack their existing customers.
POPs and PODs for Starbucks with respect to
these brands are shown in figure 9.
Group 1 Report
Indian Affordable prices
Largest network of outlets
Good Taste Cafe Brands Indian Tastes
Wide variety of products
Customer
Starbucks
Needs
High Quality Coffee
Brand Image and Brand Equity
Bigger Stores and better ambience
Figure 9 POPs and PODs of Starbucks with Indian Café
Brands
Reference Frame 3: Quick Service
Restaurants
Offerings from KFC like crushers, McFlurry,
Choco Lava etc. from McDonalds can also
pose a challenge for Starbucks in the long run.
These Quick Service Restaurants pose a
challenge to Starbucks not in terms of the
product but in satisfying a similar consumer
need. They bank on their brand value and
immediate delivery counters to attract the
youth and travellers.
Their stores and outlets are not so big in size
and so are not preferred destinations for
spending time out with friends or family
members. Starbucks with its strong brand
value and better quality of service can
leverage on these attributes to capture a part
of their market share. Figure 10 aptly
illustrates the PODs and POPs for Starbucks
with respect to QSRs.
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every nook and corner of India and provide

cheaper alternatives over the bigger brands.
Small tea/coffee outlets near our residents
Quick Customized products for
the Indian market and apartments are a popular destination for
Brand Image Service Faster Delivery the Indian college going youth for short
Serve Food & Beverage
Requirements
Restaurants evening hangouts and older family members
for their early morning tea. They also provide
multiple benefits by serving the essential daily
needs of the family.
Customer
Starbucks
Needs Designing Brand Positioning for Starbucks

In order for Starbucks to effectively compete

Specialized High Quality Coffee
against the competitors, it needs to capitalize
Brand Image and Brand Equity
Bigger Stores and better ambience on its core brand associations and it’s PODs
Figure 10 POPs and PODs of Starbucks with Quick relative to other player. Figure 12 and Figure
Service Restaurants 13 represent the perceptual mapping of
Starbucks with its competitors and the Brand
Reference Frame 4: Local Restaurants and
Concept Modeling of Starbucks
Coffee Shops

Local Indian Restaurants have the maximum Premium

market share among the general Indian Product Quality
population. They rates high in terms of their
accessibility and convenience for the
Low Premium
customers. User User
Status Status

Easy Accessibility
Local Coffee Serve Multiple Daily Needs
Shops Ordinary
Serve Tea/Coffee Home Delivery
Requirements Product Quality

Starbucks International Café Brands

QSRs Indian Café Brands
Customer Local Coffee Shops
Starbucks
Needs
Figure 12 Perceptual Maps
High Quality Coffee
Based on the characteristics of the proposed
Brand Image and Brand Equity
Bigger Stores and better ambience target segment in India and the points of
Figure 11 POPs and PODs of Starbucks with Local Indian difference of Starbucks with respect to the
Restaurants and Coffee Shops
competitors, we propose that Starbucks can
They have a best understanding of the Indian consider positioning itself as “Premium coffee
consumers’ tastes and are more preferable experience for a Premium customer”.
for going out as a family. They are present in

10

Figure 12 Brand Concept Model of Starbucks (Primary Research)
Internationally, Starbucks has focused on its’
strength of “World’s Best Coffee” which has
worked for it. We recommend that Starbucks
must continue the trend in India. They will
cater to a niche market in the beginning but
by promoting the category need for good
coffee and shaping brand attitude for quality
Starbucks coffee, the company can increase
their customer base in the future. Since
Starbucks is focusing on acquiring customers
from Costa Coffee and those from CCD who
have no choice, it is important for Starbucks
to position itself as better than anyone else.
The second important thing that Starbucks
can focus on is connecting the brand’s
premium image to its customers. As opposed
to the practice in America where it is mainly
positioned as a “one stop coffee shop for all”,
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Starbucks needs to associate itself with a
premium user image in India. Under the USER
framework, this positioning would be a part of
the “Ego” benefits derived by a Starbucks
customer. Instead of positioning itself as a
place approachable by all, it can position itself
as a reward for all those who appreciate good
coffee and are willing to pay a higher price for
it. This justifies the importance of placing its’
product offerings in a higher price range.
For Starbucks to be able to position itself as
proposed, we will consider the 7P framework
to make our suggestions in the relevant areas.
Based on the online consumer survey
conducted by us, we do not feel that
Starbucks needs to make any changes to the
People, Price and Process components
primarily because of the three reasons:
 Group 1 Report

1. They are known for treating their

employees well by providing timely
training and taking their suggestions to
improve store décor etc. Replicating a
similar strategy in India should work well
for Starbucks.
2. They have a detailed process of making the
coffee reach the final customer starting
from when it is brewed. We could not find
any significant loopholes in their
processes. However, leveraging the Tata
network can be beneficial for Starbucks
especially for a product range consisting of
tea.
3. Starbucks prices are higher than its’
competitors such as Barista, Costa Coffee
and Café Coffee Day. However, this is
justified given the better quality of coffee
served by them. While positioning itself as
a premium coffee brand, it can leverage
its’ high prices under a positive price
quality schema.

Branding and Looking Ahead

Our brand concept mapping analysis for

Starbucks indicated strong brand salience,
and thus, we believe that while
communicating our idea to the consumers
we neither need to look at creating any
category need nor creating any brand
awareness. We would be aiming at
addressing the brand attitude towards
Starbucks and establish purchase
intentions.
Based on our Segmentation, Targeting and
Positioning, we will next discuss the
appropriate marketing mix required for
successfully marketing Starbucks Coffee in
India. The first 6Ps will be focused on
Customer Acquisition, while the 7th P i.e
Promotion will be used to not only acquire
new customers but also retain the
customers through relationship building
measures.

12
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STARBUCK’S STRATEGY MARKETING MIX

As previously discussed, we will be focusing offerings during winters should be able to
on the Product, Place, Promotion, and capitalize on increased demand.
Physical Evidence for the 7P analysis.

Product

Continuing their expertise of offering

premium coffee, Starbucks should first
concentrate on communicating about its
premium beverage offerings to the customers
and maintain its unique selling point as
“premium coffee experience”. Apart from
this, to suit Indians some new measures can
be taken.

Starbucks should have a clear product

strategy for Indian market given that Indians
have very different taste preferences as
compared to the west. Competitors like Costa
Figure 13 Product Offerings for Starbucks
Coffee are already offering Apple and coconut
flavored products like Coconut Hot Chocolate Non Veg Delights: Indian population has a
suited for Indian taste. Starbucks should considerable size of meat lovers hence
augment its menu with local flavors. sandwiches and rolls with meat balls along
with other non-vegetarian items can find
Tea products: 89% people drink tea space in their menu. However, Beef is a strict
frequently in India. Since Indians like to drink no-no in most parts of India and items
tea and TATA Tea is the second biggest tea containing beef should not be introduced.
brand in the world, Starbucks can leverage on Taking care of such sentiments will help
TATA’s tea specialty and offer tea based Starbucks create brand favor in the minds of
products in addition to the premium the Indian customers.
Starbucks coffee. Starbucks already has Tazo
tea as a tea product which is going to be Regional Flavors: Catering to the north Indian
launched as TATA Tazo Tea in India. taste, Paneer based and non-vegetarian items
can be introduced in the menu along with
Seasonal offerings: Since India has hot flavors of Indian spices suiting them better to
summers, it is very much required to
concentrate on cold products like iced tea,
Iced coffee such as Iced Cappuccino and
Frapuccino and Cappuccino flavored ice
creams, something they have already come
up with in USA. During chilling winters, the
consumption of coffee in India increases from
2.39 cups to 2.75 cups a day. Special and new

13

Place
One of the most important elements for
ensuring a brand’s success is carefully
selecting the right places for selling the
product or service. Starbucks being a premier
coffee brand, our targeting is focused more
towards those segments who possess a higher
disposable income and more likely to venture
out and try out Starbucks coffee.
As a matter of convenience and availability of
information, we chose Bangalore as an
example city for our analysis to come up with
target preferred locations for opening the
initial few Starbucks outlets.
To begin with, we looked at the prime
locations for NRIs and expats, residential
settlements for people with higher disposable
income, upcoming developing areas and
suburbs in Bangalore, main hangout and
entertainment centers in the city etc. The
criteria for our evaluation included studying
the demographics and behavioral profile of
the inhabiting population and/or visiting
crowd, the location’s accessibility, existing
malls if any and property/rental rates for
opening up Café outlet. Based on these
parameters, the locations we shortlisted are
pointed out in the map snapshot given below:
Figure 14 Proposed Target Locations in Bangalore
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The strongest contender matching Starbuck’s
brand image is Lavelle Road and Vittal Mallya
Road. Coffee Experts and Status Opportunities
are brand conscious and are more likely to
visit this area looking for the right fit for their
specific preferences and which suit their
personality. Presence of the most popular
luxury brands in apparel, automobiles etc. is
likely to attract more NRIs, expats etc. and
help Starbucks gain momentum. This was
quite evident during our visit to these areas in
the kind of people who came there and their
buying behavior.
Indiranagar, Koramangala, BTM layout,
Jayanagar etc. are a mix of commercial and
residential areas, and are populated by the
higher and upper-middle income segments. A
few of these are mostly habituated by IT
professionals who are trendy and style
conscious, more influenced by peer pressure,
and will do their part in spreading the word.
Starbucks’ alliance with the Tata Group might
benefit them to a certain extent. It can
leverage on Tata’s all-India reach, extra-
ordinary network and goodwill in gaining
faster access and clearance to these locations
and also help negotiating on the lease prices
or finalizing on favorable agreements, without
having a major impact on the initial
investment required for the business.
The table below highlights the proposed
locations and how they fit into the Starbuck’s
brand image and our targeting strategies.
 Group 1 Report

Location Favorable Advantages Existing Property Rates

Characteristics Hangouts
Central Zone: Luxury High-Street Luxury Automobile Malls: Rental Rates:
Lavelle Rd, of Bangalore, Showrooms – BMW, UB City 200-265 INR/sqft/month;
Vittal Mallya Population with Porsche, Harley- Capital Values :
Rd high disposable Davidson, 18-23K INR/sqft
income
Luxury Apparel Brands,
Spas & Salons
East Zone: Populated by mostly Close to CBD, Malls: Rental Rates:
Indiranagar, high and upper Easy Accessibility, Gopalan, 175-200 INR/sqft/month;
Koramangala middle income Connected via Metro Forum Capital Values :
segment Rail, 15-20K INR/sqft

Proximity to Residential
Catchment
Brigade Rd Entertainment Hub Prime Location - Malls: Rental Rates:
of Bangalore Proximity to MG Road & Garuda, 350-450 INR/sqft/month;
Residential Rd, 1 MG Road Capital Values :
Connected via Metro 30-40K INR/sqft
Rail,
Preferred location for
new brands
South Zone: Populated by mostly Mostly IT workforce Malls: Rental Rates:
Jayanagar, upper middle and with higher disposable Forum, 150-180 INR/sqft/month;
BTM Layout middle income income, Innovation Capital Values :
segment 15-20K INR/sqft
Upcoming developing
suburb of the city
Airports Travellers (Business N.A N.A 350 INR/sqft/month
(BIA) Class) who can
contribute
significant share of
wallet

Table 3 Proposed Target Locations in Bangalore

15

Physical Evidence
Starbucks is known for its ambience and
personalized experience provided. We want
to suggest mainly two accommodations in it.
For the interior decoration of the store, there
can be an option of indigenization. But in
India, people are more inclined to foreign
culture and treat it as a status symbol. This
was evident in the conducted depth
interviews. So, they can focus more on
bringing American store design to India.
We also suggest that efforts should be made
to reinforce emotional cord with customers.
This can be done by giving personalized
attention to the customers and giving them a
sense of ownership. This can be achieved by
providing a lounge to the frequent customers
in the same price range.
Starbucks currently provides customers with
personalized name written on their mugs.
They should continue it in India also, as it is
highly appreciated by customers.
Price
Starbucks is positioning itself as a “Premium
Quality Coffee Provider”, however, according
to our primary research, Starbucks outlet in
New Delhi was “strongly associated” with
“long queues”, and we believe this is huge de-
positioning factor, given coffee purchases are
generally light touch, and such mis-events,
could prevent customers from coming to
Starbucks.
In order to avoid this rush at peak hours, we
are proposing a differential pricing strategy,
wherein we will incentivize
“morning/afternoon” visits via discounted
menu. This will help off-load consumers to
off-peak hours. Moreover, this lunch time off-
loading will also encourage managers to
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Group 1 Report
schedule client meetings in Starbucks,
thereby, helping build longer relationships
with this target segment.
Promotion
Customers Engagement and Long Lasting
Impact to make a winning entry
Beverages come under a convenience good
category and to drive brand preference in a
convenience category, there is a need for
deeper emotional appeal.
This can be achieved by associating it with
events & experiences. For example Starbucks
can celebrate a ‘Week of Joy’ between
Christmas and New Year. Christmas is
considered a festival of giving gifts and New
Year for making new resolutions. These two
emotional appeals can be used with a slogan
of ‘This time gift your time’ and by associating
with ‘Caring’ and ‘Responsible’ attributes of
Starbucks Brand Concept Mapping.
Through massive advertisements via e-mails,
Facebook etc. customers can be encouraged
to spend time and gift Starbucks mugs with
personalized name and message for the loved
ones written. Customers can be encouraged
to come up with personalized messages for
the others in their group visiting the outlets,
which can be delivered by writing them on the
cups that are used to serve coffee. “Heart’
and ‘Soul’ emails sent by Starbucks and blogs
where customers share their experiences in

the ‘Joy of Week’ can be used for
advertisements.
Discount coupons can be distributed in this
week in outlets of Archies, with slogan ‘This
Time Give your Time’. In-store decorations
can also be done with ‘Hangout’ theme and
small games can be organized like “how much
you know your friend?” and rewarding the
winners with Starbucks coffee packs. This will
help to have a long lasting impact on the
customer’s mind.
Leveraging the Tata Network for Promotion
Tata owned enterprises such as Taj Hotels,
Westside, Landmark Bookstore, Westland
Bookstores and Air Asia can be leveraged to
promote Starbucks. The above mentioned
enterprises see customers from the premium
category. It will be easy to reach out to the
targeted segment of the Stylists through the
Tata Network that spans across the entire
country. This also goes in sync with the
premium positioning strategy that we are
proposing for Starbucks.
Starbucks and Tata can come up with a two
way Reward System, wherein each of the
enterprises under Tata can leverage from
each other’s customer base. Customers
visiting these stores can be given reward
points that provide them with discounts on
selected beverages served by Starbucks.
Further, customers registered with Starbucks
can be given reward points based on
consumption during each visit. These reward
points can be used to avail discounts at the
above mentioned Tata enterprises.
Brand Communities – Creating bonds –
Retaining Customers & Building Relationship
Since Starbucks need not necessarily focus on
volumes of customers, it is essential for it to
create brand loyalty in India just the way it
has done in America. To be able to create
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Group 1 Report
brand loyalty, creating a community of like -
minded customers can work in favor of
Starbucks. While the reward system will also
be a catalyst to the community creation,
Starbucks can organize various events
targeting specific communities. For example,
devoting Saturday evenings as “Entrepreneur
Saturdays”, an initiative that aims at bringing
together the busy “Stylists” and “Coffee
Experts” working in the corporate sector by
organizing expert talks on varied subjects can
be considered. Starbucks can provide the
much required exposure to people from
different walks of life by leveraging on the
Tata network that will focus on the Stylists
knack for interacting with people.
Loyalty Programs - Customer Retention &
Relationship Building
In addition to the traditional loyalty cards
where customers get free coffee in return
of their loyalty, Starbucks can add a status
element by introducing loyalty cards in
different range ,like, low (bronze card),
medium (silver card) , high (Gold card) and
elite (Platinum card). Customers will be
promoted on spending a specific amount
which will vary for different levels. Benefits
will also vary among the different class of card
holders. For example, Executive/elite Block
could be reserved only for Platinum and Gold
card holders. Freebies and discounts will not
be of high priority for our target customer
segment. This status oriented loyalty
membership scheme will cater to their status
need.
Starbucks can also use online platforms like
sending different types of emails to its
different loyalty card holders. It can send
promotional “Green emails” highlighting new
products, discount coupons, time bound
offers, etc to the bronze and silver card
holders to increase their visit frequency. It can
also send “Star emails” to its elite and gold
 Group 1 Report

card holders to inform them of their star

counts, special offers and assortments
exclusively designed for them. It can also send
“Black Hole emails” to these elite classes,
depriving them of certain benefits, in case
there is a radical drop in their visit frequency.

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References
1. Starbucks & (Red): Starbucks Love Project
http://www.warc.com/Content/ContentViewer.aspx?MasterContentRef=4e93621a-8310-4cc5-
ab01-9da5d2b9d977

2. Strategic Advisory Group, Bangalore Retail Report, 2013

https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC0Q
FjAA&url=http%3A%2F%2Fwww.vestianglobal.com%2Fpdf%2Fbangalore-retail-report-
march13.pdf&ei=ETAjUpu5IcSUrAfJ94GIAw&usg=AFQjCNGPFXGGK65RcdK4_enyma-
jxMs45g&sig2=2regoPKwwxF4VU6NhWCf8w&bvm=bv.51495398,d.bmk

3. Property Info in major residential zones in Bangalore

http://propertyinfo.in/content/major-residential-development-zones-bangalore

4. Nescafe Dolce Gusto: Singapore Launch 2011

http://www.warc.com/Content/ContentViewer.aspx?ID=17215174-65e5-4f22-b07a-
25c0a7e9f8a6&q=dOLCE+GUSTO&MasterContentRef=17215174-65e5-4f22-b07a-25c0a7e9f8a6

5. Coffee Consumption in India Report 2008, Coffee Board of India

6. Emerging Prototypes of Coffee Drinkers in India

http://www.hindustantimes.com/business-news/Features/Emerging-prototypes-of-Indian-
coffee-drinkers/Article1-817148.aspx

7. Marketing Management, Philips Kotler, 11th Ed

8. CARE Research – The Indian Tea & Coffee Industry
9. Coffee in India – Euromonitor, July 2012
10. Case Study on Starbucks, Kathleen Lee

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