Sankaran S

Saravanan J
HISTORY
 BALDWIN – BOWKER – SIEGL

SEATTLE, 1971 - FIRST STARBUCKS

 STARBUCKS - Mission
In the beginning “ Establish Starbucks as the premier purveyor of
the finest coffee in the world while maintaining our
uncompromising principles while we grow”.

Now “ To inspire and nurture the human spirit - One person, One
cup, and One Neighborhood at a time”.

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  58 years old

 Grew up poor

 His father had a hard life

 Excelled at sports and won an

athletics scholarship

 Graduated in Business & Marketing

 Joined Starbucks Company in 1982 as Diector of

Marketing

HOWARD SCHULTZ – CEO OF STARBUCKS

  1983 : he went on a trip in Milan:
 Coffee bars existed on every street
 2,00,000 in the country
 Served as meeting places

 His idea: bring the Italian coffee house

tradition back to the United States

 The pilot coffee concept was successful but

 the owners refused to develop the concept

HOWARD SCHULTZ – VISION OF A CEO

 1985: Started his own coffeehouse: Il Giornale Coffee

 1987: purchased Starbucks Coffee (6 stores)

 Renamed Il Giornale Coffee with the Starbucks name

 Expended aggressively first across the United States and then around the world

HOWARD SCHULTZ – VISION OF A CEO

 2008: regained his status as a CEO of Starbucks

 Co-authored: “Pour Your Heart Into It”

 “Starbucks may become another soulless big chain”

HOWARD SCHULTZ – HIS FEAR

 2009: 616 US Starbucks Coffee closed
 1/3 of the headquarters employees were fired
 2000 jobs lost

TOO MANY STORES…TOO EXPENSIVE

 1st ROASTER AND RETAILER

50 COUNTRIES

15,000+ STORES

STARBUCKS TODAY
2011 - STARBUCKS NEW LOGO
 Marketing Strategy
Marketing Mix SWOT

Competitive strategy of Starbucks

Market segmentation

Market Targeting
Globalization strategy of Starbucks

Market Postioning

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 MARKET SEGMENTING

 Demographic segmentation(markets by age, gender, income,

ethnic background, and family life cycle) .
 Geographic segmentation (markets by region of a country or the
world, market size, market density, or climate)
 Psychographic segmentation, targeting customers based on their
lifestyle and attitudes about ‘fairtrade' food.
 Behavioural segmentation , Occassion , loyalty program and
rewards , benefit sought with offers [ by using starbucks card ]
 18-45 year olds

 Youngsters who want to gather with their friends

 Office workers and students who need to catch up with their work

 Those who feel that drinking coffee is "cool"

 People who are adventurous, willing to try new things

TARGET
 Market Positioning & Positioning Strategy
 Starbucks has positioned themselves as a highly respected brand.

 The Starbucks company has positioned itself in a way that it can distinguish their products
from competition, which gives them an advantage.
 Their positioning strategy is customer based, which allows them to give the best customer
service.
 Starbucks hold onto their sustainable competitive advantage in terms of their customer
satisfaction as well as their employee satisfaction.

Brands:
Starbucks Coffee
Seattle‘s Best Coffee
Tonefazione Ital ia Coffee
Tazo Tea
Evolution Fresh
 STARBUCKS - PEST Analysis
Political Influences :
Relationships between coffee producing nations and US
State & Local government controls
Economic Influences:
Constant demand for food and beverages
Changes in disposable income could influence purchase levels
Social Influences:
Consumer preferences could shift from coffee to other beverages
Technological Influences:
Use of technology can improve operational efficiencies

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SWOT
Product diversification
Established logo, developed brand, copyrights, trademarks, website and
patents
Company operated retail stores
International presence
Valued and motivated employees, good working environment

STRENGHTS (1/2)
 Good relationships with suppliers
Industry market leader
Customer loyalty
Wide spread and consistent
Knowledge based
Strong Board
Trendy brand image
Strong financial foundation

STRENGHTS (2/2)
 Lack of internal focus (too much focused on expansion)
 Cross functional management
 Product pricing is high

WEAKNESSES
Competition (restaurants, street carts, supermarkets, other coffee shops, other
caffeine based products)
Market saturation
Coffee price volatility in developing countries
Negative publicity from poorly treated farmers in supplying countries

THREATS (1/2)
 Expansion into retail operations
Technological advances
New distribution channels
(delivery)
New products
Distribution agreements
Brand extension
Emerging international markets
Continued domestic
expansion/domination of segment

OPPORTUNITIES
Consumer trends toward more healthy ways and away from sweet coffee
beverages and cakes
Cultural and Political issues in foreign countries

THREATS (2/2)
High

low
price Quality Brand Convenience location Variety Reputation Customization Online user

STARBUCKS Coffee
 STARBUCKS – Competitive Strategy
 Focused Differentiation
 Serve niche buyers than rivals.
 Have unique capabilities to serve needs of target buyer segment.
 Be profitable and offer good growth potential.
 Resources and capabilities to serve an attractive niche.

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Marketing mix
 Marketing Mix
4 P’s 4 C’s
Product Customer solution
Price Customer cost
place convenience
Promotion communication

To be effective, marketing people have to consider the 4 C’s first and then build the 4 p’s based on
requirements

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 PRODUCTS
Coffee: Fresh Food Items:
Eilonde Roast Baked pastries
Medium Roast Sandwiches
Flavored Coffee Salads
Seasonal Favorites Oatmeal
Yogurt parfaits
Handcrafted Beverages: Fruit cups
Fresh-brewed coffee
Hot and iced espresso beverages Starbucks Ice Cream:
Frappuccino coffee and non-coffee Super-premium coffee
blended beverages Coffee-free avors
Tazo teas
4/23/2015
 PRODUCTS
Ready-to-Drink : Consumer Products:
 Starbucks bottled Frappuccino coffee  Coffee and Tea :
drinks  Whole bean and ground coffee,
 Starbucks Discoveries chilled cup coffees  Starbucks VIA Ready Brew
 Starbucks Doubleshot espresso drinks
 Tazo tea lterbags and tea latte concentrates
 Starbucks Doubleshot Energy+Coffee drinks
 Seattle‘s Best Coffee Iced Lattes
 Tazo bottled iced and juiced teas
Merchandise:
 Coffee- and tea-brewing euipment
 Mugs and accessories
 Packaged goods
 Music
 Books
 Gift items
4/23/2015
 PRODUCTS

Features Variety
Brewed coffee cappuccino, Caramel cappuccino, tea

Quality Design
Fresh product Attractive ,descent, convenient

packaging services
Attractive, easy to handle Just in time ,ready to drink , fair trade policy

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 PRICING STRATEGY

PRICE SKIMMING
 Premium Price for Premium Product

Why the High Prices?

 Increase pricing in Fuel/Energy

 Fair-trade Movement
 Changes in PEST in US & different geographical location

PRICE
FAIR TRADE MOVEMENT

WHY THE FAIR TRADE MOVEMENT?

Help ensure that farmers receive an equitable
price for their coffee and strengthen their
farms for the future.

HOW IT WORKS?
Long term contracts
Affordable credit for farmers
Direct purchasing
Investing social projects in coffee communities

PRICE
FAIR TRADE MOVEMENT

STARBUCKS IN NORTH AMERICA’S

LARGEST PURCHASER OF FAIR
TRADE CERTIFIED COFFEE.

In 2005 Starbucks purchased 11.5

million pounds of Fair Trade Certified
coffee.
Pay $1.42 per pound

PRICE
 Fair Trade & the “Starbucks Effect”

Paying premium prices stimulates production of high quality coffee.

Allows farmers to increase income and reinvest in their farms and

plan for the future.
Promotes steady and sustainable growth in a market with price
fluctuations.
Upholds Starbucks commitment to purchase high-quality product in a
socially responsible manner

PRICE
 PLACE

•Higher income group location place

•Airports ,malls,wel known areas

•Highly visiting areas

•locations of Seattle’s Best or placement of the brand within 30 miles,

rebrand some locations as a local shop.

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 Warmth, Comfort, Diversity

 A place of quiet contemplation

 Some kind of neighbourhood office

 A gathering place for neighbours and friends

PLACE: A PLACE FOR AMBIENCE & EXPERIENCE

 Promotional Mix

 Advertising
 Personal Selling
 Public Relations
 Sales Promotion

4/23/2015
 Promotional Mix
ADVERTISING PERSONAL SELLING
Increase from 1.4% to 3% by 2009  Baristas must continue to be the very best
Radio  Starbucks must create an incentive to retain
TV and reward baristas
Billboards
PUBLIC RELATIONS
 Parties
Big, Juicy Paintings Change:
Trump Tower Run promotions in conjunction with contributions
 Nationwide Coffee Break
 Public Performances
 Charitable Contributions
Green initiatives
Philanthropic endeavors
4/23/2015
 Promotional Mix

SALES PROMOTIONS
 Return of incentive cards
Tie in with public relations
Loyalty program
 Daily coffee break
HOLIDAY AD
 Pass the Cheer
Holiday web site
Viral video’s
Sample vans
Ads
Newspapers, Magazines, Radio, and Billboards
 Short Cups

4/23/2015
 STARBUCKS IN MOVIES

The devil wears Prada

PROMOTION: PRODUCT PLACEMENT

 STARBUCKS IN MOVIES

Meet The Fockers 4

PROMOTION: PRODUCT PLACEMENT

PROMOTION: DIRECT MARKETING
 Social media campaign

Starbucks iPhone app

QR Code scanner and start connecting the physical

world to your mobile device

Gift card to start a relationship

SNS
SNS
 STARBUCKS - Why Globalize ?
With just 20% of the world's coffee consumed in North America, Starbucks has
to aggressively sell its offerings in countries that already have dedicated coffee
or tea drinkers.
Issues :
Saturated home market – leading to self cannibalization.
Reaching Brand Maturity stage in U.S.
International joint ventures
Culture
Gender issues
Marketing channels
Cross-cultural management issues

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 STARBUCKS - Global Marketing Mix Strategy
 Retailing formula is same throughout the world whereas
product offerings and are modified to suit local tastes.
 Starbucks advertising strategies play a crucial role in the
success of the business.
 The advertising strategies adopted by the firm are more local
and differentiated rather than standardized.

 Global Market Segments National Product HYBRID II

MARKETING STRATEGY

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 STARBUCKS - GLOBAL Entry Strategies
Some of the methods Starbucks have used to expand and
maintain their dominant market position:
 Buying out competitors' leases.

 Intentionally operating at a loss.

 Clustering several locations in a small geographical area

(i.e.,saturating the market).

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 STARBUCKS – CULTURAL DIVERSITY
“RESPECT FOR LOCAL CULTURE”
Chairman Howard Schultz “ We remain highly respectful of the culture and
traditions of the countries in which we do business . We recognize that our
success is not an entitlement, and we must continue to earn the trust and
respect of customers every day .”

Starbucks is dedicated to supporting communities around the world – where

we live, where we work and in the countries where our coffees are produced.

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 STARBUCKS - GLOBAL Expansion

Starbucks’s initial foreign forays were launched through joint

venture and licensing arrangements with prominent local
retailers.

The first market developed in 1996 was Japan with the help of
SAZABY Inc., a Japanese retailer and restaurateur.

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Globalization – Issues faced and Tackled in different
countries
JAPAN :
The Japanese are noted for admiring and adopting American products
and trends such as blue jeans and Coca-Cola.

Critics warned that the Japanese would never buy take-out coffee in
paper cups or accept the interior non-smoking policy.

Starbucks proved them wrong. Some 30% of its customers drink

take-out coffee in those throwaway cups

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Globalization – Issues faced and Tackled in different
countries
FRANCE :
Starbucks had to deal with an initial lack of acceptance from
France's historic cafe culture, with older consumers frowning on
a big U.S.coffee house chain with standardized disposable cups.

Younger coffee drinkers in France joined American tourists in

Paris to embrace such favorites as Starbucks caramel coffee.

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Globalization – Issues faced and Tackled in different
countries

CHINA:
The company is aggressively expanding in China where Chinese
traditionally prefer tea. [eg: TAZO TEA]

Key to success in China are coffee houses that empower China's

emerging middle class to publicly display their new lifestyles an
status while keeping Starbucks beverages as affordable
luxuries.
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Globalization – Issues faced and Tackled in different
countries
England
Second biggest overseas market for Starbucks.
Tackling imitators aiming at reducing market share of Starbucks.

Italy
Lower pricing and popularity of local brands.
Culture of serving food with coffee – Starbucks had to address
the demand.

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2003: Starbucks closed all six of its locations in Israel due to difficult
business environment
2007: closed its store in Beijing's Forbidden City
2008: closed 61 of its 84 stores in Australia: Starbucks failed to truly
understand Australia’s cafe culture.
STARBUCKS FAILURES
 GLOBAL CONTRIBUTION
Fair trade
Largest buyer of Certified Fair Trade coffee in North America (10% of the global market)

Starbucks has given the FTC label greater visibility, helping to raise consumer awareness in
the process.

Opens farmer support centers in Africa

PROMOTION: COMMITMENT TO THE WORLD

Product (red)

 Raise awareness and funds to help eliminate AIDS in Africa.

 Starbucks’ Red products and Red card:

PROMOTION: COMMITMENT TO THE WORLD

Helping countries after natural disasters

PROMOTION: COMMITMENT TO THE WORLD

CONCLUSION
 Global company

Howard Schultz: Geocentric Orientation

Adaptation Strategy

Globally Successful

Future Oriented
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
STARBUCKS TODAY