TROUBLE BREWS AT

STARBUCKS!
CASE PRESENTATION

Submitted By
Himanshu Satija-044022
Nidhi Gupta-044029
Nikhil Pathak- 044030
Payal Singal-044031
Himanshu Goyal-044021
 TIMELINE

Begins selling bottled Acquires Tazo, a tea company based in

Starbucks first logo was Portland, Oregon
Frappuccino coffee drink
created

Founded as Starbucks The word Coffee Tea and Species was Starbucks again changed the logo by Starbucks wanted to “begin the next
Coffee, Tea and Spice replaced by STARBUCKS COFFEE. making mermaid in the center largely chapter” on their 40th anniversary and
Company The Iconic Green and black were showing her face and fin removed “Starbucks and “Coffee” from
added their logo
STARBUCKS
Marketing Mix

Product Price Place Promotion

• Coffee as a premium • Positioned as • Stores layout was • Used grassroots
product expensive product chosen to provide advertising
comfort to customers
• Different verities of • Justified the price by • Big community events
roasted coffee providing great • For a long time, coffee before opening up
atmosphere and was sold only in its
• Introduction of opportunity to owned stores • Adverting fund was
Frappuccino interact utilized for acquiring key
locations
 SWOT ANALYSIS
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

• Strong Brand Equity • Implementation of technology • Evolving Preferences of • Threats of New Entrants

and Brand Awareness in Processes Consumers • Devaluation of currency

• Superior product and • Absence of financial resources • Product specialization • Espresso mainstream

services quality • Lack of experience • Operational excellence

• Discovering new things • Segmentation in targeted

• Substantial consumer market

base
 Porter's 5 Forces
Supplier Power-Low
• Inter-related benefits of the
supplier and the firm.
Substitutes-High
• Changing consumer preferences
Threat of New Entry-Medium
Competitive • Requirement of large amount of
Capital.
Rivalry-High
Buyer Power-High
Presence of large
• Availability of many substitutes
number of direct and
and the change in the
indirect competitors. preferences.
GROWTH
INITIATIVES
Serving quality coffee at a great price
• Started with quality coffee for at home at reasonable costs.
This was worth it and that is why it lead to enjoyment
After Extension
• Introduction of food & a change in store design lead to
convenience and a social meeting place
• Turned Starbucks to a "Third Home"
Quality
• Starbucks offered quality in every single product, it once
started with quality coffee, the Mother Brand
Stores near homes, offices providing easy access
• Multiple growth initiatives undertaken by opening up stores
consistently
• They worked on product expansion, new products and being
located everywhere, well almost
Effect on Target and Positioning
• Focus is on a bigger group. Not just focusing on people that
want quality coffee but also positioning the store as a place
where people can relax and get connected to others
Customer Experience
• "Third Place", a place that feels like home and a convenient
location
Discovering New Things
• People get to know different kinds of coffee and a different
way of enjoying the coffee and all other added values such as
food, music etc.
BRAND EXTENSION
STRATEGY • Extending the brand by not only selling coffee but also
offering variations in coffee, snacks, CDs, books, and
sponsoring movies etc.

• Especially the movie gave Starbucks the opportunity to

broaden the use of its in-store Wi-Fi network by running trailers
for this movie. Unfortunately the expected return on
investments was not achieved

• The result of this is that the mother brand is disappearing to

the background. This is not necessarily a bad thing because
the all-round customer satisfaction is most important and the
core brand Starbucks stays strong

• By focusing on customer satisfaction Starbucks can attract

different types of customers and successfully focus on the
brand extension startegy
SOUND AND INCONSISTENT
DECISIONS • New product development • Pace of Expansion

• Mostly Having Starbucks at all the • Venturing into Movies

Sound Decisions Inconsistent Decisions
relevant locations
• Licensing model
• Connecting with customers was a great
initiative and till date the same has been • Drive In Stores
working very well

Starbucks Positioning Inconsistencies

Established
STARBUCKS
Customers
Different Different New Acquisitions Service Philosophy
Sophisticated,
Consumption Brand affluent coffee
Patterns Perceptions Less sophisticated, in a Physical Environment
hurry, more pragmatic
lover, embracing
the "live coffee"
Premium Coffee lifestyle
 FOREIGN EXPANSION
By Providing what local customers are looking for
• Certain markets will be looking for convenience but others may
want the sit down experience

By accounting the local tastes on its menu

• It highlights the appreciation for the customers

By Honoring the cultures of the Existing market

• It showcases how much company thinks about its customer

By highlighting how the brand is the part of the community –

whatever that community may be
• It highlights the belongingness for the customers
SEGMENTATION TARGETING POSITIONING
College Students Near Colleges & Sense of Luxury
& Working Class Business Clusters Item

• • Fulfilling self esteem

• More than 60% Job opportunities for
college students and ego needs
market belonged to
this age group (18-
45) • Ease of getting coffee • Customer base that
on the way to work or wanted to experience
actual taste and aroma
• 80% of sales were college
of coffee
either drive-through
or take-out falling • Looking at Starbucks
• Affordable luxury
under this category on their way everyday
increases chances of offering glimpse of
engagement luxurious lifestyle
Reinvigorating Starbucks
Affordable Pricing
Traditional Coffee prices became $1 and could have complimentary refills. This
gave loyal customers an opportunity to keep enjoying their products and services.

Bringing Howard Schultz back as CEO

Schultz could have closest connection to the original position, he also had
closest personal connection to the fate of the brand

Not Spending money on National Advertising

Customers were already aware of the brand but simply couldn't use their
dollars of Starbucks
They didn't need to be reminded of Starbucks - it was visible everywhere
Action Plan
Development Of Expertise
• Training of all employees
• Redesigning their new stores to
give the same ambience as the
old ones
• Changing their overall image and
shifting back to traditional coffee
houses
Promotional Stage
• Promoting the “Italian Style” coffee
bar experience
• Advertising the rich sense of
community within Starbucks
• Meghan Markle as the brand
ambassador

Implementation Stage
• Identifying the low performing
stores and optimizing for cost
efficiency
• Greater emphasis on core
products
THANK YOU!