MANAGING A HIGHGROWTH BRAND

Presented By-Mohit GoyalNiveditaSamrendraVipul Gupta

From Bean to Cup

•In early years– Founded by Jerry Baldwin, Gordon Bowker, & Zev Siegel in

1971, in Seattle

– Early name was Starbucks Coffee Tea and Spice

– Sold only whole-bean coffee and coffee brewing machine

• In 1980’s– Howard Schultz became CEO and renamed it as Starbucks

– Re-image from only selling beans to be a coffeehouse

Starbucks in the Cup

•From 1990’s till now– 13168 retail outlets worldwide

– Business expansion into food, ice-cream, tea, RTD business, credit cards, music and film

Starbucks mission statement

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

Starbucks’ Culture

•Great work environment

•Embrace diversity as an essential component

•Apply the highest standards of excellence

•Develop enthusiastically satisfied customers•Contribute positively to community and environment

Case About

•Managing the rapid expansions of the brand

•Sustaining the core values in the face of this

expansion

Rivalry:Dunkin Donuts, Caribou coffee, Tully’s Coffee, Wal-Mart etc.

Rivalry:Dunkin Donuts, Caribou coffee, Tully’s Coffee, Wal-Mart etc.

New entrants :Low & medium entry barrier

New entrants :Low & medium entry barrier

Buyer’s:People with different age group

Substitutes:Tea, juice, soft drink, milk, Alcoholic drink,

Supplier:Farmer-collector-miller-importer-Specialty coffee

seller,

5 Forces Model

Story/Event

•Low barriers facilitating new entrants

•Medium bargaining power of suppliers

•Lot of substitutes like tea, ice-cream, juices

etc

Symptoms

•Lifestyle classification bases (Psychographics)

•Saturated domestic market

•High cost of new expansion & internet

process

Problems

•Deviation from the core values

•Difficult to maintain balance between various objectives

•Failure of diversified products

Issues

•Sustaining the core values

•Finding out a right balance between product, people, values and sales

•Closely monitoring the relationship with employees and customers

Actions Taken

•Constant innovation•Strategic alliances•Vertical integration•Corporate social responsibility•Following the Brand Mantra•Creation of a “third place

Ultimate Starbucks Experience

Actions To Be Taken

•Pull out unrelated diversification•Focus on being on top in coffee business•Semi- automated coffee machines

Brand

•Was inspired by Starbuck, Classic American Novel “Moby Dick”

•Logo included a mermaid in woodcutting style

Value

•Quality-1st preference

•Premium European coffee experience to USA

•Value simplicity over technology

•Investing in innovation•Employees as partners and the most important assets

Brand Equity

BrandKnowledge

BrandImage

BrandAwareness

BrandRecall

BrandRecognition

Favorability of brand association

Uniqueness of brand association

Strength of brand association

Types of brand association

Attributes

Attitude

Benefits

Non product related

Product related

Functional

Experiential

Symbolic

Price

User Image

Brand Personality

Feelings & Experience

Awareness

•Word Of Mouth

•Partnerships

•New channels

Image

•Premium coffee beans

•Brewing techniques

•Store design

•Italian elegance and American informality

•Artwork and Music

Associations

•Type of Brand Associations

– Premium coffee

– Consistently good customer service– A classy romantic atmosphere that meets the 5

senses

Associations

•Strength- To be a lifestyle brand

•Favorability- Coffee enthusiastic

•Uniqueness- Not entirely unique

Why is so successful?

•1st to introduce Italian coffee house with premium coffee to the American market

•Organic growth

•Partnerships

Drivers to Future Growth

•Expanding core retail opportunity worldwide

•Continued to innovate

•Expanded customer base

•Increased average unit volumes

•Leveraged Starbucks brand in other products and channels

•Didn’t use advertising at all

Growth Strategies

Ansoff’s Matrix

Market Penetration

Market Penetration

DiversificationDiversification

Product/ service Development

Product/ service Development

Market Development

Market Development

Product

Mar

ket

NewCurrent

New

Curr

ent

Growth Strategies

Market Development– Introduction of automatic espresso machine

Disadvantages•Physical barrier b/w Barista and customers•Coffee taste is not traditional•Coffee machine blocks sightline

Advantages•Convenient for Barista•Less time consuming•Less human error

Brand Strategies

Diversification

Line Extension

Line Extension

NewBrandsNew

Brands

Brand ExtensionBrand Extension

Multi BrandsMulti Brands

Product

Bra

nd

NewCurrent

New

Curr

ent

Brand Strategies

New brands– Barista– Ethos water– Frappuccino– Tazo– Joe Magazene

Brand Strategies

•Frappuccino– RTD coffee in can and bottle– Partnership with Pepsi– First Starbucks’ product in supermarkets

• Tazo– 3 types of teas- black, green & herbal– Attracted new customers who look for alternatives

to coffee

Brand Strategies

•Barista– Variety of coffee machines-espresso and

grinders– Sold online and in retail stores

•Ethos Water– Social mission– Clean water advantage to customers

Brand Strategies

Brand Extensions

•Espresso Coffee– Come in light & normal espresso

•Ice-cream– Come in containers and bars with different

flavors

Brand Strategies

•Coffee Blend– Mild, medium, bold & extra bold– Sold in Starbucks stores & supermarkets

•Coffee Liquor– Combination of Starbucks coffee & premium

spirit– Sold at restaurants, bars & liquor shops only

Brand Strategies

•Credit Cards– Make it easier for customers to purchase– Combined Starbucks card and credit card

•Starbucks Entertainment– Investment in film industry– Custom-made CDs in stores

Non Coffee Related Business

•Advantages– Increased brand awareness– Improved brand image– Enhanced parent brand

•Disadvantages– Lost brand identity– Lost core value– Frustrated customers

Partnerships

•United Airlines (to provide best services to the passengers)– 3600 flights a day, 855 destinations in 155 countries– 14% Starbucks customers had their 1st Starbucks

coffee in UA flight

•Kraft (for distribution network)– Starbucks coffee beans are distributed by Kraft in

North America

Partnerships

•Pepsi (to increase brand awareness & innovative product

development)– Created ready to drink coffee in cans & bottles– Under Frappuccino trademark

•Marriot (to increase brand awareness)– Airport concessions– Hotel lobbies & Malls

World Class Global Brand

Judgment

Resonance

Feelings

Performance Imagery

Salience

•What about you and me?

•What about you?

•What are you?

•Who are you?

Starbucks- Global Brand

•Production and distribution

•Marketing costs

•Power and scope

•Consistency in brand image

•Sustainability of core competencies

•Uniformity in controlling and co-ordination

Obstacles

•International Starbucks stores were not profitable

•Consumer needs and wants in various cultures

•Consumer response of marketing mix

•Different stage of brand life cycle

•Legal environment

•Administrative procedures

In American Market

•Increasing of direct competitors

– Dunkin Donuts, McCafe, Gloria Jean’s, Carbon Coffee

•Aggressive global marketing strategies

•Focus on overseas growth & brand development

The Biggest Threat

•Dunkin DonutsThe world largest coffee and baked goods chain

7000 shops worldwide

5300 stores in 34 states of America

Thank You

Starbucks Corporation