Nick EversMike Mydlach

Zach Voigtschild

Starbucks International Marketing Plan: South Africa

Starbucks Profile

• Founded in 1971 in Seattle’s Pike Place Market• Named after first mate in Moby Dick• Highest quality Arabica beans from coffee growing regions of Latin America, Africa/Arabia and Asia/Pacific • Started grocery sales in 1996 in Portland, OR• Also 1st opened overseas store in 96’ in Japan•Now currently more than 700 stores in Japan

• More than 15,700 stores in 43 countries

Starbucks Company VisionObjective: To become the most recognized

and respected brand in the world.

Offer simple service and comfort to the coffee experience.“You get more than the finest coffee when you

visit a Starbucks—you get great people, first-rate music and a comfortable and upbeat meeting place,” says Howard Schultz, Starbucks chairman, president and chief executive officer.

http://www.starbucks.com/aboutus/Company_Profile.pdf

Products OfferedOffers more than

-30 roasted high-quality blends and single-origin coffees-Espresso/Frappuccino Beverages-SOME Markets=Baked Pastries/sandwiches/Salads

Starbucks also-Sells whole bean coffee as well as accessories/equipment via retail stores-owner of their subsidiary, Tazo Tea Company

South African Demographics

47,900,000 pop. 9 Provinces , 11

official languagesEnglish remains the

main medium of instruction in schools and universities

Ethnic Breakdown79.5% Black9.2% White8.9% Coloured2.5% Asian

Racial tension and inequality still exists with the end of apartheid in 1994

Economy Currency: 1 South African Rand = .1143 USD

The South African rand (ZAR), is the most actively traded emerging market currency in the world. It has joined an elite club of fifteen currencies

GDP is ranked 25th in the WorldGDP based on purchasing-power-parity (PPP) valuation of

country GDP= $492.684 Billion USD http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx?sy=2006

&ey=2009&scsm=1&ssd=1&sort=country&ds=.&br=1&c=199&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC%2CLP&grp=0&a=&pr.x=53&pr.y=2

JSE Limited ( stock Exchange)Modern infrastructures supporting major

urban centersCape Town, Port Elizabeth, Durban, and

Pretoria/Johannesburg

Environmental Analysis Traditions/Customs

Only family members and close friends address each other by their first names

Like America, it’s important to use professional titles

Still remains as a male-dominated societyWomen often referred to as girls

Business CustomsPunctuality is viewed as vitalWhite South Africans typically are more to the

point than South Africans of other racesHigh pressure and strong emotions have little

place in dealing with most South African businesspeople

Growing South African Coffee Market

Market is ripe for a global coffee company South Africans insist on sitting down and enjoying

their coffeeOverseas domed lids are popular however not in

South Africa.“tea break” was worked into the weekday

“It’s a take a break culture, mainly in office or industrial parks there seems to be a tendency for them to look for an attractive environment to drink coffee” -Roman Cylkowski: Blitzforce Marketing-Johannesburg

http://www.brandchannel.com/features_effect.asp?pf_id=391

Existing CompetitionNovelty Coffee Shops

Seattle, Vida e Café, Dulce CaféNone are truly a global brand(R8) for a typical cup of coffee = $1

USD(R15) for a latte = $2 USD

Restaurants Offering instant coffeei.e McDonald’s

Instant Coffee Producers in Grocery StoresFolgers, Maxwell House

Key Competition

Seattle Coffee Company

25 Current stores

Offer coffee and WIFI similar to Starbuck’s

“We introduced this type of coffee culture to South Africa in 1997, before anyone had heard of lattes or skinny mochas” Sandy Barlow

http://www.brandchannel.com/features_effect.asp?pf_id=391

In the first eight months of Wi-Fi connection, Seattle Coffee Company has logged 2,735 sessions with customers going online from its ‘comfy bars’ for a total of 190,000 minutes. The popularity of the service is also gaining momentum with a growth rate of 25 per cent month on month.

http://www.hp.com/rnd/pdfs/seattle_coffee.pdf

Key Competition Cont.

Vida e CaféPortuguese-themed company serving coffee,

cappuccino, espresso, gelado, and muffins19 current stores within 5 yearsBright colors and loud music atmosphere geared

toward a trendier crowdPartnered up with like minded brands

Levis, Converse, Virgin, BMW MiniUse local popular personalities to advertise

product (A1 Driver, Pro Wake Boarder)

Market Entry MethodFRANCHISING

Already has a strong channel, passing process down is easy

Capitalize on market share in another country without spending a large amount on investment

Political risks for the right owner are very limited which would ease pressure to begin business

Target Market/CustomerPlan to target men and women 18-35

Students/business men & women looking for the weekday coffee break

Starting w/ a sprinkler effect in major cities1.Johannesburg 2.Durban3.Cape Town 4.East Rand5.Pretoria6.Port Elizabeth

SWOT Analysis I. Strengths

Its brand name Anticipation of Starbucks Experience in franchising

internationally Untouched by a global companyII. Weaknesses Overexpansion Some South African’s are only content

with the tastes they’ve been brought up on

SWOT cont.III. Opportunities

Market is growing and untouched as far as global coffee companies are concerned

Cheaper Brands have grasp of the lower class customers, leaving the middle to upper class customers wide open for Starbucks to hit

IV. Threats Current state of the downward economy

Downward economy will force many consumers to think about a cheaper alternative

Objectives1-Increase product awareness among the

target audience by 30% in our first yearAdvertising in newspapers, magazines, billboards, mass transit systems, and the Web

High volume areas like malls and business districts must be targeted

Even secondary schools and universities

WORLD CUP 2010 advertising

2- We would like to open our first location in Johannesburg producing $520,000 or 4.635 million Rand.Pricing our products just above Seattle and Vida at 8 Rands a cup while proving our competitive advantage over them using a price skimming strategy

Using the Johannesburg Star to advertiseAs well as mass transit, grocery stores, universities, business districts

3- Gradually open 5-10 main locations into the country’s major urban areas if Johannesburg seems to be a success.Trial and Error with products

Gradually introduce the people to our other products such as breakfast foods, salads, drive thru

Don’t push products upon people, adapt to their wants

Obtain a strong customer base and loyalty before expanding operations

Promotional Plans¼ page ad weeks in advance informing

people of grand opening as well as offering a buy 1 get 1 coupon

Product tasting at universities and shopping districts

After paper advertisement and commercials are embedded we won’t need to rely on coupons and we can use more of our budget on:BillboardsMagazine adsPerhaps hiring local celebrities

Marketing Plan Budget

Percent of Sales MethodJohannesburg projected to earn $520,000

USD or 4.635 million Rand15 % of sales will be used for

marketing/advertising2nd year of business would budget for

700,000 Rand on advertising ¼ page ad in the Star costs 2400

Rand/day @ 5 months would cost 360,000 Rand

ConclusionThere’s a need for a global coffee company

in South AfricaThe people embrace the sit down culture

that Starbuck’s offersStarbuck’s powerful global name will help

entry into South Africa as well as strength in support of distribution and marketing

Sourceshttp://www.starbucks.com/aboutus/Company_Profile.pdf

http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx?sy=2006&ey=2009&scsm=1&ssd=1&sort=country&ds=.&br=1&c=199&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC%2CLP&grp=0&a=&pr.x=53&pr.y=2

http://www.brandchannel.com/features_effect.asp?pf_id=391

http://www.hp.com/rnd/pdfs/seattle_coffee.pdf