Group 3

StarbucksPresented by:

It's bigger than coffee

Introduction to Starbucks

Company started in 1971 in Seattle, Washington named “Starbucks Coffee, Tea, and Spice”

by Jerry Baldwin, Zev Siegel & writer Gordon Bowker.

Starbucks offered exceptional coffee drinks and dark-roasted coffee beans and coffee-making equipment .

A dominant retailer with over 1500 stores in North America and new ones opening at a rate of more than one per day.

Introduction to Starbucks

Went public in 1992 and its stock price increased nearly nine fold.

The company had the best real estate team in the coffee-bar industry and thus acquired the best retailing sites for its stores.

Company's retail sales mix came from food items, coffee equipments and music cd’s apart from coffee beverages which formed the major chunk of the mix.

At present, Starbucks is the largest coffeehouse company in the world, with 19,972 stores in 60 countries.

Starbucks- Way Ahead

PRODUCT SUPPLY– Special efforts were made to secure top-notch coffee

i.e. building relationships , checking on agricultural conditions .

ROASTING COFFEE BEANS– Experienced personnel monitored the process.– If standards not match the whole batch was rejected.

MAIL ORDER SALES– Distributed six times a year.– Electronic store on the Internet

Building a Top Management Team & Employee Training

Workforce composition

• 80 % white• 85 % high school graduates with average age of

26

Training of Baristas• At least 24 hours training in the first two to four weeks.• Coffee history & knowledge, drink preparation, customer service

and retail skills

Training of Baristas• "Brewing the Perfect Cup."• Dissatisfied customers with a Starbucks coupon that entitles them

to a free drink.

Management trainees attended classes for 8 to 12 weeks. Their training went much deeper.

8 to 10 weeks before opening a new store in new market, the company placed ads to hire baristas and begin their training.

A Star team is used for providing store-opening effort, one-on-one training and orientation sessions at Starbucks Coffee School in San Francisco.

Other Insights Stores did about half of their

business by 11 am. Baristas became familiar with

regular customers, learning their names and their favorite drinks.

STARBUCKS- Personality

STARBUCKS demonstrates a “persona” that extends well beyond their brand’s functional benefits.

Starbucks is outgoing, youthful, personable, and friendly…a refreshing escape, freshness, warmth, and comfort.

It is demonstrated through their service interactions, their packaging, their décor, their product offerings, and their corporate culture.

Sophistication

Excitement

Sincerity

Personality Dimensions

Brand Personality

Starbucks’ signature music cues a multicultural personality … one that doesn’t just fade into the background. You hear it you’re aware of it.

Additionally, their merchandise drives both their brand identity and the unique flair.

‘Interesting Inviting Personable’

Brand Personality-Role of COLOURS in Logo

GREENSecure, Natural, easygoing, relaxing WHITEGoodness, Purity,Refined,Sophistication

Starbucks Brand Positioning

Brand positioning is about how we want target customers to think about a brand with respect to competitors

Components of Brand Positioning

Competitive frames of Reference– Nature of Competition– Target Market

Develop unique brand points-of-difference (POD’s)

Establish shared brand points-of-parity(POP’s)

Brand mantras– Short 3-to-5 word phrases that capture key POD’s &

the irrefutable essence or spirit of the brand.

Competitive frames of Reference

Nature of Competition– Earlier with local coffee houses.– Direct competition: Caribou,

Dunkin' Donuts – Indirect Competition: Mc Donald

(McCafe`) and Burger King.– “The third place is the other place you

wantto hang out besides your first place(your home) and your second place (your work)”

Perceptual MapExperience

Cost

7 Eleven

Dunkin’ Donuts

Mc Donald’s

Starbucks

Caribou

Competitive frames of Reference

Target Market– People who live

somewhat hectic lives– Who believe in only

getting the best in tasteand quality.

– Target audience is between the ages of eighteen and forty-five

– “Discerning Coffee Drinker”– Desire for better coffee and a better

consumption experience

Points of Parity

Great-tasting coffee Reliability Speed Convenience Cleanliness  Community

Points of Difference Quality: Exacting standards of

quality and flavor Variety: Varied and exotic

coffee drinks Customization: Over hundred

different coffee drinks Experience: Rich and Sensory

Aroma and Ambience Image: Friendly Service Freshness: Top-notch coffee

beans (Back-end Collaboration)

Rules: “Aroma First Rule”

Brand Mantra

“Rich, rewarding coffee experience” A third place Best of Class The Human

Connection Rewarding

Everyday Moments A Great Cup of

Coffee A consistent, inviting, stimulating

environment

Will Starbucks Succeed in

India ???

A story of Ifs and Buts

Right Partner!!!

Market Opportunity

A traditionally tea-drinking nation

The growing middle class

21%

79%

Organized

Unorgan-ized

“Coffee is perceived as a western, cosmopolitan luxury in many parts of India”

Market Size: $ 667 MnExpected CAGR: 30%

The China Story

Sustainable Model of: “Low Sales Volume; High Profitability”

“Lifestyle Coffee Drinking“

Need to maintain theimage of“An Aspirational Brand”

Costa Coffee India Head: “Does not believe they need to offer Indian food, rather Western food tailored for Indian pallets”

Some Additional Thoughts…

Problem of a plenty in India• 1200 outlets, a new outlet every third

day• Over 200 cafes• 95 outlets, aims opening 300 more in

next 3 years

“Perceived Price Effectiveness”

Pricing - Factors to Consider

Strategy in China: Profitability– Only 550 stores in 13 years– Designed for Longer Stays

Indians ready to spend Rs.39 at McCafe to upwards of Rs.300 at Coffee Bean & Tea Leaf

Starbucks seen as an Aspirational Brand in developing countries

Pricing for India

BrandPrice Range in USA

($)

Price Range in India (Rs.)

Regular Joe - 1.92Coffee – 70 to 90Cold Coffee – 90 - 120

$3 – $5.50 150 to 300

Frappe - $2.29 to $3.29

39-45

NACoffee – 52 to 78Cold Coffee – upto 120

Regular Joe - 2.25Frappuccino – ~$5.50 ????

Strategy so Far According to John Culver:

– Price according to where the market sits and the premium experience Starbucks offers

– Not restrict to five star locations but considering Railway Stations and University Campuses too

To launch a new premium brand of tea “Tata Tazo”

Expected to start operations in Mumbai from October end

Strategy So Far Will source most of its coffee

through Tata and save on 100% duty

Coffee accounts for about 40-45% of the costs

Experts expect an average price of Rs.125 (Forbes)

Deal with Tata for food expertise through TajSats (the airline catering arm)

Thank You!