STARBUCKSmanaging a high growth brand

MKT 6330dana turet • william campos • zach johnson • belle marco • leah torres • xue 'snow' cao

WHAT WE'LL DISCUSS

• Building the starbucks brand• Starbuck's growth strategy• Creating a global brand• Plans for product expansion• Plans for geographical expansion• Competitors and threats• The "starbucks experience" – why it

works

STARBUCKS COMMERCIAL

"We're Starbucks. Nice to meet you."

BUILDING THE STARBUCKS BRAND

• Inviting environment and pleasurable experience offers more than just coffee

• Efficient and innovative processes lead to high quality and consistent service

• Customer and employee-focus builds brand loyalty

• Strategic expansion plans through partnerships drives rapid growth

STARBUCKS BRAND EVOLUTION

SOURCES OF BRAND EQUITY

• Brand identityo Loyalty to the brand nameo Trademark green and custom logo

• Brand valueso Local community-focused mindseto Customer service is keyo Commitment to quality

• Brand personalityo Relaxing but sophisticated (European feel)o Giving back

STARBUCKS GROWTH STRATEGY

• Market expansiono Local > National > Globalo Strategic partnerships spur rapid expansion

• Market penetrationo Focus on building brand loyaltyo Leads to word-of-mouth publicityo Convenient locations maximize awareness

• Diversificationo Product variation (i.e. PepsiCo partnership)o Expanding into music, coffee-related supplies,

etc.

CREATING A GLOBAL BRAND

• Internal effortso Strong leadership with expertiseo High investment in employees and trainingo Efficient, scalable processes that can be replicated

• External effortso Highest quality products and serviceo Appeal to ‘non-coffee drinkers’ through variety to

broaden awarenesso Focus on the customer experienceo Strategic partnerships are low cost and low risk and

allow for rapid expansion

CREATING A GLOBAL BRAND, CONT.

• Challengeso Rapid expansion makes consistency difficulto Increasing costs of coffee > higher priceso Growing competition in quality, prices,

locations and convenienceo Strategic partnerships require losing a degree

of control over the brand, with low profit margins

PLANS FOR PRODUCT EXPANSION• Initial success in expansion into new

productso Music kiosks, CDs and iTunes downloadso Canned drinks, instant coffee, foods and gumo Credit cards and film productiono Branded liqueur

• Appeal to wider audience and opportunity to broaden brand awareness – be known for more than just coffee

• Analyst suggest to evaluate short-run profits versus long-run benefit for the brando Don't stray too far from core strengths

GEOGRAPHICAL EXPANSION • Successful international expansion to date

leading to increasing revenue/growth

• Should focus on areas with political and economical stability and low market saturationo Success in Asian marketso Europe has potential but high saturationo India, Russia, Brazil have opportunity with young

consumers and low saturationo Avoid areas with instability and poor economic state

such as Middle East and Africa

STARBUCKS' COMPETITORS• "Third place" competitors with similar

offering but lower penetration and brand loyaltyo Panera bread

o Caribou Coffee: a dangerous rival Similar value proposition Starbucks has more penetration (8000 stores v. 400

stores) Commercial: "Get Real."

STARBUCKS' COMPETITORS• Value competitors offering quality and

convenience but unmatched atmosphereo McDonalds

High market penetration (12,000+ locations) High quality and low cost Cannot compete on the ‘experience’

o Dunkin Donuts Strong anti-Starbucks marketing and loyal audience

RECENT DEVELOPMENTS

• Starbucks has continued to dominate as a leading global brand througho High engagement of social media o Mobile apps and rewards programs

SO, WHY DOES STARBUCKS WORK?

• People buy into the brand, not just the producto Customers are willing to pay higher prices in return

for a consistent, reliable, quality experience

o Coffee products can be replicated and some may even taste better, but customers aren’t just paying for coffee

o Brand trust and loyalty serves as foundation to continue selling high cost products (like $400 espresso machines) to loyal brand customers

let's talk.

QUESTIONS?