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Transcript of Starbucks presentation
Beth Wernet Pam Jue Meghana Khandekar Shelly Ni
Q : What brought you to Starbucks, the first time you ever went?
"Weekend morning Starbucks runs with my dad are one of our most important father-daughter traditions."
- Kylie, 15 year Starbucks customer
A : Friends or family
"Weekend morning Starbucks runs with my dad are one of our most important father-daughter traditions."
- Kylie, 15 year Starbucks customer
Super regulars16-20 x mo.
Regulars8-12 x mo.
Occasionals1-4 x month
4%customers
17%customers
79%customers
20%revenue
37%revenue
43%revenue
Who goes when?
Super regulars16-20 x mo.
Regulars8-12 x mo.
Occasionals1-4 x month
4%customers
17%customers
79%customers
20%revenue
37%revenue
43%revenue
What's interesting here?
"Individuals who start their day in a friendly coffee circle will never have a totally bad day... [As Starbucks changes] the flavor of its stores, it's belittling the very role that it created for itself, and for its customer. It isn't easy for all of us who used to love our cozy neighborhood Starbucks."
- Ray Oldenburg, writer behind 3rd place idea.
Coffee Trends
Starbucks Trends
Starbucks Trends
Strategy
Strategy
Bring a friend to Starbucks for 10% discounts on both your drinks. Bring more friends, and everybody enjoys a larger discount, up to 50% off.
Strategy
Introducing: Starbucks Coffee Breaks
How it works
Starbucks Mobile 100 million mobile payment transactions since program launch in January 2011
2 million mobile payment transactions/week
$3 billion loaded onto Starbucks Loyalty Cards (mobile & physical) accounting for
25% of all store transactions(Nov 2012)
October 2012 launching mobile payment partnership with Square, increasing payment capabilities
How it works
Increased functionality to add & manage contacts
Starbucks Coffee Breaks
Increased functionality to be built into Starbuck's existing mobile app
Select nearby friends
Select meeting place
Message multiple friends at once1 2 3
How it works main app flow
How it works main app flow
Via Square GPS,grouping and discount earned display automatically
Friends receive invitations and can accept or decline
Optional: Originator of the Coffee Break can allow invitees to add additional friends to the group
4
5
6Meet in store for a Coffee Break!The more people you can recruit, the bigger discount you will receive
1 Friend = 10% off 1 drink2 Friends = 15% off...10+ Friends = 50% off
Friends can be saved and organized into more permanent grouping
Message all group members to organize meet ups in advance, or anyone who's nearby for an impromptu coffee break
How it works app flow - saved groups
Group Stats Store Stats
How it works app flow - group & store stats
0 - 12 MONTHS (US)
$177M - 422M
5 - 10% increase in annual US customer traffic(225,000 - 450,000 more visits / year)
Estimated Revenue
0 - 12 MONTHS (US)
$177M - 422M
5 - 10% increase in annual US customer traffic (225,000 - 450,000 more visits / year)
12 - 36 MONTHS (GLOBAL)
$450M - $3B
5 - 30% increase in annual global customer traffic (400,000 - 2.4M more visits / year)
Estimated Revenue
Facts from Annual Report: 60 million / week$13.3B / year revenue75% of revenue comes drinks bought in store10,000 US stores17,000 international stores
Calculated numbers: 450 unique customers / store / day$4.93 - average spent / store / customer / day$3.70 - average spent on drinks / store / customer / day
Estimated Revenue
Increase discounts by 5% per additional customer, up to 50%
Only discount $3.70 spent on drinks
Calculate average revenue gained from 1 - 30% additional customers buying discounted drinks
Calculate average revenue lost in discounts from 1 - 20% (portion of Starbucks customers who are super regulars and regulars)
Estimated revenue = revenue gained - revenue lost
Model
Americans spend $40 bil on coffee
35 mil premium
36 mil low
8 mil Starbucks
79 million buy coffee away from home
62 million take coffee breaks
Coffee Market in US
MARCH/APRIL 2013 MAY 2013
1-2 months before app launch
● Introduce the concept with in-store promotion: Wednesday afternoons, bring in friends for discounts on coffee
● In initial phase, groups will simply tell barista that they are together
Launching the Program
6 months: start with US, all stores
pilot program: analog and update to the app side by side. try to get people to adopt the app.
timing:try out discountsif you want to continue taking advantage of discounts, DL the appapp DL card? usually costs money, but you get a coupon code to DL it for free
app + square - most convenient for barista & customeranalog - widest adoption1/4 of customers can participate if payment can only be made using app + sq
between now and april - dev the app, marketing campaign, user testing, in april:1-3 months before the app launch and after: once a week (set by SBX) bring a friend for hump day. (work on wording)use the card/app anytime
Mockup facebook/email integration? (App could send invite via facebook to user w/o app, accepting directs to coupon code as well as prompt to download app)
MARCH/APRIL 2013 MAY 2013
● Launch Coffee Breaks across all US stores with update to existing mobile app
● Square GPS integration makes allows baristas to seamlessly access groups
● Encourage higher adoption by allowing app users to invite friends via Facebook or Email
Launching the Program
6 months: start with US, all stores
pilot program: analog and update to the app side by side. try to get people to adopt the app.
timing:try out discountsif you want to continue taking advantage of discounts, DL the appapp DL card? usually costs money, but you get a coupon code to DL it for free
app + square - most convenient for barista & customeranalog - widest adoption1/4 of customers can participate if payment can only be made using app + sq
between now and april - dev the app, marketing campaign, user testing, in april:1-3 months before the app launch and after: once a week (set by SBX) bring a friend for hump day. (work on wording)use the card/app anytime
Mockup facebook/email integration? (App could send invite via facebook to user w/o app, accepting directs to coupon code as well as prompt to download app)
Risks
● Customers don't use it● A competitor will launch
something similar
Costs
$1.03 million in US
● App Design/Development● Print and Online Advertising● Training Baristas
Risks & Costs
Large & loyal customer base
5 Million active Starbucks card
members
Mobile Payment leader
Square Partnership2 mill mobile
transactions per week
Locations
17,600 locations worldwide
10,700 in US
"Third Space"
Free WiFi
Starbucks Evenings
Starbucks Strengths
Meetup and Eventbrite encourage face to face interaction but many organizers face the issue of finding a physical space for their events.
A partnership with Starbucks will:● give Meetup and Eventbrite organizers more
options for space ● promotion for Meetup and Eventbrite● increase traffic and regulars for Starbucks
Future MeetUp/Eventbrite
Coursera, Udacity and edX are the leaders of the massive open online courses (online course aimed at large-scale participation and open access via the web)
By pursuing a partnership and with various online universities, Starbucks can be the sponsored and official meeting place or "campus" for students globally to convene to study.
A partnership with Starbucks will:● increase traffic & regulars● reinforce goal of facilitating community &
customer engagement● support educational initiatives & help online
universities keep student retention high
United States
- online education
increasing, 2010 6 mil+ in the US signed up for a least one online class
- 31% of total enrollment
were online enrollment in higher education
- 10% growth rate in
enrollment
- Funding $22 mill
- 197 courses in 18 subjects
- 1,755,551 students from
196 countries have enrolled in at least one course
- meet-ups organized by
students in about 1,850 cities.
- Funding $15 mill
- 18 courses
- 753,000 students
worldwide have signed up since January
- meet-ups
organized by students in about 450 cities.
- Non profit $60 mill
- 8 courses, expanding to 25
in 2013
- 370,000 “unique learners”
and 31,000 new students this semester, aiming for 1 billion students
- meet-ups organized by
students world wide: Tunisia, Pakistan, New Zealand, Latin America.
Future Online Education
Future Global Profits
Model:
Total # of groups globally within online education, MeetUp & EventbriteAssume 25% of groups use social groups discountApproximately 10 people per group, meet 2 times per monthSpend $30.90 per visit
Online Education: $590 milEventbrite/Meetup: $215 mil
Total: $805 million first year
"if you decide to join [a group], you can cut your risk of dying over the next year in half."
- Robert Putnam, Bowling Alone
"Coffee is a gift to mankind, coffee unites, coffee entertains, and coffee educates."