MARKETING PLAN :STARBUCKS

CORPORATIONPresented by:

JULIYATIRUHIYATI IDAYUNURULHAFIZAH

Presentation Outline About Starbucks

Overview Timeline of Starbucks Starbucks Values Starbucks Mission Statement Starbucks Environmental Mission

Statement Starbucks 6 Guiding Principles Corporate Social Responsibility

Malaysia Industry Analysis

Macro-Environmental Analysis Economics Political/Legal Demographics Social/Cultural Technological

SWOT Analysis Competitive Analysis Internal Analysis

Target Market Segment Product Life-Cycle & Sales Trend

Analysis The Starbuck Model Marketing Strategies Placement Strategies Promotion Campaign Plan

Conclusion Recommendation

ABOUT STARBUCKS

OVERVIEW Established in 1971 at Seattle, Washington Famous for its quality fresh-roasted coffee beans and stylish

atmosphere. Over 9,000 stores worldwide Product lines include :

beverages (coffee, Tazo tea, soda, juices) pastries whole coffee beans coffee-related hardware and equipment merchandise (mug, CDs)

TIMELINE OF STARBUCKS

TIMELINE OF STARBUCKS (cont’d)

Starbucks ValuesSTARBUCKS VALUES

Passion for Everything We Do Integrity Entrepreneurial Spirit & Drive Pride & Success Respect for Our Partner

STARBUCKS MISSION STATEMENT

“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising

principles while we grow.”

STARBUCKS ENVIRONMENTAL

MISSION STATEMENT

“Starbucks is committed to a role of environmental leadership in all facets

of our business.”

Focuses its efforts on:- Improving social and economics conditions for coffee farmers Minimizing environmental impact; Making a positive contribution in the communities where they do

business; and Providing a great work environment for their partners (employees).

Established the Starbucks Foundation in 1997

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility

A major contributor of CARE, worldwide relief and development organization (Health, Education, and Humanitarian aid)

Provides financial support to community literacy organizations Participate in local charitable projects 2004 EnviroStars Recognized Leader Award – for its community

service and environmental activities

CORPORATE SOCIAL RESPONSIBILITY (cont’d)

MALAYSIA INDUSTRY ANALYSIS

The coffeehouse business has grown every year. Lifestyle factors converge to make the coffee industry strong at all

times.Coffeehouse provides calm, invigorating ambiance for people to

socialize, relax or catch up on work.Coffee drinking is now an all-day activity. Not unusual for a well located coffeehouse to exceed a daily average

of 900 customers. The business of coffeehouse definitely will continue to grow

intensely.

MALAYSIA INDUSTRY ANALYSIS

Starbucks Malaysia, which became a 50% associated company of the Berjaya Group during the financial year, registered a 26.2% and 4% increase in revenue and pre-tax profit respectively as compared to the previous year.

This is mainly due to the growth of new stores and growing popularity of the brand and its products.

FINANCIAL REVIEW 2008

Thus led to More new customers visiting the stores Increased frequency of visits by existing customers as the company

expands its stores to new states and towns in Malaysia. Opening 21 stores Bringing the total number of Starbucks Coffee stores to 109 stores

nationwide. Consistency in introduction of new and innovative food and

beverage products.

FINANCIAL REVIEW 2008 (cont’d)

Complimentary WIFI service offered at all Starbucks stores nationwide continued to be well received by customers who used the facility for both business and leisure.

The company launched a strategic coffee knowledge program in all its stores, called “Coffee Seminars” conducted by certified coffee masters.

Starbucks is committed to opening more stores as well as introducing new store designs and programs to cater to the various needs of its customers.

FINANCIAL REVIEW 2008 (cont’d)

MACRO-ENVIRONMENTAL ANALYSIS

MACRO-ENVIRONMENTAL ANALYSIS

In a time of inflation when the purchase of non-essential items is down, Starbucks is feeling the effects.

600 Starbucks locations will close by mid-year 2009 12,000 employees will lose their jobs. Offer relocation packages to

many employees, severances to others. In response to competition and imitators, Starbucks now offers the

“bottomless” $1.00 coffee. Fewer than 200 new US locations will be opened in 2009 in

comparison to 900 new US locations projected to be opened in 2008.

Economic growth in countries where Starbucks operates, such as USA, Pacific Asia and Europe, stipulates the firm’s growth strategies.

The Starbucks business depends on economic factors in developing countries, where it buys the coffee beans.

As Starbucks is expanding internationally, trade restrictions, tariffs, tax policies and employment laws of related to their business countries have influence upon Starbucks.

Starbucks has to take into account very different political situations in countries from which it buys coffee and countries the company expands to: from extensive poverty and deep social inequality (Latin America) to the fast growing economy of Asia.

As predicted, by 2010 60% of the world’s population will live in the Asia Pacific region

Starbucks had two class action suits pending since 2001: Carr vs. Starbucks and Sheilds vs. Starbucks

Possible threats on a change in import laws for its imported coffee beans could greatly affect numerous areas of production for the company

People ages 15-64 make up the largest percentage of the US population

Starbucks targets both males and females, mainly 18-30 year olds, but really does cater for everybody's needs

Starbucks customers are mainly in their final years of high school, in university or just starting to work.

All these customers have had a good education

Understand environmental issues & share information with partners, Develop innovative & flexible solutions to bring about change, striving to buy, sell & use environmentally friendly products, Recognize that fiscal responsibility is essential to our environmental future, Instill environmental responsibility as a corporate value, measure & monitor

progress for each project, and Encourage all partners to share in the mission

Principles Towards Environment

Participating and organizing activities such as neighborhood clean-ups and walk-a-thons

Recycling and reusing of resourcesBuying policiesWaste reduction“Green Team” to install the environmental views into trainees Consumer preferences could shift from coffee to other

beverages

In line with the launching of Starbucks “Shared Planet” recently, Starbucks Malaysia has planned to achieve the following goals by 2010:

Reaching 5,000 volunteer hours in 2009 across Malaysia. Achieving 2% target of customers using Starbucks reusable mug over

paper or plastic cup in 2009. Conducting at least two community activities in support of local

neighbourhood causes per district per year. Implementing in-store recycling starting from stores in the Klang

Valley in 2009.

Organizing the first Starbucks™ Shared Planet™ Store Award Program in 2009.

Establishing the first Starbucks Social Entrepreneurs project in 2009.

Increasing energy conservation by 5% in 2009

Technologies allow Starbucks to offer the higher standard quality products

Introduction of the Starbucks Card Most if not all Starbucks location have WI-FI for consumer

needs Its computerized roasters allow the company to create

unique computerized curves in roasting coffee beans.

Starbucks invests in research to obtain even better quality of roasting and various blending.

Starbucks uses the Internet as a distribution mechanism and implement Internet cafes to attract customers.

New methods of working such as mobile communication, intranet gives enables prompt communication .

SWOT ANALYSIS

SWOT ANALYSIS

STRENGTHS

Product diversification Established logo, developed brand,

copyrights, trademarks, website and patents

Company operated retail stores, International stores (no franchise)

High visibility locations to attract customers

Valued and motivated employees, good work environment

Good relationships with suppliers Industry market leader Globalized Customer base loyalty Product is the last socially accepted

addiction Widespread and consistent Knowledge based Strong financial foundation It is a global coffee brand built upon a

reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.

WEAKNESSES

Lack of internal focus (too much focus on expansion)

Ever increasing number of competitors in a rowing market

Cross functional management Product pricing (expensive)

Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.

Dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

OPPORTUNITIES

Expansion into retail operations Technological advances New distribution channels (delivery) New products Distribution agreements Brand extension

Emerging international markets Continued domestic expansion /

domination of segment Co-branding with other

manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

THREATS

Competition (restaurants, street carts, supermarkets, other coffee shops, other caffeine based products)

US market saturation Coffee price volatility in developing countries Negative publicity from poorly

treated farmers in supplying countries

Consumer trends toward more healthy ways and away from caffeine

Fragile state of worldwide production of specialty coffees

Alienation of younger, domestic market segments

Cultural and Political issues in foreign countries

Starbucks are exposed to rises in the cost of coffee and dairy products.

COMPETITIVE ANALYSIS

Starbucks faces competition from a number of international, national, regional, and even local coffee bars and houses.

The more well known international ones would be :Coffee BeanSan Francisco CoffeeGloria Jeans

The local Competitors would be :Secret RecipeOldtown White Coffee

COMPETITIVE ANALYSIS

COMPETITORS

COMPETITIVE ANALYSIS

Starbucks competitors are primarily in the Restaurants & Cafes industry.

Starbucks also competes in the Nonalcoholic Beverages, Candy & Confections, and Consumer Electronics & Appliances Retail sectors.

Is comfortable facing Coffee Bean and Tea Leaf as its major competitor but, with the upcoming and modernized kopitiams, it is now quite an issue for Starbucks.

COMPETITORS

COMPETITIVE ANALYSISCOMPETITORS

Fortune ranked Starbucks number one in innovation, quality of management, people management and quality of products or services in the food industry 2007.

According to The Star online, in Malaysia, Starbucks currently holds 45% to 50% of local gourmet coffee market.

Starbucks is still the world and Malaysia leader in its industry.

Starbucks is constantly innovating and showing strong product differentiation in their industry.

Is aware of the threats to potential entrants since the profit is attractiveness.

The main technique used to analyse competition in the industry environment is Porter’s (1980)

The stronger each force, the more competitive is the industry and the lower is the rate of return that can be earned. (Goudaskas, 2002)

COMPETITIVE ANALYSISPORTER’S FIVE FORCES

MODEL

THREATS OF NEW ENTRANTS

BARGAINING POWER OF SUPPLIERS

COMPETITIVE RIVALERY WITHIN THE INDUSTRY

THREAT OF SUBSTITUTES

COMPETITIVE ANALYSIS

PORTER’S FIVE FORCES MODEL (cont’d)

THREAT OF ENTRANTS

Starbucks operates in highly competitive industry where there are strong brands among competitors

However, the entry in the retail specialty coffee market is low as the capital requirement for purchasing or renting one store is not high.

New entrants have to compete with respected brands. Most of these were one-store establishments with no real plan for growth.

THREAT OF ENTRANTS (cont’d)

Coffee bulk purchasing offers Starbucks significant economies of scale.

Outlets, stores, grocery chain, kiosks, Internet, mail delivery allow Starbucks to have access to a wide range of distribution services.

BARGAINING POWER OF CUSTOMERS

The force is high, because customers are large and provide a large proportion of company profits.

Easy to switch between competitors, as the competition on brand recognition is very high in the coffee industry.

To neutralize the threat of powerful buyers, Starbucks could reduce buyer uniqueness by product differentiation, cooperation, diversification, and forward vertical integration.

BARGAINING POWER OF SUPPLIERS

Supplier power is high for Starbucks. there are a few suppliers and increasing volumes of purchasing

by Starbucks leading to difficulties in finding beans that meet the company’s quality requirements.

To neutralize the threat, Starbucks could reduce supplier uniqueness and look into development of second sources.

To develop second sources, Starbucks should invest in coffee industry where there are a number of coffee farms that can be increased.

THREAT OF SUBSTITUTES

This threat can be generated by competition among non-coffee related products such as teas, and soft drinks.

Technological innovations in roasting also give the opportunity to roast Soya beans.

The threat is however quite low since there are no natural substitutes for coffee beans.

COMPETITIVE RIVALERY WITHIN THE INDUSTRY

The competition intensifies as the specialty coffee market is growing.

There is little difference between products, which makes the competition fiercer.

Starbucks can take an advantage of the recognition of its brand in countries where it has its name.

Comprehensive Internet site allows Starbucks to attract more stakeholders. Gaining the market share by store clustering, Starbucks depletes its rivals.

INTERNAL ANALYSIS

INTERNAL ANALYSIS

Target Market Segment

Starbucks positions itself as a specialty premium coffee retailer, which sells a wide variety of coffees and other beverages, both hot and cold, together with snacks and sandwiches.

However, intense competition in the retail beverage segment could adversely affect the company’s profit margins, and the company is currently still strongly dependent on the US market for the majority of its revenue and profits.

As Starbucks is a premium coffee brand, it generally relies on its target market having a significant number of middle and high earners with disposable income to frequent its coffee houses.

Product Life-Cycle & Sales Trend Analysis

The Starbucks Model

The Green Apron BookCreating the experience that keeps people

coming back relies on the magical combination of three things :

Our products, our places and our people.

They come for coffee, stay for the inviting warmth , and return for the very human connection

Attention to Detail Occurs by Design, Not by Default

Creating an Environment for the Starbucks Experience Details converge into a “Felt Sense” about the business Never cut corners on quality Prioritizing objectives and keeping them in front of your people Creating a playful corporate culture All that and so much more Everyone matters-Uniqueness of customers and employee

The Expectation Effect Creating the familiar : Predictability in

product Creating predictability in experience Delighting the customers even when

things go wrong

Macro Resistance Never try to beat them ; always join them Errant perceptions and taking valid responsibilities Example of challenges ;

We don’t want you hereBeware the naysayersWhen customers say NoResistance inside the store

The View from 30,000 Feet Building trust Triple shot of Socially responsible business practices

Benefits for partners C.A.F.E practices Partnerships with environmentally conscious and socially

diverse company Giving back : Writing checks and igniting service

Corporate giving Community volunteerism

Future leadership

Marketing Strategies, Action Plan and Assessment

Prior Strategies

Domestic & International Expansion

Domestic Blanket an area completely, even if the stores

cannibalize one another’s business Starbucks-everywhere approach Clustering stores increases total revenue and market

share

International Starbucks Coffee International Inc Company-owned or company operated store or

licensing Partner first, country second First 3 years of store opening is concentrating on

building the brand in the country

Employee system & Location Employee Training and Recognition

Systems to recruit, hire and train baristas and store managersScreening training programsawards for partners

Real Estate, Store Design, Planning, and Construction A broad range of store formats (the right image and

character) A “stores of the future” project team High-traffic, high-visibility store locations Control of average store opening costs Wi-Fi availability at stores

Product Line

Wide range of products choices Special product promotion Selling music CDs Joint ventures Acquisitions Starbucks Reward Cards

Coffee Purchasing Coffee and Farmer Equity (C.A.F.E.) The guidelines address coffee quality, financial

transparency, and social and environmental responsibility.

All suppliers that become members of CAFÉ must undergo a third party review to assess their adherence to the quality and sustainability guidelines established by CAFÉ.

CAFÉ members must provide a living wage, protect workers rights and provide a safe humane workplace and living environment.

Current Strategies A proprietary and revolutionary in-store Clover® brewing system that delivers the best cup of brewed coffee available anywhere

A complete reinvention of brewed coffee in-store, that will be brought to life by baristas across the globe, who will scoop and grind a new unique coffee blend, connecting customers to the early days of Starbucks

The introduction of new state-of-the-art espresso system that provides the perfect shot every time and helps facilitate the critical connection between barista and customer;

The launch of MyStarbucksIdea.com, Starbucks first online community, that takes the Starbucks Experience outside the store and enables customers to play a role in shaping the company’s future; and

Retail Strategy

Retail Mix

People Strategy

Human Resource Strategy

Quality Control Training Strategy

Product Strategies

Product & Brand Consideration

Leveraging the Brand

Packaging Consideration

Service Policy

Pricing Strategies

Pricing Objective and External Environmental Influences

Impact of the Other 5 Ps Customers are willing to pay the premium price that’s

being charge by Starbucks base on their perception of Starbucks as a high quality coffee.

The price is not as important as quality and it was found that customers understood that they’re not only paying the price for the coffee also for them to experience “The Starbucks Experience”.

Competitor Price Analysis

Competitor Beverages Price

San Francisco Coffee House Ice-Blended Mocha RM14.50

Coffee Beans & Leafs Ice-Blended Mocha RM13.50

Gloria Jeans Coffee Ice-Blended Mocha RM13.50

Old town White Coffee Ice-Blended Mocha RM 6.50

Secret Recipe Ice-Blended Mocha RM 7.50

Criteria for Planned Price Adjustments

There are two main pricing strategies available to Starbucks when entering the market: Skimming Market Penetration

Both of these strategies can be combined with promotion and placement strategies to provide an overall marketing strategy. Skimming strategy is usually seen as the best entry strategy, with

the company leveraging its brand and setting a high price to attract the most affluent customers.

In contrast, market penetration would involve offering initial discounts and low prices with the aim of attracting as much market share as possible. The aim would then be to convert this market share into repeat and loyal customers, and gradually remove the promotional and discount prices to produce a consistently profitable operation

Potential Competitor Action/Reaction They will start to emulate several Starbucks strategies, including holding a free

coffee day a week after Starbucks held its free coffee giveaway. Differentiating strategy by being true to its core as a coffee shop that sells quality

coffee such as never resteaming milk, roasting beans in small batches, and maintaining a large variety of coffees for customers to choose from.

Starbucks has strong competition from other coffee shops, but surprisingly, the other main competitors rising in the coffee market are prominent fast food chains. Corporations such as McDonald’s and Burger King have been around much longer and have a much bigger establishment than Starbucks does. They already have the infrastructure in place to sell coffee, and these fast food chains have recently been promoting what they assert is coffee that’s of similar quality to Starbucks for a cheaper price.

Placement Strategies, Action Plan and Assessment

Placement Strategies

Research & Development

Patens, trademark, copyright

& domain names

Food services

Licensing

Specialty operations

Company-operated retail

store

Placement Strategies

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Company – operated retail store

increase its market share by selectively operating additional stores in existing markets

operating stores in new markets to support its long term strategic objectives.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Company – operated retail store

Starbucks retail stores

are typically located in high-traffic, high visibility locations.

Company can vary the size and format;

its stores are located in or near variety settings.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Company – operated retail store

Company selectively located stores in shopping malls.

The company also locates retail stores in select rural and off-highway locations.

At the end of Fiscal 2008, the Company operated approximately 2,800 drives thru locations, compared to approximately 2,300 at the end of fiscal 2007, representing approximately 35 % and 31%.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Specialty operations

To reach customers where they work, travel, shop and dine by establishing relationships with prominent third parties that share the company’s values and commitment to quality.

During Fiscal 2008, specialty revenues accounted for 16% of total net revenues.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Licensing – Retail Stores

Shares Starbucks operating and store development experience.

Employees working in licensed retail locations are required to follow Starbucks detailed store operating procedures and attend training classes similar to those given to employees in Company-operated stores.

During fiscal 2008, 438 Starbuck licensed retail stores were opened in the United States and, as of September 28, 2008, the Company’s International operating segments had a total of 3134 licensed retail stores.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Licensing – Packages coffee and tea

With Kraft Foods, Inc (“Kraft”), the Company sells a selection of Starbuck and Seattle’s Best Coffee in grocery and warehouse club stores

The Company sells packages coffee and tea internationally both directly to warehouse club customers

By the end of Fiscal 2008, the company’s coffee and teas were available in approximately 37,000 grocery and warehouse club stores

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Licensing – through several partnerships both Domestically and Internationally.

The North American Coffee Partnership, a joint venture with the Pepsi-Cola company in which Starbuck is a 50% equity investor, manufactures and markets ready-to-drink beverages.

Collectively the revenues from these branded product accounted for 4% of specialty revenues in fiscal 2008.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Licensing – through several partnerships both Domestically and Internationally.

Licensing agreements for the manufacturing, marketing and distribution of Starbuck discoveries, a ready-to-drink chilled cup coffee beverage, in Japan and South Korea.

Collectively the revenues from these branded product accounted for 4% of specialty revenues in fiscal 2008.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Licensing – through several partnerships both Domestically and Internationally.

August 2008 with Unilever and Pepsi-Cola Company for the manufacturing, marketing and distribution of Starbucks super-premium Tazo Tea ready-to-drink beverages in the US and Canada.

Collectively the revenues from these branded product accounted for 4% of specialty revenues in fiscal 2008.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Licensing – through several partnerships both Domestically and Internationally.

Another joint venture with the Pepsi-Cola Company, to manufacturer, market and distribute ready-to-drink beverages internationally which currently includes bottled Frappucino beverages in china and Mexico.

Collectively the revenues from these branded product accounted for 4% of specialty revenues in fiscal 2008.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Foodservice

Sells whole bean and ground coffees, to institutional foodservice companies that services business and industry, education, healthcare, airlines and other retailers.

The majority of the Company’s direct accounts are through national broad line distribution networks with SYSCO Corporation and US Foodservice.

The Company’s total foodservice operations had over 19,000 accounts, primarily in the US, at fiscal year end 2008. Revenues from foodservice accounts comprised 25% of total specialty revenues in fiscal 2008.

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Patents, trademarks, Copyright and domain

Names

The Company owns and /or has applied to register numerous trademarks and service marks in the United States and in many additional countries throughout the world.

The Company owns numerous copyrights for items product packaging, promotional materials, in-store graphics and training materials, certain products, systems and design the Company has registered and maintains numerous Internet domain names,

Strategies (Rank Order) Action Plans Per Strategies Evaluation Method (s)

Research and

development

responsible for the technical development of Food and beverage products and new equipment.

The Company spent approximately $7.2 million, $7.0 million and $6.5 million during fiscal 2008, 2007 and 2006, respectively, on technical research and development activities.

PLACEMENT STRATEGIES, ACTION PLANS AND ASSESSMENTS (cont’d)

PRODUCT PLACEMENT TASKS NEEDED AND THE ABILITY TO BE PROVIDED BY STARBUCKS AND/OR BY OTHER ORGANIZATIONS

Task neededLevel Needed Ability to be provided by

High Low Starbuck Others

Marketing Activities:Forecasting and Market

IntelligenceYES YES

Sales Activity Sales force training and

managementYES YES

Missionary Sales YES YES

Task neededLevel Needed Ability to be provided

by

High Low Starbuck Others

Stock-based Compensation YES YES

Material Handling Systems YES YES

PRODUCT PLACEMENT TASKS NEEDED AND THE ABILITY TO BE PROVIDED BY STARBUCKS AND/OR BY OTHER ORGANIZATIONS

Task neededLevel Needed Ability to be provided by

High Low Starbuck Others

Promotion ActivitiesAdvertising

YES YES

Coop ads with retailer YES YES

Sales Promotion YES YES

Public Relation(Publicity)

YES YES

Specialty operations YES YES

Risk Factors YES YES

PRODUCT PLACEMENT TASKS NEEDED AND THE ABILITY TO BE PROVIDED BY STARBUCKS AND/OR BY OTHER ORGANIZATIONS

PLACE OPTION SELECTION AND EVALUATION CRITERIA

CriteriaDegree of Important Minimum level

of AcceptanceManagerial Assessment Factors

Reputation with clients for :

Management Very Important High

Prices /Negotiating Medium Important Average

Office Operations Very Important High

Retailers Operation Very Important High

Delivery commitments met Very important High

PLACE OPTION SELECTION AND EVALUATION CRITERIA

CriteriaDegree

of Important

Minimum level of

AcceptanceManagement Expertise Indicators:

Knowledge about end-users

Sales force professionalism:Training and retaining

Very Important High

Knowledge about the product Medium Important Average

Assistance provided to retail customers Very Important High

Stock outs and back orders Very Important High

ANALYSIS OF CHANNELS CURRENTLY BEING USED

Evaluation Criteria Wholesale Retail

Management Assistance / ServicesProvided to

Very Committed

Cooperative Advertising / promotionProvided to

Very Committed

Sales force assistance/trainingProvided by

Very Committed

PROMOTION CAMPAIGN PLAN FOR STARBUCKS

STARBUCKS PROMOTION PLAN

Focus more on the food service.

Shares Starbucks operating and

store development experience.

To reach customers where

they work, travel, shop and dine

To provide convenient

access for both pedestrians and drivers

Promotion Plan

Direct response advertising

OBJECTIVE TASK COST

To provide convenient access for both pedestrians

and drivers

Stores are located in or near a variety settings, including downtown and suburban retail centers, office buildings and university campuses.

It also locates retail stores in shopping malls, and in select rural and off-highway locations.

The company has continued to expand development of drive-thru retail stores.

OBJECTIVE TASK COST

To reach customers where they work, travel, shop and

dine

Establishing relationships including licensing arrangements, food service accounts and other initiatives related to the company core business.

During fiscal 2008, specialty revenues accounted for 16% of total net revenues.

OBJECTIVE TASK COST

Shares Starbucks operating and store development

experience.

Employees working in licensed retail locations are required to follow Starbucks detail store operating procedures and attend training classes similar to those given to employees in company-operated stores.

At the fiscal year end 2008, Starbucks total licensed retail in stores that operated similar like the Company-operated stores in Malaysia was 113.

OBJECTIVE TASK COST

Focus more on the food service. The company sells

whole bean and ground coffees,

Sells the product to the institutional foodservice companies that service business and industry, education, healthcare, office coffee distributors, hotels, restaurants, airlines and other retailers.

The company’s total services operations had over 19,000 accounts.

OBJECTIVE TASK COST

Direct response advertising

Consists primarily of customer acquisition expenses including applications for customers to apply for the Starbucks Card Duetto Visa.

Total advertising expenses, recorded in “store operating expenses”, “other operating expenses” and “general and administrative expenses” on the consolidated statements of earning, totaled $129.0 million, $103.5 million and $107.5 million in fiscal 2008, 2007 and 2006, respectively, as of September 28, 2008 and September 30, 2007 , $8.8 million and $12.0 million,

CONCLUSION

CONCLUSION From a single privately-owned coffee shop to becoming a publicly-owned

corporation with over 10,000 stores in 37 countries worldwide, Starbucks has been through some growing pains to where the Company stands now, all because of the vision of its founder Howard Schultz.

The Company has been very successful in achieving its goal to become the world's leading coffee brand.

As the Company's full efforts has been focused on store expansion and new market discovery, Starbucks may have neglected some consumers' concern that Starbucks brand is too pricy.

CONCLUSION (cont’d) It appears that Starbucks' main marketing segment is the young adults

with its coffee shop setting and music service additions. There does not seem to be any special services being offered to older adult retirees.

Since the Company has been concentrating on developing more blends of coffee drinks, Starbucks may have over looked the potential market of different healthy tea drinks.

Although Starbucks maintains a top-notch management team, the Company does not seem to have a well-organized consumer relations department.

RECOMMENDATION

RECOMMENDATION Starbucks should consider the general demand and work a price

reduction strategy into the Company's overall pricing strategies.

Price reduction strategies may include a rebate or coupon promotion program as the increase in sales will offset the costs of these price reduction programs.

Starbucks should consider tailoring some of its coffee shops to accommodate these older adults, perhaps another line of special drink products and services.

RECOMMENDATION (cont’d) Starbucks should also consider researching into the tea specialty

drinks market. Tea drinks will increase popularity because their perceived value of healthy benefits.

Starbucks may need to review its company policies to see if updates are needed to address different consumer relation situations.

Starbucks may consider locality pay to compensate employees who are working in Starbucks store where the local living cost is much higher compared to other towns.

THANK YOUTHANK YOU

- Question and answer session -