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Starbucks Its bigger than coffee Presented by: Group 3
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. Companys 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 TrainingWorkforce composition• 80 % white• 85 % high school graduates with average age of 26Training of Baristas• At least 24 hours training in the first two to four weeks.• Coffee history & knowledge, drink preparation, customer service and retail skillsTraining 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 12weeks. Their training went much deeper.8 to 10 weeks before opening a new store in newmarket, the company placed ads to hire baristasand begin their training.A Star team is used for providing store-openingeffort, one-on-one training and orientation sessionsat 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.
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 PositioningBrand positioning is abouthow we want targetcustomers to think about abrand with respect tocompetitors
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 ReferenceNature 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 want to hang out besides your first place (your home) and your second place (your work)”
Competitive frames of Reference Target Market – People who live somewhat hectic lives – Who believe in only getting the best in taste and 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
A story of Ifs and Buts Right Partner!!! Market Opportunity 21% A traditionally tea-drinking Organized nation 79% Unorganized Market Size: $ 667 Mn Expected CAGR: 30% The growing middle class “Coffee is perceived as a western, cosmopolitan luxury in many parts of India”
The China Story Sustainable Model of: “Low Sales Volume; High Profitability” “Lifestyle Coffee Drinking“ Need to maintain the image 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 Price Range in USA Price Range in IndiaBrand ($) (Rs.) Coffee – 70 to 90 Regular Joe - 1.92 Cold Coffee – 90 - 120 $3 – $5.50 150 to 300 Frappe - $2.29 to $3.29 39-45 Coffee – 52 to 78 NA Cold Coffee – upto 120 Regular Joe - 2.25 Frappuccino – ~$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)