Starbucks: Managing A High

Growth Brand
Group 9: Indraneel Mukherjee
Rakesh Kumar
Rakesh Sharma
Sunil Bansal
Sunil Jain
 Objectives
• Starbucks – Company Background
• Early Geographical Expansion
• JVs and other partnerships
• Maintaining growth and new areas
• Missteps
• Aaker’s and CBBE model analysis
• Starbuck’s foray into non-traditional areas
• Learnings
 InterBrand & BrandZ Ranking
• Interbrand ranking in 2010: 97 ; 2009:90
• Brand Value @Interbrand : 3339 Million $
• BrandZ ranking in 2010: 85 ; 2009: 89
• Brand Value@BrandZ : 8490 Million $
 Company Background
• Started by Seattle Entrepreneurs Jerry Baldwin
, Gordon Bowker & Zev Siegl in 1971.
• Started as a new concept selling only finest
whole bean coffee & coffee brewing
equipment
• At the starting the Starbucks coffee was not
brewed in store, but rather by consumer
themselves
 Growing The Brand-Geographical
Expansion
• Japan(Tokyo), New York, LA , Washington DC , San Franscisco
• Success was based on Word of Mouth publicity campaigns
• Employed a “Hub” market Strategy- Coffee Houses entered a new
market in a clustered group
• Grand Store Opening were a community event
• A large city would serve as Hub , spokes markets were for smaller
cities & suburban locations
• Lead to cannibalization of store sales
• Brought about cost economies in marketing , distribution, customer
convenience
Growing the Brand-JV’s &
Partnership’s
 Growing the Brand- Other
Partnerships
• Urban Coffee Opportunities – Johnsons Company
developed store location & Starbucks operated them
• Teamed with Alliance for Environment Innovation
• Alliance with Conservation International
• Doonesbury themed products – Licensing agreement to
sell these products in stores & online
 Maintaining the Growth
• Encouraging results
• Market expansion
• Acquisitions- London
Based Seattle Coffee ,
Pasqua Coffee
Company(California) , Tazo
Tea
• S&P 500, 1999
 New Areas
Starbuck’s Cafe

Starbuck’s Joe
 Starbucks Missteps
• Internet
Strategy Debacle :
Unsuccessful investments in
1. Living.com
2. Cooking.com
3. TalkCity- Internet Chat Site

• Failed Acquisition Attempt : Home –

Goods & Kitchen Retailer Williams-
Sonoma

• Lifestyle Magazine Joe was axed

within a year of launch
 Starbucks Mental Map & Brand
Mantra
Earth Colors Expensive Variety
Customized Seattle Coffee
Convenient Fresh Sophisticated
Relaxing Comfortable Exotic
Treat/Reward Quality faddish/trendy
Consistent Wholesome Pretentious

• Brand Mantra-“Rich, rewarding coffee experience”

 Starbucks Competitive
Positioning
Competitor Point of Parity Point Of Difference
Fast food chains/ Convenience Quality
convenience shops Value Image
Experience
Variety
Supermarket brands Value Quality
(for home) Convenience Image
Experience
Variety
Freshness
Local cafe Quality Convenience
Experience Freshness
Price
Community
 AAKER’S MODEL

• “Personal Treat” • Product

• “Third Place” • People
• Atmosphere • In-store Experience
• Service

• Environmental
Responsible
• Progressive and
Socially responsible
Core Identity • Innovation

Value Proposition Extended Identity

 CBBE Model – Starbucks 2000’s &
1980’s
• Behavioral Loyalty
• Sense of community
• Active Engagement

Resonance
• Credibility / Trust • Comfort / Relaxed
• Superior Quality • Homely
• Quality Service • Social Approval
Judgments Feelings
• Self Respect
• High Quality
Coffee / Products
• Elegant
Simplicity
• Romantic
• Availability Performance Imagery • Innovative
• State of The Art
• crème de la crème
technology
• Complete Coffee House
• Music(Entertainment) Salience
• Films
•Coffee Retail Chain
 Starbucks Fights Back
• Strengthened its core product – Coffee
• Introduced new flavors of Frappuccino –
Chocolate brownie , Orange mocha chip ,
Strawberry & cream
• Introduced Chiantico – An indulgent drinking
chocolate
• Reduced fat blueberry coffee cake & Lemon
raspberry loaf
 Foray Into Non Traditional Areas
• Pre Packaged CDs
• Media Bars- Facility to burn CDs
• Promoted artist collection(Ray Charles) as well
new upcoming artists(Madeleine Peyroux)
• Starbucks Branded Coffee Liqueur
• Film Business – “Akeelah” partnered with
LionsGate
 Continued Growth-Post 2000
• Added stores in France , Cyprus , Jordan ,
Ireland & Bahamas
• Opened more 1800 stores across US
• Started a certification program named “Coffee
Master” as a differentiating strategy
 Conclusion & Learning's
• Right from the beginning Starbucks focused on its core
competency i.e. Quality coffee . Based on that it
became an international coffee powerhouse
• Focused more on word of mouth advertising
• In the process of diversifying it moved away from its
core competency
• The growing size of the company needed more efforts
to monitor & satisfy its customers
• A global Starbucks will need to strike a balance between
pursuing :product , people , values & sales
Thank You!!!