INTRODUCTION

Starbucks is another industry to enter the Indian markets due to vast potential and the huge untapped market. Indian market is always influenced by the traditions followed in the Western counterparts hence the success of Mc Donalds, surrounding brands such as Starbucks scale new heights. Indian consumers have always welcomed change when it comes to their taste buds. "appuccinos, %atte have eclipsed the traditional &spresso filter coffee. !ilter coffee seems like an archaic notion, only restricted to the elderly people. In fact the coffee shops have itself undergone a tremendous transformation, with them replacing a hang'out (oint for the teenagers. )he timing of their entry could not have been better. With *arista, "af+ "offee Day and "osta coffee almost losing their sheen, Starbucks comes in like a breath of fresh air. )he future outlook of any company is not complete without an analysis of the industry in which it operates. )he coffee industry of India is the si,th largest producer of coffee in the world, accounting for over four percent of world coffee production, with the bulk of all production taking place in its Southern states. India is most noted for its Monsooned Malabar variety. It is believed that coffee has been cultivated in India longer than anywhere outside of the -rabian .eninsula. )ata Starbucks %imited, the /01/0 (oint venture between Starbucks "offee "ompany and )ata 2lobal *everages %imited is bringing an unparalleled e,perience to Indian customers. *oth companies have a history of delivering product innovation and the highest $uality e,perience to customers around the globe. )hey are delighted to come together today and transform the coffee e,perience for consumers across India, while providing a community gathering place to connect with family and friends. )hus, "offee culture is poised to be deeply in'grained into Indian culture in the near future, if this strategic alliance succeeds. !", etc to name a few. With access to #ollywood movies where these brands are flashed $uite often, the aura

OBJECTIVE OF STUDY

)o analyse Starbucks as a company )o analyse the Indian coffee industry and India as a potential destination for Starbucks.

)o discuss strategies undertaken by Starbucks in India. )o discuss the opportunities and challenges that Starbucks face in India. )o discuss the benefits of tie up with )-))o discuss the threats from competitors and its position in the market.

COMPANY PROFILE
STARBUCKS CORPORATION Starbucks "orporation is an -merican global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 30,456 stores in 73 countries, including 68,395 in the :nited States, 6,83; in "anada, 545 in <apan, 4/6 in the .eople=s >epublic of "hina, 407 in the :nited ingdom, //7 in South orea, 899 in Me,ico, 356 in )aiwan, 307 in the .hilippines, 695 in )urkey, 696 in )hailand, and 679 in 2ermany Starbucks Missio ? @ur mission? to inspire and nurture the human spirit A one person, one cup and one neighbourhood at a time. Our Co!!""# Weve always believed in serving the best coffee possible. It=s our goal for all of our coffee to be grown under the highest standards of $uality, using ethical sourcing practices. @ur coffee buyers personally travel to coffee farms in %atin -merica, -frica and -sia to select the highest $uality beans. -nd our master roasters bring out the balance and rich flavour of the beans through the signature Starbucks >oast. TATA $LOBAL BEVERA$ES AND TATA COFFEE )ata 2lobal *everages is a part of the global )ata 2roup. )ata 2lobal *everages is a global beverage business and the worlds second largest tea company. )he groups annual turnover is :S B6./ bn and it employs around 8000 people worldwide. )he "ompany focuses on Cgood for you beverages and has a stable of innovative regional and global beverage brands , including )ata )ea, )etley, #imalayan natural mineral water and &ight @ "lock "offee. )ata "offee is a subsidiary of )ata 2lobal *everages. It is -sias largest coffee plantation company and the 8rd largest e,porter of instant coffee in the country. )he "ompany produces more than 60,000 M) of shade grown -rabica and >obusta coffees at its 65

estates in South India and its two Instant "offee manufacturing facilities have a combined installed capacity of 7000 metric tonnes. TATA STARBUCKS% JOINT VENTURE TO OPEN CAFES IN INDIA Starbucks is the number one specialty coffee retailer in the world. )he company wants to deliver the finest coffee products and offers handcrafted beverages. Starbucks is not only about drinking coffee but about a uni$ue e,perience. )he company follows an international e,pansion strategy through strategic alliances. Starbucks wants to prevent competitors from having a head start, build upon the growing interest for Western brands and take advantage of the higher coffee consumption rates. -fter building a successful brand in <apan and "hina, Starbucks wants to enter the Indian market. Starbucks found a local supplier for their coffee, )ata. M:M*-I, India, <anuary 80, 3063 ' )ata 2lobal *everages %imited and Starbucks "offee "ompany today announced a (oint venture between the iconic international coffee brand and the 3nd largest branded tea company in the world. )he /01/0 (oint venture, named )-)- Starbucks %imited, will own and operate Starbucks caf+s which will be branded as Starbucks "offee D- )ata -lliance.E )he retail stores had started developing in cities across the country, beginning with stores in Delhi and Mumbai in calendar 3063. In a separate sourcing and roasting agreement between Starbucks "offee "ompany and )ata "offee %imited, )ata "offee %imited will roast coffee to supply )-)- Starbucks %imited, and to e,port to Starbucks "offee "ompany. )his agreement paves the way for consumers in India to en(oy the premium Starbucks &,perience, while further discovering the uni$ue taste of high'$uality Indian arabica coffee worldwide. )-)- Starbucks %imited brings together two companies with a rich heritage in and passion for coffee, tea and innovative beverages. )ogether, the <F will enable an e,panded range of beverage offerings for Indian consumers.

PESTLE ANALYSIS )he .&S)%& analysis is a tool which provides insight of the e,ternal environment in which organiGations operate or will operate and aids the strategy formulation of those organiGations. "onsidering the fact that Starbucks is planning to enter the market in India, the .&S)%& analysis is going to evaluate favorable and unfavorable conditions in the countrys political, economic, social, technological, legal and environmental setting. a& Po'itica' !actors )he political factors have strong influence upon the regulation and controlling of business and the spending power of consumers and other businesses. We must consider those factors as very important and even crucial depending on the political system of the country we are operating in and the political condition of the country as a whole. )he Indian economy has been sub(ect to series of positive economic reforms since 6556 which had created a better working environment for foreign companies and has made it possible for foreign investors to operate in the country more easily. )he reforms have also resulted in higher growth rates, lower inflation and increase and ease of the foreign investments. )he current Indian government ' :nited .arties -lliance H:.-I, headed by the Indian Jational "ongress party HIJ"I has shown more tolerance towards foreign countries in general and towards !DI in numerous economic sectors. )hese reforms have placed India in a favorable position in the world economic stage. )aking into consideration the political environment in India as a whole, the bureaucracy complications and the regulatory !DI controls and regulations, it is safer for Starbucks to enter India via a (oint venture or a strategic alliance with an Indian company that can provide a buffer from possible political tension. !urthermore, Starbucks can face some opposition from the e,isting competitors H""D, *arista, etc.I through the use of political influence and delaying tactics. -lthough situations like these are possible to happen, the chance is low taking into account that the Indian market is large enough to hold more companies and the leaders in the Indian gourmet coffee industry will not be strongly affected by Starbucks entry.

b& Eco o(ic !actors )he factors like inade$uate infrastructure, bureaucracy, regulatory and foreign investment controls, the reservation of key products for small'scale industries, and high fiscal deficits are constraining economic growth of India. #owever, the liberaliGation measures taken in 6556 opened the economy to foreign investment and trade? it dismantled important controls, lowered customs duties, and devalued the currency? it virtually abolished licensing controls on private investment, dropped ta, rates, and broke public sector monopolies. !urther, reforms have been seen in retail industry with Indian government=s approval on !DI up to /6K on multi brand retail. )he country has recently become is a ma(or e,porter of software services and software workers, and the information technology sector leads the strong growth pattern. With a world changing from an industrial to an informational economy, India is bound to play a monumental role in the future of the global industry. c& Socio%Cu'tura' !actors -s (ob opportunities increase in India, money stays in the palms of the Indian consumers enabling them to reinvest in the Indian economy. -ttitudes towards money are also changing. )he mantra for the average Indian family, as in most of -sia, has always been saving, but young Indians today, inspired by (ob opportunities, have switched to spending e,travagantly. )he attitude of the young generation is to en(oy life and spend money. -ccording to sources the population of the country consists of more than 70K of the people between the age of 6/'/5. -lso with the westerniGation of the social trends more and more young people trust western brands and prefer foreign goods. )hey also go for the same trends and try to mimic the same status of e,clusivity young people in the :S and &urope look for. )his places Starbucks at a very dynamic position, where it has a good opportunity and much possibility to capture $uick customers. )he only problem is that they will not be the first on the market with specialty coffee offering and their otherwise leadership position could strongly be undermined and only sustained by their brand image.

Je,t to that, the culture and cuisine of India poses a very interesting challenge. )he mi, of traditional tea'drinking population together with the various differences between Muslim and #indu and the growing difference among various regions of the country, make it e,tremely to divide and place is concrete consumer groups. Still the most obvious separation with regard to coffee consumption is visible in the city versus rural areas separation with the urban population having distinctly higher preferences for coffee. Still the numbers of coffee consumers remains low with slow negative growth figure between 3000 and 300/ ' 7.9K and 3.0K respectively. )& T"c* o'o+ica' !actors Starbucks entered into a strategic alliance with )ata "offee %)D., the largest coffee producer in India. With signing this agreement, Starbucks finally found the partner it needed. - company which met all the conditions and standards followed by Starbucks. )ata proved its $uality standard by winning a gold medal for the best >obusta coffee in the world. )he factor of $uality is very important at the Indian market as high $uality coffee beans are easily available. With this strategic relation with the )ata 2roup, the company, Starbucks, might be able to succeed with competitive pricing in India. -nother important technological factor is the lack of infrastructure in India. #owever, having such an e,perienced local partner, Starbucks does not face any problems with this issue. It also provides free Wifi at all its outlets in India, with a great ambience. "& L"+a' !actors "ompanies may be public or private but the common public is not allowed to buy shares of the company and there can only be up to fifty shareholders. Import duties are applied to almost all goods entering India. )he tariff system is based on the #armoniGed System H#SI and tariffs are in the ;0 to 70 percent range for basic raw materials, 70 to 600 percent for semi'processed goods, and 600 percent and above on finished and consumer goods. Shipments to India re$uire a commercial invoice, a packing list and bill of lading. - certificate of origin is not re$uired on imports originating in the :nited States. !DI

approval though has come to rela,ation. %ower tariffs and lower barriers to enter have made the Indian market e,tremely promising and willing to change. !& E ,iro (" ta' !actors Starbucks believe in the importance of caring for our planet and working with and encouraging others to do the same. -s a company that relies on an agricultural product, it makes good business sense. It engages itself in recycling, energy management, water conservation, green building, and in reducing carbon footprints wherever possible. With these integrated environmental responsibilities, the company will obviously build its image in the eyes of Indian "onsumers as well. )he ecological concerns regarding the farming of -rabica coffee must also be addressed in order to ensure consistency in productivity.

MARKETIN$ STRATE$Y

Ca-tur" Va'u" In this section, tools and techni$ues will be used to e,plain how Starbucks can create and capture value for their products. Mark"t S"+(" tatio -part from the demographic characteristics presented in part one of the analysis, marketers should also consider psychographic variables such as interests and lifestyles. In general, Indias coffee culture has changed the way young Indians socialise. In a country where there is a limited bar culture, and where drinking alcohol is still not allowed in many circles, it has provided an acceptable and safe outlet for people, particularly young Indians, to share a drink. -s mentioned earlier, coffee is becoming a statement of wealth and prosperity among people with high disposal income, i.e. individuals in employment.

Tar+"t Mark"t S"'"ctio )he marketing strategy will focus on targeting both groups A college and university students Haged 643/I in the short term and working professionals H3/ ;0I in the medium to long run. -lso, tourist and fre$uent flyers will be a target audience in the longrun. Pro)uct a ) S"r,ic" Positio i + It is essential to have a uni$ue selling point to position Starbucks above competitors. In )-)-Starbucks customers will be able to rely on genuine service, an inviting atmosphere and a superb cup of premium coffee or tea every time.

C.APTER /& PROMOTION STRATE$Y

MEANIN$ # .romotional activities will not be analysed in details as they should be in line with Starbucks promotions worldwide. *esides, retailers in India rely heavily on word of mouth Hpersonal communicationI. )he Starbucks "ard will be introduced A a convenient way to pay for your drinks and earn rewards for your purchase. !urthermore, Din store promotions accompanied by new products such as drinks and accessories sourced from the regionsE should be present in India as well.

Starbucks might consider the idea of advertising on television. In the :S, there are three places that the average -merican spend his time during weekdays at home, in the work place and in Starbucks. So, they should somehow show the western lifestyle to the Indian and a )F advertisement. !urthermore, it is the first /01/0 (oint venture for StarbucksL so, both Starbucks and )-)- 2roup will benefit from comarketing activities.

Pro(otio is one of the market mi, elements or features, and a term used fre$uently in marketing. )he specification of five promotional mi, or promotional plan. )hese elements are personal selling, advertising, sales promotion, direct marketing, and publicity.M - promotional mi, specifies how much attention to pay to each of the five subcategories, and how much money to budget for each. - promotional plan can have a wide range of ob(ectives, including? sales increases, new product acceptance, creation of brand e$uity, positioning, competitive retaliations, or creation of a corporate image. !undamentally, however there are three basic ob(ectives of promotion. )hese are?M3N 6. )o present information to consumers as well as others. 3. )o increase demand. 8. )o differentiate a product. )here are different ways to promote a product in different areas of media. .romoters use internet advertisement, special events, endorsements, and newspapers to advertise their product. Many times with the purchase of a product there is an incentive like discounts, free items, or a contest. )his is to increase the sales of a given product. )he term OpromotionO is usually an OinO e,pression used internally by the marketing company, but not normally to the public or the market ' phrases like Ospecial offerO are more common. -n e,ample of a fully integrated, long'term, large'scale promotion are My "oke >ewards and .epsi Stuff. )he : version of My "oke >ewards is "oke Pone. .romotional activities to push a brand enabling social media channels to spread content making something viral such as the advertising by "oke using the release of a new bond

film creating a huge amount of attention which then gets promoted across all social channels by people spreading the information due to e,citement. .romotion can be done by different Media=s, namely print media which includes Jewspaper and magaGines, &lectronic media which includes radio and television, Digital media which includes internet, social networking and social media sites and lastly outdoor media which includes banner ads, @@# Hout of homeI

TYPES OF PROMOTION STRATE$Y

i& A),"rtisi + ii& S"''i + iii& Sa'"s Pro(otio i,& Pub'ic R"'atio s

i& 0*at is a),"rtisi +1

-dvertising is a form of communication designed to persuade potential customers to choose your product or service over that of a competitor Successful advertising involves making your products or services positively known by that section of the public most likely to purchase them. It should be a planned, consistent activity that keeps the name of your business and the benefits of your products or services uppermost in the mind of the consumer.

0*2 a),"rtis"1
)he ob(ective of advertising is to increase your profit by increasing your sales. -dvertising aims to? Make your business and product name familiar to the public "reate goodwill and build a favourable image

&ducate and inform the public @ffer specific products or services -ttract customers to find out more about your product or service

T*" ru'"s o! a),"rtisi +

)here are four rules to consider when planning any advertising activity A ie? before you prepare and book any form of advertising. Ai( ' What is the primary purpose of the advertisementQ Is it to inform, sell, produce listings or improve the image of your businessQ Tar+"t ' Who is the targetQ !rom which sector of the public are you trying to achieve a responseQ !or e,ample is it male, female, adult, teenager, child, mother, father etc. M")ia A *earing the aim and target in mind, which of the media available to you is the most suitable A ie? )F, radio, press or InternetQ Co(-"titors A What are your competitors doingQ Which media channel do they useQ -re they successfulQ "an you improve on their approach and beat them in competitionQ

D","'o-i + "!!"cti," a),"rtisi +

2ood advertising generally elicits the following four responses? Att" tio A It catches the eye or ear and stands out amid the clutter of competing

advertisements. I t"r"st A It arouses interest and delivers sufficient impact in the message or offering. D"sir" A It creates a desire to learn more or crave ownership.

Actio A It spurs an action which leads to achievement of the ads original ob(ective A ie? it prompts potential customers to purchase or use your product or service.

Maki + sur" 2our a),"rtis"(" t is '"+a'

Section /3 of the )rade .ractices -ct H"thI 659; prohibits misleading or deceptive conduct. Rou must consider the advertisement as a whole and the ordinary meaning of the words used. Rou must determine if the people to whom the advertisement is directed are likely to be misled or deceived by its content. Rou can use humour, cartoons and slogans to make your ad stand out, but be sure theyre not likely to mislead or deceive your audience. )he -ustralian "ompetition and "onsumer "ommission H-"""I provides advertising guidelines in information circulars that are available from the local office of the -""", or from www.accc.gov.au.

Co((o '2 us") (")ia

)here are many media options open to advertisers. Which media you use will depend on who you are trying to reach, what you want to say and your budget. @ften a combination of media Hthe media mi,I can be used to good effect. >emember to keep your branding and message consistent across all media. )his includes use of colours, logos, design elements and fonts.

3 Statio "r2

Stationery, which includes letterheads, envelopes and business cards, is a means by which your business image or Dname identificationE is pro(ected. 2ood $uality stationery, used with care and attention and with a high standard of presentation, is an everyday means of presenting your business image.

3 0i )o4 )is-'a2 or o!!ic" !ro t )he e,ternal presentation of your business office or shop is one of the principal ways of establishing your business image. -n attractive, well maintained e,terior with clear, bold sign writing is an essential start. Windows should be bright, attractively presented, scrupulously clean and well lit at night. )he display should be arranged neatly and aimed at pro(ecting an attractive company image and providing a reason to buy your products or services. -bove all it should have sufficient impact to attract attention.

3 Pr"ss a),"rtisi + )his is a commonly used form of general advertising and includes advertising in all press such as newspapers, magaGines and (ournals. .ress advertising is suitable for image building, information dissemination and sales campaigns. It is also a very affordable option for small businesses.

3 Ra)io >adio is considered by many advertisers as an ideal medium due to its ability to reach specific target groups e.g. teenagers, racing followers or grocery buyers. >adio advertising covers spot adverts Husually 6/ or 80 secondI, promotions or talkback1D<

discussions. Most radio stations offer packages which include production and e,tension of your radio campaign through their websites.

3 T"'",isio )elevision is a powerful advertising medium because it creates impact through sight, sound and movement however the cost of producing the advertisement and procuring sufficient air time to allow the campaign to work often makes it prohibitive for small business.

3 Dir"ct (ai' )his is a broad category covering direct communication with the consumer through email, post or fa,. It can include newsletters, catalogues and letters. If you plan to use email, be sure to comply with national anti'S.-M legislation which makes it illegal to send unsolicited commercial electronic messages. Fisit the -ustralian "ommunications and Media -uthority website for more details ' www.acma.gov.au.

3 Out)oor )his is any type of advertising which is done outdoors, including static advertising such as billboards, backs of street benches and bus shelters or mobile advertising displayed on buses, trains, ta,is or towed signage.

3 A(bi" t >efers to any form of advertising that occurs in a non'standard medium outside the home, and usually where your consumers are likely to be. Its limited only by your imagination and includes things like advertising on the back of shopping receipts or toilet doors at the cinema, placing branded coasters at the local pub, pro(ecting onto buildings, advertising inside lifts or distributing branded cups.

3 Ci "(a Rou can purchase cinema advertising by individual cinemas or screens for a set amount of screenings or DrunsE. Most providers offer packages which include production and screening of your advertisement

3 Poi t o! Sa'" -dvertising at the point where the consumer makes a purchase decision eg? floor stickers, in'store digital advertising, shopping trolley signage, shelf or counter posters or playing interviews about your product in store.

3 O 'i " )he options for online advertising continue to grow rapidly. )hey include advertising on your website, advertising on other websites, creating links to your website from other websites, publishing blogs, offering online product games, social networks and forums.

3 Dir"ctor2 'isti +s

Many consumers use business directories to find a supplier. Directories include the yellow or white pages, union directories, trade directories or local business directories.

E,a'uati + t*" "!!"cti," "ss o! 2our a),"rtisi +

!amous -merican department store merchant <ohn Wanamaker H6484'6533I was attributed as saying D#alf the money I spend on advertising is wasted A the trouble is I dont know which half.E )his $uote is often still true today as many businesses do not evaluate the effectiveness of their advertising. &valuating effectiveness can be as simple as staff asking every new customer D#ow did you hear about usQE or asking every customer that responds to an advertised special Dwhere did you see or hear our advertisementQE Whatever method you use, it is absolutely critical in getting top value for your advertising dollar by finding out which media works and which doesn=t.

iii& SELLIN$
0*at is s"''i +1
.ut simply, selling is the e,change of goods or services for an agreed sum of money. Depending on the circumstances, a sales transaction can include one, some or all of the following stages.

Pros-"cti + a ) 5ua'i!2i + A identifying $ualified prospects ie? those that are likely to want or need your product or service and can afford to pay for it. Pr"%a--roac* A undertaking research about prospects to assist in the actual selling process. A--roac* A making actual contact with the prospect in person, by phone or in writing. Pr"s" tatio a ) )"(o stratio A presenting and demonstrating the features and

benefits of your product or service in order to convince the prospect that their want or need can be satisfied. .a )'i + ob6"ctio s A demonstrating the product or service value to overcome real or perceived ob(ections or misunderstandings that are impeding the purchase decision. C'osi + A bringing the selling process to a successful conclusion by either asking for the order or responding to a positive decision from the prospect. Fo''o4%u- A proactive or reactive contact with the purchaser to establish their satisfaction level and to address any problems that may e,ist.

In planning the selling element of your marketing strategy you will need to consider the following?

)he siGe and structure of your sales team 6. >ecruiting, training, motivating and evaluating individuals and the team as a whole 3. )he remuneration structure 8. )he location1territory to be serviced ;. Management and communication systems

Selling is a particularly important element if you are marketing services because the purchaser of a professional service is in fact buying the capabilities of the seller. So he or she would be closely evaluating the behaviour and characteristics of your sales person, your business, its reputation, facilities and appearance.

iii& Sa'"s Pro(otio 0*at is sa'"s -ro(otio 1

Sales promotion relates to short term incentives or activities that encourage the purchase or sale of a product or service. Sales promotions initiatives are often referred to as Dbelow the lineE activities. 0*at ar" t*" (a6or sa'"s -ro(otio acti,iti"s1 Sales promotion activities can be targeted toward final buyers Hconsumer promotionsI, business customers Hbusiness promotionsI, retailers and wholesalers Htrade promotionsI and members of the sales force Hsales force promotionsI. #ere are some typical sales promotion activities?

/& Co su("r -ro(otio s .oint of purchase display material In'store demonstrations, samplings and celebrity appearances "ompetitions, coupons, sweepstakes and games @n'pack offers, multi'packs and bonuses %oyalty reward programs

7& Busi "ss -ro(otio s

Seminars and workshops "onference presentations )rade show displays )elemarketing and direct mail campaigns Jewsletters &vent sponsorship "apability documents

8& Tra)" -ro(otio s >eward incentives linked to purchases or sales >eseller staff incentives "ompetitions "orporate entertainment *onus stock

9& Sa'"s Forc" Pro(otio s "ommissions Sales competitions with priGes or awards

i, & Pub'ic R"'atio s

0*at is -ub'ic r"'atio s1

)he .ublic >elations Institute of -ustralia H.>I-I defines .ublic >elations H.>I as? D)he deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation Hor individualI and its Hor theirI publicsE. .ut more simply, public relations is about building good relations with the stakeholders HpublicI of your business by obtaining favourable publicity, building a good corporate image and handling or heading off unfavourable rumours, stories and events. *y building good relationships with your stakeholders, particularly customers, you can generate positive word of mouth and referrals from satisfied customers.

0*o is a stak"*o')"r1 Stakeholders are the various groups in a society which can influence or pressure your businesss decision making and have an impact on its marketing performance. )hese groups include? "lients1customers Staff Shareholders

Strategic partners Media 2overnment %ocal community !inancial institutions "ommunity groups @perationally, stakeholders really refer to those groups that your business is or should be, communicating with.

0*at ar" t*" (ai -ub'ic r"'atio s Too's1 )ypical .> tools include? 6. Jews creation and distribution Hmedia releasesI 3. Special events such as news conferences, grand openings and product launches 8. Speeches and presentations ;. &ducational programs /. -nnual reports, brochures, newsletters, magaGines and -F presentations 7 "ommunity activities and sponsorships

0*at ar" t*" k"2 st"-s i i(-'"(" ti + -ub'ic r"'atio s1 Implementing effective public relations activities re$uires careful planning. )he three ma(or steps are outlined below S"tti + t*" ob6"cti,"s A what is it you want to achieve and who do you want to reachQ Is it to create awareness of a new product or service to your e,isting clients, to overcome community misconceptions about your business or to create a positive impression with your bank managerQ D"ci)i + o t*" ("ssa+" a ) t*" ,"*ic'" A what is the ma(or thing you want to

communicate and what public relations tools will you use to get the message to its targetQ

E,a'uati + t*" r"su'ts A did you achieve the desired result and did it lead to a positive outcomeQ Many small businesses do not devote enough attention to public relations in their promotional mi, but done properly, it can be a powerful and cost effective business development and marketing tool.

C.APTER 7 COLLECTION OF DATA : ANALYSIS

/&COMPETITION

"af+ coffee day has 3,000 locations mostly in India, with plans to reach /,000 stores worldwide in the ne,t five years, whereas Starbucks has only 6/ till now. It has created a

stir in the coffee industry with (ust 6/ cafes which are doing very well. In the days after its first store opened in @ctober in a chic area of Mumbai, lines stretched so long that security guards were forced to implement a one'in, one'out policy. Starbucks plans to setup many such cafes in the near future and give a tough competition. "urrently in 3068, Starbucks has 9 outlets in Delhi and 4 in Maharashtra. &ven though Starbucks has a number of competitors it has adapted well in the Indian markets and giving a tough competition to the other brands.

7& PRODUCT LIFE CYCLE

CCD BARIST AA

STARBUC KS

Since Starbucks has (ust entered the Indian markets a year back, it shall come under the introduction stage which is slowly moving towards the growth stage.

I tro)uctio
Starbucks is currently in the introduction stage. It has started earning sales. )his stage re$uires a good deal of promotion. It is a /0'/0 partnership with )-)- and thus becomes easier for Starbucks to get into the Indian market. Since )-)- group is in India since

years. It knows the Indian market well. )hus, can develop marketing strategies according to the Indian tastes and needs more efficiently. )his stage involves high costs and investments to be made, less sales and profits. )he company has to make it aware to the people of their entry.

$ro4t*
Starbucks is making its way towards the growth stage. It has already e,panded its outlets in India with 6/ cafes in India and plans to set up a total of /0 Starbucks cafes. )his stage has a high growth rate, which means higher sales and more profits. )here is lot of promotion and advertisements. -lso the cost per unit decreases. "ompetition is also high? e.g. 2loria (eans, costa coffee, coffee bean and tea leaf as well as caf+ coffee day and barista.

Maturit2
In the maturity stage, the end of stage of the growth rate and sales slowdown as the product has already achieved acceptance in the market. )here is severe competition, and need for innovation in order to compete in the market. -s we can see from the graph, "af+ coffee day has already gained acceptance in the market, having a huge number of outlets. It is now facing tough competition from new entry Starbucks and other prevalent brands.

D"c'i "
When sales decrease and continue to drop to lower levels, the product has entered the decline stage of the product life cycle. In the decline stage, changes in consumer preferences, technological advances, and alternatives that satisfy the same need can lead to a decrease in demand for a product.
As we can see from the above graph, Barista Lavazza is a most at the verge of !ec ining, b"t if it gets more innovative an! competitive, it can strive in the mar#et$ There

has been a !ec ine in the n"mber of o"t ets of barista !"e to osses$ It has a so got new competition from Starb"c#s$

PERCEPTUAL MAP
%I&% 'UALIT(

L)* +RIC ,

%I&% +RIC,
STARBUCKS CA-. C)--,, DA( /CCD0

L)* 'UALIT(

BARISTA LA1A22A

)he graph shows that? as far as $uality is concerned, Starbucks is better than both *arista as well as caf+ coffee day. *ut pricing wise, Starbucks has a slightly higher price than the other two. It clearly shows that *arista has the lowest $uality of the two having a little high price than ""D. -nd ""D is in a good position of fairly good $uality and affordable price. Starbucks, with )atas as partner, has opted for competitive pricing that is nearly half the coffee chain=s charges elsewhere in the world '' with a cup of coffee costing about >s. 40 for a small offering and >s. 67/ for a large one. Starbucks is known for its high product $uality and as a premium brand. - hot coffee at Starbucks will range from >s. 40 to >s. 67/, while a cold coffee will cost anywhere between >s. 630 and >s. 300. )he ""D sells hot coffee at about >s. 40 and cold coffee at about >s. 6/0. )hough ""D has a number of branches in India, Starbucks has created a buGG and penetrated in the Indian market and differentiates itself from other cafes already prevalent.

-s far as for *arista, it is not doing well, since there is no innovation. )he $uality is not that good as compared to others having almost the same price range as "af+ "offee Day. -t *arista, - hot coffee costs >s. 4/ and cold coffee costs >s. 6//. -lso, one of the weaknesses of *arista is that it is perceived to be e,pensive by people.

ANALYSIS ON T.E BASIS OF T.E INTERVIE0 S6 Why did you decide to come into India with a partnerQ We do not have any restrictions in !DI in single brand retail. Why did not you (ust do it on your ownQ #oward SchultG? India is like no other market in the world. )ata=s position in India is very uni$ue. It is a company that has uni$ue capabilities in terms of infrastructure. *ut mostly their values were so consistent with ours, building a company with a conscience, treating people well, taking care of the communities and we thought this was an opportunity to do something together that we (ust could not do ourselves. S3 Jo doubt )ata is one of the biggest corporate houses in India. It is their second coming in the coffee space. )hey ventured into the coffee retail space with *arista by holding a minority stake and that really did not go very well. #ow did they sell themselves to you toQ #oward SchultG? )he coffee market here is ferocious in terms of competition. )here are so many players trying to do what we think we can do better. What )ata brings is a uni$ue perspective in terms of real estate ac$uisition capabilities, the opportunity to integrate Starbucks into )a( #otels, the ability to bring food from the )a( into Starbucks stores and the capability that we (ust could not do on our own (ust in terms of the infrastructure and distribution. )heir previous e,perience had no bearing whatsoever on what we thought would be a fantastic partnership. We are here to build a ma(or business and when I say ma(or business, we think over time India will be one of the largest markets in the world for Starbucks. We also think that the competition has done us a favour. )hey have educated the market and created lots of

consumers. @ur own research suggests that this market is perhaps like no other. )he awareness of Starbucks is so large here and there is so much pent'up demand that we think that over time this is going to be one of the best markets in the world for Starbucks. I do not think we could have done it without )ata. S8 &arlier we were given to believe that you had a /0 outlet target for Starbucks in India by the end of 3063. Do you have a revised plan now on how you are going to be e,pandingQ #oward SchultG? I do not know where that number originally came from, but I am not here to say how many stores or how soon. I will tell you we are going to build a very large successful business here. S; Rour pricing is significantly lower from the way you price a cup of coffee in the :S. Starbucks has a policy of not bending their pricing too much. 2iven that, why did you break the rules for IndiaQ #oward SchultG? I do not know if we broke the rules. We want to create a value proposition and as much accessibility as possible. We are sourcing and roasting coffee in India. )his is the first time we have ever done that anywhere outside of Jorth -merica for store opening. )his gives us a competitive advantage as well, but we want to win here and we have created a pricing strategy that will be very competitive and put us in a position to succeed. S/ #ow will you ensure that the Starbucks e,pansion in India will be both sustainable and profitable given that a lot of premium players who entered the market, to name a few such as "osta "offee, 2loria <ean=s, "offee *eans, are all struggling and have not yet been able to make a dent in the Indian marketQ #oward SchultG? Res. We have heard this many'many times in <apan, in "hina, in &urope, in Me,ico that Starbucks is not going to succeed here, no one else has, you are

an outsider, etc. We are going to take the long view. )his is not a sprint, it is a marathon. We are going to bring a $uality product that does not e,ist. )he e,perience will be so significantly different. @ur people will be passionately committed to service and are highly trained and the e,perience of the store will be significantly different. Rou can not compare the Starbucks brand and reputation what we are going to bring to this market to what e,ists here. What we are bringing is going to be new and e,citing and completely different. S7 What is your purpose in the Indian market considering we are populated with restaurants, roadside eateries, etcQ #oward SchultG? We want to create a coffee e,perience that is a stunning e,perience in terms of $uality. We want to create a physical environment that does not e,ist and when people see it, it will become the third place Hthird most popular place after home and workI. !rom a reputation standpoint, we also want to create the kind of company that is steeped in humanity and gives back to the community and we will do that here as well. S9 Rou have specialised food menus, catering to the Indian palette. What is so special about the menu that you deemed it right to be served at a Starbucks outletQ #oward SchultG? We got great advise from the people at the )a( about the kind of food that would appeal to the Indian customer. .eople have been pretty e,cited about the food at all the tastings that we have done. )he food is very different than anything we have done anywhere else because it is cue to the Indian palette. It will be hot, it will be cold, it will be savoury and sweet and will be vegetarian as well as meat. I suspect that the food will be a higher percentage of sales than we have seen in other markets. S4 What about the fact that India is traditionally not a coffee drinking nation, but a tea loving nationQ

#oward SchultG? Jot any more. Walk the streets of India. )here are so many coffee players doing pretty well. )hat gives us a lot of confidence that the winds are going to be at our back. S5 Is there an element of customisation that has gone into designing outlets for city 1 localityQ #ow does the balance between standardisation of the brand and customisation for city 1 locality work for StarbucksQ )he stores are a critical part of the Starbucks e,perience that we offer to consumers. &ach and every one of our flagship store actually incorporate very significantly the culture and the tradition of the country. )he designers marry the elements of Indian tradition and craftsmanship with the modernity elements of Starbucks. I give full credit to our designers as they balance the elements as there is a high e,pectation that people have from a Starbucks store that they have visited abroad. )he designers have worked across many markets and their understanding of the Indian ethos that they have incorporated well and it differs from store to store. )here is no magic number saying that this much of Indian sensibility and this much of core Starbucks will be there. Its a fine balance they maintain.

C.APTER 8& CONCLUSION

Starbuckss success in India like other foreign brands depends on their adaptability in addition to what they do globally. %ike Dominos D.eppy .aneerE piGGa, McDonalds Mc-loo tikki burger Starbucks might consider tasty healthy vegetarian recipes for an Indian breakfast treat, ne,t to its muffins some chicken tikka sandwiches may also do fine. Starbucks is catering to local tastes, it has been doing very well in many other countries including "hina and hopes to have success in India as well. )he staff is very pleasant and professional and is slowly creating a good image in the minds of the customers giving them a really good ambience with high premium products at fairly affordable rates. )he winning mantra according to SchultG, Starbucks will look to create different entry points for different demographics and Dwill create food relevant to Indian consumers that Mit does notN provide anywhere else.E )hus, Starbucks should follow the strategies that is using and set up more number of outlets. )here is also a good feedback from people and has already created its image in the consumers mind. Starbucks has a huge potential and can do much better in the near future.

#SU$$ESTIONS
6. )ata Starbucks can aim at increasing the number of outlets since the current caf+s are already doing well. 3. eep a constant track of its competitors, and have a competitive advantage. its own culture, tastes and preferences. 8. "onduct research of places in India, before setting up a caf+, since each city has

;. Maintain high $uality of products. /. )ry to make the prices a little more affordable for the lower income group. 7. "ontinue to introduce new products that are suitable to Indian taste.

BIBLIO$RAP.Y
Frushali .aunikar, 3066, OInternational *usiness .lan Starbucks IndiaO, - proposal >uchi Mankad and <oel Sarosh )hadamalla, 3066, O"ase? Starbucks "offee "ompany, )he Indian DilemmaO, Strategic Management and Business Policy, 68th &dition, )homas %. Wheelen, <. David #unger #erve >., Dec 36, 300;, O)he Starbucks "orporation? .ast, .resent and !utureO, -uch'>oy'.en? 6309##arold *rown, 3066, O&,ternal &nvironmental -nalysis of Starbucks and the "offee IndustryO !light, 2eorgia. D2rinding @ut Success Je,t to StarbucksE Business 2.0, @ct. 3007. Fol. 9, Issue'5 >yan ". %arson, 3004, OStarbucks a Strategic -nalysis ' .ast Decisions and !uture @ptionsO, *rown :niversity &conomics Department

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http://www.ca eco eeday.com/our-business.php'mnid(%3lmids(" accessed on !ug ",$ 20"% http://en.wikipedia.org/wiki/4ata&Starbuck accessed on sept %$ 20"%