Starbucks

Pre se n te d
b y:
A rch a n a

B a la ji
 Howard Schultz’s
idea with Starbucks
in the mid 1980’s
was to create a
chain of
coffeehouses with a
product
differentiation of
specialty “live
coffee”, service or
customer intimacy
with an
“experience”, and
an atmosphere of a
“third place” to add
to their work and
home alternatives.

 Starbuck’s brand image
 Dominant specialty coffee brand
 Growth rate 40% since it got public
 serving 20 million unique customers
 opening 3 stores a day
 spent nothing on advertising
 Objective
To establish Starbucks as the most
recognized and respected brand in
the world.


Differentiation
Strategy

Unique in ways that are valuable to a

wide range of customers.


 Growth strategies
 In 1991, Starbucks became the first
privately owned company to offer a stock
option program to all of their employees.
 Higher employee satisfaction leads to lower
turnover rates, which in turn leads to
lower employee training costs, which
leads to greater profits.
 Starbucks also gives back to the
community, both local and
 abroad.
 This provides Starbucks with plenty of good
publicity.
 Starbucks also takes great interest in its
suppliers wellbeing.

 Factors that contributed to
startbuck’s success
Experimental branding strategy
Reach
Product variety
Customer service
High quality coffee
Starbuck’s transformed coffee
 consumption from a picking
 behavior to an experience with
 high credence attribute
 Starbuck’s value
proposition
1.To create an “experience "around the
consumption of coffee an
experience that people would
weave into their lives
2.To create an uplifting experience in
“customer intimacy”
3.To create an “ambience” based on
human spirit, sense of community,
and the need for people to come
together
 Channels of distribution
 Stores in high-traffic , high-visibility(retail
centers , office buildings and university
campuses)
 Product mixes
 Variety of pastries , sodas , juices , music
CDs , games and many more
 Sold through non company operated
retail channels

S ta rb u cks p a rtn e rs
 Why so successful?

 1stto introduce
Italian coffee
house with
premium coffee to
the American
market
 Organic growth
 Partnerships

 Key drivers to future
growth
Expanding core retail opportunity
worldwide
Continued to innovate
Expanded customer base
Increased average unit volumes
Leveraged starbucks brand in
 other products and channels

Did not use advertising at all

 Delivering on service
 Training -hard skills n soft
skills
 Hundreds of combinations
of drinks in their portfolio
 Removing non value added
tasks
 Introduction of automated
espresso machines.
 Measuring service
performance
“BASIC SERVICE”
 service , cleanliness ,product
quality, speed of service

“LEGENDARY SERVICE”

 Expansion
§Owned close to one-third of America's coffee bars
§Coffee consumption was on the rise
§Eight states in US without a single company
operated starbucks .
§It was far from reaching saturation levels in many
existing markets.
§New products were launched on a regular basis
§Product development process-12-18 months
§Partner acceptance
§Starbuck’s stored value cards(SVC)
§T-mobile hotspot wireless internet service
 problem
Lacked a strategic marketing groupNew stores cannibalized
existing store sales, but Starbucks did not see that as an
important issue.
Very little image or product differentiation between Starbucks
and competing chains.
The newer customers were younger, less educated, in lower
income brackets, had less frequent visits, and had a
different perception of Starbucks.
Concern had been expressed that Starbucks had lost the
connection between satisfying our customers and growing the
business,
Starbucks wanted to serve the customer within 3 minute time
window
Starbucks wanted more handcrafted time consuming choices for
consumers.
Starbucks sees themselves as selling innovative products
 Rediscovering the Starbucks
customer
 Challenge-relaxing
the labour-hour
controls in the
stores to add an
additional 20 hours
of labour ,per week ,
per week , per
store , at a cost of
an extra $40 million
per year
 Focus on building the
image and
introducing new
 Evaluations
 Redefine their marketing strategies starting with a proper
research and evaluation of what the customer wants.
 Analyze the customers, and potential customers through their
specialty sales to see the impact upon current or potential
retail sales in stores
 Research customers who do not frequent Starbucks, or who
have never been inside a Starbucks store to determine why
 Create a centralized marketing department which can
attempt to coordinate all marketing efforts
 Analyze the innovative sales to determine the effect on labor
costs to determine if the sales support the costs and the
potential decrease in the time available to quickly serve
the customer.
 Concentrate new store openings in areas that would not
cannibalize existing sales.
 Advertise more to establish the branding of Starbucks.
 Quick term fix to add more employee hours to reduce wait
time, although this should be allocated according to an
established need per store
 Separate serving customers with customized orders from
those which will require less time, such as the customer
just wanting coffee.
 Solutions
Starbucks should pursue all of these
alternatives
Starbucks appears to consider
competition as minimal, and they are
somewhat insulated. probably,
entertaining either idea is a strategic
mistake .
Strengths Weakness Opportunities Threats
The product is Leverage the brand Expanding into Loss of sales to
to other that has substitute products
strongly to be proven to new geographic
differentiated strengthen the markets
brand portfolio
from those of strategy such as
rivals Hear Music

Strong brand- Expanding the Restrictions trade

polices on the part
name company’s of foreign
image/company product government
reputation line to meet a
Good supply broader range of
Joint ventures that Entry of product
customer needs new competitors
chain can expand the
management firm’s market
coverage or boost
its
competitive
Better product capability
quality relative to
Thank u