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8/10/2010

Financial

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8/10/2010

Positioning

“The third place”

“We built our


company in a “The Starbucks
different way. experience.”
We built it on
trust.”

“A Starbucks you “Sense of


call you own.” connection.”

Product

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Coffee House Market Analysis

MARKET FACTOR DESCRIPTION Evaluation of Attractiveness

Size $ 13.6 billion (-)Large market but dominate


by big brand
Growth -46% (-)(Negative growth rate in
USA)
Cyclicity high (-) High influence from
recessions
Seasonality None/Low (+/0) Low influence from
holiday spending
Life Cycle State Decline (-)Decline to $13.6 billion from
$25 billion last year

Five Forces Analysis

MARKET FACTOR DESCRIPTION Attractiveness

Power of customer Buyer aware of competitive offering (-)

Power of Supplier Starbucks has a degree of control over (+)


its suppliers
Rivalry Intense; Heavy competition (-)

Threat of New Entrants High; Low barriers to entry (-)

Power of Substitutes High (-)

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8/10/2010

Competitor Analysis

Analysis Starbucks Peet’s Coffee McCafe Dunkin Donuts

Objectives Increase lead Get foothold Overtake Get foothold


Starbucks
Strategies Experience Quality Low price Extend coffee

Differential A Starbucks Hand made Global Brand Early-morning


you call you coffee coffee
own

SWOT Analysis

1.Brand establishment, high-end 1pricing/utility, Starbucks are


atmosphere with an affluent overpriced when we consider the
customer base. difference between the cost of a
cup of coffee and what Starbucks
2.Its fundamental business is sells it for.
lucrative (300% on investment)
2 Its ubiquity challenge the
3.It generally provides quick service exclusivity of the brand image.

4.Has strong customer loyalty 3.Lack of quality control.

5.The organization espouses strong 4.Seats is hard to find in city's area


ethical value. store.

6.Has a strong sophisticate and 5.Food offer in store are not


highly develop supply chain. attractive outside U.S store.

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SWOT Analysis

1. Increased competition
1. Opportunity to branch out
beyond coffee, due to favorable 2. Recession
brand image
3. Financial crises, lone, dept
2.International growth market such
as China UK India Brazil Japan 4. Further price rise can influence
customer to consider the Latte
3.Opportunity to success in instant Factor
coffee market and capture
significant market share from the 5 Rising in milk, coffee beans
competition and other supply

4.hard working life style is a factor 6. Copy-cat stores


that drive people drink more coffee
7. Healthy food and organic
trend

Problem Statement

Should Starbucks try to


meet market and
shareholder
expectations by
continuing to expand or
by reconsidering more
immediate concerns ?

Had the company


reached a crisis in
Lost in customer branding, its ubiquity
loyalty? and over-exposure
challenged its down-
home appeal ?

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8/10/2010

Decision Time: Market Expectations are High,


Should Starbucks…

OR Focus on more immediate


Continue to Expand? concerns?

Threat of competition

Major financial
restructuring, global
$$$$ recession and rising
commodity prices
Is this world half-full of Starbucks
or half-empty? Unhappy Baristas and
Recruiting Difficulties

Alternative Strategies

World Licensed to No Place Like Tea Time


Domination Thrive “Third Home”
• Continued • Limited • No • No
Domestic International Expansion Expansion
and Expansion: • Focus on • Focus on
International China, India, customer expanding
Expansion Russia, SE experience high-margin
Asia tea business
• Licensing in Asia,
model Europe and
Americas

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8/10/2010

Critical Issues

• Brand Affinity: Brand is recognized and respected as a Best Place to Work,


―Starbucks Family,‖ environmentally friendly, ethical.

• Competitive Advantage: In-store/coffee-house experience, consistency and


customer loyalty.

• Financial Impact: Revenue potential, operational costs, need for additional


working capital.

• Alignment With Organization Mission: ―To inspire and nurture the human
spirit— one person, one cup, and one neighborhood at a time.‖

• Ease of Expansion: Market access, hiring good talent, finding licensees.

Alternative Analysis

Critical Issue Weight World Licensed to Thrive “Third Tea Time


Domination Home”
Brand and 0.3 4 (1.2) 9 (2.7) 10 (3) 8 (2.4)
Reputation

Competitive 0.25 7 (1.75) 7 (1.75) 10 (2.5) 9.5 (2.38)


Advantage

Financial 0.25 4 (1.0) 7 (1.75) 4 (1) 6 (1.5)


Impact
Mission 0.1 3 (0.3) 3 (0.3) 6(0.6) 4 (0.4)
Ease of 0.1 2 (0.2) 6 (0.6) 5 (0.5) 5 (0.5)
Expansion

Total 1 (4.45) (7.1) (7.6) 7.18

Scale: 1=Negative Impact, 5 = Neutral Impact, 10 = Positive Impact

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8/10/2010

Recommendation: Restore Starbucks as the


―Third Home‖ of Choice (Stores)

Store Interior Design Contest ―What Does YOUR Starbucks


Look Like? (test ideas like ―flagship‖ stores, family style seating)

Brighter, ―Green‖ Lighting: energy savings, easier to work and read.

―Customer DJ‖: Customer requests play over store PA.

(Overt – i.e. VIA) Marketing Free Zone in store. Create


direct marketing campaign.

Recommendation: Restore Starbucks as the


―Third Place‖ of Choice (Partners)

Engage: “Hear from Howard” employee webcasts with ―live‖ Q&A.

Equip: Regular virtual and in-store training.

Recognize: ―Employee of the Month‖ pictured for each store location


online.

Involve and Reward: Partners can submit product ideas to win cash
and charity donation.

$$$$ Referral Bonuses: Increases recruiting pool and gives employees


(trusted source) reason to spread image of ―Best Place to Work.‖

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8/10/2010

Recommendation: Restore Starbucks as the


―Third Place‖ of Choice (Customers)

Stay Awhile: Happy Hour from 4-6 with specials on coffee drinks
and selected food items.

Let Us Serve (With) You: All Expense Paid Service Trip opt-in
promotion based on annual card spend.

Donate Points: Donate points to Starbucks supported charities for


yourself or as a gift.

Recommendation: Restore Starbucks as the


―Third Home‖ of Choice

• Brand Affinity: Central focus is on brand restoration as a neighborhood locale and


―your home,‖ not an ubiquitous chain. Enhances brand recognition and respect as a
Best Place to Work, ―Starbucks Family,‖ environmentally friendly, ethical.

• Competitive Advantage: Return to the roots of a consistent ―Starbuck’s Experience‖ –


which helped drive the now infamous customer loyalty.

• Financial Impact: Increase in revenues and cash flow from store closings vs. financial
outlay to refurbish store environments. Spend money on environment now to retain
customers and attract new when recession ends.

• Ease of Expansion: No need to access new markets (find real estate, foreign legal
issues), focus on attracting and retaining smaller, more committed talent pool.

• Alignment With Organization Mission: Getting back to inspiring the human spirit by
centering on customers and employees and returning to a more of a local feel.

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8/10/2010

Example

The Objective and Goals of this direct marketing plan are to solve the main problem:
decrease in sale and customer loyalty issue.

Goals • to retain loyal customers and create new


ones.

• Increase traffic to the stores and


Objective improve sales by 10%
• Generate sale of 50,000 Starbuck card

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8/10/2010

Target and Media

College student and


Urban professional
Face
book + Twitter

Offer: Happy hours 15% discount (between 2-4 p.m. or 4-6 p.m. ) ; random
tweet and post 3 days a week

New product
Existing Starbucks Card holder Direct Mail information and
coupon with
unique No. for
each member

Offer: Free dink for Card holder and 5 of their friend who purchase Starbucks Card

Thank you for support


Starbucks 1 FREE drink for friend 1 FREE drink for friend

1 FREE drink for you

With Starbucks Card purchased With Starbucks Card purchased


Customer code: xxxx1 Customer code: xxxx1 Customer code: xxxx1

1 FREE drink for friend 1 FREE drink for friend 1 FREE drink for friend

With Starbucks Card purchased With Starbucks Card purchased With Starbucks Card purchased

Customer code: xxxx1 Customer code: xxxx1 Customer code: xxxx1

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8/10/2010

Direct Mail (in the back)

The more you come in to


Starbucks card Benefits Starbucks card Benefits
Starbucks, the more we’ll
reward you.
A Free Drink on your A Free Drink on your
We want to say “thanks” for coming into Birthday Birthday
our stores and using a registered
Starbucks Card. With My Starbucks Free Wi-Fi – Up to 2 Free Wi-Fi – Up to 2
Rewards, you'll earn 1 Star every time
you pay with your Card. And as you
Continuous Hours a Day Continuous Hours a Day
collect Stars, you move up to bigger
benefits

Starbucks card Benefits Starbucks card Benefits Starbucks card Benefits

A Free Drink on your A Free Drink on your A Free Drink on your


Birthday Birthday Birthday
Free Wi-Fi – Up to 2 Free Wi-Fi – Up to 2 Free Wi-Fi – Up to 2
Continuous Hours a Day Continuous Hours a Day Continuous Hours a Day

Direct Mail

100,000 pieces of direct mail + customer share with 5 people

=
500,000 offer

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8/10/2010

Twitter and Facebook

Happy Wednesday, Today our Happy hours is


between 2-4 p.m. 15% discount on specialty
espresso just mention “Twitter Promo”

random tweet and post 3 days a week

Happy Monday 15% discount


start between 4-6 p.m. Happy Monday, Today our Happy hours 15%
discount on our satisfying Frappuccino started
between 4-6 p.m. just mention “Facebook
Promo”

Sharing content that showcases Starbuck


Facebook Only expertise to create value for followers

There’s No Place Like Home…Except


Starbucks.
$$$$

$$$$
+ + =
$$$$

Return to the Engaged, Loyal, Satisfied


Starbucks Equipped
Customers
Experience Partners

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8/10/2010

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