Starbucks Case Study

MANAGING A HIGH GROWTH BRAND
Presented ByMohit Goyal Nivedita Samrendra Vipul Gupta
From Bean to Cup

In
early years
Founded by Jerry Baldwin, Gordon Bowker, & Zev Siegel in 1971, in Seattle Early name was Starbucks Coffee Tea and Spice
Sold only whole-bean coffee and coffee brewing machine
In 1980s
Howard Schultz became CEO and renamed it as Starbucks Re-image from only selling beans to be a coffeehouse
Starbucks in the Cup

From
1990s till now
13168 retail outlets worldwide
Business expansion into food, ice-cream, tea, RTD business, credit cards, music and film
Starbucks mission statement
Establish Starbucks as the premier
purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.
Starbucks Culture
Great
work environment
Embrace
Apply
diversity as an essential component
the highest standards of excellence enthusiastically satisfied customers
Develop
Contribute
positively to community and environment
Case About
Managing
the rapid expansions of the brand
Sustaining
the core values in the face of this
expansion
New entrants : Low & medium entry barrier
Supplier:
Farmer-collectormiller-importerSpecialty coffee
Rivalry:
Dunkin Donuts, Caribou coffee, Tullys Coffee, Wal-Mart etc.
seller,
Buyers: People with different age group
5 Forces Model
Substitutes: Tea, juice, soft drink, milk, Alcoholic drink,
Story/Event
Low
barriers facilitating new entrants
Medium
Lot
bargaining power of suppliers
of substitutes like tea, ice-cream, juices
etc
Symptoms
Lifestyle
classification bases (Psychographics)
Saturated
High
domestic market
cost of new expansion & internet process
Problems
Deviation
from the core values
Difficult
to maintain balance between various objectives

Failure
of diversified products
Issues
Sustaining
the core values
Finding
out a right balance between product, people, values and sales

Closely
monitoring the relationship with employees and customers
Actions Taken
Constant
innovation Strategic alliances Vertical integration Corporate social responsibility Following the Brand Mantra Creation of a third place Ultimate Starbucks Experience
Actions To Be Taken
Pull
out unrelated diversification Focus on being on top in coffee business Semi- automated coffee machines
Brand
Was
inspired by Starbuck, Classic American Novel Moby Dick

Logo
included a mermaid in woodcutting
style
Value
Quality-1st
preference
Premium
Value
European coffee experience to USA
simplicity over technology in innovation
Investing
Employees
as partners and the most important assets
Brand Equity
Brand Recall Brand Awareness Brand Recognition Types of brand association Strength of brand association Attributes Product related Attitude Functional Benefits Experiential Symbolic Non product related
Price
User Image Brand Personality Feelings & Experience
Brand Knowledge
Brand Image
Favorability of brand association

Uniqueness of brand association
Awareness
Word
Of Mouth
Partnerships
New
channels
Image
Premium
Brewing
coffee beans
techniques
Store
design
elegance and American informality and Music
Italian
Artwork
Associations
Type
of Brand Associations
Premium coffee Consistently good customer service A classy romantic atmosphere that meets the 5 senses
Associations
Strength-
To be a lifestyle brand
Coffee enthusiastic
Favorability-
Uniqueness-
Not entirely unique
Why is so successful?
1st
to introduce Italian coffee house with premium coffee to the American market
Organic
growth
Partnerships
Drivers to Future Growth

Expanding
Continued Expanded Increased
core retail opportunity worldwide

to innovate
customer base average unit volumes
Leveraged Didnt
Starbucks brand in other products and channels use advertising at all
Growth Strategies
Ansoffs Matrix
Product Current New Current Market
Market Penetration Market Development Product/ service Development
New
Diversification
Growth Strategies
Market Development
Introduction of automatic espresso machine
Disadvantages Physical barrier b/w Barista and customers Coffee taste is not traditional Coffee machine blocks sightline Advantages Convenient for Barista Less time consuming Less human error
Brand Strategies
Diversification
Product Current Brand New Current Line Extension New Brand Extension
Multi Brands
New Brands
Brand Strategies
New brands
Barista Ethos water Frappuccino Tazo Joe Magazene
Brand Strategies
Frappuccino
RTD coffee in can and bottle Partnership with Pepsi First Starbucks product in supermarkets
Tazo
3 types of teas- black, green & herbal Attracted new customers who look for alternatives to coffee
Brand Strategies
Barista
Variety of coffee machines-espresso and grinders Sold online and in retail stores
Ethos
Water
Social mission Clean water advantage to customers
Brand Strategies
Extensions Espresso Coffee
Come in light & normal espresso
Brand
Ice-cream
Come in containers and bars with different flavors
Brand Strategies
Coffee
Blend
Mild, medium, bold & extra bold Sold in Starbucks stores & supermarkets
Coffee
Liquor
Combination of Starbucks coffee & premium spirit Sold at restaurants, bars & liquor shops only
Brand Strategies
Credit
Cards
Make it easier for customers to purchase Combined Starbucks card and credit card
Starbucks
Entertainment
Investment in film industry Custom-made CDs in stores
Non Coffee Related Business

Advantages
Increased brand awareness Improved brand image Enhanced parent brand
Disadvantages
Lost brand identity Lost core value Frustrated customers
Partnerships
United
Airlines (to provide best services to the passengers)
3600 flights a day, 855 destinations in 155 countries 14% Starbucks customers had their 1st Starbucks coffee in UA flight
Kraft (for distribution network)
Starbucks coffee beans are distributed by Kraft in North America
Partnerships
Pepsi (to increase brand awareness & innovative product
development)
Created ready to drink coffee in cans & bottles Under Frappuccino trademark
Marriot
(to increase brand awareness)
Airport concessions Hotel lobbies & Malls
World Class Global Brand

Resonance What about you and me?
Judgment Feelings Performance Imagery
What about you?
What are you? Salience Who are you?
Starbucks- Global Brand

Production
Marketing Power
and distribution
costs in brand image of core competencies
and scope
Consistency
Sustainability Uniformity
in controlling and co-ordination
Obstacles
International
Consumer
Starbucks stores were not profitable
needs and wants in various cultures
Consumer
Different Legal
response of marketing mix
stage of brand life cycle
environment
procedures
Administrative
In American Market
Increasing
of direct competitors
Dunkin Donuts, McCafe, Gloria Jeans, Carbon Coffee

Aggressive
Focus
global marketing strategies
on overseas growth & brand development
The Biggest Threat

Dunkin
Donuts The world largest coffee and baked goods chain

7000
5300
shops worldwide
stores in 34 states of America
Starbucks Corporation
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MANAGING A HIGH GROWTH BRAND

Presented ByMohit Goyal Nivedita Samrendra Vipul Gupta

From Bean to Cup

Sold only whole-bean coffee and coffee brewing machine

Starbucks in the Cup

1990s till now

13168 retail outlets worldwide

Starbucks mission statement

Establish Starbucks as the premier

diversity as an essential component

the highest standards of excellence enthusiastically satisfied customers

positively to community and environment

the rapid expansions of the brand

the core values in the face of this

New entrants : Low & medium entry barrier

Buyers: People with different age group

Substitutes: Tea, juice, soft drink, milk, Alcoholic drink,

barriers facilitating new entrants

bargaining power of suppliers

of substitutes like tea, ice-cream, juices

classification bases (Psychographics)

cost of new expansion & internet process

from the core values

to maintain balance between various objectives

the core values

out a right balance between product, people, values and sales

monitoring the relationship with employees and customers

inspired by Starbuck, Classic American Novel Moby Dick

included a mermaid in woodcutting

European coffee experience to USA

simplicity over technology in innovation

as partners and the most important assets

Favorability of brand association

Not entirely unique

Drivers to Future Growth

core retail opportunity worldwide

customer base average unit volumes

Starbucks brand in other products and channels use advertising at all

Social mission Clean water advantage to customers

Investment in film industry Custom-made CDs in stores

Non Coffee Related Business

Increased brand awareness Improved brand image Enhanced parent brand

Lost brand identity Lost core value Frustrated customers

Airlines (to provide best services to the passengers)

Starbucks coffee beans are distributed by Kraft in North America

(to increase brand awareness)

Airport concessions Hotel lobbies & Malls

World Class Global Brand

Judgment Feelings Performance Imagery

What about you?

What are you? Salience Who are you?

Starbucks- Global Brand

in controlling and co-ordination

Starbucks stores were not profitable

needs and wants in various cultures

response of marketing mix

stage of brand life cycle

Dunkin Donuts, McCafe, Gloria Jeans, Carbon Coffee

global marketing strategies