Group Presentation: Starbucks

Presentation By:

Ng Yee Jie

Damian Lim Kwi Hoong

Chin Siow Lyn

Dr. Abdul Razak Rahman Hamzah

Group Members

Chin Siow Lyn (2752505)

Damian Lim Kwi Hoong (2752508)

Dr. Razak Abdul Rahman Hamzah

(2752464)

Ng Yee Jie(2821942)

Objective of Report

To discuss and analyze Starbucks’:

• Product levels• Classification of products• Individual product decisions• Brand & customer equity• Brand positioning• Service marketing at Starbucks• International marketing issues• Recommendations for continuous international expansion

Starbucks…Growth of an Empire

Starbucks’ Global Expansion

1971

1982

1987

1993

1996

1998

1999

2001

2002

2004

Now?

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1st Starbucks in Seattle by Jerry Baldwin, Gordon Bowker & Zev Siegl

Howard Schultz recruited as Marketing Director

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Schultz became President of Starbucks – Reshaped image

Starbucks is worth $13.5 billion

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Ventured into Japan & Singapore

Purchased the Seattle Coffee Company in London, UK

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Starbucks is worth $18 billion

Opened coffeehouses in Zurich, Switzerland & Vienna, Austria (late 2001)

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Total stores worldwide is 5,405 stores with 1,153 stores outside US

More than 2,000 stores in 34 international markets

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About Starbucks

A Global Coffee Brand Offerin

g

The “Starbucks

Experience” – A coffee drinking

experience which

combines the ‘community’

ambience, background

music, freshly brewed

premium coffee, friendly

baristas, free wi-fi and

plush seats.

A variety of related

products

Gourmet Coffee

Product Levels

Starbucks’ Product Levels

Questions to ponder… What is Starbucks’ core product? What are the actual and augmented levels of

that product?

Starbucks’ Product Levels (Cont.)

Core Product Level

•The “Starbucks lifestyle”•Sophisticated, trendy, community

Actual Product Level

•Physical goods: premium coffees & teas, sandwiches, desserts, CDs, packaged coffees & teas, coffee-making equipment, collectibles, ice cream, etc.•Starbucks Brand•Elegant yet comfortable store layout

Augmented Product Level

•Free wireless internet•Prepaid Starbucks card•Starbucks Duetto Visa (credit card & rewards card)•In-store music download

Starbucks’ Product Levels (Cont.)

Product Classification

Starbucks’ Product Classification

Question to ponder… What is the classification of Starbucks’

product, based on consumer marketing concepts?

Starbucks’ Product Classification (Cont.)

Convenience Prod

uct

Frequent and immediate purchaseMinimal effort to purchaseWidely available with ‘clustered’ Starbucks stores

Staple

Product

Regular frequency of purchase

Individual Product Decisions

Question to ponder… What individual product decisions has

Starbucks made?

Individual Product Decisions (Cont.)

Product Attributes

Branding

Product-Support Services

Product Attributes

Premium quality coffee beans

• Arabica beans are chosen instead of Robusta beans• Sources: Sumatra, Kenya, Ethiopia, Costa Rica, etc.• Example of premium coffee: Brazil Ipanema BourbonTM

Product Attributes (Cont.)

Categories

• Starbucks beverages are divided into 11 categories:Brewed coffees Espresso-Hot Espresso-Iced

Frappuccino Blended Coffee

Frappuccino Light Blended Coffee

Frappuccino Blended Crème

Frappuccino Juice Blends

Tazo Tea Classic Favourites

Drink Extras Vivanno Nourishing Blends

Product Attributes (Cont.)

Cup sizes• Tall Small

• Grande Big or Medium

• Venti Large

Branding

♦ Positioned based on strong values & beliefs♦ Premium coffee♦ Relaxed ambience♦ Origin of brand name: Old mining camp: “Starbo”, “Starbuck” character from Moby-Dick

Higher Brand Loyalty, Higher Brand Equity

Branding (Cont.)

•Bottled Frappuccino drinks•DoubleShot espresso can drinks

Co-branding with PepsiCo

•Starbucks ice creamJoint-ventured with Dreyer’s

•New flavours of coffees. E.g. Toffee Nut Latté during Christmas

Line Extension

•Starbucks moon cakesBrand Extension

Packaging & Labeling

Cold Drinks

• Clear Plastic Cups

Hot drinks

• Opaque Paper Cups

Product-Support Services

Brand Equity, Customer Equity &

Brand Positioning

Brand Equity, Customer Equity & Brand Positioning

Question to ponder… How does Starbucks deal with:

– Brand equity?– Customer equity?– Brand positioning?

Brand Equity

Premium

Coffee

Stylish Conducive

Environment

Standardization of

Services

Delivering on

Promises

Increases Brand Equity

Customer Equity

Customer Equity: value derived from customer relationship

Free Wi-fi

Customer

feedback mechanis

m

Expanding outlets to offer

convenience

Increases Customer Equity

Brand Positioning

“Experience”, offering

emotions, self-expressive and

functional benefits to customers.

Also known as “Starbucks Experience”

Community feeling

Cool, stylish, active, healthy

Gourmet coffee

Brand Positioning

Strategy

Emotions Benefits

Self-Expressive

Benefits

Functional Benefits

Brand Positioning (Cont.)

Maturing brand – Gen-Y

• Use of high technology• Prepaid card system• Cashless system• Wireless internet

Green corporate colour scheme

Services Marketing at Starbucks

Services Marketing at Starbucks

Questions to ponder… Is Starbucks a product or a service? How are services marketing concepts

important to Starbucks?

Services Marketing at Starbucks (Cont.)

Starbucks: Product or Service?Equipment-

based

People-based

Almost pure

service

Almost pure

physical goods

StarbucksStarbucks

Services Marketing at Starbucks (Cont.)

Starbucks leveraged on emotions by creating a multi-sensory atmosphere

Inherent services characteristics: variability, perishability, inseparability, intangibility

Services Marketing Mix at Starbucks

Physical Evidence as Visual Representation

• Comfortable chairs, store design, cozy corners

People• Employees including baristas• Training to inculcate Starbucks culture• Customers

Processes• Standardized yet allows room for

customization by customers

Product, Price, Place & Promotion

• High quality beverages• Higher price• “Clustered” stores• Promotion through direct employee-

customer contact, sponsor parties, etc.

International Marketing Issues

International Marketing Issues

Question to ponder… How has Starbucks dealt with international

marketing issues?

International Marketing Issues (Cont.)

Standardizing the marketing mix

International supply chain management

Standardizing the Marketing Mix

Why? •Creates homogeneity of customers’ tastes & wants•Strong global brand

How?•Marketing mix: product attributes, positioning, brand, packaging/labeling, price, placement at retail outlets, promotions, processes, and services•‘Standardized’ internationally

International Supply Chain Management

Why? •Support high growth rate & ensure continuous supply of premium-quality coffee beans

How?•Societal marketing: Coffee and Farmer Equity (C.A.F.E.) Practices•Preferred supplier program•New coffee suppliers. E.g. China

Recommendations forContinuous Global Expansion

International Expansion: Recommendations

Standardization – Vs –

Adaptation

Marketing in fast-

paced societies

Standardization – Vs – Adaptation

Adaptation

•Make changes to products & services to fulfill requirements of customers from specific markets

Food menu

•Include local foods

Different levels of ability to afford

•Reduce costs & lower prices

Marketing in Fast-paced Societies

Fast-paced societies: Hong Kong, Singapore

• Order coffee through phone, online web portals, SMS• Drinks ready upon arrival at store

Demand for quick & efficient service with same high quality, minimal waiting time

Re-introduce Starbucks Express

Conclusion

Conclusion

Reviewing branding and positioning strategy to ensure relevance to current markets

Corporate social responsibility Staying relevant to the current generation:

Generation –Y

Thank You…

Q&A