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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?
↑
1st Starbucks in Seattle by Jerry Baldwin, Gordon Bowker & Zev Siegl
Howard Schultz recruited as Marketing Director
↓
↑
Schultz became President of Starbucks – Reshaped image
Starbucks is worth $13.5 billion
↓
↑
Ventured into Japan & Singapore
Purchased the Seattle Coffee Company in London, UK
↓
↑
Starbucks is worth $18 billion
Opened coffeehouses in Zurich, Switzerland & Vienna, Austria (late 2001)
↓
↑
Total stores worldwide is 5,405 stores with 1,153 stores outside US
More than 2,000 stores in 34 international markets
↓
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