Case Study: Case Study:

StarbucksStarbucks

Presented By:Presented By:Group 3Group 3

Harish Rajendran (40)Harish Rajendran (40)Shashank Pawar (59)Shashank Pawar (59)Dinesh Shinde (66)Dinesh Shinde (66)Hitesh Khadse (27)Hitesh Khadse (27)Mahesh Surnar (73)Mahesh Surnar (73)Pratik Wasnik (84)Pratik Wasnik (84)

Prof. K. RavindranProf. K. Ravindran

Introduction to Introduction to StarbucksStarbucks• Company started in 1971 in Seattle,

Washington• Grew from 55 stores in 1989 to over 20,891

stores today• Products sold include:

- beverages - pastries- whole coffee beans- coffee-related retail items

Mission StatementMission Statement

“ Establish Starbucks as the premier purveyor of thefinest coffee in the world while maintaining ouruncompromising principles while we grow”

Guiding PrinciplesGuiding Principles

• Provide a great work environment and treat each other with respect and dignity

• Embrace diversity as an essential component in the way we do business

• Apply the highest standards of excellence to the purchasing, roasting, and fresh delivery of our coffee

• Develop enthusiastically satisfied customers all of the time• Contribute positively to our communities and our

environment• Recognize that profitability is essential to our future success

Coffee: Some FactsCoffee: Some Facts

• First consumed in East Africa during the 11th century

• Quality of beans – Robusta & Arabica• Produced in 70 countries• Global coffee production – 134.2 mn bags• More than $70 bn retail sales globally

Industry DefinitionIndustry Definition

• Specialty Eatery Industry– Food and beverages– Steady growth in the 90s leading to increased

competition– Demand for specialty food services has increased

in recent years

SWOT AnalysisSWOT Analysis

• Strengths– Never experienced a strike or work stoppage– Good relationships with coffee suppliers– Value employees– Located in high traffic areas– They don’t move into new markets until they dominate

the ones they expand into

• Weaknesses– Excessive focus– Increasing shareholders dilutes their interest– They have expanded too quickly, and have already

saturated the US market– They do not allow smoking in their stores, alienating

some of their customers

SWOT AnalysisSWOT Analysis

• Opportunities– Expansion into European and Latin American markets– Distribution agreements, such as hotels, airlines, and

office coffee suppliers– Use supermarkets as a way of expanding into

international markets– Improve on perception of instant and decaffeinated

coffee to expand that market share

SWOT AnalysisSWOT Analysis

• Threats– The coffee market is saturated– Cost of coffee beans is expected to rise in the near future– High competition from competitors– Consumers trend toward more healthful fare

SWOT AnalysisSWOT Analysis

Competitors

International• Dunkin Donuts• Mc Donalds ( Mc Cafe )

Domestic• Barista• Café Coffee Day• Costa Coffee• Qwiky’s

Starbucks’ Strategy

Rapid store expansion strategy

• Domestic store expansion− A three-year expansion strategy− “Starbucks everywhere” approach

• International store expansion− Company-owned and company-operated stores or licensing − Created a new subsidiary, Starbucks Coffee International− Expanded its consumer products channel in South Pacific region

Starbucks’ Strategy

• Employee Training and Recognition− Systems to recruit, hire and train baristas and store managers

screening training programs awards for partners

• Real Estate, Store Design, Planning, and Construction− A broad range of store formats (the right image and character)− A “stores of the future” project team− High-traffic, high-visibility store locations− Control of average store opening costs− Wi-Fi availability at stores

Starbucks’ Strategy

• Store ambience− The concept of “everything matters”− Assessment of standards

Starbucks’ Strategy

Product Line

•Wide range of products choices•Special product promotion•Selling music CDs •Joint ventures

PepsiCoDreyer’s Grand Ice Cream Jim Beam Brands

•Acquisitions Hear Music Ethos Water

•Starbucks Cards•Partnership with Bank One

Industry and Competitive Analysis

Focused differentiation

Serve niche buyers better than rivalsBuyers have distinctive preferences, special requirements, or unique

needsHave unique capabilities to serve needs of target buyer segmentBig enough to be profitable and offers good growth potentialCostly or difficult for multi-segment competitors

to meet specialized needs of niche membersStarbucks has resources and capabilities

to effectively serve an attractive nicheFew other rivals are specializing in same niche

Product DifferentiationProduct Differentiation

• Products: Coffee, beans, pastries, equipment, mugs, containers, accessories, music CDs

• “Everything matters” store ambience• Retention of coffee aroma• City specific mugs and t-shirts• Season special coffees, rare exotic coffees,

handcrafted beverages etc• Custom drinks and customer attention

Customer Willingness to Customer Willingness to PayPay• Starbucks charged coffee

at slightly higher rates• Location• Ambience (Everything

matters), seating, comfort and convenience

• COFFEE centered theme• Wi-Fi … more value,

more time, more business

Why go to Starbucks?

A place to think and ImagineA place to gather and talk

A Third Place beyond Work and Home

Leather Chairs Newspapers Couches The Authentic Coffee Experience: the

artistry of espresso making Fast Service and Quiet Moments

Stores Designed on 4 stages of coffee making: growing, roasting, brewing and

aromaMails, Music, Work

New Products and PlacesNew Products and Places

• Music CDs• The Starbucks card• The Duetto Visa card• Wifi internet• Starbucks coffee in supermarkets (in Flavorlock packaging)• Airports, Universities, airlines, equipment in hotel rooms,

business offices• Mail order sales

Thank You….!!!

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