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INDIA – CZECH REPUBLIC
STARBUCKS
OBJECTIVES To develop a good base for the future in this
challenging market.
To establish a consistent brand globally.
To develop a niche position with year on year growth of 5% for the next 5years.
To secure long term profitability.
Budget is £2.5million.
STARBUCKS COFFEE COMPANY
Founded: 1971 in Seattle, USA
Main activity: Starbucks sells coffee, tea, food
Confectionery, Smoothies and pastries through its specialty operations
Subsidiaries:
Tazo Tea CompanySeattle's Best CoffeeTorrefazione ItaliaHear MusicEthos Water
Global presence in green
GLOBAL PRESENCE
Present in 49 countries
STARBUCK‘S FIGURES In US $ in 2008
Revenue: 10.383 billion
Operating income: 503.9million
Net income: 315.5 million
Total assets: 5.673 billion
Gross Profit Margin:
57.5 %
Employees: 176,000
PERFORMANCE (REVENUE)
GLOBAL COMPETITORS
INDUSTRY
Beverage Industry
- Falls in largest disposable income spending
segment
- Steady growth in the segment in Europe and Asia
- Growth in restaurant and coffee culture
Industry Analysis – Czech Republic
• Market structure- Oligopolistic competition ( Few companies
dominate)
• Competitive activity- Moderate competition
- Location, Product innovation, local adaptation,
Competitive Pricing and Promotion are important
to succeed in market.
PESTLE Analysis (Czech)
• Political- Close business ties between the US & Czech
Republic- Stable political conditions- EU Member (2004)
• Economic - Stable economic growth of about 3% per annum- High GDP($261.777 billion)
- Good per capita income resulting in more disposable income($25,118)
- High coffee consumption ( 88.2% of the market)
PESTLE (CZECH)
SocialHigh number of working class
Consumers like value for money
Dense Population in Prague (132/km2)
TechnologicalTechnology lowers operational costs
PESTLE (CZECH)
LegalNo major legal barriers
Fair trade
EnvironmentalLot of water is required for the production of
coffee
INDUSTRY ANALYSIS(INDIA)
Market structure- Oligopoly (Few competitors)
Competitive activity- Moderate competition
- Location, Competition is in Pricing and
Promotion
PESTLE (INDIA)
Political
- Close business ties between the US & India
- Stable political conditions
Economic
- High economic growth 6% p.a
- High GDP $2.965 trillion- Largest middle class
population- Economy is based on
Services.- High consumption of tea
(70.2% of the market)
PESTLE (INDIA)
Socio-cultural
- Consumer preference for
value for money
- Price sensitive population
- High population density
Technological
• High Technology
PESTLE (INDIA)
Legal
- Fair trade- No major legal
barriers
Environmental
- high levels of greenhouse
gases.
Low access to water
PORTER 5 FORCES (CZECH)
Supplier power (1)
Rivalry (2)
Buyer power (3)
Barriers to entry (2)
Threat of substitute (2)
1----------2----------3----------4
Low Medium High
PORTERS 5 FORCES, INDIA
Supplier power (1)
Rivalry (2)
Buyer power (3)
Barriers to entry (1)
Threat of substitute (3)
1----------2----------3----------4
Low Medium High
MARKET ANALYSIS (CZECH)
Accessibility:The market is fairly accessible since FDI is encouragedMain language is Czech but English is also spoken.High bureaucracy in public administration.
Competitive threatsBuyer Power is very high in the market
Potential profitabilityThe prospects are high, Czech has a high number of travelers and tourists
to Prague and Bohemia and there is high middle class.
Risk Analysis (BERI INDEX) BERI index 72( average conditions)
MARKET ANALYSIS INDIA Accessibility:
The market is fairly accessible, Language is predominantly English
Inefficiencies in public administration
Competitive threats
Buyer Power is very high in the market
Potential profitability
The prospects are high, has a high number of travelers and tourists. Population density in Delhi, Agra and Mumbai.
Risk Analysis (BERI INDEX)
BERI index 72( average conditions)
MARKET SIZING
INDIA Czech
2008 2013 2008 2013
$31.5M $652,000
CONTEXT AND DIFFUSION RATE
FAST SLOW
HIGH CZECH INDIA,
LOW USA
This is useful for Marketing Communication
Context
Diffusion
HOFSTEDE’s VARIABLES
UNITED STATES
INDIA CZECH
INDIVIDUALISTIC HIGH LOW(COLLECTIVE) MEDIUM
POWER DISTANCE
LOW HIGH HIGH
UNCERTAINTY AVOIDANCE
LOW HIGH MEDIUM
MASCULINITY MASCULINE MIXED BUT MORE TILTED TOWARDS MASCULINE
FEMININE
Useful for marketing communications, as well as marketing mix strategy
Hofstede’s Variables
SEGMENTATIONCZECH
Target market: Tourists, travellers, young
western oriented generation, young
businessprofessionals and University
students
Target cities: Prague , Ostrava, Bohemia regions
Target areas within these cities:
Airports, train stations, tourist
attraction places, business centres,
INDIA
Target market: Tourists, travellers, young western oriented generation, young business professionals and university students.
Target cities: Dehli, Agra and Mumbai
Target areas within these cities: Airports, train stations, tourist attraction places, business centres, motor way stops
MARKET POSITIONING Starbucks is more than just COFFEE, it is a
UNIVERSAL EXPERIENCE for the customer.
Starbucks a social gathering place and good for networking.
Starbucks provides an escape into relaxing, peaceful environment
MARKETING INFORMATION SYSTEM
Given the budget of only £2.5m, the preferable sources of marketing information are:
Qualitative: Personal sources including government employees and
consultants, Customer records
Quantitative: Primary Data collection through research. Data generated at the points of purchase from Starbucks; Data derived from marketing campaigns.
STRATEGY
Wholly owned subsidiary ( Czech Rep.) Less risky, more control
Licensing ( India ) Good for sharing risk.
STRATEGY AND BRANDING
INDIA
Promotions will capture world class
service,
Indian adaptation, focus on nutrition and
Value. Endorsement by Bollywood Stars
Special promotions during festivals,
Cricket tournaments
CZECH
Promotions will capture world
Class service,
Czech adaptation, focus on nutrition andValue. Endorsement
Special promotions duringfestivals, Sports eventstournaments
THANK YOU