starbucks marketing strategy
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Sankaran S Saravanan J
HISTORY
BALDWIN – BOWKER – SIEGL
SEATTLE, 1971 - FIRST STARBUCKS
4STARBUCKS Coffee
In the beginning “ Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow”.
Now “ To inspire and nurture the human spirit - One person, One cup, and One Neighborhood at a time”.
STARBUCKS - Mission
STARBUCKS Coffee
58 years old
Grew up poor
His father had a hard life
Excelled at sports and won an athletics scholarship
Graduated in Business & Marketing
Joined Starbucks Company in 1982 as Diector of Marketing
HOWARD SCHULTZ – CEO OF STARBUCKS
1983 : he went on a trip in Milan:Coffee bars existed on every street2,00,000 in the countryServed as meeting places
His idea: bring the Italian coffee house tradition back to the United States
The pilot coffee concept was successful butthe owners refused to develop the concept
HOWARD SCHULTZ – VISION OF A CEO
1985: Started his own coffeehouse: Il Giornale Coffee
1987: purchased Starbucks Coffee (6 stores)
Renamed Il Giornale Coffee with the Starbucks name
Expended aggressively first across the United States and then around the world
HOWARD SCHULTZ – VISION OF A CEO
2008: regained his status as a CEO of Starbucks
Co-authored: “Pour Your Heart Into It”“Starbucks may become another soulless big chain”
HOWARD SCHULTZ – HIS FEAR
2009: 616 US Starbucks Coffee closed1/3 of the headquarters employees were fired2000 jobs lost
TOO MANY STORES…TOO EXPENSIVE
STARBUCKS TODAY
15,000+ STORES
50 COUNTRIES
1st ROASTER AND RETAILER
2011 - STARBUCKS NEW LOGO
12STARBUCKS Coffee
Marketing Mix
Marketing Strategy
SWOT
Market segmentation Competitive strategy of Starbucks
Globalization strategy of Starbucks
Market Targeting
Market Postioning
STARBUCKS Coffee
MARKET SEGMENTING
Demographic segmentation(markets by age, gender, income, ethnic background, and family life cycle) .
Geographic segmentation (markets by region of a country or the world, market size, market density, or climate)
Psychographic segmentation, targeting customers based on their lifestyle and attitudes about ‘fairtrade' food.
Behavioural segmentation , Occassion , loyalty program and rewards , benefit sought with offers [ by using starbucks card ]
18-45 year olds
Youngsters who want to gather with their friends
Office workers and students who need to catch up with their work
Those who feel that drinking coffee is "cool"
People who are adventurous, willing to try new things
TARGET
Market Positioning & Positioning Strategy
Starbucks has positioned themselves as a highly respected brand.
The Starbucks company has positioned itself in a way that it can distinguish their products from competition, which gives them an advantage.
Their positioning strategy is customer based, which allows them to give the best customer service.
Starbucks hold onto their sustainable competitive advantage in terms of their customer satisfaction as well as their employee satisfaction.
Brands:Starbucks CoffeeSeattle‘s Best CoffeeTonefazione Ital ia CoffeeTazo TeaEvolution Fresh
17STARBUCKS Coffee
Political Influences :Relationships between coffee producing nations and USState & Local government controls
Economic Influences:Constant demand for food and beveragesChanges in disposable income could influence purchase levels
Social Influences:Consumer preferences could shift from coffee to other beverages
Technological Influences:Use of technology can improve operational efficiencies
STARBUCKS - PEST Analysis
STARBUCKS Coffee
SWOT
Product diversificationEstablished logo, developed brand, copyrights, trademarks, website and
patentsCompany operated retail storesInternational presenceValued and motivated employees, good working environment
STRENGHTS (1/2)
STRENGHTS (2/2)
Good relationships with suppliers
Industry market leaderCustomer loyaltyWide spread and consistentKnowledge basedStrong BoardTrendy brand imageStrong financial foundation
Lack of internal focus (too much focused on expansion) Cross functional management Product pricing is high
WEAKNESSES
Competition (restaurants, street carts, supermarkets, other coffee shops, other caffeine based products)
Market saturationCoffee price volatility in developing countriesNegative publicity from poorly treated farmers in supplying countries
THREATS (1/2)
Expansion into retail operationsTechnological advancesNew distribution channels
(delivery)New productsDistribution agreementsBrand extensionEmerging international marketsContinued domestic
expansion/domination of segment
OPPORTUNITIES
THREATS (2/2)
Consumer trends toward more healthy ways and away from sweet coffee beverages and cakes
Cultural and Political issues in foreign countries
STARBUCKS Coffeeprice BrandQuality Convenience location Variety Reputation Customization Online user
low
High
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Focused Differentiation Serve niche buyers than rivals. Have unique capabilities to serve needs of target buyer segment. Be profitable and offer good growth potential. Resources and capabilities to serve an attractive niche.
STARBUCKS – Competitive Strategy
STARBUCKS Coffee
Marketing mix
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Marketing Mix
Product
Price
place
Promotion
Customer solution
Customer cost
convenience
communication
4 P’s 4 C’s
To be effective, marketing people have to consider the 4 C’s first and then build the 4 p’s based on requirements
STARBUCKS Coffee
PRODUCTS
Coffee: Eilonde RoastMedium RoastFlavored CoffeeSeasonal Favorites
Handcrafted Beverages:Fresh-brewed coffeeHot and iced espresso beveragesFrappuccino coffee and non-coffee blended bev
eragesTazo teas
Fresh Food Items:Baked pastriesSandwichesSaladsOatmealYogurt parfaitsFruit cups
Starbucks Ice Cream:Super-premium coffeeCoffee-free avors
PRODUCTS
Ready-to-Drink :Starbucks bottled Frappuccino coffee drinksStarbucks Discoveries chilled cup coffeesStarbucks Doubleshot espresso drinksStarbucks Doubleshot Energy+Coffee drinksSeattle‘s Best Coffee Iced LattesTazo bottled iced and juiced teas
Merchandise:Coffee- and tea-brewing euipmentMugs and accessoriesPackaged goodsMusicBooksGift items
Consumer Products:Coffee and Tea :Whole bean and ground coffee,Starbucks VIA Ready BrewTazo tea lterbags and tea latte concentrates
31STARBUCKS Coffee
PRODUCTS
Variety
Quality Design
Features
Brewed coffee
Attractive ,descent, convenient Fresh product
cappuccino, Caramel cappuccino, tea
packaging services
Attractive, easy to handle Just in time ,ready to drink , fair trade policy
STARBUCKS Coffee
PRICING STRATEGY
PRICE SKIMMING Premium Price for Premium Product
Why the High Prices?
Increase pricing in Fuel/Energy Fair-trade Movement Changes in PEST in US & different geographical location
PRICE
FAIR TRADE MOVEMENT
WHY THE FAIR TRADE MOVEMENT?Help ensure that farmers receive an equitable price for their coffee and strengthen their farms for the future.
HOW IT WORKS? Long term contractsAffordable credit for farmersDirect purchasing Investing social projects in coffee communities
PRICE
FAIR TRADE MOVEMENT
STARBUCKS IN NORTH AMERICA’S LARGEST PURCHASER OF FAIR TRADE CERTIFIED COFFEE.
In 2005 Starbucks purchased 11.5 million pounds of Fair Trade Certified coffee.
Pay $1.42 per pound
PRICE
Fair Trade & the “Starbucks Effect”
Paying premium prices stimulates production of high quality coffee.
Allows farmers to increase income and reinvest in their farms and plan for the future.
Promotes steady and sustainable growth in a market with price fluctuations.
Upholds Starbucks commitment to purchase high-quality product in a socially responsible manner
PRICE
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•Higher income group location place
•Airports ,malls,wel known areas
•Highly visiting areas
•locations of Seattle’s Best or placement of the brand within 30 miles, rebrand some locations as a local shop.
PLACE
STARBUCKS Coffee
PLACE: A PLACE FOR AMBIENCE & EXPERIENCE
Warmth, Comfort, Diversity
A place of quiet contemplation
Some kind of neighbourhood office
A gathering place for neighbours and friends
Promotional Mix
AdvertisingPersonal Selling Public RelationsSales Promotion
Promotional Mix
ADVERTISING Increase from 1.4% to 3% by 2009
RadioTVBillboards
PERSONAL SELLING Baristas must continue to be the very best Starbucks must create an incentive to retain an
d reward baristas
PUBLIC RELATIONS Parties
Big, Juicy PaintingsTrump Tower
Nationwide Coffee Break Public Performances Charitable Contributions
Green initiatives Philanthropic endeavors
Change:Run promotions in conjunction with contributions
SALES PROMOTIONS Return of incentive cards
Tie in with public relationsLoyalty program
Daily coffee break HOLIDAY AD Pass the Cheer
Holiday web siteViral video’s Sample vansAds
Newspapers, Magazines, Radio, and Billboards Short Cups
Promotional Mix
PROMOTION: PRODUCT PLACEMENT
STARBUCKS IN MOVIES
The devil wears Prada
PROMOTION: PRODUCT PLACEMENT
STARBUCKS IN MOVIES
Meet The Fockers 4
PROMOTION: DIRECT MARKETING
SNS
Social media campaign
Starbucks iPhone app
QR Code scanner and start connecting the physical world to your mobile device
Gift card to start a relationship
SNS
46STARBUCKS Coffee
With just 20% of the world's coffee consumed in North America, Starbucks has to aggressively sell its offerings in countries that already have dedicated coffee or tea drinkers.Issues :
Saturated home market – leading to self cannibalization.Reaching Brand Maturity stage in U.S.
International joint venturesCultureGender issuesMarketing channelsCross-cultural management issues
STARBUCKS - Why Globalize ?
STARBUCKS Coffee
47STARBUCKS Coffee
Retailing formula is same throughout the world whereasproduct offerings and are modified to suit local tastes. Starbucks advertising strategies play a crucial role in thesuccess of the business. The advertising strategies adopted by the firm are more localand differentiated rather than standardized.
Global Market Segments National Product HYBRID II MARKETING STRATEGY
STARBUCKS - Global Marketing Mix Strategy
48STARBUCKS Coffee
Some of the methods Starbucks have used to expand and maintain their dominant market position: Buying out competitors' leases.
Intentionally operating at a loss.
Clustering several locations in a small geographical area (i.e.,saturating the market).
STARBUCKS - GLOBAL Entry Strategies
STARBUCKS Coffee
49STARBUCKS Coffee
“RESPECT FOR LOCAL CULTURE”
Chairman Howard Schultz “ We remain highly respectful of the culture and traditions of the countries in which we do business . We recognize that our success is not an entitlement, and we must continue to earn the trust and respect of customers every day .”
Starbucks is dedicated to supporting communities around the world – where we live, where we work and in the countries where our coffees are produced.
STARBUCKS Coffee
STARBUCKS – CULTURAL DIVERSITY
50STARBUCKS Coffee
Starbucks’s initial foreign forays were launched through jointventure and licensing arrangements with prominent local retailers.
The first market developed in 1996 was Japan with the help ofSAZABY Inc., a Japanese retailer and restaurateur.
STARBUCKS - GLOBAL Expansion
STARBUCKS Coffee
51STARBUCKS Coffee
JAPAN :The Japanese are noted for admiring and adopting American productsand trends such as blue jeans and Coca-Cola.
Critics warned that the Japanese would never buy take-out coffee inpaper cups or accept the interior non-smoking policy.
Starbucks proved them wrong. Some 30% of its customers drinktake-out coffee in those throwaway cups
Globalization – Issues faced and Tackled in different countries
STARBUCKS Coffee
52STARBUCKS Coffee
FRANCE :Starbucks had to deal with an initial lack of acceptance from France's historic cafe culture, with older consumers frowning on a big U.S.coffee house chain with standardized disposable cups.
Younger coffee drinkers in France joined American tourists in Paris to embrace such favorites as Starbucks caramel coffee.
STARBUCKS Coffee
Globalization – Issues faced and Tackled in different countries
53STARBUCKS Coffee
CHINA:The company is aggressively expanding in China where Chinesetraditionally prefer tea. [eg: TAZO TEA]
Key to success in China are coffee houses that empower China'semerging middle class to publicly display their new lifestyles anstatus while keeping Starbucks beverages as affordable luxuries.
STARBUCKS Coffee
Globalization – Issues faced and Tackled in different countries
54STARBUCKS Coffee
EnglandSecond biggest overseas market for Starbucks.Tackling imitators aiming at reducing market share of Starbucks.
ItalyLower pricing and popularity of local brands.Culture of serving food with coffee – Starbucks had to addressthe demand.
STARBUCKS Coffee
Globalization – Issues faced and Tackled in different countries
STARBUCKS FAILURES
2003: Starbucks closed all six of its locations in Israel due to difficult business environment
2007: closed its store in Beijing's Forbidden City2008: closed 61 of its 84 stores in Australia: Starbucks failed to truly
understand Australia’s cafe culture.
PROMOTION: COMMITMENT TO THE WORLD
Fair trade
Largest buyer of Certified Fair Trade coffee in North America (10% of the global market)
Starbucks has given the FTC label greater visibility, helping to raise consumer awareness
in the process.
Opens farmer support centers in Africa
GLOBAL CONTRIBUTION
PROMOTION: COMMITMENT TO THE WORLD
Product (red)
Raise awareness and funds to help eliminate AIDS in Africa.
Starbucks’ Red products and Red card:
PROMOTION: COMMITMENT TO THE WORLD
Helping countries after natural disasters
CONCLUSION
Global company
Howard Schultz: Geocentric Orientation
Adaptation Strategy
Globally Successful
Future Oriented
IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE
STARBUCKS TODAY
THANK
YOU ALL!!!
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