MANAGING A HIGH

GROWTH BRAND

Presented B
Mohit Goyal
Nivedita
Samrendra
Vipul Gupta
 From Bean to Cup
•In early years
– Founded by Jerry Baldwin, Gordon Bowker, & Zev Siegel in
1971, in Seattle
– Early name was Starbucks Coffee Tea and Spice
– Sold only whole-bean coffee and coffee brewing machine

• In 1980’s
– Howard Schultz became CEO and renamed it as Starbucks
– Re-image from only selling beans to be a coffeehouse
 Starbucks in the Cup

•From 1990’s till now

– 13168 retail outlets worldwide

– Business expansion into food, ice-cream, tea,

RTD business, credit cards, music and film
 Starbucks mission statement

“Establish Starbucks as the

premier purveyor of the finest
coffee in the world while
maintaining our
uncompromising principles as
we grow.”
 Starbucks’ Culture
•Great work environment
•Embrace diversity as an essential component
•Apply the highest standards of excellence
•Develop enthusiastically satisfied customers
•Contribute positively to community and
environment
 Case About
•Managing the rapid expansions of the brand
•Sustaining the core values in the face of this
expansion
 New entrants :
Low & medium entry
barrier

Supplier: Rivalry: Buyer’s:

Farmer-collector- Dunkin Donuts, Caribou People with
miller-importer- coffee, different age
Specialty coffee Tully’s Coffee, Wal-Mart group
seller, etc.

5 Forces
Model Substitutes:
Tea, juice, soft drink,
milk, Alcoholic drink,
 Story/Event
•Low barriers facilitating new entrants
•Medium bargaining power of suppliers
•Lot of substitutes like tea, ice-cream, juices
etc
 Symptoms
•Lifestyle classification bases (Psychographics)
•Saturated domestic market
•High cost of new expansion & internet
process
 Problems
•Deviation from the core values

•Difficultto maintain balance between various

objectives

•Failure of diversified products

 Issues
•Sustaining the core values

•Finding out a right balance between product,

people, values and sales

•Closely
monitoring the relationship with
employees and customers
 Actions Taken
•Constant innovation
•Strategic alliances

•Vertical integration

•Corporate social responsibility

•Following the Brand Mantra

•Creation of a “third place

Ultimate Starbucks Experience

 Actions To Be Taken
•Pullout unrelated diversification
•Focus on being on top in coffee business

•Semi- automated coffee machines

 Brand

•Wasinspired by Starbuck, Classic American

Novel “Moby Dick”

•Logo included a mermaid in woodcutting

style
 Value
•Quality-1st preference
•Premium European coffee experience to USA
•Value simplicity over technology
•Investingin innovation
•Employees as partners and the most
important assets
 Brand Equity Price
Brand
Recall User
Brand Non Image
Awareness product
Brand related Brand
Recognition Attributes Personality

Types of Product
related Feelings &
brand
Brand Experience
association Attitude
Knowledge
Strength of
brand
Functional
association
Favorability
Benefits Experiential
of brand
Brand association
Image Symbolic
Uniqueness
of brand
association
 Awareness

•Word Of Mouth

•Partnerships

•New channels
 Image

•Premium coffee beans

•Brewing techniques
•Store design
•Italian elegance and American informality
•Artwork and Music
 Associations

•Type of Brand Associations

– Premium coffee

– Consistently good customer service

– A classy romantic atmosphere that meets the 5
senses
 Associations

•Strength- To be a lifestyle brand

•Favorability- Coffee enthusiastic
•Uniqueness- Not entirely unique
 Why is so successful?

•1st
to introduce Italian coffee house with
premium coffee to the American market

•Organic growth

•Partnerships
 Drivers to Future Growth

•Expanding core retail opportunity worldwide

•Continued to innovate
•Expanded customer base
•Increased average unit volumes
•Leveraged Starbucks brand in other products
and channels
•Didn’t use advertising at all
 Growth Strategies

Ansoff’s Matrix
Product
Curren New
New Current

t
Market Product/ service
Market

Penetration Development

Market
Diversification
Development
 Growth Strategies
Market Development
– Introduction of automatic espresso machine

Disadvantages Advantages
•Physical barrier b/w Barista •Convenient for Barista
and customers •Less time consuming
•Coffee taste is not •Less human error
traditional
•Coffee machine blocks
sightline
 Brand Strategies

Diversification
Product
Curren New
Current

t
Line
Brand Extension
Extension
Brand

New
Ne

Multi Brands
w

Brands
 Brand Strategies

New brands
– Barista
– Ethos water
– Frappuccino
– Tazo
– Joe Magazene
 Brand Strategies
•Frappuccino
– RTD coffee in can and bottle
– Partnership with Pepsi
– First Starbucks’ product in supermarkets

• Tazo
– 3 types of teas- black, green & herbal
– Attracted new customers who look for alternatives
to coffee
 Brand Strategies

•Barista
– Variety of coffee machines-espresso and
grinders
– Sold online and in retail stores

•Ethos Water
– Social mission
– Clean water advantage to customers
 Brand Strategies
Brand Extensions
•Espresso Coffee
– Come in light & normal espresso

•Ice-cream
– Come in containers and bars with different
flavors
 Brand Strategies

•Coffee Blend
– Mild, medium, bold & extra bold
– Sold in Starbucks stores & supermarkets

•Coffee Liquor
– Combination of Starbucks coffee & premium
spirit
– Sold at restaurants, bars & liquor shops only
 Brand Strategies

•Credit Cards
– Make it easier for customers to purchase
– Combined Starbucks card and credit card

•Starbucks Entertainment
– Investment in film industry
– Custom-made CDs in stores
 Non Coffee Related Business
•Advantages
– Increased brand awareness
– Improved brand image
– Enhanced parent brand

•Disadvantages
– Lost brand identity
– Lost core value
– Frustrated customers
 Partnerships
•United Airlines (to provide best services to the passengers)
– 3600 flights a day, 855 destinations in 155 countries
– 14% Starbucks customers had their 1st Starbucks
coffee in UA flight

•Kraft (for distribution network)

– Starbucks coffee beans are distributed by Kraft in
North America
 Partnerships

•Pepsi (to increase brand awareness & innovative product

development)
– Created ready to drink coffee in cans & bottles
– Under Frappuccino trademark

•Marriot (to increase brand awareness)

– Airport concessions
– Hotel lobbies & Malls
 World Class Global Brand
Resonance •What about you and me?

Judgment Feelings •What about you?

Performance Imagery
•What are you?

Salience
•Who are you?
 Starbucks- Global Brand

•Production and distribution

•Marketing costs
•Power and scope
•Consistency in brand image
•Sustainability of core competencies
•Uniformity in controlling and co-ordination
 Obstacles
•International Starbucks stores were not profitable
•Consumer needs and wants in various cultures
•Consumer response of marketing mix
•Different stage of brand life cycle
•Legal environment
•Administrative procedures
 In American Market

•Increasing of direct competitors

– Dunkin Donuts, McCafe, Gloria Jean’s, Carbon
Coffee
•Aggressive global marketing strategies
•Focuson overseas growth & brand
development
 The Biggest Threat

•Dunkin Donuts
The world largest coffee and baked goods
chain
7000 shops worldwide
5300 stores in 34 states of America
Starbucks Corporation

Thank