Case Study:

Starbucks
Prof. K. Ravindran Presented By: Group 3

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

Introduction to Starbucks
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 Statement
Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow

Guiding 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 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 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 Analysis
Strengths
Never experienced a strike or work stoppage Good relationships with coffee suppliers Value employees Located in high traffic areas They dont move into new markets until they dominate the ones they expand into

SWOT Analysis
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 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 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

Competitors
International
Dunkin Donuts Mc Donalds ( Mc Cafe )

Domestic
Barista Caf Coffee Day Costa Coffee Qwikys

Percentage Share of different countries in Number of Starbucks Stores

UNITED STATES
ASIA-PACIFIC EUROPE-AFRICA NORTH-SOUTH AMERICA
8000.00 10000.00 12000.00

Yearly Sales Data of Starbucks

2% 1%

12%

6000.00

Years

4000.00

85%
2000.00

0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008

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 PepsiCo Dreyers 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 rivals Buyers have distinctive preferences, special requirements, or unique needs Have unique capabilities to serve needs of target buyer segment Big enough to be profitable and offers good growth potential Costly or difficult for multi-segment competitors to meet specialized needs of niche members Starbucks has resources and capabilities to effectively serve an attractive niche Few other rivals are specializing in same niche

Product 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 Pay

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 Imagine A 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 aroma Mails, Music, Work

New 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.!!!