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8/10/2010
1
Financial
8/10/2010
2
“The third place”
“The Starbucks experience.”
“Sense of connection.”
“A Starbucks you call you own.”
“We built our company in a different way. We built it on
trust.”
Positioning
Product
8/10/2010
3
Coffee House Market Analysis
MARKET FACTOR DESCRIPTION Evaluation of Attractiveness
Size $ 13.6 billion (-)Large market but dominate
by big brand
Growth -46% (-)(Negative growth rate in
USA)
Cyclicity high (-) High influence from
recessions
Seasonality None/Low (+/0) Low influence from
holiday spending
Life Cycle State Decline (-)Decline to $13.6 billion from
$25 billion last year
Five Forces Analysis
MARKET FACTOR DESCRIPTION Attractiveness
Power of customer Buyer aware of competitive offering (-)
Power of Supplier Starbucks has a degree of control over
its suppliers
(+)
Rivalry Intense; Heavy competition (-)
Threat of New Entrants High; Low barriers to entry (-)
Power of Substitutes High (-)
8/10/2010
4
Competitor Analysis
Analysis Starbucks Peet’s Coffee McCafe Dunkin Donuts
Objectives Increase lead Get foothold Overtake
Starbucks
Get foothold
Strategies Experience Quality Low price Extend coffee
Differential A Starbucks
you call you
own
Hand made
coffee
Global Brand Early-morning
coffee
SWOT Analysis
1.Brand establishment, high-end
atmosphere with an affluent
customer base.
2.Its fundamental business is
lucrative (300% on investment)
3.It generally provides quick service
4.Has strong customer loyalty
5.The organization espouses strong
ethical value.
6.Has a strong sophisticate and
highly develop supply chain.
1pricing/utility, Starbucks are
overpriced when we consider the
difference between the cost of a
cup of coffee and what Starbucks
sells it for.
2 Its ubiquity challenge the
exclusivity of the brand image.
3.Lack of quality control.
4.Seats is hard to find in city's area
store.
5.Food offer in store are not
attractive outside U.S store.
8/10/2010
5
SWOT Analysis
1. Opportunity to branch out
beyond coffee, due to favorable
brand image
2.International growth market such
as China UK India Brazil Japan
3.Opportunity to success in instant
coffee market and capture
significant market share from the
competition
4.hard working life style is a factor
that drive people drink more coffee
1. Increased competition
2. Recession
3. Financial crises, lone, dept
4. Further price rise can influence
customer to consider the Latte
Factor
5 Rising in milk, coffee beans
and other supply
6. Copy-cat stores
7. Healthy food and organic
trend
Should Starbucks try to meet market and
shareholder expectations by
continuing to expand or by reconsidering more immediate concerns ?
Had the company reached a crisis in
branding, its ubiquity and over-exposure
challenged its down-home appeal ?
Lost in customer loyalty?
Problem Statement
8/10/2010
6
Continue to Expand?Focus on more immediate
concerns?
Decision Time: Market Expectations are High,
Should Starbucks…
Is this world half-full of Starbucks
or half-empty? Unhappy Baristas and
Recruiting Difficulties
$$$$
Major financial
restructuring, global
recession and rising
commodity prices
Threat of competition
OR
Alternative Strategies
World Domination
• Continued Domestic and International Expansion
Licensed to Thrive
• Limited International Expansion: China, India, Russia, SE Asia
• Licensing model
No Place Like “Third Home”
• No Expansion
• Focus on customer experience
Tea Time
• No Expansion
• Focus on expanding high-margin tea business in Asia, Europe and Americas
8/10/2010
7
Critical Issues
• Brand Affinity: Brand is recognized and respected as a Best Place to Work,
―Starbucks Family,‖ environmentally friendly, ethical.
• Competitive Advantage: In-store/coffee-house experience, consistency and
customer loyalty.
• Financial Impact: Revenue potential, operational costs, need for additional
working capital.
• Alignment With Organization Mission: ―To inspire and nurture the human
spirit— one person, one cup, and one neighborhood at a time.‖
• Ease of Expansion: Market access, hiring good talent, finding licensees.
Alternative Analysis
Critical Issue Weight World
Domination
Licensed to Thrive “Third
Home”
Tea Time
Brand and
Reputation
0.3 4 (1.2) 9 (2.7) 10 (3) 8 (2.4)
Competitive
Advantage
0.25 7 (1.75) 7 (1.75) 10 (2.5) 9.5 (2.38)
Financial
Impact
0.25 4 (1.0) 7 (1.75) 4 (1) 6 (1.5)
Mission 0.1 3 (0.3) 3 (0.3) 6(0.6) 4 (0.4)
Ease of
Expansion
0.1 2 (0.2) 6 (0.6) 5 (0.5) 5 (0.5)
Total 1 (4.45) (7.1) (7.6) 7.18
Scale: 1=Negative Impact, 5 = Neutral Impact, 10 = Positive Impact
8/10/2010
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Recommendation: Restore Starbucks as the
―Third Home‖ of Choice (Stores)
Store Interior Design Contest ―What Does YOUR Starbucks
Look Like? (test ideas like ―flagship‖ stores, family style seating)
Brighter, ―Green‖ Lighting: energy savings, easier to work and read.
―Customer DJ‖: Customer requests play over store PA.
(Overt – i.e. VIA) Marketing Free Zone in store. Create
direct marketing campaign.
Recommendation: Restore Starbucks as the
―Third Place‖ of Choice (Partners)
Engage: “Hear from Howard” employee webcasts with ―live‖ Q&A.
Equip: Regular virtual and in-store training.
Recognize: ―Employee of the Month‖ pictured for each store location
online.
Involve and Reward: Partners can submit product ideas to win cash
and charity donation.
Referral Bonuses: Increases recruiting pool and gives employees
(trusted source) reason to spread image of ―Best Place to Work.‖$$$$
8/10/2010
9
Recommendation: Restore Starbucks as the
―Third Place‖ of Choice (Customers)
Stay Awhile: Happy Hour from 4-6 with specials on coffee drinks
and selected food items.
Let Us Serve (With) You: All Expense Paid Service Trip opt-in
promotion based on annual card spend.
Donate Points: Donate points to Starbucks supported charities for
yourself or as a gift.
Recommendation: Restore Starbucks as the
―Third Home‖ of Choice
• Brand Affinity: Central focus is on brand restoration as a neighborhood locale and
―your home,‖ not an ubiquitous chain. Enhances brand recognition and respect as a
Best Place to Work, ―Starbucks Family,‖ environmentally friendly, ethical.
• Competitive Advantage: Return to the roots of a consistent ―Starbuck’s Experience‖ –
which helped drive the now infamous customer loyalty.
• Financial Impact: Increase in revenues and cash flow from store closings vs. financial
outlay to refurbish store environments. Spend money on environment now to retain
customers and attract new when recession ends.
• Ease of Expansion: No need to access new markets (find real estate, foreign legal
issues), focus on attracting and retaining smaller, more committed talent pool.
• Alignment With Organization Mission: Getting back to inspiring the human spirit by
centering on customers and employees and returning to a more of a local feel.
8/10/2010
10
Example
• to retain loyal customers and create new ones.Goals
• Increase traffic to the stores and improve sales by 10%
• Generate sale of 50,000 Starbuck cardObjective
The Objective and Goals of this direct marketing plan are to solve the main problem:
decrease in sale and customer loyalty issue.
8/10/2010
11
College student and
Urban professional
Existing Starbucks Card holder
Target and Media
Face
bookTwitter
Direct Mail
Offer: Happy hours 15% discount (between 2-4 p.m. or 4-6 p.m. ) ; random
tweet and post 3 days a week
+
Offer: Free dink for Card holder and 5 of their friend who purchase Starbucks Card
New product
information and
coupon with
unique No. for
each member
Thank you for support
Starbucks
1 FREE drink for you
With Starbucks Card purchased
1 FREE drink for friend
With Starbucks Card purchased
1 FREE drink for friend
1 FREE drink for friend 1 FREE drink for friend 1 FREE drink for friend
With Starbucks Card purchased With Starbucks Card purchased With Starbucks Card purchased
Customer code: xxxx1 Customer code: xxxx1 Customer code: xxxx1
Customer code: xxxx1 Customer code: xxxx1 Customer code: xxxx1
8/10/2010
12
Direct Mail (in the back)
The more you come in to
Starbucks, the more we’ll
reward you.
We want to say “thanks” for coming into
our stores and using a registered
Starbucks Card. With My Starbucks
Rewards, you'll earn 1 Star every time
you pay with your Card. And as you
collect Stars, you move up to bigger
benefits
Starbucks card Benefits
A Free Drink on your
Birthday
Free Wi-Fi – Up to 2
Continuous Hours a Day
Starbucks card Benefits
A Free Drink on your
Birthday
Free Wi-Fi – Up to 2
Continuous Hours a Day
Starbucks card Benefits
A Free Drink on your
Birthday
Free Wi-Fi – Up to 2
Continuous Hours a Day
Starbucks card Benefits
A Free Drink on your
Birthday
Free Wi-Fi – Up to 2
Continuous Hours a Day
Starbucks card Benefits
A Free Drink on your
Birthday
Free Wi-Fi – Up to 2
Continuous Hours a Day
100,000 pieces of direct mail customer share with 5 people
Direct Mail
=
500,000 offer
+
8/10/2010
13
Twitter and Facebook
Happy Wednesday, Today our Happy hours is
between 2-4 p.m. 15% discount on specialty
espresso just mention “Twitter Promo”
random tweet and post 3 days a week
Happy Monday 15% discount
start between 4-6 p.m.
Facebook Only
Happy Monday, Today our Happy hours 15%
discount on our satisfying Frappuccino started
between 4-6 p.m. just mention “Facebook
Promo”
Sharing content that showcases Starbuck
expertise to create value for followers
There’s No Place Like Home…Except
Starbucks.
+ + =
Return to the
Starbucks
Experience
Engaged,
Equipped
Partners
Loyal, Satisfied
Customers
$$$$
$$$$
$$$$
8/10/2010
14