Published on January 2, 2017
1. A BRAND STUDY On Starbucks
2. A BRIEF HISTORY
3. • The first Starbucks opened in Seattle, Washington, on March 30, 1971. • 3 partners at the University of San Francisco: English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker. • They were taught a unique style of roasting beans by fellow coffee lover/store owner, Alfred Peet . • Current CEO, Howard Schultz joined in 1982 who pressed for espresso drinks and coffee.
4. • Initially slated to be called Pequod after a whaling ship that appears in Moby Dick. • It was scrapped in favor of the ship’s chief mate Starbuck. • As per Bowker, they were very close to naming it Cargo House. • However Heckler suggested that names beginning with “st” were powerful.
5. • This led them to base the name off of an old mining town named Starbo. • The Starbucks logo is an image of a twin-tailed mermaid, or as per Greek mythology, a siren. • The logo is based on a 16th century Norse woodcut. • It’s gone through various significant changes, such as changing the color from brown to green, which was a nod to the 3 founders’ alma mater.
6. THE 7 P’s: Product
7. • Starbucks has 30 varieties of whole bean coffee. • They sell coffee, Italian-style espresso beverages, cold blended beverages, as well as a selection of premium teas. • Novelty items, music CDs etc. are also sold. • In addition, they also sell coffee-related accessories and equipment. • Tazo Tea is the Starbucks brand. There’s many, many different flavors: iced teas, lemonades, lattes, hot or cold. • Some of the most popular teas fall in the Chai tea category: a spicy black tea with cardamom, cinnamon, black pepper and star anise.
8. • Espresso: Strong, black coffee brewed by forcing hot water through coffee grounds. More concentrated, has more caffeine than regular. • Starbucks Latte: Espresso with steamed milk and foam. • Caramel Macchiato: Vanilla latte with less vanilla, extra foam and a caramel sauce on top. • Starbucks Cappuccino: Similar to latte but with more foam. • Starbucks Mocha: Espresso, steamed milk and chocolate with whipped cream on top.
9. • Starbucks Coffee Frappuccino: Starbucks coffee, milk and blended with ice. • Starbucks blended creams: Pumpkin spice frappuccino which includes pumpkin and traditional fall spices, mixed with milk and blended with ice, then topped with whipped cream and pumpkin spices. • Starbucks conducts various surveys to determine what its customers prefer. • In addition, ingredient research is outsourced to dedicated teams who determine what spice/flavor goes best with what, in accordance with Starbucks’ Guide To The Perfect Beverage.
10. THE 7 P’s: Price
11. • Starbucks has a simple price strategy: High price, high quality i.e. the perceived upscale image. • If customers feel they are getting a good deal, they are willing to pay more. • A single coffee in India costs anywhere from Rs. 200 – 300, and $2.50 – 5.00 • Unlike the coffee however, tea prices aren’t based on the size, instead it’s based on the number of tea bags, since water is pretty cheap in non-bottle form. • The price, according to Starbucks, is said to include the entire Starbucks experience: free WiFi, the unique ambience, and the food.
12. Source: Wall Street Journal Prices vary drastically, with India being the cheapest.
13. THE 7 P’s: Place
14. • Starbucks has branches in Argentina, Australia, Chile, Singapore, Japan and the UK. • Has in-store tie-ups with Barnes & Nobles and Target. • Approximately 20 Starbucks cafes in Mumbai. Other cities are Pune, Delhi, Kolkata, Chennai etc. • It had 165 stores when it went public in 1992. It surpassed its 10,000 outlets goal and plans for another 10,000, worldwide. • They believe that by creating an intimate and welcoming environment, and providing great coffee, patrons will not only keep coming back for more, but will spread the word.
15. • Starbucks has a controversial strategy: saturating the market. • Typically, stores place their retail outlets in locations based on demographics, traffic patterns, location of competitors as well as the location of its own stores. • The Starbucks strategy went against the grain. Instead of following the trend, Howard Schultz chose to go against conventional wisdom. • The strategy was to blanket an area completely. Instead of worrying about stores eating up each other’s business, it focused on heavily increasing the foot traffic in one specific part of town.
16. • Schultz knew that his strategy was a risk, but it was one he was willing to take. In the end it paid off. • Clustering its stores in one area helped Starbucks quickly achieve market dominance. • With over 20 million regular customers per week, no other American retailer can claim a higher frequency of visiting customers. Santa Fey Springs, CA hasthehighestdensityof Starbucksintheworld. About560Starbucksoutlets… … in 25 miles of land.
17. • What’s amazing is the fact that the company spends less than 1% of its annual revenues on advertising, versus the typical 10% of most other retailers. Instead, the Starbucks strategy relies on word of mouth advertising. • Store design, planning and construction are also part of the strategy. Locations are designed for customers to meet, relax or simply enjoy a peaceful interlude in their day. • It is also notorious for buying out competitors’ leases and conducting operations at a deliberate financial loss. This intentional loss is designed to drive out local competitors.
18. THE 7 P’s: Promotion
19. • Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. • My Starbucks reward program allows members to earn a free drink after every 15 purchases at participating Starbucks stores. • It’s rare to find a Starbucks ad on billboards, ad spaces, newspapers, posters. • Starbucks stresses quality above price and other features it could emphasize. • In 2001 Starbucks introduced the Starbucks Card, a stored-value card for customers to use and reload.
20. • The company has gone to great lengths to create a “community atmosphere” among premium coffee lovers. • It’s a running joke on the Internet, wherein the “premium coffee lovers”, or hipsters as they are called, are usually depicted as having iPhones, MacBooks or any other Apple products. • It is oft remarked that Starbucks should be renamed iCoffee for these privileged people who use only Apple products and wear vintage clothing to distinguish themselves.
21. A bus-stand troll in Los Angeles Don’t be an iDiot (clever Apple reference)
22. • Starbucks has its unique home concept of writing its customers’ names on the cups. • However there’s more here than meets the eye. This is one more viral Internet sensation, where Starbucks baristas are perpetually getting your names wrong, eg. Abhishake. • The often hilarious spelling mistakes in the customers’ names may be intentional or unintentional – take your pick. This is the part of the whole Starbucks experience. • A sense of intrigue and mystery is invoked, and in some cases extreme annoyance. But it’s all planned as part of a shrewd promotion strategy.
23. Diana Naomi Jessica
24. • INDIRECT PROMOTION: Thebestandshrewdest formofpromotion. • Whether itisoutofannoyance orwanting to shareyourname being misspelled humorously withtheworld, itultimately leads youtotweeting orsharing about itin anywayonsocial media. • Virality isnecessary tosurvive andretain yourself today, andStarbucks cashesupon that brilliantly.
25. THE 7 P’s: Process
26. • Starbucks operates primarily through joint ventures and licensing arrangements with consumer products business partners. • International specialty operations comprise retail store licensing operations in more than 40 countries and foodservice accounts in Canada and the UK. • US specialty operations include licensed retail stores, food service accounts and other projects related to Starbucks’ main business strategy. • They have a contact less payment service that is available on iOS as well as Barclay card. An Android app is in the works.
27. • Starbucks accepts store license applications online, with the initial information centering on the type of operation being run by the applicant. • Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. • A dedicated team works specially on these recommendations. The feasibility of the suggestions is gauged and efforts are done to maximize it. • Thus Starbucks’ process is overall, pretty customer-centric.
28. THE 7 P’s: Physical Evidence
29. • Starbucks provides information on its products, business partnerships, and career opportunities on its website . • The famous Starbucks Logo (which is green and features a siren) has stayed largely unchanged since its origin, however it has been altered to adjust to international sensibilities. • The latest change was made when Starbucks opened in Saudi Arabia. • Starbucks stopped using pre-ground beans in its stores in so that the grinding of whole bean coffee will "bring aroma, romance and theater" to American stores.
30. • Starbucks offers a combination of product and service and does a good job in giving customers the best experience, so they want to try it again and again. • Customers pay not just for cup of coffee or tea, but for overall enjoying their time. When you enter the café you see a clean, friendly environment, with cozy chairs, sofas, tables, book shelves, bright show cases with alluring pastries, menus with tempting coffee pictures. • The smiling welcoming staff in the green uniforms, with soft music in the background complements the atmosphere.
31. THE 7 P’s: People
32. • Howard Schultz: Chairman, Chief Executive Officer for Starbucks. • Olden Lee: Interim Vice President • Barbara Bass: Director, Non Executive Board • Cliff Burrows: President, Starbucks Coffee US • Author Rubenfeld: Global Development • Troy Alstead: Chief Financial Officer • John Culver: President, Global Consumer Products
33. • “Happy customers start with a happy staff” – This is at the root of Starbucks’ people ideology. • People are the core standing point of Starbucks and they lay extra emphasis on “We are not employees, we are partners”. “We are not in the coffee business, serving people. We are in the people business, serving coffee.” – Howard Schultz, 2004
34. • Starbucks spends a lot of time and effort to train and teach its staff. • Every employee goes through coffee making, serving, and even tasting as they are expected to advise customers who are confused with the wide choice. • It also encourages diversity, whether racial/ethnic or country related as it incorporates a large number of people from the local stream where it is setting up cafes. • It believes in fostering a truly world neighborhood environment and is, in every sense, a truly international company.
35. PRODUCT DIFFERENTIATION
36. • Starbucks also spends a lot of time and energy differentiating itself from the competition. • This is evident in the design of its coffee shops, the music played there and the types of products it sells, such as coffee-brewing equipment and jazz CDs. • Starbucks makes sure to keep current on the latest technology, often being the first to introduce the newest advancements to its customers. • Starbucks was one of the first companies to adopt location-based promotions and mobile payments.
37. • It employs a broad differentiation strategy. This strategy is concentrated on a broader segment of the total market. It serves a market that is defined by coffee drinkers. • This has made the organization well-known for tailoring to broad customers’ needs by preparing orders to meet customers’ wishes, no matter how detailed they are. • Starbucks is also well known for quality products, with stringent guidelines outlining how their coffees are to be prepared eg. espressos must be served within twenty-three seconds of brewing.
38. USP: Unique Selling Proposition
39. • The USP of Starbucks is a relatively simple one: premium coffee. • It has never claimed to offer the cheapest coffee in town, but by offering their own style of an enriched upscale coffee experience, they have managed to carve out a large niche of coffee loving people. • The premium coffee experience that Starbucks claims to offer is what makes it stands out from its peers and this includes not just the high quality coffee, but also employee-customer interactions, environment and ambience offered, complete with various conveniences.
40. REFERENCES: • Forbes magazine: www.forbes.com/sites/rachelhennessey/2012/08/06/3- reasons-why-starbucks-still-shines-despite-market- shortcomings/ • UK Essays: www.ukessays.com/essays/marketing/marketing-mix- analysis-for-starbucks-coffee-marketing-essay.php • BaristaExchange: www.baristaexchange.com/forum/topics/what-makes- the-starbucks • Business Strategy: www.thebusinesstrategy.blogspot.in/2013/03/how- has-starbucks-been-so-successful.html
41. THANK YOU