Starbucks overview

1. Case Study:Case Study:
StarbucksStarbucks
Presented By:Presented By:
Group 3Group 3
Harish Rajendran (40)Harish Rajendran (40)
Shashank Pawar (59)Shashank Pawar (59)
Dinesh Shinde (66)Dinesh Shinde (66)
Hitesh Khadse (27)Hitesh Khadse (27)
Mahesh Surnar (73)Mahesh Surnar (73)
Pratik Wasnik (84)Pratik Wasnik (84)
Prof. K. RavindranProf. K. Ravindran

2. Introduction to StarbucksIntroduction 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

3. Mission StatementMission Statement
“ Establish Starbucks as the premier purveyor of the
finest coffee in the world while maintaining our
uncompromising principles while we grow”

4. Guiding PrinciplesGuiding 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

5. Coffee: Some FactsCoffee: 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

6. Industry DefinitionIndustry 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

7. SWOT AnalysisSWOT Analysis
• Strengths
– Never experienced a strike or work stoppage
– Good relationships with coffee suppliers
– Value employees
– Located in high traffic areas
– They don’t move into new markets until they dominate
the ones they expand into

8. • 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 AnalysisSWOT Analysis

9. • 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 AnalysisSWOT Analysis

10. • 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
SWOT AnalysisSWOT Analysis

11. Competitors
International
• Dunkin Donuts
• Mc Donalds ( Mc Cafe )
Domestic
• Barista
• Café Coffee Day
• Costa Coffee
• Qwiky’s

13. 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

14. 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

15. Starbucks’ Strategy
• Store ambience
− The concept of “everything matters”
− Assessment of standards

16. Starbucks’ Strategy
Product Line
•Wide range of products choices
•Special product promotion
•Selling music CDs
•Joint ventures
PepsiCo
Dreyer’s Grand Ice Cream
 Jim Beam Brands
•Acquisitions
 Hear Music
 Ethos Water
•Starbucks Cards
•Partnership with Bank One

17. 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

18. Product DifferentiationProduct 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

19. Customer Willingness to PayCustomer 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

20. New Products and PlacesNew 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

21. Thank You….!!!
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