11. Methodology
• Record real sales data at Starbucks for two periods (Tuesday).
1. Offer Promotion Period:12/4 13:10~15:10
2. Normal Period: 12/11 13:10~15:10
• Information collection is focused on the drinks customers
ordered and whether they used the “buy 1-get 1 for free”
offer.
• Analyze the data by calculating and comparing the total
revenue and profit and the average price and order size.
14. Assumptions
• The two hours we recorded are representative.
• The weather and the temperature don’t affect customers buying
behavior.
• We assume those who used “buy 1 get 1 for free” during the offer
period all used the offer promotion plan; no other promotion
plans.
15. Assumptions
• On a normal Tuesday with no offer
promotion, there is still a promotion to
“buy 1 get 1 for free” by using an I-bon
ticket.
• According to the research on the Internet,
the cost for a Starbucks coffee is 30%.
16. Data Analysis
Offer Promotion period Normal Period
Total Revenue Total Cost Total Profit
11,515.00$ 6,276.00$ 5,239.00$
Amount of Drinks Single Cup 17
Promotion Cup 140
Total 157
Total Revenue Total Cost Total Profit
12,385.00$ 4,818.00$ 7,567.00$
Amount of Drinks Single Cup 71
Promotion Cup 56
Total 127
17. Data Analysis
Average Price(revenue): Total Amount of Drinks
Normal Day 97.52 127
PromotionOffer Day 73.34 157
Price Elasticity
ϵ =
−(157/127)/127
(73.34−97.52)/97.52
= 0.95 close to 1
21. Compare top-5 products
The promotion day The normal day
No.1 Caffè Latte (Venti: $135) No.1 Caffè Latte (Venti: $135)
No.2 Toffee Nut Latte (Venti: $155) No.2 Toffee Nut Latte (Venti: $155)
No.3 Green Tea Latte (Venti: $145) No.3 Java Chip (Venti: $165)
& Cranberry White Chocolate Mocha
(Venti: $155)
No.4 Caramal Macchiato (Venti: $155)
No.5 Cranberry White Chocolate Mocha
(Venti: $155)
No.5 Vanilla Caffè Latte (Venti: $150)
22. Compare the average size
The promotion day The normal day
Promotion Single Total i-bon Single Total
Tall
(12oz)
14(cups) 5 19 4 28 32
Grande
(16oz)
82 9 91 42 42 84
Venti
(20oz)
44 3 47 10 2 12
Average
size
16.71(oz) 15.5(oz)
30. SWOT Analysis
of Promotion
Strength Weakness
Lower quality of service
-Loss comport and good atmosphere
-Long-time waiting
Opportunity Threat
New source of customer Loss of loyal customer
(college student->loyal customer) Loss of the good brand image
The lowest price compare to other
high-quality coffee shop
38. Conclusion
• Promotional offer didn’t increase profit
• Marketing purpose
• Building loyal customer base
Future:
• From 2013/01/01, second cup half price
• Attempt to increase profit?
Editor's Notes
Promotion offer of starbucks... Impacts on revenue?
Maybe two slides??
The Starbucks from which we collected data is at the back door of NTU, which is a special place, where both office workers and students can easily go to. From the experiment, we found out that the revenue on the promotion day is actually lower than the normal one.
Therefore, we want to see if there is a huge difference between the promotion day and the normal one among these customers by the three ways followed, ‘compare the top-5 products’, ‘compare the average size’ and ‘compare the average price.’
From the table above, we can see that the top five favorites look like similar not only the product types but their prices. It shows that people may not change their habits easily due to the promotion.
Furthermore, compared to the normal day the average size is larger and people buy much more venti cups on the promotion day. Hence, we conclude three reasons for the results.
For the larger size, we think that’s because students have higher price sensitivity. They will be more willing to buy a larger cup of coffee to feel like they earn more. Therefore, the venti cups are much more compared to the normal day.
However, on the promotion day, there are too many people to attract the office workers. Because they have lower price sensitivity but higher time sensitivity, the crowd will keep them away from buying coffee. On the normal day, there are fewer people in the store, in front of the counter, so they will be more willing to buy a coffee. What’s more, their purpose of buying one is different from students’. They want to get away from work and take a rest, after buying one they still need to go back to work, so they will buy a smaller one than students do.
When you go to Starbucks to buy a smaller cup of coffee such as the ‘tall’ one, the clerk may point at the cup size to make sure if you want to order it or have a bigger size of it. In other words, they want to make you feel that buying a larger size is a smarter action and they can make more money as well.
As for the average price, it's obvious the promotion day’s is lower than the former one because there's a promotion; however, the price on the normal day is still below $100 is because there's another price down method – the i-bon ticket.
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