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How and Why a Global Brand Starbucks failed in Australia

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How and Why a Global Brand Starbucks failed in Australia

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As a part of our Research Project - II at the S P Jain School of Global Management, Sydney we conducted a research on how one of the biggest brands of the world Starbucks failed to local competition in Australia

Transcription

  1. 1. HOW AND WHY A GLOBAL BRAND STARBUCKS FAILED IN AUSTRALIA PRESENTATION BY: VIREN BAID | LOHITHA LEKKALA | RAM VIGNESH S | JAYESH SRIVASTAVA MENTOR: MS. ZEYNEP ROBERTS
  2. 2. AGENDA Background Information Objective Research Problem Research Questions Research Design Literature Review Conceptualization Data Analysis Conclusion Recommendations 2
  3. 3. BACKGROUND INFORMATION 3 World’s largest coffeehouse company Over 21,000 stores worldwide The Starbucks experience 2nd Most Valuable Brand in Fast Food Industry Brand Value of $ 25.8 Billion
  4. 4. RESEARCH PROBLEM & OBJECTIVES 4 RESEARCH PROBLEM: Failure of Starbucks in Australia OBJECTIVES: Starbucks hasn’t understood the coffee market in Australia Australians preference towards Australian brands Competition from McDonalds, Gloria Jeans & local coffee shops High Price – Low Quality Not enough stores to access Cultural Differences
  5. 5. RESEARCH QUESTIONS 5 Starbucks Australia : What went wrong Understand the Australian Coffee Market Is Starbucks delivering what consumers need ? What do consumers like & dislike about Starbucks? How willing are consumers to buy from Starbucks?
  6. 6. RESEARCH DESIGN 6 Literature Review Qualitative Research Quantitative Research Study existing academic journals and news articles on the history of Starbucks in Australia Interview industry experts, consumers and representatives from various other coffee shops to understand their strategies Conduct consumer surveys to understand what they feel about Starbucks and what changes Starbucks should make
  7. 7. LITERATURE REVIEW 7 Culture included smaller boutique type coffee shops Coffee was more about relationships than a product Australians like their coffee stronger without any flavoured sugary syrups, unlike Americans Highest consumption of instant coffee in the world 14,000 cafés generating income of $9.7 billion per year Gloria Jean’s dominates coffee retailing market
  8. 8. 8 Number of stores in Australia Year established in Australia Business Model Price of an espresso (similar sized cup) Gloria Jeans 500 1996 Franchise $3.25 McCafe 488 1993 Store-owned $3.25 Coffee Club 220 1989 Franchise $3.40 Wild Bean Café 105 2004 Franchise $3.40 Hudson’s 45 1998 Franchise $3.10 Starbucks 23 2000 Store-owned $3.60 Figure: Competition in the Australia speciality coffee chain market (2008) LITERATURE REVIEW (CONTD.)
  9. 9. LITERATURE REVIEW (CONTD.) 9 What went wrong in the Australian market? Unsustainable business model Failure to communicate the brand Late entry into a highly competitive market Quick expansion Declining service quality
  10. 10. EXPERT OPINION 10 Gloria Jeans Straighter and Stronger coffee (less flavors) Use only Soymilk Franchise based model
  11. 11. EXPERT OPINION 11 Starbucks Flavor based coffee Use Soymilk, skim and regular milk Most selling coffee: Frappuccino Caramel Macchiato Flat latte Owned by 7/11 New stores to open
  12. 12. CONSUMER SURVEY 12
  13. 13. Gloria Jean's 20% McCafe/McDonald 10% Starbucks 18% Local independent coffee shops 8% Doesn't matter 44% Brand Loyalty 13
  14. 14. 50.0% 12.5% 32.5% 30.0% 25.0% 22.5% Beverages Food Ambience Customer ServiceStarbucks Overall ExperienceOthers What do Consumers Like about Starbucks 14
  15. 15. 30.0% 47.5% 20.0% 2.5% 7.5% 17.5% Consumer Beverage Consumption : Starbucks 15
  16. 16. 46.2% 35.9% 17.9% 2.6% 38.5% 0.0% 35.9% High Quality Unique Value for money Bad Customer service Overpriced Poor Quality Good Customer service Consumer Feedback on Starbucks 16
  17. 17. 0.0 1.0 2.0 3.0 4.0 5.0 Taste Price Accessibility Customer Service Ambience Value for Money Consumer Expectation Vs Starbucks General Starbucks 17
  18. 18. 0.0 1.0 2.0 3.0 4.0 5.0 Coffee Espresso Tea Frappuccino Hot Chocolate Consumer Preference Vs Starbucks General Starbucks 18
  19. 19. Very Satisfied 18% Somewhat Satisfied 25% Neither Satisfied nor Dissatisfied 44% Somewhat Dissatisfied 13% Very Dissatisfied 0% Starbucks Overall Satisfaction 2.7 0.0 1.0 2.0 3.0 4.0 5.0 Willingness to Buy : Starbucks Products 19
  20. 20. CONCLUSION 20 There is NO Brand Loyalty 50% of consumers like Starbuck’s Beverages (47% liked Espresso/Coffee) Consumer Feedback 46% - High Quality 38% - Overpriced Consumer Expectation Taste (Espresso & Coffee) Price & Value for Money Accessibility
  21. 21. Fulfil Consumer Expectation Taste (Espresso & Coffee) Price Create Value for Money Increase Starbucks stores gradually RECOMMENDATION 21
  22. 22. THANK YOU!

Description

As a part of our Research Project - II at the S P Jain School of Global Management, Sydney we conducted a research on how one of the biggest brands of the world Starbucks failed to local competition in Australia

Transcription

  1. 1. HOW AND WHY A GLOBAL BRAND STARBUCKS FAILED IN AUSTRALIA PRESENTATION BY: VIREN BAID | LOHITHA LEKKALA | RAM VIGNESH S | JAYESH SRIVASTAVA MENTOR: MS. ZEYNEP ROBERTS
  2. 2. AGENDA Background Information Objective Research Problem Research Questions Research Design Literature Review Conceptualization Data Analysis Conclusion Recommendations 2
  3. 3. BACKGROUND INFORMATION 3 World’s largest coffeehouse company Over 21,000 stores worldwide The Starbucks experience 2nd Most Valuable Brand in Fast Food Industry Brand Value of $ 25.8 Billion
  4. 4. RESEARCH PROBLEM & OBJECTIVES 4 RESEARCH PROBLEM: Failure of Starbucks in Australia OBJECTIVES: Starbucks hasn’t understood the coffee market in Australia Australians preference towards Australian brands Competition from McDonalds, Gloria Jeans & local coffee shops High Price – Low Quality Not enough stores to access Cultural Differences
  5. 5. RESEARCH QUESTIONS 5 Starbucks Australia : What went wrong Understand the Australian Coffee Market Is Starbucks delivering what consumers need ? What do consumers like & dislike about Starbucks? How willing are consumers to buy from Starbucks?
  6. 6. RESEARCH DESIGN 6 Literature Review Qualitative Research Quantitative Research Study existing academic journals and news articles on the history of Starbucks in Australia Interview industry experts, consumers and representatives from various other coffee shops to understand their strategies Conduct consumer surveys to understand what they feel about Starbucks and what changes Starbucks should make
  7. 7. LITERATURE REVIEW 7 Culture included smaller boutique type coffee shops Coffee was more about relationships than a product Australians like their coffee stronger without any flavoured sugary syrups, unlike Americans Highest consumption of instant coffee in the world 14,000 cafés generating income of $9.7 billion per year Gloria Jean’s dominates coffee retailing market
  8. 8. 8 Number of stores in Australia Year established in Australia Business Model Price of an espresso (similar sized cup) Gloria Jeans 500 1996 Franchise $3.25 McCafe 488 1993 Store-owned $3.25 Coffee Club 220 1989 Franchise $3.40 Wild Bean Café 105 2004 Franchise $3.40 Hudson’s 45 1998 Franchise $3.10 Starbucks 23 2000 Store-owned $3.60 Figure: Competition in the Australia speciality coffee chain market (2008) LITERATURE REVIEW (CONTD.)
  9. 9. LITERATURE REVIEW (CONTD.) 9 What went wrong in the Australian market? Unsustainable business model Failure to communicate the brand Late entry into a highly competitive market Quick expansion Declining service quality
  10. 10. EXPERT OPINION 10 Gloria Jeans Straighter and Stronger coffee (less flavors) Use only Soymilk Franchise based model
  11. 11. EXPERT OPINION 11 Starbucks Flavor based coffee Use Soymilk, skim and regular milk Most selling coffee: Frappuccino Caramel Macchiato Flat latte Owned by 7/11 New stores to open
  12. 12. CONSUMER SURVEY 12
  13. 13. Gloria Jean's 20% McCafe/McDonald 10% Starbucks 18% Local independent coffee shops 8% Doesn't matter 44% Brand Loyalty 13
  14. 14. 50.0% 12.5% 32.5% 30.0% 25.0% 22.5% Beverages Food Ambience Customer ServiceStarbucks Overall ExperienceOthers What do Consumers Like about Starbucks 14
  15. 15. 30.0% 47.5% 20.0% 2.5% 7.5% 17.5% Consumer Beverage Consumption : Starbucks 15
  16. 16. 46.2% 35.9% 17.9% 2.6% 38.5% 0.0% 35.9% High Quality Unique Value for money Bad Customer service Overpriced Poor Quality Good Customer service Consumer Feedback on Starbucks 16
  17. 17. 0.0 1.0 2.0 3.0 4.0 5.0 Taste Price Accessibility Customer Service Ambience Value for Money Consumer Expectation Vs Starbucks General Starbucks 17
  18. 18. 0.0 1.0 2.0 3.0 4.0 5.0 Coffee Espresso Tea Frappuccino Hot Chocolate Consumer Preference Vs Starbucks General Starbucks 18
  19. 19. Very Satisfied 18% Somewhat Satisfied 25% Neither Satisfied nor Dissatisfied 44% Somewhat Dissatisfied 13% Very Dissatisfied 0% Starbucks Overall Satisfaction 2.7 0.0 1.0 2.0 3.0 4.0 5.0 Willingness to Buy : Starbucks Products 19
  20. 20. CONCLUSION 20 There is NO Brand Loyalty 50% of consumers like Starbuck’s Beverages (47% liked Espresso/Coffee) Consumer Feedback 46% - High Quality 38% - Overpriced Consumer Expectation Taste (Espresso & Coffee) Price & Value for Money Accessibility
  21. 21. Fulfil Consumer Expectation Taste (Espresso & Coffee) Price Create Value for Money Increase Starbucks stores gradually RECOMMENDATION 21
  22. 22. THANK YOU!

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