INDIA – CZECH REPUBLIC

STARBUCKS

OBJECTIVES To develop a good base for the future in this

challenging market.

To establish a consistent brand globally.

To develop a niche position with year on year growth of 5% for the next 5years.

To secure long term profitability.

Budget is £2.5million.

STARBUCKS COFFEE COMPANY

Founded: 1971 in Seattle, USA

Main activity: Starbucks sells coffee, tea, food

Confectionery, Smoothies and pastries through its specialty operations

Subsidiaries:

Tazo Tea CompanySeattle's Best CoffeeTorrefazione ItaliaHear MusicEthos Water

Global presence in green

GLOBAL PRESENCE

Present in 49 countries

STARBUCK‘S FIGURES In US $ in 2008

Revenue: 10.383 billion

Operating income: 503.9million

Net income: 315.5 million

Total assets: 5.673 billion

Gross Profit Margin:

57.5 %

Employees: 176,000

PERFORMANCE (REVENUE)

GLOBAL COMPETITORS

INDUSTRY

Beverage Industry

- Falls in largest disposable income spending

segment

- Steady growth in the segment in Europe and Asia

- Growth in restaurant and coffee culture

Industry Analysis – Czech Republic

• Market structure- Oligopolistic competition ( Few companies

dominate)

• Competitive activity- Moderate competition

- Location, Product innovation, local adaptation,

Competitive Pricing and Promotion are important

to succeed in market.

PESTLE Analysis (Czech)

• Political- Close business ties between the US & Czech

Republic- Stable political conditions- EU Member (2004)

• Economic - Stable economic growth of about 3% per annum- High GDP($261.777 billion)

- Good per capita income resulting in more disposable income($25,118)

- High coffee consumption ( 88.2% of the market)

PESTLE (CZECH)

SocialHigh number of working class

Consumers like value for money

Dense Population in Prague (132/km2)

TechnologicalTechnology lowers operational costs

PESTLE (CZECH)

LegalNo major legal barriers

Fair trade

EnvironmentalLot of water is required for the production of

coffee

INDUSTRY ANALYSIS(INDIA)

Market structure- Oligopoly (Few competitors)

Competitive activity- Moderate competition

- Location, Competition is in Pricing and

Promotion

PESTLE (INDIA)

Political

- Close business ties between the US & India

- Stable political conditions

Economic

- High economic growth 6% p.a

- High GDP $2.965 trillion- Largest middle class

population- Economy is based on

Services.- High consumption of tea

(70.2% of the market)

PESTLE (INDIA)

Socio-cultural

- Consumer preference for

value for money

- Price sensitive population

- High population density

Technological

• High Technology

PESTLE (INDIA)

Legal

- Fair trade- No major legal

barriers

Environmental

- high levels of greenhouse

gases.

Low access to water

PORTER 5 FORCES (CZECH)

Supplier power (1)

Rivalry (2)

Buyer power (3)

Barriers to entry (2)

Threat of substitute (2)

1----------2----------3----------4

Low Medium High

PORTERS 5 FORCES, INDIA

Supplier power (1)

Rivalry (2)

Buyer power (3)

Barriers to entry (1)

Threat of substitute (3)

1----------2----------3----------4

Low Medium High

MARKET ANALYSIS (CZECH)

Accessibility:The market is fairly accessible since FDI is encouragedMain language is Czech but English is also spoken.High bureaucracy in public administration.

Competitive threatsBuyer Power is very high in the market

Potential profitabilityThe prospects are high, Czech has a high number of travelers and tourists

to Prague and Bohemia and there is high middle class.

Risk Analysis (BERI INDEX) BERI index 72( average conditions)

MARKET ANALYSIS INDIA Accessibility:

The market is fairly accessible, Language is predominantly English

Inefficiencies in public administration

Competitive threats

Buyer Power is very high in the market

Potential profitability

The prospects are high, has a high number of travelers and tourists. Population density in Delhi, Agra and Mumbai.

Risk Analysis (BERI INDEX)

BERI index 72( average conditions)

MARKET SIZING

INDIA Czech

2008 2013 2008 2013

$31.5M $652,000

CONTEXT AND DIFFUSION RATE

FAST SLOW

HIGH CZECH INDIA,

LOW USA

This is useful for Marketing Communication

Context

Diffusion

HOFSTEDE’s VARIABLES

UNITED STATES

INDIA CZECH

INDIVIDUALISTIC HIGH LOW(COLLECTIVE) MEDIUM

POWER DISTANCE

LOW HIGH HIGH

UNCERTAINTY AVOIDANCE

LOW HIGH MEDIUM

MASCULINITY MASCULINE MIXED BUT MORE TILTED TOWARDS MASCULINE

FEMININE

Useful for marketing communications, as well as marketing mix strategy

Hofstede’s Variables

SEGMENTATIONCZECH

Target market: Tourists, travellers, young

western oriented generation, young

businessprofessionals and University

students

Target cities: Prague , Ostrava, Bohemia regions

Target areas within these cities:

Airports, train stations, tourist

attraction places, business centres,

INDIA

Target market: Tourists, travellers, young western oriented generation, young business professionals and university students.

Target cities: Dehli, Agra and Mumbai

Target areas within these cities: Airports, train stations, tourist attraction places, business centres, motor way stops

MARKET POSITIONING Starbucks is more than just COFFEE, it is a

UNIVERSAL EXPERIENCE for the customer.

Starbucks a social gathering place and good for networking.

Starbucks provides an escape into relaxing, peaceful environment

MARKETING INFORMATION SYSTEM

Given the budget of only £2.5m, the preferable sources of marketing information are:

Qualitative: Personal sources including government employees and

consultants, Customer records

Quantitative: Primary Data collection through research. Data generated at the points of purchase from Starbucks; Data derived from marketing campaigns.

STRATEGY

Wholly owned subsidiary ( Czech Rep.) Less risky, more control

Licensing ( India ) Good for sharing risk.

STRATEGY AND BRANDING

INDIA

Promotions will capture world class

service,

Indian adaptation, focus on nutrition and

Value. Endorsement by Bollywood Stars

Special promotions during festivals,

Cricket tournaments

CZECH

Promotions will capture world

Class service,

Czech adaptation, focus on nutrition andValue. Endorsement

Special promotions duringfestivals, Sports eventstournaments

THANK YOU