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  • 1. Starbucks -Beyond The Cup INFSCI 2810 M.I.S. Ken Sochats Presented by: Sangeeta Bokil * Arindam Dutta Jessica Fondy * Shawn Lewis

2. Strengths / Weaknesses

  • Strengths
    • Name Recognition
    • Market Penetration
    • Perception of Quality
    • Consumer Respect for Brand
  • Weaknesses
    • Social / Environmental Criticism (Fair Trade)
    • Anti-Starbucks Sentiment
    • People who simply dont like the coffee

3. Opportunities / Threats

  • Opportunities
    • Branch out into new US Markets
    • Acquire socially / environmentally conscious customers
    • Increase public goodwill for company
    • Make a positive impact in the world
  • Threats
    • Anti-Starbucks Sentiment
    • Competition from other coffee shops

4. What Makes aGood New Product?

  • Seven basic decision criteria
    • Revenue boosting
    • Cost viability
    • Image boosting
    • Social outreach
    • Market appropriateness
    • Capitalize on brand strength
    • Market effects

5. Our Proposal

  • Starbucks T-shirts and sweatshirts
  • Beyond the Cup Corporate Social Responsibility campaigns
  • Environment, Literacy
  • Targets Starbucks customers and the socially responsible

6. Revenue / Cost Viability

  • Start with only T-shirts in limited markets
  • Avoid sweatshop labor!
  • Beyond the Cup allows tie-in to existing corporate strategies through a new consumer avenue

7. Revenue / Cost Viability

  • Socially Responsible Supplier The Icon Guild
  • Bundles shirt and printing costs

$10/$25 free $0.25 $0.50 < $6 Addl Screens 1 stScreen Addl Color 1 Color Shirt Cost 8. Revenue / Cost Viability

  • Separate Shirt / Printing Costs
  • Shirts
    • American Apparel, Unionwear
    • Between $4.45 - $7.50 depending on size and quantity
  • Printing
    • The Icon Guild, Comtempl8 T-shirts
    • $0.50 - $0.60 per shirt plus set up costs
  • Artwork billed separately at $40/hour; superseded by Starbucks existing Art Dept
  • Transportation between $0.28 - $0.70 per shirt; superseded by Starbucks existing logistical capabilities

9. Revenue / Cost Viability

  • Cost Summary
    • $10 - $12 per shirt, $15 worst case
  • Expected price point
    • $20 - $30
  • Leaves comfortable profit margin

10. Image Boosting Social Outreach

  • Already does a lot of work for social causes
    • Literacy
    • Environment
  • Need to better inform public of their positive contributions to the environment and community

11. Image Boosting Social Outreach

  • Starbucks donations to charitable organizations: $30.3 million in 2005
  • Starbucks also contributes to literacy, environmental, and coffee origin communities
  • Our products help publicize this knowledge
  • Re-educate coffee consumers about Starbucks

12. Image Boosting Social Outreach

  • Caveat Supporting Coffee Farmers and Fair Trade, but where?
  • Our product does not address this issue
  • but It highlights Starbucks commitment to responsible suppliers
  • Mitigates this line of criticism.

13. Market Appropriateness

  • Is it time?
    • Disposable Personal Income (DPI)
      • 1.7% DPI increase in last year and 4.5% growth projected over next year
      • 5.4% growth in the last 12 months
    • US Apparel sales market
      • $181 billion in 2005, 4% growth rate
      • Promising three-year outlook
    • US Charitable Donations
      • $260.3 billion in 2005, 2.7% growth rate
  • Yes!

14. Market Appropriateness

  • Customer Profile
    • Men, women, and children of all ages
  • Versatile product line considered as:
    • Fashionable
    • Sportswear
    • Active wear
    • Casual Wear
    • Work Wear
    • Resort Wear
  • all with a theme of social responsibility

15. Brand Strength

  • Customers and employees fiercely loyal
  • Very strong brand presence
    • Believed the brand was created from Starbucks business strength
    • Received Brandweek Customer Loyalty Gold Award in 2006 for Coffee and Doughnuts category
  • Is and will be highly marketable

16. Market Effects

  • Relaxed lounging environment at Starbucks supports our product
  • Capitalize on customer brand loyalty
  • Donate 10% of profits to charity to further commitment to social responsibility
  • Customize available inventory to local demographic (literacy in areas with educational deficiencies, environment in appropriate areas)
  • No need for large store display

17. Marketing Plan

  • Pre-Distribution
    • Short-Term: 3-month trial in California and New York (high traffic) areas)
    • Long-Term: national approach
    • Extend existing advertising to encompass Beyond the Cup idea
    • Wrap shirts with tags that emphasize donation to charity and social campaign

18. Marketing Plan

  • Small shipments through local delivery services (UPS, FedEx, DHL)
  • Large shipments through logistical chain
  • Stock stores with limited inventory
  • Establish reorder points
  • Tag as subset of existing inventory for asset tracking

19. Marketing Plan

  • Develop promotional efforts
    • Coupons
    • Contest prizes
    • Gift-with-purchase
    • Seasonal sales
    • Press releases
  • Analyze customer reactions in NY and CA

20. Gauging Success

  • Small initial run of 5000 shirts
  • Break Even Point
    • worst case, 4,167 shirts @ $15 / $20 cost/price ratio
    • best case, 1,852 shirts @ $10 / $30 cost/price ratio
  • Profits become even steeper as per-shirt costs decrease with increased quantities

21. Gauging Success

  • One-Year goal
    • $10 million in revenue
  • Five-Year goal
    • $40 million in revenue

22. Expansion

  • Move from T-Shirts to sweatshirts and other apparel items
  • Capitalize on existing celebrity authentic personal endorsements (i.e. not compensated) for public exposure
  • Further the cause through existing partnerships