1
STARBUCKSCanon Consultants: Wai Yin Chan
Tik Fai Ling
Angel On Kee Wong
2
Agenda• Background
• Issue
• Brief Recommendation
• SWOT Analysis
• Rival Analysis
• Alternatives
• Recommendation
• Implementation Plan
• Finances
• Conclusion
3
Starbucks Background
• First Store in Seattle’s Pike Place Market1971
• Began selling bottled Frappuccino coffee drink through North American Coffee Partnership (Pepsi-Cola North America)
1987
• Starbucks came out with their first mail-order catalog, enabling mail-ordering of their coffee in all 50 states
1988
• Acquireed Tazo, a tea company based in Portland, Oregon
1998
• Grew from 55 stores to 15,000 stores
1989 - 2013
4
ISSUEHow does Starbucks compete with the rival and sustain its success for
future?
5
Brief Recommendation
Improvement
DevelopmentExpansion
Marketing
6
SWOT Analysis – Strength and Weakness
Strength Weakness
• Companies Value $6.9 billion
• Largest coffeehouse chain in the
world
• Strong brand image with quality
coffee
• No. 19 in Forbes’ The World’s
Most Innovative Companies
• Employee management
• Consistently strong financial and
operating performance
• Lack of internal focus
• Need more of a wide spread
customer base
• Product Pricing
• Stores can become crowded at times
• Increasing Number of competitors
7
Opportunities Threat
• Extend supplier range
• Expansion to emerging economies
• Increase product offerings
• Expansion of retail operations
• Co-branding with other food
manufactures
• Rising prices of coffee beans and dairy
products
• Trademark infringements
• Increased competition from local cafes
and specialization of other coffeehouse
chains
• Market Saturation
SWOT Analysis – Opportunities and Threat
8
RIVAL: DUNKIN’ DONUTS
9
Dunkin’ Donuts: Strength and WeaknessStrength Weakness
• Strong Brand Name• High Percent of Change in
Sales• Over 100 varieties of donuts• Popular for a number of
bakery products like coffee, tea, and hot chocolate
• Innovative ways to retain customer by issuing coupon and discount
• Constant rift with the franchisee owners and numerous instance of suing them
• High competition in this industry makes them hard to gain more market share.
• Lack of Products Choice • Limited Geographic
Presence• Weak Advertising Strategy
10
Market Share Comparison Between 2011 & 2013
2011
2013
11
Positioning
Price
Quality
12
Alternatives
Options 1• Status Quo
Option 2• Refocused
on the Price Strategy
Option 3• Store
expansion to boost up the % of change
Option 4• Refocused
on Customer Experience and Distribution Channel
Recommendation
13
2014
2015
2016
Expansion:Starbucks Mobile Store
Development:Starbucks
Culture
Improvement:Starbucks Apps and Customer
Experience
Marketing:Promoted through different media
2017
14
IMPLEMENTATION PLAN
15
Target Audience
•Most of the Starbucks are located in big cities /
shopping mall
•Middle to Upper Class
•Business associates
•Either single / married
•Have a tendency for a greater amount of disposable income
•College Student
16
YOU WANT MORE AUDIENCE!!!
Starbucks
Custome
rs
17
Phase I: Expansion of Starbucks Mobile Stores
•Bypass some of the flow from store to truck
•Goal: Make it internationally
• In major cities’ commercial district
• Irregularly to do promotion in College
•Tasting Event for New Product
•Offer “Buy one get one free”
Phase I• Expansion
Phase II• Improvement
Phase III• Development
Target: 3 trucks in
every city in 2017
18
Phase I: Expansion of Starbucks Mobile Stores
Phase II: Customer Experience
•Training Program (Focused on Customer)
•Train the employees to remember the loyal or frequent
customers’ names and orders, have conversations with
customers, etc.
•Creating customer intimacy
•Customers to feel special and welcome
19
Phase I• Expansion
Phase II• Improvement
Phase III• Development
Make your customer experience warmer and friendlier
20
How to encourage the employee?
• “Star of the Month”
• Allow the consumer to pick the best
employee of the month
• Reward the “Star of the Month” with bonus
• Monthly Bonus: $100-200
• Increase employee’s loyalty
• Increase the willingness to serve better
Lola
21
Phase II – Starbucks AppsPhase I• Expansion
Phase II• Improveme
nt
Phase III• Developme
nt
Source: Google Play Website
1. Make it more user friendly
2. Top Ten Favorite Drinks
3. Allow Customer to Buy Products on Apps
4. Creating personalized promotions
• Combining the customers’ personal / non personal
about them
• The amounts and types of purchases they make or
any benefits they receive through Starbucks Cards
Programs.
5. Add More Categories
• Examples: Drinks Menu, Food Menu, Nutrition
Menu
22
PHASE III – Create Starbucks Culture
•Enhance the Store
Experience
•Increase the loyalty
•Uniformity of “Name on the
Cup”
•Make it become a culture of
Starbucks
Phase I• Expansion
Phase II• Improvement
Phase III• Development:
23
PHASE III – Promote the Starbucks Culture
Embedded Advertisements
Music Video
TV program• Big Bang
Theory• Broken Girl
Movie
Phase I• Expansion
Phase II• Improveme
nt
Phase III• Developme
nt:
24
FINANCE
25
Starbucks’s Sales Dunkin’ Donuts’ Sale
YearSales
% of Change
2008 8624
2009 8141 -5.6
2010 8943 9.9
2011 9205 2.9
20121000
78.7
20131065
46.5
Year
Sales
% of Change
2008
5572
2009
5706
2.4
2010
5921
3.8
2011
6433
8.6
2012
6774
5.3
2013
7150
5.6
• Starbucks Seems to be unstable
• Dunkin’ Donut is more stableFinance – Sales Forecast
26
Finance - Growth Rate
Growth rate of Starbucks:
3.975%Growth rate ofDunkin’ Donut:
5.14%
We hope to:• Make the growth rate more stable• Increase the growth rate gradually catch up with the growth rate of
Dunkin’ Donut
27
Finance – Sales Forecast
2015$11,201.62
2016$11,777.38
2017$12,382.74
28
Finance - Phase I
•Target 3 trucks in every city in 2017
•$60,000 to get a food truck on the ground
• 13 cities
• Operating Cost for 1 truck $50,000
•First try to operate 1 truck in each city
• Total budgets to buy trucks in 2014 - 2015: $780,000
• Cost of operating trucks: $650,000
Source: http://www.forbes.com/sites/investopedia/2012/09/27/the-cost-of-starting-a-food-truck/
29
Finance - Phase II
Spend 1100 hour for
making an apps
Hire Specialist:
$150 / hour
Approximated Cost:
$165,000
Source: http://appmuse.com/appmusing/mobile-app-development-costs-revisited/
30
Finance - Phase IIIAverage cost of TV commercial for one quarter:$109,000Average cost of TV commercial for one year:$436,000
Cost of Making a tier 1 commercial:$5,000
Assume 4 commercial per year
Total cost of making commercial $20,000
Source: http://www.adweek.com/news/television/their-prime-broadcast-spot-costs-soar-132805
31
Conclusion
Attract more
people by increasing exposure if food trucks
Enhance our
application to
increase data
exchange with
customer
Increase loyalty by increase intimacy
with customer
Increase customer by more
aggressive advertising
32
QUESTIONS?
33
Appendix A – Starbucks Mission Statement in 2013
Our MissionTo inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
Our Vision Our Goals
CoffeeIt has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care and improving the lives of people who grow them. We care deeply about all of this; our work is never done.
PartnersWe’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold each other to that standard.
Customers
When we are fully engaged, we connect with, laugh with and uplift the lives of our customers – even if just for a few moments.Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.
StoresWhen our customers feel this sense of belonging, our stores become a haven, a break from the worries outside, a place where you can meet with friends. It’s about enjoyment at the speed of life – sometimes slow and savored, sometimes faster. Always full of humanity.
Neighborhood
Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action – bringing together our partners, customers and the community to contribute every day. Now we see that our responsibility – and our potential for good – is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.
Shareholders
Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to be invited in wherever we do business. We can be a force for positive action – bringing together our partners, customers and the community to contribute every day. Now we see that our responsibility – and our potential for good – is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.
Environmental
Understanding of environmental issues and sharing information with our partners.
Developing innovative and flexible solutions to bring about change.
Striving to buy, sell and use environmentally friendly products.
Recognizing that financial responsibility is essential to our environmental future.
Instilling environmental responsibility as a corporate value.
Measuring and monitoring our progress for each project.
Encouraging all partners to share in our mission.
Source: Company Website
34
Appendix B – Starbucks Financial Performance(2007-2013)
35
Appendix C – Dunkin’ Donuts’ Financial Performance (2008-2013)
36
Appendix D – Majority of Starbucks Retail Sales
Specialty Coffee Beverage61%
Food16%
Whole-Bean Coffees15%
Coffee-related products8%
Specialty Coffee Beverage FoodWhole-Bean Coffees Coffee-related products
Source: Company Website
Top Related