Starbucks Presentation Brand Management Course University of Newcastle

1. Present by Sethaphat P.

2. On the board today... History Brand value, AWARENESS, IMAGE, Equity, Association Marketing Strategies The Global Brand Starbucks Experience References

3. History...

4. From “B”ean to “C”up in Early Year Was founded by Jerry Baldwin, Gordon Bowker and Zev Siegl in 1971 in Seattle, US. Early name was “Starbucks Coffee Tea and Spice” Sold only whole-bean coffee and coffee brewing machine Starbucks in 1980’s Howard Schultz came into Starbucks in 1982 and re-named from “Starbucks Coffee Tea and Spices” to “Starbucks” Re-image from only selling coffee beans to be a coffeehouse

5. Starbucks in the Cup 90’s till now 13,168 retail outlets worldwide Starbucks has been expanding its business into food, ice cream, tea, RTD business, music, credit cards and film

6. Financial Highlight Source: Starbucks.com

7. Social Responsibility Launched “Ethos” water .donate some profit to help children get clean water Breakthrough “paper cup” design .10% post-consumer fiber Purchased renewal energy The largest purchased of coffee “Fair Trade Certified”

8. is all about B-R-A-N-D ...

9. B R A N D Was inspired by Starbuck, Classic American Novel “ Moby Dick” Logo included an mermaid in woodcutting style

11. Value Source: Worlds Top Brands, Rank (2006) Rank (2005) Country of Origin Brand Value (2006) Brand Value (2005) Change 91 99 U.S.A. 3,099 2,576 20%

12. Equity Brand Knowledge Brand Awareness Brand Image Brand Recognition Brand Recall Type of Brand Associations Favorability of Brand Associations Strength of Brand Associations Uniqueness of Brand Associations Attributes Benefits Attitude Non-Product Related Product Related Price User Image Brand Personality Feelings and Experience Functional Experiential Symbolic Source: Strategic Brand Management, Kevin Lane Keller, p. 75

13. Awareness W-O-M Partnerships New Channels

14. Image Premium coffee beans Brewing techniques Store design .Italian Cafés .Artwork and Music.

15. Associations Type of Brand Associations Premium coffee Consistently Good Customer Service A classy, romantic atmosphere with consistent store design that meets the 5 senses STRENGTH . to be an lifestyle brand FAVOURability . coffee enthusiastic UNIQUEness . not entirely uniqueness

16. Why is so successful? 1 st to introduce Italian coffee house with premium coffee to the American market Organic Growth Partnerships

17. Key Drivers to Future Growth Expanding core retail opportunity worldwide Continued to innovate Expanded customer base Increased average unit volumes Leveraged Starbucks brand in other products and channels

18. The Venti Success...

19. Growth Strategies Ansoff’s Growth Vector Matrix Market Penetration Market Development Product/Service Development Diversification Market Present New New Present Product Source: D.T. Brownville, MCB University Press

20. Growth Strategies Market . introduction of Automatic Espresso Machine Advantages .convenient for barista .less time consuming .less human error Disadvantage . physical BARRIER between barista and customers .coffee taste is NOT traditional .coffee machine blocks SIGHTLINE .missing the traditional COFFEE VALUE for baristas Recommendation .semi-automation coffee machines .design proper layout to place coffee machines

21. Growth Strategies Ansoff’s Growth Vector Matrix Market Penetration Market Development Product/Service Development Diversification Market Present New New Present Product Source: D.T. Brownville, MCB University Press

22. Brand Strategies Diversification Line Extension Brand Extension Multi-Brands New Brands New Present Brand Present New Product Source: Kotler, Adam, Armstrong, Foundation of Marketing, p. 238

23. Brand Strategies New Brand

24. Brand Strategies .RTD coffee in can and bottle .Partnership with Pepsi in 1997 . First Starbucks’ product in Supermarket

25. Brand Strategies .3 types of tea; black teas, green teas, herbal teas .Took over Oregon retailer in 1999 .Attracted new customers who look for alternatives to coffee

26. Brand Strategies .Partnership with in 1999 .Original, warm and conversational lifestyle magazine . Inspired by coffeehouse traditional atmosphere

27. Brand Strategies .Positioned as a “durable, convenient, and consistent .Variety of coffee equipments such as grinders, Espresso Machine . Sold online and in retail stores

28. Brand Strategies .Social mission .To help children around the world to have clean water .Contributed US$0.05 for fund raising

29. Brand Strategies Brand Extension

30. Brand Strategies .Mild, Medium, Bold, Extra Bold .Sold in Starbucks stores and supermarket .Decaf

31. Brand Strategies .Combines Starbucks’ coffee and premium spirit .Sold at restaurants, bars, and liquor shops only . Cream Liquor and Coffee Liquor

32. Brand Strategies .RTD Espresso coffee in can .Come in light and normal Espresso .Innovative advertising

33. Brand Strategies .Come in full containers and bars .3 flavours for ice cream bars; Mocha, Java , Vanilla . 7 flavours for containers; Java, Mocha, Vanilla, Cappuccino, Brownie, Mud Pie, Almond Fudge

34. Brand Strategies .Make it easier for customers to purchase .Combined Starbucks Card and Credit Card . The Best Product of 2003 by Business Week

35. Brand Strategies Starbucks Entertainment

36. Brand Strategies Starbucks Entertainment .“Akeelah”, independent film in 2006 .Plan to invest more on film in upcoming years .Custom-made CDs in store . Customers can create their own CDs from the station in store .Threat from ipod

37. Advantages .increased brand awareness .improved brand image .enhanced parent brand Disadvantage .lost brand identity .lost core value .frustrated customers Recommendation .pull out unrelated diversification .focused on being number one in the coffee business Non-coffee related business...

38. The Next Step... ART Supported

39. Partnership

40. Partnership Partnership Strategy: suggest evaluating strategies against the key criteria such as: Suitability, Acceptability and Feasibility. source: Johnson & Scholes (1999)

41. Partnership .6 Starbucks Coffee ice cream beating Haagen Dazs .Most selling in coffee ice cream segment “ We've been proud to have Starbucks coffee served to millions of customers on United flights for the past 13 years," Rich Rodriguez, Starbucks Foodservice vice president, sales .3,600 flights a day, 855 destinations in 155 countries .14% of Starbucks customers had their first Starbucks coffee on the UA flight

42. Partnership .Starbucks coffee beans are distributed by Kraft in North America .Created Ready-To-Drink coffee in cans and bottles .Under “Frappuccino” Trademark . Frappuccino sales reached $125 million in 1997 , 80% penetrated to the RTD segment 

43. Partnership .Airport concessions Other Partners .Urban Coffee Opportunities – NBA Player Magic Johnson .Alliance for Environment Innovation - Less wasteful of takeaway cups .Non-profit organization – TransFair USA .Starbucks Foundation - Youth served communities

44. Starbucks...everywhere...

45. 2006 International Expansion Source: Starbucks.com

46. International Expansion Source: Starbucks.com

47. World-Class Global Brand... Salience Performance Imagery Judgments Feelings Resonance What about you & me ? What are you ? Who are you ? What about you ? Source: Strategic Brand Management, Kevin Lane Keller, p. 95

48. Starbucks... Global Brand ? Production and Distribution (saving costs and coffee quality) Marketing costs (packaging and promotion) Power and Scope (credibility, acceptance, social status, high quality, etc) Consistency in brand image Sustainability of core competences Uniformity (controlling and coordination)

49. Obstacles.. International Starbucks stores were not profitable Consumer needs and wants in different cultures eg: Asia – consumption of coffee is not big France – different coffee drinking behaviour “ Starbucks is great when I'm late for work, have my car, and want my coffee American-style.” Parisian customer – source : Consumer response of marketing mix (attitudes and opinions) Different stage of brand lifecycles Legal environment (different labour policies between countries) Administrative procedures

50. Increasing of direct competitors eg: .ski lodge theme .similar theme .the biggest competitor . convenient, offer quality coffee .Aggressive global marketing strategies .Focus on overseas growth and brand development .So far, Starbucks was in 37 countries .North America, Latin America, Europe, Middle East and Asian-Pacific Region) in American Market

51. The biggest Threat .The world largest coffee and baked goods chain .7,000 shops worldwide .5,300 stores in 34 states in America

52. Starbucks Experience...

53. Starbucks Experience Comfortable setting to create positive and uplifting experience Inviting store ambience Unique warmth that sets apart from “work” and “home” Customized beverage order Emotional connection between barista and customers

54. Starbucks Experience...$$$ Most of Starbucks consumers are not price sensitive In 2004, Starbucks raised price more than 3% in every products Starbucks stock price has been increasing since 1992 Benefit of the strong brand .Able to charge more .Less brand switching .Prevented erosion in market share

55. Your drink is ready... What Starbucks is thinking… Has Starbucks lost its focus? Is its brand Values still the same? Is it time to focus again on the coffee experience?

56. References... www.starbucks.com www.businessweek.com www.hoovers.com Starbucks Article, D.T. Brownville, MCB University Press Strategic Brand Management, Keller, 2006 Starbucks Experiences, Joseph Michelli, 2005