2. STRATEGIC ALTERNATIVES: Enter the Financial district market with a best
customer relations proposition, enter it with a best cost proposition or opt
to enter first in a different neighborhood where Starbucks hasnât entered
yet.
STRATEGIC RECOMMENDATION: Enter the Financial district market with a Best
CR proposition, achieving 20% of the market share in 5 years.
STRATEGIC OPPORTUNITY: The possibility to enter the Financial District of San
Francisco market by the end of 2015, which has the potential of a 20% market
share in 5 years.
âą INSIGHT: This is the SF neighborhood with the highest number of
Starbucks locations - our companyâs main competitor
âą IMPLICATION: The opportunity is risky but highly profitable if accomplished
EXECUTIVE SUMMARY
2
3. MATURE COMMODITY WITH STABLE
DEMAND
CATEGORY:
Coffee Beverages
(commodity product)
DEMAND:
3,453,556 units/ year
(Growth = 0%)
NEED:
Energy and comfort
WANT:
Tasty, high quality Arabica
coffee beverage
âą Mature, commodity product implies ability to easily âstealâ
market share by having lower prices and/or production costs CATEGORY
3
5. SUPERIOR CONSUMER SATISFACTION MIGHT
BE OFFSET BY LOWER BRAND LOYALTY
5
S
W
Superior innovation and consumer attraction
âCompetitive advantages to succeed in entry
Top ranked in the American Customer Satisfaction Index (79)
â Useful know-how for the launch of the SF store
SWOT REFERS TO THE U.S. MARKET AS A WHOLE UNLESS OTHERWISE STATED
Inferior Brand Loyalty compared with Starbucks (main
competitor)
â An investment in brand equity might result in high growth
rates
Highest profit margin in the industry
âDD has an advantage in case of price rivalry intensification
COMPETITION
/COMPANY
No access connections - uncertain supply-chain
â Inferior access can hinder the expansionâs success
Coffee considered inferior than othersâ currently in the market
âHardship in creating loyalty from demanding consumers
â â
â
â
7. THERE IS AN UNSATISFIED DEMAND FOR QUALITY
SERVICE
7
CONSUM
ERS
CUSTOM
ERS
CUSTOMER !
= !
CONSUMER!
=!
ANY BUSY PERSON
THE TARGET CONSUMER
ISNâT VERY PRICE
SENSITIVE BUT
DEMANDS HIGH QUALITY
SERVICE
RELATIVEPRICE
PERCEIVED PERFORMANCE
HIGH
SUPERIORINFERIOR
LOW
SOURCE: YELP SAN FRANCISCO - FINANCIAL DISTRICT
OPPORTUNITY
DUNKINâ DONUTS HAS A
HIGHER RANKING IN THE
ACSI THAN THE CURRENT
SF MARKET LEADER
(STARBUCKS)
DD = 79
STARBUCKS = 76
CLICK HERE TO SEE THE CUSTOMER SATISFACTION INDEX CHART
8. HIGH INCOME AND INNOVATION-
ORIENTED CULTURE
8
CONTEXT
!
E San Francisco is one of the highest household incomes cities in the
countryâ Opportunity for higher margins.
!
S Local trends for gourmet coffee beverages and organic
productsâNiche thatâs not reached.
!
S Preference for local establishments instead of chains â Increased
difficulty to penetrate the market.
!
T High concentration of early adopters of new social
media and mobile apps â Opportunity for promotion
that can be a threat in case of dissatisfied customers
9. VISION: âDELIVER HIGH QUALITY FOOD AND BEVERAGES QUICKLY,
AFFORDABLY AND CONVENIENTLY IN A WELCOMING ENVIRONMENTâ
GOALS: BE THE MARKET LEADER
OBJECTIVES: ACHIEVE 25% U.S. MARKET SHARE IN 10 YEARS
STRATEGIC ANALYSIS:
DD HAS A HOLISTIC APPROACH TO MARKETING STRATEGY
9
Best Product
Best Customer
Relations
Best Total Cost to
Customer
High
Medium
Low
MARKETING STRATEGY:
WIERSEMAâS CUSTOMER INTIMACY MODEL
TARGET: BEST CUSTOMER RELATIONS,
WHILE ACHIEVE ABOVE-THRESHOLD COST TO
CUSTOMER AND PRODUCT QUALITY
10. 10
DECISION TREE
STRATEGIC
ALTERNATIVES
WAIT/
OTHER AREA
BEST COST
PROPOSITION
BEST CR
PROPOSITION
FINANCIAL
DISTRICT
+ LESS RISK!
!
- MISSED OPPORTUNITY
+ STEAL MARKET SHARE!
!
- LOSE BRAND EQUITY
+ INCREASE BRAND EQUITY!
!
-âSTUCK IN THE MIDDLEâ?
11. 11
BEST
CUSTOMER
RELATIONS
+ -
âą Growth in Brand Equity
âą Appealing to the service
quality-demanding
target market
âą Possibility of high gross
margins while still being
affordable
ALTERNATIVE 1: ENTER THE FINANCIAL DISTRICT WITH A BEST
CUSTOMER RELATIONS PROPOSITION
âą Risk of being âstuck in
the middleâ
âą Possibility of being in
the worse value area of
the perceptual map
âESTIMATED NMC OF $1,949,000
CLICK HERE TO SEE THE QUANTITATIVE ANALYSIS
13. 13
W
AIT
/
OTHER
NEIGHBORHOOD
ALTERNATIVE 3: WAIT AND/OR ENTER IN A DIFFERENT
NEIGHBORHOOD WHERE STARBUCKS HASNâT PENETRATED YET
+ -
âą Less competition
â less risk
âą Possibility to further
understand the market
âą Chance to be the
market leader in the
new neighborhood
âą Possibility of missed
opportunity
âą Difficulty to compete
with Starbucks will only
increase with time
âESTIMATED OPPORTUNITY COST = NMC OF $1,949,000
CLICK HERE TO SEE THE QUANTITATIVE ANALYSIS
14. STRATEGIC RECOMMENDATION: ENTER THE
FINANCIAL DISTRICT WITH A BEST CUSTOMER
RELATIONS PROPOSITION
ENTER THE FINANCIAL DISTRICT MARKET WITH
A BEST CR PROPOSITION, ACHIEVING 20% OF
THE MARKET SHARE IN 5 YEARS.
ESTIMATED GROSS PROFITS: $2,324,000
âINTENATIONALâ MARKET ATTRACTIVENESS
INDEX= 80.8
APPEALING TO THE SERVICE QUALITY-
DEMANDING TARGET MARKET
POSSIBILITY OF HIGH GROSS MARGINS WHILE
STILL BEING AFFORDABLE
14
CLICK HERE TO SEE THE INTERNATIONAL MARKET ATTRACTIVENESS INDEX
15. TACTICAL MARKETING PLAN
SOLUTION
BRANDED
15
INFO&INCENTIVES
Quality coffee beverage that is affordable and served quickly
Social Media
Supermarket Coupons
Free Samples
â Estimated Marketing Expenses: $375,000
â Estimated NMC: $1,949,000
Estimated SDI: 4.48%
Estimated MSI: 39.4%
CLICK HERE TO SEE THE FULL PRODUCT POSITIONING
16. 16
VALUERELATIONSHIP
Usage Of Reduce-Focus Pricing To Establish The Optimal Price
Average Price Per Coffee Beverage: $6
ACCESS
TACTICAL MARKETING PLAN
Open 2 stores in the first year, in addition to a food truck, which
would have its location announced through the social media
channels
In addition to applying the current programs DD Perks and DD
Card, there should be constant activity through social media
networks, most importantly twitter and facebook, where popup-
challenges could be easily implemented.
REDUCE-FOCUS
PRICING
17. Chapter Tool(s) Slide(s)
1 Customer Satisfaction Index 2
2 NMC, Relative Market Share/ ProïŹtability 25;24
3 Product Life Cycle, Market Share Performance Tree 3;29
4 Value Map 7
5 Segment Marketing ProïŹtability 25
6 Industry Forces Analysis 4
7 Product Positioning 26
8 Product Life Cycle- Based Pricing 30
9 Marketing channel proïŹtability 31
10 Marketing communications and customer response 29
11 GE/McKinsey Matrix 6/20
IM International Market Attractiveness Index 32
? Porterâs 5 Forces, SWOT, Protanoâs 11Cs 4/21;5/6; 5
MARKETING TOOLS CHECKLIST
17