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Retail Analysis: Starbucks

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by

Erinn Maguire

on 17 April 2014

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Transcript of Retail Analysis: Starbucks

&
Customer Relationship
Loyalty Programs

No crowd, seating area full.
Excellent Customer Service
Upgrades pushed
Store Design

History & Background
Stores & Location
Retail Strategy
Brand Image
Channels
Store Visits
Forbes Ave.
Petersen Events Center
Sixth & Penn Avenue
Competitive Analysis
Dunkin' Donuts
Competitive Analysis
Tim Horton's
Competitive Analysis
Peet's Coffee
Communications Activity
SWOT Analysis
Key Observations
Recommendations
Target Audience
Retail Mix
sustainable competitive advantage
Store
1st Starbucks was opened in Seattle, Washington on March 30, 1971

Three friends learned coffee roasting techniques from coffee entrepreneur Alfred Peet

The original store is located in Pike Place Market, where it still stands today

In 1982, Howard Schultz joined Starbucks as Director of Retail Operations and Marketing

Schultz later opened own coffee shop, “Il Giornale”

In 1987, Schultz and Il Giornale acquired Starbucks’ assets and rebranded the coffee shops as Starbucks

Starbucks expanded soon after to Chicago, Illinois and Vancouver, British Columbia

Schultz is the current CEO of Starbucks

There are currently 20,981 Starbucks locations around the world
United States – 13,279 (65%)
Canada – 1,324
Japan – 989
China – 851
United Kingdom – 806
64 countries have at least one Starbucks site

Types of Locations
Common Store
Independent store
Starbucks foodservice
Competitive Analysis
Over 15,000 locations in 37 countries
Concentrated in Northeast

Advantages over Starbucks
Lower priced
Better Food

Disadvantages to Starbucks
Number of Locations; Less Expanded
In-store experience
Loyalty Program

Over 3,588 locations in Canada
1,324 Starbucks locations in Canada

Advantages over Starbucks
62 to 7 percent market share in Canada
Lower priced

Disadvantages to Starbucks
Lack of quality in-store experience
Lack of locations (only 807 in US)
New to drinks other than coffee

Over 200 stores
Mainly located in California and various airports

Advantages over Starbucks
Taste of their coffee/beverage
- More upscale, fewer locations, less generic
Strong presence in grocery stores

Disadvantages to Starbucks
Less locations
Have been working on expanding
- Caribou Coffee

Tim Horton’s is trying to find new expansion locations before Starbucks and other competitors get there first

Qatar
Bahrain
UAE
Kuwait
Oman
My Starbucks Rewards
Consumers earn Stars by paying for their purchases with a registered Starbucks card or Mobile app

Program contains three tiers

My Starbucks Rewards
Tier 1 – Welcome Level
Requirement: Register a Starbucks card online
Rewards: Free drink on birthday, 15% off coupon for future visit, email offers

Tier 2 – Green Level
Requirement: 5 stars
Rewards: Free refills in participating locations, all Welcome Level rewards

Tier 3 – Gold Level
Requirement: 30 stars, and 30 stars every following 12 months
Rewards: Free food or drink for every 12 stars, all Green and Welcome Level rewards

Website
Twitter
Facebook
Website
Menus
Store Locator
Customer Service
Links to Social Media
My Starbucks Rewards page
“My Starbucks Idea”

Twitter
Over 6 million followers
Have separate accounts for different countries
Very engaging
New content daily
Customer Service

@Starbucks
Facebook
About 36.5 million Likes
Posts content at least once a day
Engages with consumers
Instagram – starbucks
YouTube – Starbucks Coffee
Pinterest – Starbucks Loves
Google+ - Starbucks Coffee

Communications Activity
Sales Promotion
Direct Marketing
EMail
Mobile App
Sales Promotion
Coupons
Discounts
Free Samples

Direct Marketing
Email
My Starbucks Rewards members can opt-in to Starbucks emails
Exclusive offers
Discounts
Rewards
Product Information

Direct Marketing
Mobile App
Uses:
Pay in-store
Tip Barista
Load money onto Starbucks Card
Find closest locations
Track My Starbucks Rewards and Star Count

Fix Quality of Secondary Locations
Poor quality of baristas and drinks affects the Starbucks brand
Can fix by either properly training employees at these locations or by not allowing Starbucks products to be sold there.

#1
#2
Fix Customer Complaints about Loyalty Program
Main complaint is that Gold level members can be promptly demoted to the Green level if they don’t earn enough stars within one year.
Give multiple warnings to customers about the deadline.

#3
men & women, ages 25-40
men & women, ages 18-24
college campuses
Location
Merchandise
Store Design
Advertising & Promotion
Pricing
Customer Service
The Starbucks Experience
Third Place
"A place for conversation & a sense of community."
Store Design
Baristas
online
Forbes Ave. (Oakland)
Petersen Events Center (Oakland)
Sixth & Penn Ave. (Downtown)
Friday @ 11am
Thursday @ 3pm
Poor quality of service & drinks
Poor location/atmosphere
Lacks The Starbucks Experience
Peak time - Busy
Excellent Customer Service
Store Design
Efficiency
Monday @ 8am
Strengths
Weaknesses
Opportunities
Threats
Location, Location, Location
Service Provided
Pricing
Self-Cannibalization
Late Night Stores -Alcohol
New Entrants
Rising Costs of Production
Placement Strategy of New Locations
In order to avoid self-cannibalization, Starbucks must strategize the placement of new locations, in proximity to existing stores.
Leader in a very competitive market
"Cult" following
Always expanding
Full transcript