Transcript: McDonalds: "It's just another chain, why would anyone care whether they were in Starbucks, Costa or Nero anyway?" Facebook SOCIAL MEDIA Global chain stereotype -Print campaign only Fair Trade Wieden & Kennedy Pass the cheer 2007 Ages 25-40—49% with 3% growth Ages 18-24—40% with 4.6% growth Educated Liberal Working Professionals Urban Choices Quality Coffee Monopoly, dominating Trained Middle class, college educated Fashionable Urban 25-40 Huge Variety PREVIOUS COMMUNICATIONS "I never go into Starbucks; it's impersonal, the coffee is mediocre, and it's expensive,” New York Times Create your flavor, name, share Consumer Insight "We all have McDonalds in common". Print Digital Television Barista Quality coffee beans Consumers want an accessible place to have exactly what they want to drink. Felicity "Award winning coffee, hand crafted to perfection" Nathan Brand Truth Other Brands effective campaigns: GET TO BY: OUR DIRECTION OUR CREATIVE Coca-Cola: BBDO Outdoor and online campaign 2009 Starbucks is omnipresent, has something for everyone. 6% Annual growth 2012 "insincere, impersonal and offensive. To be honest, I expected more from Starbucks and I'm sorely disappointed". Ruth 2010 GOING FORWARD Confused identity - inconsistent advertising campaigns and adopted a negative stereotype WHO IS STARBUCKS NOW? 'Us' and 'We' "I was made for loving you" 'Bring a Friend' / 'Share a coffee with...' Choice Omnipresent Versatile Urban Practical OUR TEAM OUR PROCESS Pioneering brand Omnipresent INITIAL IDEAS Costa: Thibault AMV Guatemala Antigua 2013 BUSINESS PROBLEM Largest coffee in the world "I would say I would much rather be in a nice place like the Vienna Coffee House than some impersonal chain like Starbucks or Costa" Trip Advisor Comfort AMV Names campaign 2013 Community route Flexible Business model Sam Who is our consumer? Who is Starbucks? Objectives Execution OUR STRATEGY BRIEF WHAT WAS STARBUCKS? Community Ideals "Share a Coke with..." BRAND PLATFORM Less personal experience FOCUS ON: THE CHALLENGE YOUR COFFEE YOUR CREATION 1.To establish the positives of being omnipresent 2.To increase customer awareness of all the drinks varieties available Starbucks has: Starbucks is on every corner. Their huge variety of drinks means that they have something for everyone, wherever they are. STRATEGY OBJECTIVES A Third Place COMPETITIVE LANDSCAPE Customer movement to more intimate coffee chains or those with perceived better quality coffee Nero: To get consumers to choose Starbucks over other chain competitors by showing them it is great that Starbucks is on every corner and has every variety of drink they could want. Focus on individual not the collective FOCUS ON: Misconstrued perception of the chain experience Whatever you want, wherever you are. Confused identity from mixed past communications CREATIVE BRAND TRUTH: TELEVISION Excellent produce CONSUMER INSIGHT: Wide Variety Specialist Knowledge GOING FORWARD
Transcript: The idea of the game is to fulfill each customer’s order in a timely manner. You have to make the coffee exactly the way they asked and add any extra items they want. You have to be quick in filling customer’s orders or they will just leave. Each level you have to satisfy a certain amount of customers in a small amount of time. It gets harder each level you move up. App Card Mock-up Low detail characters for easier player association Theme Fast Bean Tim Hall and Marquis Holmes
Transcript: Lucy Lee Helm executive vice president, general counsel and secretary Deverl Maserang executive vice president, Global Supply Chain Scott Maw executive vice president and chief financial officer Sharon Rothstein global chief marketing officer Arthur Rubinfeld chief creative officer and president, Global Innovation and Evolution Fresh Retail Craig Russell executive vice president, Global Coffee Matthew Ryan global chief strategy officer Blair Taylor chief community officer Vivek Varma executive vice president, Public Affairs Annie Young-Scrivner executive vice president and president, Teavana Frappuccino Corporate Structure StarJiffy Competitors Total Revenue: $14.6 billion Total Value: $4.48 billion Starbucks is a wholy owned company with no sub companies 20,737 stores WW 11,910 stores in the U.S Employs 160,000 (as of 2013) Headquarters in Seattle, Washington History Starbucks Founded March 30, 1971 in Seattle, Washington Funded by English teacher Jery Baldwin, history teacher Zev Siegl, and a writer Gordon Bowker at the University of San Francisco The three were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans Total stores: 20,519 * (as of March 30, 2014) (0_o) Interesting Facts car maintenance oil change 3 Departments Car Maintenance Global Technology (IT) Costumer Service tire repair Vertical Merger Merging so that people who are getting their oil changed can enjoy a coffee or tea while they are getting their oil changed Opposed to sitting and doing nothing Stock Quotes Company Details FAQ's Recap Named after after the first mate in Herman Melville’s Moby Dick coffee Products Late Is there an actual product? no, this is a servicing business So, if I just want Starbucks do I have to deal with everything going on in an oil changing shop? no, Starbucks stores will be placed in Jiffy Lube stores. There will still be separate Starbucks stores Does Jiffy Lube only do oil changing? no, they also do brake repair, fuel services, tire replacing, etc. Will the Starbucks still have free wifi? Yes If I'm getting my car repaired or my oil changed, will it come with a complementary coffee/late/tea as opposed to if I'm just going there not for my car? No, prices are separate from car repair Do I have to be getting something done to my car if I want to go to the Starbucks Starbucks is still for anyone to enter at their own will, it is merged with Jiffy Lube for the convenience of people already getting their car done. Founded March 30, 1971 in Seattle, Washington Total Revenue: $14.6 billion Total Value: $4.48 billion Cost per share : $ 72.38 High/Low: $ 82.50 / $ 67.93 Cost per share : $ 72.38 High/Low: $ 82.50 / $ 67.93 Yearly/Quarterly dividends: $ 1.04 / $ 0.26 Total Stocks Purchased: 554 million Logo is inspired by the sea–featuring a twin-tailed siren from Greek mythology. Howard Schultz chairman, president and chief executive officer Troy Alstead chief operating officer Marissa Andrada senior vice president, Global Partner (Human) Resources Adam Brotman chief digital officer Cliff Burrows group president, U.S., Americas, and Teavana Michael Conway executive vice president, Global Channel Development John Culver group president, Starbucks Coffee China and Asia Pacific, Channel Development and Emerging Brands Curt Garner chief information officer Jeff Hansberry president, Starbucks China and Asia Pacific brake repair Starterd in 1979 Steven Ledbetter president of Jiffy Lube International Jiffy Lube is the largest system of franchised service centers in North America and is consistently ranked as one of the top franchising opportunities for entrepreneurs Headquartered in Houston, Texas JLI is a wholly owned Subsidiary of Shell Oil Company 2,000 franchised service centers in North America
Transcript: Provider Gap 1 (The Knowledge Gap): – not knowing what customers expect • Provider Gap 2 (The Service Design & Standards Gap): – not having the right service designs and standards • Provider Gap 3 (The Service Performance Gap): – not delivering to service standards • Provider Gap 4 (The Communication Gap): – not matching performance to promises Case Background and Relevant Information Hand Crafted Beverages Caffeinating the World Conclusion S A M I M R O S T A I N A J A D N A V E E D S S H A W N C O R P S Provider Gaps Product Expansion We had evidence coming in from our market research that contradicted some of the fundamental assumptions we had about our brand and our customer" Problems With Starbucks Consumer Products Began 1971 Seatle's Pike Place market Today : 17,000 Retailers in 55 countries Inspire and nurture the human spirit- one person, one cup and one neighbourhood SVC (store-value card) is a prepaid swipeable smart card Pay for transactions in any Starbucks across North America T-Mobile HotSpot wireless Internet, starting at $49.99/month No Centralized Marketing, and lack of Strategic marketing All senior Marketing Executives assume marketing related responsiblity. Service Encounters Used monthly status reports and self-reported checklists, also used a program called “Customer Snapshot” Service Cleanliness Product quality Speed of service (3 minute standard) Also rated on “Legendary Service” Experiential branding strategy is captured by keeping national coffee culture alive Create an experience around the coffee, an experience that people can put into their everyday lives 3 components of their strategy Offering highest-quality coffee around the world, having a stronghold on the supply chain Providing top service “customer intimacy” Providing an atmosphere and setting CSR Starbucks employees also called “partners”, also called baristas-partner satisfaction leads to customer satisfaction Encouraged promotion from within its own ranks, 70% store managers were ex-baristas, 60% district managers were ex-store managers. Senior executives train and succeed as bariastas before getting positions in corporate headquarters Starbucks employees are "Partners" 60,000 Partners worldwide, and 50,000 are in North America "Baristas" Respect and dignity towards partners Two landmark programs Equity Health Coverage Use of "Customer snapshots" to measure service performance Mystry shopper that visits stores once a quarter. Grade store on Service, Cleanliness, Product quality and speed of service and "legendary service" Assumption that good grade = good customer service Products Starbucks Story Future Recommendation Delivering on Service • Choose which market segment they want to be in • Centralize the marketing department • Regain Market sensing and customer linking capabilities Majority of Starbucks’ are located in high-traffic, high-visibility settings Product mixes vary depending on store size and location Non-company-operated retail channels; sales of whole bean & ground coffees to hotels, airlines, restaurants International licensed stores, grocery stores, warehouse clubs, online and mail-order sales Value Proposition Service Quality “Starbucks cares primarily about making money,” 61%. “Starbucks cares primarily about building more stores,” 55%. Starbucks brand image was becoming more about the growth plans of Starbucks rather than the value they wanted to provide to their customers. Centralized Marketing Any problems? Face-Face Encounter Source of displeasure Recovery Adaptablity Spontaneity Channels of Distribution Inconsistant message Lack of Fit Mutiple Authority Might result in contradicting ideas Contradicting presonality/ management styles Gap 2 Services Marketing Concepts Widely available Gormet/ Specialty Coffee Trendy Overall Satisfying Insufficient Relationship Focus Inadequate Service Recovery But also Partners http://assets.starbucks.com/assets/aboutuscompanyprofileq42011121411final.pdf Poor Service Design Absence of Customer Driven Standards Product Innovation Perception of Starbucks Thank you for your time. Questions? About Starbucks Brewing Equipment Mugs Gifts and Items Books and CDS Sandwhiches, Pasteries, yogurt Parfaits and fruit cups Ethically and Socially responsible production of beans Selection of the highest quality of Arabica Bean More then 30 blends and single Orgin premium. Brand Image Measuring Service Performance Gap 1 Ready to drink Bottled Drinks, Energy Drinks Packaged Coffee and Tea Icecream Disadvantages Decreasing Customer Satisfaction New products launched on regular basis R&D ran focus groups, conducted in-store experiments, market tests, create product formulations If Partners aren’t excited about it, it won’t sell Bottled non-coffee-based line of Frappuccino beverages Coffee Service Innovation ServQual Reliability Responsiveness Assurance Empathy Fresh‐brewed coffee hot and iced espresso beverages, Frappuccino® coffee and noncoffee blended beverages, smoothies Tazo®
Transcript: Starbucks has introduced its own value meals at “attractive” prices. Hard to sell -> Expensive Schultz was “the man they needed to grow their business”. He had big dreams for Starbucks. Wanted to emphasize serving coffee, not just selling beans. The owners were too comfortable being a business of just 4 stores. Environment Starbucks Bouncing Back Have any other serious competitors emerged for gourmet coffee and for the coffeehouse atmosphere? The Reform McDonald's is expanding --> Mc Cafe. Dunkin' Donuts is running various promotions -> Investing in advertising -> New stores Both companies are aggressively targeting Starbucks customers. Hiring Schultz 2008: Bought coffee machine manufacturing company. Got loyalty card for customers Created a website for customers to offer suggestions. 100 stores closed. Energy drinks and health-orientated items hit the Starbucks shelves. Starbucks involved itself in environmental projects: Improving children’s health in coffee-and- tea-producing regions Helping the education of indigenous Mayan peoples dependent on coffee production. Promoting coffee quality Environmental sustainability Natural resource conservation in east Africa. Starbucks Success What is the situation with Starbucks now? Competition Mc Donalds Dunkin Donuts Cheaper prices FROM THE BEGINNING Starbucks' close competitors include other specialty coffee shops, doughnut shops, and restaurants. Competition is spread among the thousands of independent or small-chain coffee shops around the nation and the world. From The Beginning Has the more aggressive competition of firms such as McDonald’s and Dunkin’ Donuts had an impact on Starbucks? Schultz Expansion Competitors 1987: Original Starbucks owners sold Schultz their 6 stores, roasting plant and the Starbucks name. Shultz knew that he needed to gain the Starbucks employees trust. He wanted to create a work environment filled with eager, happy employees. The Reform Suppliers - Who delivers the coffee beans? Customers Employees Environmental groups Starbucks Success Targeting 1981: Howard Schultz discovered a store named Starbucks in Pike Place Market, Seattle. It had 3 sisters stores, all located in Seattle. This store offered rich and exotic coffee at an expensive price. Other way then companies normally do Aggressive Competition Starbucks remains the largest coffeehouse company in the world 20.000 Emotional message style - feel like home - Happiness Increase pedestrians Message styles Stakeholders A little Movie 2008: Bought coffee machine manufacturing company. Got loyalty card for customers Created a website for customers to offer suggestions. 100 stores closed. Energy drinks and health-orientated items hit the Starbucks shelves. Starbucks holds a dominant position in the coffeehouse atmosphere Its closest specialty coffeehouse competitor is Caribou Coffee Recovering from crisis Turning again to expansion into new markets diversification Positioning Environment Satisfaction the market Starbucks 2012 Middle & High class Prices Luxury store Strategy Paid employees more than the going rate at most restaurants. Wanted eager, well-educated, loyal and dedicated employees. Provided health care, even for part-timers working as little as 20 hours a week. Covered employees with terminal illnesses. October 1991: 1st profitable year. Offered stock option plan to employees. This meant employees were partners. McDonalds promoted its coffee in 2006. Starbucks offered a $1 “short” brew and free refills for traditional-brewed coffee in Seattle. Stopped selling hot breakfast sandwiches. Planned to add more stores and close down the slow ones. Starbucks strategy was to saturate the market with so many outlets no matter how close they were to each other, this created smaller lines at each outlet and more convenience. 200 million Starbucks success can be contributed to: Social responsibility towards employees, the environment and suppliers. Satisfying customers with helpful and friendly service. Rapidly opening to large markets and spreading out into nearby smaller markets. Starbucks biggest limitation was market saturation, customers will only buy so many coffees. 1981: Howard Schultz discovered a store named Starbucks in Pike Place Market, Seattle. Had 3 sisters stores all located in Seattle. Sold rich, exotic coffee at an expensive price. Starbucks 2012 Starbucks success can be contributed to: Social responsibility towards employees, the environment and suppliers. Satisfying customers with helpful and friendly service. Rapidly opening to large markets and spreading out into nearby smaller markets. Starbucks biggest limitation was market saturation, customers will only buy so many coffees. Employees 1985: Schultz started his own Italian-style social coffee shop named IL Giornale. The shop exceeded expectations, but was not profitable. There was a mindset that “coffee is only a commodity” Within 1 month, they had served over 1,000 customers. 2 more stores were opened.
Transcript: Starbucks Coffee The Daily Commuter-someone traveling to or from work, out shopping, or delivering goods or services. The Captive Consumer-someone who is in a restricted environment that does not allow convenient departure and return while searching for refreshment, or where refreshment stands are an integral part of the environment. Starbucks trend in sales How buyers choose? China is the biggest potential market Since Starbucks opened its first store in Beijing, capital of China it has quickly gained attraction amongst the Chinese people. China has a large urban population, rising economy and increase in coffee consumption Resources and Competencies: 1) The cornerstone value of Starbucks is to build a company with soul 2) Never stop pursuing the perfect cup of coffee buying the best beans and roasting them to perfection. 3) Consistently pleasing customer service, provided by knowledgeable and enthusiastic employees who know the companies products, pay attention to detail when preparing drinks, and communicate the company’s passion for coffee. Intensity of competition is high. The toughest competition would be local cafes. These cafes have a customer base that is dedicated and take pride in their product. Fast food and convinces stores that hold the benefits of convince of drive thru, cheaper pricing and time efficiency. Copy cats, such as other specialty coffee retailers. In 1971, Jerry Baldwin, Zev Siegel, and Gordon Bowker opened the first store in Seattle. Inspired and mentored by Alfred Peet. First store opened in Pikes Place, a touristy area in Seattle. Customers were encouraged to learn how to grind the beans and make their own freshly brewed coffee at home. The store did not offer fresh-brewed coffee sold by the cup like today, they sold beans and coffee makers. The store was an immediate success, with sales exceeding expectations. Competitor Disadvantages: Building stores across the street from one another to intercept consumers on their way to work or home or anywhere in between and to build brand awareness. Starbucks used their storefronts as billboards giving them more street exposure, allowing them to pool advertising dollars and drive traffic into their stores. It successfully worked. Because Starbucks is an early mover they own almost half of the nation’s 13,500 coffee bars and none of its competitors appear to catch up. Starbucks has strong brand identity and word of mouth that its extremely difficult for rivals to compete. Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting , and fresh delivery of our coffee Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success. Corporate Mission and Objectives: Competitor Advantages: Starbucks success inspired copy cats: for example Starbucks has mastered real estate so rivals are picking similar spots like Starbucks populated with well-educated, well-paid and well-traveled consumers sophisticated enough to appreciate a pricey cup of coffee as well as mimicking their specialty drinks. Starbucks crams stores close to one another cannibalizes its owns sales Starbucks business can suffer if the chain expands so rapidly that its service or quality of its products slips Standardized high prices 1) 14,000 specialty coffee outlets in the U.S alone 2) Number of ambitious rivals to increase their expansion plans 3) No other specialty coffee rival had more than 250 stores, but there were at least 20 small local and regional chains that aspired to compete against Starbucks Who buys? In an average week in 2003, 22 million customers visited Starbucks stores in North America, up from 5 million in 1998. Local customers patronized a Starbucks store 15 to 20 times a month, spending $50 to $75 monthly. Competition: Potential target markets THANK YOU! 1. Tully’s Coffee, 98 stores in 4 states 2. Gloria Jean’s, 280 mall locations in 35 states and a few foreign countries 3. New World Coffee, 30 locations 4. Brew HaHa, 15 locations in Delaware and Pensylvania 5. Bad Ass Coffee, 30 locations in 10 states and Canada 6. Caribou Coffee, 241 locations in 9 states 7. Second Cup Coffee, the largest chain based in Canada Intensity of competition Customers make choices based on their aspects of a brand’s identity. Starbucks creates brand equity by commanding a price premium in the market place. For example, consumers may pay $1.89 for a cup of Starbucks coffee when they could purchase the same volume for 69 cents at another coffee shop. If consumers prefer the Starbucks coffee and will pay more for it simply because of the label, their choices appear to be determined by their positive associations with the Starbucks name. Brand effect- Consumer will pay extra for a cup of Starbucks coffee
Transcript: Chapter 3: Business Cycles Affect Management Chapter 5: Ethical Dimension of Management Chapter 6: Prospectors and Analyzers Starbucks Going Green! Chapter 5: Ethical Dimension of Management Starbucks Presentation Starbucks Background 6. What valuable lesson(s) did Howard Schultz learn about the strategic importance of social media? 5. How would a SWOT analysis for Starbucks look? Starbucks Goes International 4. How does this case illustrate the dynamic strategic management process? Summary Secret Menu Logos 1. What strategy-making mode does Howard Schultz appear to follow? What are the pros and cons of this approach? Starbucks opens their first store in Seattle’s Pike Place Market in 1971 Starbucks Menu Works Cited Chapter 6: Prospectors and Analyzers Evolution of the Logo By: Alexa, Anthony, Kathrine, Aleisha, and Mercedes http://www.starbucks.com/responsibility/environment/energy http://www.starbucks.com/responsibility/environment/green-building http://www.starbucks.com/about-us www.starbuckssecretmenu.net www.trippapparel.com www.starbucks.com/coffee/menu 3. Who is included in Starbucks's business ecosystem? What does Starbucks need to do to maintain a healthy business ecosystem? Concepts http://starbuckssecretmenu.net/ http://www.trippapparel.com/2013/14304 Starbucks Case 2. Which of Porter's generic competitive strategies is apparent in this case? What are the pros and cons of this strategy? Frequently Asked Questions
Transcript: What Is Starbucks Doing To Help The Enviroment? What Is Starbucks Doing To Help The Enviroment? Who Made Starbucks? Starbucks was founded in Seattle, Washington by Jerry Baldwin, Zev Siegl, and Gordon Bowker. They founded Starbucks in 1971. Their mission statement: "Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time". https://www.starbucks.com/responsibility/sourcing/coffee Who Made Starbucks? With Water? With Water? Starbucks is reducing the water they waste in many ways. One way is that they are using high-pressure blast nozzles to clean pitchers instead of running water. They are also modifying their equipment to use less water. Starbucks has taking lots of measures to recycle. They have made more environmentally friendly cups, and encourage the use of tumblers by taking 10 cents of your coffee each time you use a tumbler. They have lots of tubler to choose from, so everyone can help the enviroment. With Their Recycling? With Their Recycling? They are modifying all their equipment so they use less energy, and finding renewable resources for their energy. They are also trying to use less energy. They are trying very hard to reduce energy usage because it takes up 80% of their carbon footprint. With Energy? With Energy? They are making green stores, which include the following measures: “Our ongoing efforts to green our stores include a mix of design elements: Conserving energy by allowing air-conditioned stores to reach 75°F instead of 72°F on warm days Saving water by using high-blast nozzles to clean pitchers instead of running water Installing low-flow valves throughout the store Installing cabinetry made from 90% post-industrial material (where available), with no added formaldehyde Improving lighting efficiency Using recycled flooring tiles Using wood products that are Forest Stewardship Council–certified (where available) Using paints with lower amounts of volatile organic chemicals With Their Buildings? With Their Buildings? https://www.starbucks.ca/responsibility/environment
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