STARBUCKS COFFEE Magda Lopez Victoria Robertson Min Lee Kristan MacLean Artur Gnandt Dillon Berry

Agenda Overview of Starbucks Operations Competitive Analysis Wrap Up

Target Market Demographics Both male and female Middle Class – Higher Class Income Level Business men/women, Students, Higher income level jobs

Target Market Psychographics People go to Starbucks looking for high quality products and more prestigious service Those looking for the right atmosphere to meet with people or do some work or reading People with brand loyalty and awareness

Distribution Strategy Stores are normally placed in high traffic areas (26 years in Canada with 1299 stores) Coffee and tea associated goods are sold to business in the foodservice industry Some products are also marketed to grocery, warehouse club and specialty retail stores (Distribution of Starbucks VIA® through Walmart, Loblaws, Safeway and Metro)

Form of Ownership Company oriented, supply chain Licensed store operations leveraged by the expertise of Starbucks’ local partners For Starbucks’ Seattle’s Best Coffee brand, diverse methods of licensing are used, which comprise traditional franchising

Level of Service Limited Service Customers may rely heavily on employees recommendations Starbucks strives to serve their customers with the best service possible to ensure customer satisfaction

Merchandising Mix BREADTH DRINKS FOOD CONSUMER PACKAGED GOODS OTHER MERCH. Regular and decaffeinated coffee drinks, wide range of Italian-style espresso brews, icy mixed drinks, cooled shaken refreshment drinks, a variety of premium Tazo® teas Assortment of fresh meals, comprising high-quality ingredients based ones, nutritional value and prodigious taste, such as baked meals, delicious breakfast and lunch sandwiches, oatmeal and salads Uniquely presented roasted whole bean and ground coffees, a selection of Starbucks VIA® Ready Brew solvable coffees, Starbucks® coffee and Tazo® tea K-Cup®, serving packages, Starbucks RefreshersTM drinks Travel mugs Hot cup thermos Reusable cold cups Mugs Reusable water bottles (Reusable sleeves and straws) Roasted whole Coffee machines (Verismo, Keurig) Coffee pressers Coffee grinds Teapots and kettles DEPTH

Pricing Strategy Starbucks uses an “Above-Market” pricing strategy when selling their products The Above-Market pricing also falls into line with prestige pricing and believing you pay more for better products and service

Promotion Social Responsibility Adapting to today’s eco-friendly products Giving 10 cents to every customer who brings in their own reusable cup

Promotion Sales Promotion Starbucks Reward Card Partnership with Living Social Contest for Canadians to rename the Blonde Roast Coffee

Online Strategy Well equipped site with Social Media streams and MyStarbucksIdea page High-tech, easy use, convenient IPhone and Android Smartphone apps YouTube channel where they advertise, show how products are made and how the staff is trained

Competitive Matrix 4 P’s Starbucks Tim Horton's McDonald's McCafe Product - Large variety of coffee beverages to choose from (customized specialty coffees) also present in grocery stores - More health conscious foods available ranging from breakfast sandwiches to Panini - Coffee based beverages and large variety of fresh baked goods - Smaller range of product, present in grocery stores - Well-known brand extended to include MacAfee, where coffee beverages are the main product. - Cold specialty drinks, such as iced latte, iced mocha, iced coffee, smoothies in 3 different flavours Price - Prices are based in the perceived upscale image attached to its brand and, premium quality coffee supply - Medium drinks typically cost from $2.25 to 4.75 before tax and small pastries priced from $0.95 to $6.95 - Price strategy based on affordability - Medium size cold drinks cost from $1.81 to $3.19 and medium size hot specialty drinks price ranges from $1.60 to $3.19 - Price settlement based in affordability - Medium Coffee costs $1.49, medium hot specialty drink $3.29 and medium Fruit smoothies cost $3.39 Place - Stores are normally placed in high traffic areas - Packaged products available in grocery, warehouse club and specialty retail stores - Huge amount of stores conveniently located in universities/colleges, malls and plazas - Packaged products available in a limited quantity at grocery stores - Limited number of stores across Canada - Conveniently located inside shopping centres and plazas Promotion - My Starbucks RewardsTM program, and my Starbucks’ Foundation - Social Media: Facebook Twitter, YouTube, and My Starbucks Idea - Roll-Up-the-Rim to Win and Tim Horton’s Children’s Foundation annual event - Twitter, YouTube and Facebook presence - Sales promotions and Ronald MacDonald’s House Charities

Competitive Matrix Starbucks Tim Horton’s McDonald's MacAfee Strengths - Consistency of high level of service and quality products with superior comfort store environment - Built in customer base loyalty, a strong board, strong financial position and strong brand equity - Affordability of products and wide variety of baked products - Canadian brand with the largest number of conveniently located stores across Canada including drive-thru and 24 hour service ones - Positive corporate image through it’s Ronald McDonald House - McDonald’s brand name is one of its most prominent strengths Weaknesses - Product pricing is higher compared to other competitors and the range of products, mainly in the bakery area is limited, which makes business profit to be highly dependent on coffee products -Not as many locations as the competition and limited hours of operation as opposed to competitors that have shops open 24h/7days - Geographic concentration of stores that could be considered as self cannibalization and weak management in some locations impacting the consistency of the service provided with staff not sufficiently trained - Drinks are not customizable and stores tend to be noisy and crowded due to larger customer traffic which impacts stores’ image -Coffees are available in all the locations, but specialty McCafe drinks are only available in some locations, they are not customizable and some quality issues across the franchise network have been perceived - McCafe is not very well known as a coffee brand

Works Cited http://www.starbucks.ca/about-us/company-information   http://www.starbucks.ca/about-us/company-information http://www.starbucks.ca/coffeehouse/store-design/west-hastings-and-howe http://www.prdaily.com/Main/Articles/6_ways_Starbucks_excels_at_social_media_marketing_13814.aspx# Starbucks Corporation Fiscal 2012 Annual Report. Retrieved from: http://investor.starbucks.com

Question Time!