Akasha Beker, Brie Moore, Amanda Pounds, Dion Low

Who is Starbucks Target Market? Demographics Gender: equally divided Age: consumers 35 years and older tend to consumer coffee more often than the age group Income Level: mid-income levels were frequent buyers, grew substantially after $75K was reached Education level: majority of consumers had some level of higher education experience Starbucks does not choose their locations based on the demographic profiles of the area (clusters stores) Source: Mintel Reports

What does Starbucks provide that is attractive to consumers? Variety: over 30 types of coffee blends Alternatives: many non-caffeinated drinks and pastries, sandwiches Quality: customer service and product Ease and speed: drive-thru and counter Atmosphere: comfortable, non-smoking environment that caters to their target market needs Provides a third place between home and work Source: Mintel Reports Cup sizes ranging from espresso to Vente

Where is Starbucks Located? Originated in Seattle, Washington in 1971 First “traditional” coffee bar established in 1984 Expanded to many West Coast locations in 1980’s Currently operating over 15,0000 stores in over 35 countries (company owned and franchised combined) Well saturated – Starbucks is located in airports, malls, bookstores, college campuses & grocery stores Starbucks lives by the philosophy that in every nation and every culture there is a segment of the population who are a viable market Source: Hoovers Online Reports Original Pike Place logo Seattle, Washington

Starbucks Around the World

Why do consumers purchase Starbucks? Source: Mintel Reports, Hoovers Online Reports Psychographics Product: enjoy taste, quality, variety Status: branding Convenience: “quick fix” Purpose: contributions to a company involved with community Comfort: welcoming environment: warm, friendly, and urban ambiance

How does Starbucks keep their customers? Competitive Advantages Extensive menu including specialty drinks, breakfast and lunch options Followed the health conscious trend by reducing caloric and fat content in products Offering organic, soy & rice milk, along with other organic options Wifi available at many of Starbucks locations Incorporated iTunes and CDs into their coffee shops and product line

Who are Starbucks Main Competitors? #1 Coffee based competitor: Caribou Coffee (based in Minnesota) McDonalds 1,000 McCafes; planning to introduce 14,000 more within the next year McCafe offers lattes, mochas, cappuccinos, coffee and iced drinks Cheaper: charge $1 less per cup than Starbucks Dunkin Donuts Benefit from consumers positive perception about coffee Only 8% of people surveyed who visited a donut house in the last month believe the donut shop coffee is better than other coffee offerings

“If you merged all of its rivals (that is, chains with more than three stores) into one patchwork coffee goliath, it still wouldn’t be even half the size of Starbucks.” –Taylor Clark, Starbucked

Coffee Industry Market Size Source: Starbucks: Company Financial NetAdvantage Starbucks is a leader in ready to drink beverages Starbucks has surpassed the expectations of coffee consumers by reaching out to the community Starbucks revenues (Million $) for Fiscal Year Ending September 2007: Q Q Q Q Year

What are Current Market / Industry Trends? National Coffee Association’s National Coffee Drinking Trends (NCDT) Starbucks customers continue to be the backbone of company’s success The lifestyles of Starbucks consumers Starbucks accommodation

Product Market Grid Existing Products New Products Market Penetration : Product Development : Existing Markets Increasing sales of current products to current existing market segments without changing the product Offering new or modified products to current market segments Market Development : Diversification: New Markets Identifying and Developing new market segments using current company products Starting up or acquiring businesses outside the company’s current products and markets

Product Market Grid Existing Products New Products Market Penetration : Product Development : Existing Markets *Focus on learning the customers name, repeating it and making them feel important *Offer whole fruit smoothies to their increasingly health conscious consumers *Increasing hours in popular neighborhoods (24 hours) *Incorporate local business products into their menu that are popular within the community *Frequent purchaser card (incent customer to return) *Become licensed to serve liquor. Create own liquor line to serve during late night music sessions *Invest in enhanced barista training to enable departure from fully automated beverage creation Market Development : Diversification: New Markets *Adding stores in areas (smaller towns) that do not currently have Starbucks, focus on tourist areas *Focus more on families by offering more kid sized items (offer milkshakes, smoothies), kid friendly areas *Possible negotiations with smaller drive-thru coffee shops to use Starbucks coffee beans (beneficial to carts by using Starbucks well- known name) *Add a "Starbucks Library" in stores to attract consumers to a new environment and keep them in the store - this library can include books and/or music *Focus on the traveler/trucker: Place more signage on highways to inform of locations (presence in rest stops)

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