managing a high growth brand STARBUCKS managing a high growth brand MKT 6330 dana turet • william campos • zach johnson • belle marco • leah torres • xue 'snow' cao

WHAT WE'LL DISCUSS • Building the starbucks brand • Starbuck's growth strategy • Creating a global brand • Plans for product expansion • Plans for geographical expansion • Competitors and threats • The "starbucks experience" – why it works

STARBUCKS COMMERCIAL "We're Starbucks. Nice to meet you."

BUILDING THE STARBUCKS BRAND Inviting environment and pleasurable experience offers more than just coffee Efficient and innovative processes lead to high quality and consistent service Customer and employee-focus builds brand loyalty Strategic expansion plans through partnerships drives rapid growth

STARBUCKS BRAND EVOLUTION

SOURCES OF BRAND EQUITY Brand identity Loyalty to the brand name Trademark green and custom logo Brand values Local community-focused mindset Customer service is key Commitment to quality Brand personality Relaxing but sophisticated (European feel) Giving back

STARBUCKS GROWTH STRATEGY Market expansion Local > National > Global Strategic partnerships spur rapid expansion Market penetration Focus on building brand loyalty Leads to word-of-mouth publicity Convenient locations maximize awareness Diversification Product variation (i.e. PepsiCo partnership) Expanding into music, coffee-related supplies, etc.

CREATING A GLOBAL BRAND Internal efforts Strong leadership with expertise High investment in employees and training Efficient, scalable processes that can be replicated External efforts Highest quality products and service Appeal to ‘non-coffee drinkers’ through variety to broaden awareness Focus on the customer experience Strategic partnerships are low cost and low risk and allow for rapid expansion

CREATING A GLOBAL BRAND, CONT. Challenges Rapid expansion makes consistency difficult Increasing costs of coffee > higher prices Growing competition in quality, prices, locations and convenience Strategic partnerships require losing a degree of control over the brand, with low profit margins

PLANS FOR PRODUCT EXPANSION Initial success in expansion into new products Music kiosks, CDs and iTunes downloads Canned drinks, instant coffee, foods and gum Credit cards and film production Branded liqueur Appeal to wider audience and opportunity to broaden brand awareness – be known for more than just coffee Analyst suggest to evaluate short-run profits versus long-run benefit for the brand Don't stray too far from core strengths Purchased Hear Music retailer in 1999

GEOGRAPHICAL EXPANSION Successful international expansion to date leading to increasing revenue/growth Should focus on areas with political and economical stability and low market saturation Success in Asian markets Europe has potential but high saturation India, Russia, Brazil have opportunity with young consumers and low saturation Avoid areas with instability and poor economic state such as Middle East and Africa

STARBUCKS' COMPETITORS "Third place" competitors with similar offering but lower penetration and brand loyalty Panera bread Caribou Coffee: a dangerous rival Similar value proposition Starbucks has more penetration (8000 stores v. 400 stores) Commercial: "Get Real."

STARBUCKS' COMPETITORS Value competitors offering quality and convenience but unmatched atmosphere McDonalds High market penetration (12,000+ locations) High quality and low cost Cannot compete on the ‘experience’ Dunkin Donuts Strong anti-Starbucks marketing and loyal audience

RECENT DEVELOPMENTS Starbucks has continued to dominate as a leading global brand through High engagement of social media Mobile apps and rewards programs

SO, WHY DOES STARBUCKS WORK? People buy into the brand, not just the product Customers are willing to pay higher prices in return for a consistent, reliable, quality experience Coffee products can be replicated and some may even taste better, but customers aren’t just paying for coffee Brand trust and loyalty serves as foundation to continue selling high cost products (like $400 espresso machines) to loyal brand customers

QUESTIONS? let's talk.