1. Starbucks Hot Alcoholic Drinks Kirk Kaubish Suzanne Souva Chris Tagliavia Leina Rabanal 5-7-13

2. Agenda O Products O Market Needs/Trends O Target Market O Market Size/Growth O Positioning O Competition O Marketing Mix O Financials O Conclusion

3. Take a Look Video

4. New Products O The Irish Coffee O Spiked Hot Chocolate

5. Market Needs O The Starbucks “experience” O Liquor demand O Where our product is offered

6. Market Trends O Market Trends O What our product does for existing trends O Starbuck’s and it’s differentiation

7. Target Market

8. Market Growth O Growth within the coffee industry and its marketplace O Correlation between coffee and alcohol O Evenings Menu O Continuing market growth

9. Marketing Objectives O Survey results O Goal

10. Marketing Mix Distribution Pricing Marketing Communication

11. Distribution O Starbucks builds relationships with its distributors O Using this strategy, Starbucks’ distribution channel is:

12. Pricing O Spiked Hot Chocolate $6.00 O 70% profit margin O Cost $1.78 (raw materials) O Irish Coffee $6.25 O 60% profit margin O Cost $2.49 (raw materials)

13. Spiked Hot Chocolate Raw MaterialPortion SizeCalculationCost Per Portion ($) Baileys Irish Cream2.5 oz.1 oz. = $0.54$1.35 Milk6 oz.1 oz. = $0.03$0.18 Fontana Bittersweet Chocolate Mocha Sauce 3 tbsp. (1.5 oz.) 1 oz. = $0.11$0.17 Whipped Cream2 oz.1 oz. = $0.04$0.08 Total:$1.78

14. Irish Coffee Raw MaterialPortion SizeCalculationCost Per Portion ($) Baileys Irish Cream 3.5 oz.1 oz. = $0.54$1.89 Coffee6.5 oz.1 oz. = $0.08$0.52 Whipped Cream 2 oz.1 oz. = $0.04$0.08 Total:$2.49

15. Promotion O Starbucks does not use national advertising campaigns O There will be one party at each location O Each location will create hype O Starbucks will provide sale incentives

16. Product Position O More for the same O Competitors cannot match

17. Competitors

18. Spiked Hot Chocolate Price Per Unit$6.00 Number of Units Sold2850 Total Sales$17,100100% Less: Variable Production Costs$5,07329.7% Less: Variable Selling Costs$00% Total Variable Costs$5,07329.7%$1.78 Contribution Margin$12,02770.3% Less: Fixed Production Costs$00% Less: Fixed Selling and Administration Costs $00% Total Fixed Costs$00%$0 Income Before Taxes$12,02770.3%$4.22

19. Irish Coffee Price Per Unit$6.25 Number of Units Sold2850 Total Sales$17,813100% Less: Variable Production Costs$7,09739.8% Less: Variable Selling Costs$00% Total Variable Costs$7,09739.8%$2.49 Contribution Margin$10,71660.2% Less: Fixed Production Costs$00% Less: Fixed Selling and Administration Costs $00% Total Fixed Costs$00%$0 Income Before Taxes10,71660.2%$3.76

20. Finance O Goal = sell 300 hot alcoholic drinks O There are no fixed costs O Design and produce new mugs O We expect sales to grow quarterly

21. Sales Forecasts Measuremen t of Time Beginning on:Units SoldSales 1 st QuarterJune 1, 201310,26062,842.5 2 nd QuarterSeptember 1, 201311,97073,316.25 3 rd QuarterDecember 1, 201313,68083,790 4 th QuarterMarch 1, 201315,39094,263.75 2 nd YearJune 1, 201468,400418,950 3 rd YearJune 1, 201568,400418,950

22. Thank you Any Questions Comments