Group9_BrandManagement_STARBUCKS

Starbucks: Managing A High Growth Brand

Group 9: Indraneel MukherjeeRakesh Kumar

Rakesh SharmaSunil Bansal

Sunil Jain

Objectives

• Starbucks – Company Background• Early Geographical Expansion• JVs and other partnerships• Maintaining growth and new areas• Missteps• Aaker’s and CBBE model analysis• Starbuck’s foray into non-traditional areas• Learnings

InterBrand & BrandZ Ranking

• Interbrand ranking in 2010: 97 ; 2009:90• Brand Value @Interbrand : 3339 Million $• BrandZ ranking in 2010: 85 ; 2009: 89• Brand Value@BrandZ : 8490 Million $

Company Background

• Started by Seattle Entrepreneurs Jerry Baldwin , Gordon Bowker & Zev Siegl in 1971.

• Started as a new concept selling only finest whole bean coffee & coffee brewing equipment

• At the starting the Starbucks coffee was not brewed in store, but rather by consumer themselves

Growing The Brand-Geographical Expansion

Growing The Brand-Geographical Expansion

• Japan(Tokyo), New York, LA , Washington DC , San Franscisco • Success was based on Word of Mouth publicity campaigns• Employed a “Hub” market Strategy- Coffee Houses entered a new

market in a clustered group• Grand Store Opening were a community event• A large city would serve as Hub , spokes markets were for smaller

cities & suburban locations• Lead to cannibalization of store sales• Brought about cost economies in marketing , distribution, customer

convenience

Growing the Brand-JV’s & Partnership’s

Growing the Brand-JV’s & Partnership’s

Growing the Brand- Other Partnerships

Growing the Brand- Other Partnerships

• Urban Coffee Opportunities – Johnsons Company developed store location & Starbucks operated them

• Teamed with Alliance for Environment Innovation• Alliance with Conservation International • Doonesbury themed products – Licensing agreement to

sell these products in stores & online

Maintaining the GrowthMaintaining the Growth

• Encouraging results• Market expansion• Acquisitions- London

Based Seattle Coffee , Pasqua Coffee Company(California) , Tazo Tea

• S&P 500, 1999

• Encouraging results• Market expansion• Acquisitions- London

Based Seattle Coffee , Pasqua Coffee Company(California) , Tazo Tea

• S&P 500, 1999

New AreasNew Areas

Starbuck’s Cafe

Starbuck’s Joe

Starbucks MisstepsStarbucks Missteps

• Internet Strategy Debacle : Unsuccessful investments in

1. Living.com 2. Cooking.com 3. TalkCity- Internet Chat Site

• Failed Acquisition Attempt : Home –Goods & Kitchen Retailer Williams-Sonoma

• Lifestyle Magazine Joe was axed within a year of launch

Starbucks Mental Map & Brand Mantra

Earth Colors Expensive Variety Customized Seattle Coffee

Convenient Fresh Sophisticated Relaxing Comfortable Exotic

Treat/Reward Quality faddish/trendy Consistent Wholesome Pretentious

• Brand Mantra-“Rich, rewarding coffee experience”

Starbucks Competitive Positioning

Competitor Point of Parity Point Of Difference

Fast food chains/convenience shops

ConvenienceValue

QualityImageExperienceVariety

Supermarket brands(for home)

ValueConvenience

QualityImageExperienceVarietyFreshness

Local cafe QualityExperiencePriceCommunity

ConvenienceFreshness

AAKER’S MODEL

Core Identity

Value Proposition

• Product• People• In-store Experience

• Environmental Responsible• Progressive and Socially responsible • Innovation

• “Personal Treat” • “Third Place”• Atmosphere• Service

Extended Identity

CBBE Model – Starbucks 2000’s & 1980’s

Salience

Performance Imagery

Judgments Feelings

• High Quality Coffee / Products Simplicity• Availability• State of The Art technology

• Complete Coffee House• Music(Entertainment)• Films•Coffee Retail Chain

• Behavioral Loyalty• Sense of community• Active Engagement

• Comfort / Relaxed• Homely• Social Approval• Self Respect

• Credibility / Trust• Superior Quality• Quality Service

• Elegant• Romantic• Innovative• crème de la crème

Resonance

Starbucks Fights Back

• Strengthened its core product – Coffee• Introduced new flavors of Frappuccino –

Chocolate brownie , Orange mocha chip , Strawberry & cream

• Introduced Chiantico – An indulgent drinking chocolate

• Reduced fat blueberry coffee cake & Lemon raspberry loaf

Foray Into Non Traditional Areas

• Pre Packaged CDs• Media Bars- Facility to burn CDs• Promoted artist collection(Ray Charles) as well

new upcoming artists(Madeleine Peyroux)• Starbucks Branded Coffee Liqueur• Film Business – “Akeelah” partnered with

LionsGate

Continued Growth-Post 2000

• Added stores in France , Cyprus , Jordan , Ireland & Bahamas

• Opened more 1800 stores across US• Started a certification program named “Coffee

Master” as a differentiating strategy

Conclusion & Learning's

• Right from the beginning Starbucks focused on its core competency i.e. Quality coffee . Based on that it became an international coffee powerhouse

• Focused more on word of mouth advertising• In the process of diversifying it moved away from its

core competency• The growing size of the company needed more efforts

to monitor & satisfy its customers• A global Starbucks will need to strike a balance

between pursuing :product , people , values & sales

Thank You!!!