Starbucks - The Third Space

Starbucks - The third Space

Presented byNeha Nair 29

Shruti Shah 60

Starbucks Coffee

•The first Starbucks location opened in 1971.

• Starbucks original location in Seattle Washington.

• Starbucks has 20,400+ stores in 61 countries.

• Starbucks has 50-50 joint venture

with TATA alliances.

Introduction

Why the name starbucks

• Originally the company was to be called Pequod, after a whaling ship from Moby-Dick, but this name was rejected by some of the co-founders. The company was instead namedafter the chief mate on the Pequod, Starbuck.

Starbucks Coffee

Swot analysis of Starbucks

Strengths•High quality of products•Extensive range of staff benefits contributes to employee morale•Strategic relationships with suppliers

Weaknesses•Tall management structure•Occasional lack of workforce on the floor• High turnover rate among employees•Over-saturation of markets

Opportunities•International market expansion (especially Chinese and Indian markets)•Innovate products and services•Increasing the product ranges

Threats•Frequent changes in the market trends•Better value offered by local cafes.•Competitor intentions

Starbucks Coffee

In IN

DIAGro

w

th

Settled CountryDecline

Product Life Cycle

Sale

s

Time

Global market Takeaway culture,

which helps retailers add margins with very little cost.

Less real estate value in comparison

Indian market Many office-goers

and students go to cafe to relax and spend hours on coffee and snacks

Also, real estate costs are high in India, making it important for retailers that average price realization per square feet of space.

Starbucks goes plush for India, gives its stores a local flavour

Starbucks' stores in India don’t fit the global design template — each store has been designed differently, with “local” touches incorporated.

Research on the coffee chain showed that for Indian consumers, coffee is not the primary reason to visit a cafe — and very few order a beverage to take away with them. Most consumers spend about 45 minutes in a cafe, using it as a spot to meet friends and relatives.

So, Starbucks wanted its stores to be as appealing as possible while giving consumers a unique "Starbucks experience“

"The idea was to bring about the traditional elements of this country and present them in modern settings,"

Starbucks Coffee

Product

Price

place

Promotion

Marketing Mix of Starbucks

Starbucks Coffee

Marketing Mix of Starbucks

Product

Variety

Quality Design

Features

Brewed coffee

Attractive ,descent, convenient Fresh product

cappuccino, Caramel cappuccino, tea

packaging services

Attractive, easy to handle Just in time ,ready to drink , fair trade policy

Starbucks Coffee

List Of Price

Rs. 95 – Rs. 250

Card

Payment card system

Marketing Mix of Starbucks

price

Starbucks Coffee

• Social media campaign

• Starbucks iPhone app

• Gift card to start a relationship

Marketing Mix of Starbucks

Promotion

Starbucks Coffee

• Higher income group location place

• Airports ,malls,well known areas

• Highly visiting areas

Marketing Mix of Starbucks

Place

CUSTOMER AGE GROUP

•Urban

•Age =18 to 40 •Men women

•High income group

• Occupation= college student office employee • Technology= Smart Phone user.

Market segmentation

Strategies

• Maximize market penetration

• Provide a relaxing social atmosphere

• Offer high-quality products

• Encourages a great working environment

• Achieve profitability

Starbucks 10/31/2011

STARBUCKS COMMERCIAL

Financials

2013 2014 Growth

14.89 $ b 16.45 $ b 10.45%

• Sales Revenue growth =10.45 %

• Gross profit margin = 23.21%

• EBITDA = 3.57 $ b

Gross Profit Sales Gross Profit/ Sales

3.82 $ b 16.45 $ b 23.21%

• Calculation of EPS

• Liquidity ratio

Net Income for Shareholders 2.07 $ b

Number of shares outstanding 735.1 m

Earnings per share 2.75 $ per share

Total Current Assets

Total Current Liabilities

Current assets/ Current liabilities

4.17 $ b 3.04 $ b 1.37 times

• Cash flow statement analysisParticulars Amount in US $

Operating Activities 607.8 m

Investing activities (817.7) m

Financing Activities (623.3) m

Net change in cash (867.3) m

Free Cash Flows (553.1) m

Global Responsibility• They are committed to being a deeply responsible

company in the communities where we do business.

• Focus is on ethically sourcing high-quality coffee, reducing our environmental impacts and contributing positively to communities around the world.

• Starbucks Global Responsibility strategy and commitments are integral to our overall business strategy.

• They believe in delivering benefits to their stakeholders.

Timeline of Starbucks

1985

1996

1997

2006

2007

2009

2010

10% DISCOUNT ON USING TUMBLER

PARTNERED WITH ENVIRONMENT

DEFENCE FUND TO REDUCE IMPACT OF

CUP

INTRODUCED RECYCLED CUP

SLEEVES

LAUNCHED FIRST PAPER CUP MADE

WITH POST CONSUMER FIBRE

FRONT STORE RECYCLING LAUNCHED

CUP RECYCLING PILOT IN 7 NEW

YORK CITY STORES

CUP SUMMIT1971

STARBUCKS OPENSAT SEATTLE

STARBUCKS INITIATIVES

• LEED Certified store• Water Conservation• Energy Conservation & Renewable Energy• Store Design

• It joined the U.S. Green Building Council (USGBC) in 2001 and collaborated with them to develop the LEED for Retail program.

• An effort to adapt LEED to new construction and commercial interior strategies for retail business.

• The first retailers to join USGBC’s LEED volume certification pilot program.

Leed Certified Stores

Leed Certified Stores

• We have currently certified 583 stores in 19 countries.

• 20 of our stores are in Thailand, including Porto Chino which is the first LEED Gold store for Starbucks in all of Asia.

• This store includes the use of recycled coffee grounds in table tops, low emitting materials for adhesives, sealants, paints, coatings and flooring, over 10% of materials extracted within 500 miles and over 45% lighting power savings through the use of efficient LED fixtures.

Leed Certified Stores

Water Conservation

2008 2012 2013 2015

Baseline17.5%

Decrease21.1%

Decrease25%

Decrease

24.35 gal 19.22 gal 18.27 gal20.08 gal

Average water use per square foot/ store/ month U.S. and Canada Company operated store

• Managing water that can be seen “going down the drain” provides one set of challenges, but much of our water footprint happens behind the scenes. Leaks can develop below floors, outside in sprinkler systems, even in toilets.

• Starbucks Energy and Resource Conservation team uses advanced analytics to identify stores that are using inordinate amounts of water.

• Facilities experts visit these stores to diagnose and rectify anomalies.

• A robust program that provides rapid response to suspected water leaks.

Water Conservation

Energy Conservation & Renewable Energy

2008 2012 2013 2015

6.8 KWH 6.32 KWH 5.10 KWH6.36 KWH

Average electricity use per square foot/ store/ month U.S. and Canada Company operated store

Baseline 6.5% Decrease

7.1% Decrease 25%

Decrease

• They set the goal to purchase Green-E certified Renewable Energy Certificates (RECs) equivalent to 50% of the electricity used in our U.S. and Canada company-operated stores.

• They achieved that goal in 2010, so in 2011 we began working toward a goal to purchase the equivalent of 100% of the electricity used in our company-operated stores globally by 2015.

• The U.S. Environmental Protection Agency has named starbucks

among the top 10 purchasers of renewable energy in the country.

• Due to the expansion of our business in food and beverage offerings, they are currently evaluating the changes to our stores’ energy demand and how we measure and monitor efficiency improvements.

Store Design• Our coffee comes directly from the earth so we

naturally take an interest in treating it well.

• To reflect the unique character of the neighbourhoods they serve.

• They strive to reduce the impact our stores have on the environment and this commitment influences almost every aspect of how we approach design and construction, including landscape, building methods, materials, lighting and more.

Recycling Cups

• In 2013 customers brought their own tumblers into our stores 46.9 million times, up from 35.8 million in 2012

• Saved 1.4 million pounds of paper from landfills.

• As more customers brought in their personal tumblers over the previous year, the percentage of customers choosing reusable mugs saw a 22% increase.

• Starbucks is committed to reducing our cup waste. By offering this option and providing our 10-cent discount, we hope to inspire you to bring your own cup, we’ll provide the coffee.

• You receive a 10-cent discount every time you use it in our stores, this cup pays for itself in just 10 uses.

• If you use it daily for a month you’ll help avoid using more than a pound of paper or 3.5 pounds of wood.

• At the end of its life, if plastic recycling is available in your region, you can recycle this cup and help minimize your impact on the planet even more.

References

• http://quotes.morningstar.com/stock/SBUX/s?t=SBUX&region=USA

• http://www.businessinsider.in/Starbucks-Biggest-Environmental-Failures-Are-Still-Better-Than-Most-Companies/articleshow/35683336.cms

• http://globalcitizens.pbworks.com/w/page/9036435/The%20Impact%20of%20One%20Cup%20of%20Starbucks%20Coffee

• http://www.mnn.com/money/sustainable-business-practices/stories/starbucks-and-the-environment

• http://www.starbucks.com/responsibility/environment

• http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsannual

Thankyou