USERS Family Pillar Joe Banker Lazy Receiver Business Protocol High Emotion Low Emotion High EffortLow Effort.

USERS

Family Pillar

Joe Banker

Lazy Receiver

Business Protocol

High Emotion

Low Emotion

High EffortLow Effort

INSIGHTS

PersonalUseful

Burden-Free

(DRINK)RED

THE EXPERIENCE

BUSINESS MODEL

Java Cards Sold in Traditional Outlets

Volume

Profit

• 20,000,000 gift cards sold annually• 2% of gift cards are (RED)

400,000 (RED) Java Cards sold

Revenue• $8.00 Java Card cost to consumer• 5% lost or stolen

Expenses• $5.00 Java Card carried value• 45% gross profit• 50% profit sharing

$2.02 profit to (RED) per Java Card

$810,000 profit = 5,800 lives

Java Cards Sold in Card Stores

• 20,000 retailers participating• 0.3 (RED) cards sold per store per week

312,000 (RED) Java Cards sold

$2.02 profit to (RED) per Java Card

$632,000 profit = 4,500 lives

Volume

ProfitRevenue• $8.00 Java Card cost to consumer• 5% lost or stolen

Expenses• $5.00 Java Card carried value• 45% gross profit• 50% profit sharing

Conservative$1.4 million = 10,300 lives

Optimistic20% of Starbucks Gift Cards

are (RED) and 1.0 APS in Hallmark

$10.2 million = 72,900 lives

BRAND FIT

“[The AIDS] issue is one that is very, very close to us and we're very connected to it.”

already work with Africa, East Africa, and African growers…good alignment

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are needed to see this picture.

APPENDIX

Other ConsiderationsUser Experience TestFinancial Model

OTHER CONSIDERATIONS

Cannibalization“I like the concept of a sleeve that you can redeem for a coffee drink. It’s totally different, not like a gift card.”

Portability“I immediately tried to put the sleeve in my wallet...however, the odd size of the sleeve made it impossible to keep in my wallet without the end sticking out which I didn’t like…it was just one more thing to add to my messy purse.”

“It was okay to carry it around…it’s small and lightweight, but I carried it specifically en route to Starbucks.  I would be unlikely to carry it around with me in my pocket given its size, and I don’t have a purse.”

USER EXPERIENCE TEST

Receiving the Java Card as a gift…“The real incentive to me would be the free beverage and not the permanent sleeve – especially since the sleeve prototypes that I used weren’t of the quality where I would bring them with me to use each time I went to Starbucks.  Part of it is doing good, but it was unclear how the system worked and how either I was helping the charity (or the person giving me the gift was).”

USER EXPERIENCE TEST

Receiving the Java Card as a gift…“I like the red envelope that the gift came in (it would be really cool if it came in a distressed red envelope). It’s not every day that I get a red envelope in my mailbox and it would be exciting to receive one in the mail at home.”

“I also enjoyed the personalized note on of one of the sleeves. It was nice to get a kind note from Kate. I also like that the note is written in Kate’s handwriting – it is a nice touch.”

“I didn’t really identify with the part of the gift that goes towards fighting AIDS in Africa. While I support the fight against AIDS, I don’t understand the work that is being done in Africa by the proceeds from product red (it would be cool to have a website address where I could learn more information).”

USER EXPERIENCE TEST

In store experience…“It’s a bit of a hassle to use the perma-sleeve rather than the throw away sleeve, because the barista normally puts that on the cup for you, so you have to remove it and give it back (or throw it away as I did) and replace it with the sleeve.  I was also asked many questions by the local baristas. It was kind of cool/novel though – the red stands out quite well (particularly the non-velcro one), but they don’t seem premium or interesting enough for me to want to use them as a quasi-fashion accessory.”

USER EXPERIENCE TEST

Giving the Java card to someone else…“I would consider giving it as a gift to someone. However, since it seems like I can only give someone a single coffee drink by purchasing the sleeve I would not get it for someone as a big gift. It would have to be a little something gift.”

“I really like the design of the gift and it’s cool that parts of the proceeds go towards fighting AIDS in Africa. However, I think I would feel uncomfortable giving this gift to someone I don’t know well because I don’t know how they would react to getting a gift that supports the fight against AIDS in Africa. I guess there is a part of me that would feel like I’m forcing the person to support the cause of the product.”

FINANCIAL MODEL

Revenue Assumptions Price per card 8.00$ % of cards lost or stolen 5%

Cost AssumptionsMaximum redeemable value of Java Jacket 5.00$ % of Java Jacket value redeemed 95%Cost per Java Jacket 0.50$ Cost per card / enveloppe 0.70$ Average gross profit on Starbucks products 45%Proft sharing with (RED) 50%

Volume AssumptionsStarbucks Existing Gift Card Outlets

Total gift cards sold in a year (all channels) 20,000,000 % of gift cards redeemed 90%Expected growth gift card sales 3%% of gift cards that are (RED) 2%

Hallmark StoresHallmark retailers participating 20,000 Number of (RED) cards sold per week per store 0.30 Number of weeks in store per year 52

Other AssumptionsDiscount rate 10%Funds required to save a life 140.00$

Revenue Assumptions Price per card 8.00$ % of cards lost or stolen 5%

Cost AssumptionsMaximum redeemable value of Java Jacket 5.00$ % of Java Jacket value redeemed 95%Cost per Java Jacket 0.50$ Cost per card / enveloppe 0.70$ Average gross profit on Starbucks products 45%Proft sharing with (RED) 50%

Volume AssumptionsStarbucks Existing Gift Card Outlets

Total gift cards sold in a year (all channels) 20,000,000 % of gift cards redeemed 90%Expected growth gift card sales 3%% of gift cards that are (RED) 20%

Hallmark StoresHallmark retailers participating 20,000 Number of (RED) cards sold per week per store 1.00 Number of weeks in store per year 52

Other AssumptionsDiscount rate 10%Funds required to save a life 140.00$

Conservative: Optimistic:

FINANCIAL MODEL

Scenario 1: Cards Sold in Existing Outlets 1 2 3 4 5Volume of cards sold in Starbucks 20,000,000 20,600,000 21,218,000 21,854,540 22,510,176 Volume of cards that are (RED) 400,000 412,000 424,360 437,091 450,204

Redeemed Cards 360,000 370,800 381,924 393,382 405,183 Non-Redeemed Cards 40,000 41,200 42,436 43,709 45,020

Total Revenue 3,200,000$ 3,296,000$ 3,394,880$ 3,496,726$ 3,601,628$ Revenue lost or stolen 160,000$ 164,800$ 169,744$ 174,836$ 180,081$ Net Revenue 3,040,000$ 3,131,200$ 3,225,136$ 3,321,890$ 3,421,547$

ExpensesProduct Expenses

Java Jacket 200,000$ 206,000$ 212,180$ 218,545$ 225,102$ Card / Enveloppe 280,000$ 288,400$ 297,052$ 305,964$ 315,142$

Total card expense 480,000$ 494,400$ 509,232$ 524,509$ 540,244$

Coffee ExpenseProduct value redeemed by consumer 1,710,000$ 1,761,300$ 1,814,139$ 1,868,563$ 1,924,620$ Value retained by Starbucks (product GM%) 769,500$ 792,585$ 816,363$ 840,853$ 866,079$

Total (net) coffee expense 940,500$ 968,715$ 997,776$ 1,027,710$ 1,058,541$

Total Expenses 1,420,500$ 1,463,115$ 1,507,008$ 1,552,219$ 1,598,785$

Total Profit 1,619,500$ 1,668,085$ 1,718,128$ 1,769,671$ 1,822,762$ Profit Retained by (RED) 809,750$ 834,043$ 859,064$ 884,836$ 911,381$

5,784 5,957 6,136 6,320 6,510

Present Value 736,136$ 689,291$ 645,427$ 604,355$ 565,896$ Lives Saved 5,258 4,924 4,610 4,317 4,042

Sum of Present Value 3,241,105$ Lives Saved 23,151