Akasha Beker, Brie Moore, Amanda Pounds, Dion Low

Who is Starbucks Target Market?

Demographics Gender: equally divided Age: consumers 35 years and older tend to consumer coffee more often than the 18 - 25 age group Income Level: mid-income levels were frequent buyers, grew substantially after $75K was reached Education level: majority of consumers had some level of higher education experience Starbucks does not choose their locations based on the demographic profiles of the area (clusters stores)

Source: Mintel Reports

What does Starbucks provide that is attractive to consumers?

Variety: over 30 types of coffee blends Alternatives: many non-caffeinated drinks

and pastries, sandwiches Quality: customer service and product Ease and speed: drive-thru and counter Atmosphere: comfortable, non-smoking environment that caters to their target market needs Provides a third place between home and work

Source: Mintel Reports

Cup sizes ranging from espresso to Vente

Where is Starbucks Located? Originated in Seattle, Washington in 1971 First “traditional” coffee bar established in 1984 Expanded to many West Coast locations in 1980’s Currently operating over 15,0000 stores in over 35 countries (company owned and franchised combined)

Well saturated – Starbucks is located in airports, malls, bookstores, college campuses & grocery stores Starbucks lives by the philosophy that in every nation and every culture there is a segment of the population who are a viable market

Source: Hoovers Online Reports

Original Pike Place logoSeattle, Washington

Why do consumers purchase Starbucks?

Source: Mintel Reports, Hoovers Online Reports

Psychographics

Product: enjoy taste, quality, variety

Status: branding

Convenience: “quick fix”

Purpose: contributions to a company involved with community

Comfort: welcoming environment: warm, friendly, and urban ambiance

How does Starbucks keep their customers?Competitive Advantages

Extensive menu including specialty drinks, breakfast and lunch options

Followed the health conscious trend by reducing caloric and fat content in products

Offering organic, soy & rice milk, along with other organic options

Wifi available at many of Starbucks locations Incorporated iTunes and CDs into their coffee shops and

product line

Who are Starbucks Main Competitors?

#1 Coffee based competitor: Caribou Coffee (based in Minnesota)

McDonalds 1,000 McCafes; planning to introduce 14,000 more

within the next year McCafe offers lattes, mochas, cappuccinos, coffee and iced drinks Cheaper: charge $1 less per cup than Starbucks

Dunkin Donuts Benefit from consumers positive perception about coffee Only 8% of people surveyed who visited a donut house in the

last month believe the donut shop coffee is better than other coffee offerings

“If you merged all of its rivals (that is, chains with more than three stores) into one patchwork coffee goliath,

it still wouldn’t be even half the size of Starbucks.”

–Taylor Clark, Starbucked

Coffee Industry Market Size

Source: Starbucks: Company Financial NetAdvantage. 2008.

Starbucks is a leader in ready to drink beverages

Starbucks has surpassed the expectations of coffee consumers by reaching out to the community

Starbucks revenues (Million $) for Fiscal Year Ending September 2007:

  2007 2006 2005 2004 2003 2002

Q1 2356 1934 1590 1281 1004 805.3

Q2 2256 1886 1519 1241 954.2 783.2

Q3 2359 1964 1602 1319 1037 835.2

Q4 2441 2003 1659 1453 1091 865.2

Year 9412 7787 6369 5294 4076 3289

What are Current Market / Industry Trends?

National Coffee Association’s National Coffee DrinkingTrends (NCDT)

Starbucks customers continue to be the backbone of company’s success

The lifestyles of Starbucks consumers

Starbucks accommodation

Product Market Grid Existing Products New Products Market Penetration: Product Development:

Existing Markets

Increasing sales of current products to current existing market segments without

changing the product

Offering new or modified products to current market segments

Market Development: Diversification:

New MarketsIdentifying and Developing new market

segments using current company products

Starting up or acquiring businesses outside the company’s current products and markets

Product Market Grid Existing Products New Products Market Penetration: Product Development:

Existing Markets*Focus on learning the customers name,

repeating it and making them feel important

*Offer whole fruit smoothies to their increasingly health conscious consumers

*Increasing hours in popular neighborhoods (24 hours)

*Incorporate local business products into their menu that are popular within the community

*Frequent purchaser card (incent customer to return)

*Become licensed to serve liquor. Create own liquor line to serve during late night music sessions

*Invest in enhanced barista training to enable departure from fully automated beverage

creation

Market Development: Diversification:

New Markets

*Adding stores in areas (smaller towns) that do not currently have Starbucks, focus on tourist

areas

*Focus more on families by offering more kid sized items (offer milkshakes, smoothies), kid friendly

areas

*Possible negotiations with smaller drive-thru coffee shops to use Starbucks coffee beans (beneficial to carts by using Starbucks well-

known name)

*Add a "Starbucks Library" in stores to attract consumers to a new environment and keep them in

the store - this library can include books and/or music

*Focus on the traveler/trucker: Place more signage on highways to inform of locations

(presence in rest stops)

Questions or comments?