Download - Starbuck Verismo
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Starbucks Mission Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
Here are the principles of how we live that every day:
Our CoffeeIt has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply about all of this; our work is never done.
Our CustomersWhen we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Coffee Timeline
1971: The first Starbucks opens in Seattle’s historic Pike Place Market. 1982 Howard Schultz joins Starbucks Corp.
1998: Keurig’s first brewer, the B2000 made for office use launched. By 2003, there were more than 40,000 commercial brewers in American offices.
2004: Keurig’s B100 home brewer was introduced. 2011: Starbucks introduces k-cups 2012: the Keurig Vue brewer was offered, which allows choice of
temperature, cup size, and brew strength. This was released to in order to increase the choices users have in brewing beverages.[
September 2012, Starbucks announced the Verismo, a consumer-grade single-serve coffee machine that uses sealed plastic cups of coffee grounds, and a "milk pod" for lattes.
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
One touch brewers such as the Keurig system created a new market segment based on the convenience of home brewing
Single-cup category is growing 9 times faster than the overall coffee category.
The rapid growth of this market caused Starbucks to introduce a
line of coffees compatible with the Keurig
Starbucks later creation of their own home brewer the Verismo poses an interesting question:◦ How does Starbucks compete in a segment counter to their
position as “the third place”, and in which they have already manufactured a product for their competition?
The Dilemma for Starbucks
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
The Current Big Picture
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Current Big Picture Commercial
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Current
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Business Objective
Marketing Objective
Source of Volume
Segmentation
Targeting
Positioning
Product
Price
Place
Promotion
STPExecution
FE: Starbucks FE: Starbucks
Category: Luxury Brewing
Category: Luxury Brewing
Benefit:Need for Quality
Benefit:Need for Quality
Core Competence:Skill @ Coffee
BeaningSkill @ Marketing
Core Competence:Skill @ Coffee
BeaningSkill @ Marketing
RetentionRetention Stimulate Demand
Stimulate Demand
Quadrant 2Quadrant 2
Main: Need for Convenience
Main: Need for Convenience
Dynamic: Need for Quality
Dynamic: Need for Quality
Enjoys convenience,
but still desires high quality
Enjoys convenience,
but still desires high quality
CredenceCredence
ValueValue
Product Time (Speed)
Product Time (Speed)
ImageImage
Verismo: Current
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
The Verismo: What Went Wrong?
Current strategy is attempting to retain the Starbucks loyal customers by adding value and expanding their experience creation to the home.
By producing Starbucks branded K-cups they raised the importance of the Keurig and single-cup brewing at home.
This strategy abandons the successful positioning of Starbucks as the “third place”
Has the potential of cannibalizing in-store sales.
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
The Proposed Big Picture
Verismo
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Business Objective
Marketing Objective
Source of Volume
Segmentation
Targeting
Positioning
STP
FE: Starbucks Verismo
FE: Starbucks Verismo
Category: Luxury
Home Brewing
Category: Luxury
Home Brewing
Benefit:Need for
Convenience
Benefit:Need for
Convenience
Core Competence:Skill at Real
EstateSkill at Logistics
Skill at Coffee Beaning
Core Competence:Skill at Real
EstateSkill at Logistics
Skill at Coffee Beaning
AcquisitionAcquisition Stimulate Demand
Stimulate Demand
Quadrant 1Quadrant 1
Main: Need for Convenience
Main: Need for Convenience
Dynamic: Need for affordable
luxury
Dynamic: Need for affordable
luxury
Requires convenience,
but doesn’t want to be limited in
choice
Requires convenience,
but doesn’t want to be limited in
choice
See 5 BoxSee 5 Box
Product
Price
Place
Promotion
Execution
Emphasize Search
Emphasize Search
Trial/ValueTrial/Value
Product Expertise
Product Expertise
Awareness/ Information
Awareness/ Information
Verismo: Proposed
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Business Objective
Convenience, without sacrificing quality
Stores, Distribution Channels
Skills @ Real EstateSkills @ Logistics
Benefit
Strategic Asset
Core Competencies
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
While Starbucks has a solid, heart loyal customer base, this is a
relatively new category, so their focus should be on acquiring
customers into the luxury home brewing category.
To compete in this category, Starbucks should look to be the leader and adopt a stimulate
demand approach rather than try to steal shares from smaller
competitors.
Sourc
e o
f V
olu
me
Sti
mu
late
Dem
an
dSte
al Share
Marketing Objective
Acquisition Retention
Emphasize category variable
Grow the category
Emphasize category variable
Focus on increased consumption
Emphasize dynamic variable
Try to win users over to your brand
Emphasize dynamic variable
Increase consumption of your brand
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Coffee Industry Snapshot
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Coffee Industry Snapshot
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Starbucks Financial Performance
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Segmentation
Need for convenience
Need for affordable luxury
MAIN VARIABLE
DYNAMIC VARIABLE
Emphasis on Main VariableSame great Starbucks taste, in the comfort of your
home!
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Competitive Landscape KeurigSLOGAN: “Brewing excellence one cup at a time”
ADVANTAGES: Keurig was the first to market in single-cup brewing. Convenience and simplicity. Keurig systems fill the gap between lower end mass-market coffees in
a can, and true high-end specialty coffee
DISADVANTAGES: Only brews coffee and lacks variety from other coffee based drinks
AVILABILITY: Macy’s, Kmart, JCP, Sears, Bed Bath & Beyond, Target, Meijer, Wal-Mart.
$99 - $149 $229 $119 - $149 or $229 special edition
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Competitive Landscape TassimoSLOGAN: “What makes a perfect cup of coffee? Tassimo knows.”
ADVANTAGES: Ease of use.
DISADVANTAGES: Lower quality and bad press from recalls
On February 9, 2012 about 835,000 coffee makers were recalled in the United States after reports of the brewers spraying hot liquid, coffee grounds or tea leaves onto people.
AVAILABILITY: HSN, Bed Bath & Beyond, Target, Macy’s, and Wal-Mart.
Tassimo MSRP $99 - $169
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Competitive Landscape Nespresso
SLOGAN: “The perfect cup – every time”
ADVANTAGES: Provides the ultimate gourmet coffee experience from the use of
premium coffee to the technology that brings out the coffees flavor.
Unlike Keurig, the Nespresso machine is designed to create customized coffee drinks such as espressos and lattes
DISADVANTAGES: The priced as a high end brewer
AVIALABILITY: Crate & Barrel, Bed Bath & Beyond, Target, Macy, William Sonoma, Sur La Table. $129 -
$699
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Verismo SLOGAN: “Impossible until now”
ADVANTAGES: Affordably priced Allows for customized drinks such as espresso and lattes Starbucks is known for its quality coffees
DISADVANTAGES: Competing with Starbuck’s K-cups for Keurig Competes with in-store sales
AVAILABILITY: Starbucks, Walmart, Amazon, Bed Bath and Beyond, and Williams Sonoma
$99 $159
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Plot the Market
Need for Convenience
Need
fo
r A
ffo
rda
ble
Lu
xury Starbuck
s includin
gVerismo
Keurig
N
Nespresso
TTassimo
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Target Audience DescriptionKristen is 35 and works from home most days as an IS Portfolio Strategy
Consultant. Because she works with customers all over the globe she
sometimes has conference calls early in the morning or late at night. She is
on call at any hour and is quite busy. She drives a Lexus CT 200 h Hybrid
and her husband drives a Toyota Avalon Hybrid; both offer luxury and gas
savings, which are important to her. Her husband travels during the week
for work so the two of them enjoy their quality time at home. They have
been married for one year. Recently they took an all-inclusive trip to a 5
Star Jamaican resort that they purchased on Groupon. She works out every
day in the gym located in her building. She frequently shops for clothes at
Target and Nordstrom Rack because she can to purchase the designer lines
for less. She also shops on Amazon quite frequently as they will deliver right
to the house. She buys her groceries at Whole Foods and Trader Joes
because the quality ingredients and social responsibility are important to
her. She frequently uses them to cater parties she hosts because it is
convenient and offers superior taste.
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
Proposed Big Picture Commercial
© 2011 Starbucks Coffee Company. All Rights Reserved. Company Confidential.
26
Questions?