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Starbucks World leader in Coffee Shops, but still potential for more
INTRODUCTION
Almost 8200 tones of coffee produced in India each
year.
Indian coffee is the finest in the world India produces only 4.5% of the total production in
the world.
Almost 80% of the countrys coffee production is
exported
today.
Retail brands say that more 3000 to 5000 outlets
needed.
Huge demand in India needing higher
penetration.
The competition on the coffee market is quite high A unique strategy is important to attract customer
Threaths of New Entry + High economies of scale (coffee import) + Brand awareness - No special knowledge needed (using coffee machine) - Low capital requirement
Established Rivals - Mature market - Many competitors with little differentiation (CCD, Barista etc.)
Suppliers
Supplier power + Low bargaining power cause many coffee bean producer (Indonesia, Brasil ,India etc.) Threat of Substitution - Tea, Hot Chocolate
Intensity of rivalry
Buyers
Buyer power + Buying power of a single person is low, buy only little quantity - Low switching cost
Substitutes
62% of industry players observe decreasing spend per visit as consumers cut back on spending.
How can Starbucks profit from this growing market and the perspectives? In which direction does Starbucks have to go to Expand in India?
STARBUCKS
SWOT-Starbucks
Strength Famous brand which is associated with high quality People like Starbucks atmosphere Starbucks has many outlets and often is in high class locations Well trained and treated employees Weakness: High price products Coffee quality is not as good as reputation Aggressive expansion Unhealthy products
Opportunities: Launching new products/product extension (e.g. tea, healthy, premium, co-branding) Capturing new markets (retailing) and new consumer groups Selling more whole coffee beans and equipment Develop in non high street areas
Threats: Growing competition within the Coffee Outlet industry and new competition from Fast Food restaurants Lack of ownership of coffee farms Global crisis/financial resources
Segmenting
Segments in Coffee Market India Age Coffee Starters Young Adults Middle Age Higher Age Gender Male Female (sweet, low calorine) Income Low Income Medium Income Higher Income Psychographic (coffee) Coffee as lifestyle product Coffee Lovers Coffee as drink Coffee as caffeine donor Psychographic (place) Coffee Outlet as a good place to be Atmosphere lovers Coffee outlet as a place to buy a a coffee and consume it
Targeting
Targeted segments
Age: Young adults
Customer Needs
Nice place to relax, chat, chill music Trendy coffees which present their lifestyle
Place to calm down, relax, chat, read a book Possibility for a small (healthy) snack with a great coffee
Trendy, fresh, high quality, new developed coffee (some: fairtrade) A great third place
Positioning
Targeted segment Young adults Customer Needs Nice place to relax, chat, chilly music Marketing Strategy
Atmosphere lovers
Market Development and Diversification Starbucks is already a global player and active in 44 countries worldwide9
Produce more Indian flavours.
Starbucks is famous for its overall quality. The Perfect Blend is the right answer!
Goals
Medium term
Long term
Goals Keep & dominate position in India Quality leader in all points
Risks
Starbucks as a Franchiser Can all shops serve the high standards? Will the development of coffee as a lifestyle product go on?
Will people accept to pay an adequte price for high quality products?
Will actual users like the new concept or stay away?
CONCLUSION
Starbucks, its brand and products are at the Introduction stage of the PLC Change in a more and more competive market is essential. The Perfect Blend will give Starbucks a new, unique and future orientated brand image
Thank You