Executive Summary

Starbucks is a coffee chain company, which started its business in Seattle that is situated in

Washington, United States. Now, Starbucks is recognized as an International Organisation,

which is famous all over the world for its quality coffee. It has almost 16,120 stores in 49

different countries, which makes it the largest coffee company in the world. Apart from

coffee Starbucks serves snacks with soft drinks and also espresso based hot drinks. It has

also started supplying some fancy items like coffee mugs with Starbucks logo on it. Later

on with the brand name of Hear Music Starbucks entered into music division. It has also

started selling some books and movies related to the locality of the stores along with some

seasonal and specific company products. Also in many countries at various grocery shops

Starbucks has started selling ice cream with its brand name. Today the Starbucks has

become the power brand for its coffee all over the world and is famous for its Italian style

of coffee, espresso beverages, teas and pastries.

In this report we will first discuss the corporate mission statement of the Starbucks

Company. Then based on Competitive analysis and PESTLE analysis we will analyze its

industry structure. Later on we will perform SWOT analysis and discuss Porter's five

forces model. After this we will discuss and analysis various core competencies of the

Starbucks company, its competitive advantages and its potential fallout. Also, based on the

two strategic models, we will discuss the various strategy recommendations for the

company. As a conclusion various other suitable recommendations and competitive

strategies for the further growth of the company will be discuss.

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INDEX

SR.N0. PARTICULARS PAGE NO.

Declaration Certificate

Evaluation Certificate

Assessment Marking

Acknowledgement

Executive Summary

1 Introduction 1-2

1.1 -History 2-3

1.2 -Market Size 4-9

2 PESTEL Analysis 10-11

3 Competitive Analysis 12

3.1 - Porter’s Five Model 12-13

3.2 - SWOT Analysis 14-16

3.3 - Segmentation 17

4 Marketing Mix 18-20

5 Conclusion 19-21

6 Recommendations 21-24

7 References 24

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1.Introduction

In the last ten years, the coffee brewing industry has seen so much activity in terms of

massive changes in the landscape of coffee brewing companies. These changes range from

mergers and acquisitions to changing consumer tastes and finally, to different branding

strategies. These activities are expected to continue over the course of the next five years.

The Indian food industry is poised for huge growth, increasing its contribution in world

food trade every year. In India, food has become a high-profit industry by reason of the

scope it offers for value addition, particularly with the food processing industry getting

recognised as a high-priority area in this liberalised era. Accounting for about 32 per cent

of the country's total food market, the food processing industry is one of the largest

industries in India and is ranked fifth in terms of production, consumption, export and

expected growth. The total food production in India is likely to double in the next 10 years

with the country's domestic food market estimated to reach US$ 258 billion by 2015. So,

this report will attempt to demonstrate the marketing strategies that aided Starbucks to

grow in India quite significantly when compared to the other brands in this industry. It will

also recommend some suggestion that will aid Starbucks to even grow wider via bringing

some changes in its promoting and marketing strategies.

Starbucks Corporation, generally known as Starbucks Coffee, is an American

global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is

the largest coffee house company in the world ahead of UK rival Costa Coffee, with

20,737 stores in 63 countries and territories, including 11,910 in the United States, 1,496

in China, 1,442 in Canada, 1,052 in Japan and 772 in the United Kingdom.

Starbucks locations serve hot and cold beverages, whole-bean coffee, micro ground instant

coffee, full-leaf teas, pastries, and snacks. Most stores also sell pre-packaged food items,

hot and cold sandwiches, and items such as mugs and tumblers. Starbucks Evenings

locations also offer a variety of beers, wines, and appetizers after 4pm. Through the

Starbucks Entertainment division and Hear Music brand, the company also markets books,

music, and film. Many of the company's products are seasonal or specific to the locality of

the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.

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From Starbucks' founding in 1971 as a Seattle coffee bean roaster and retailer, the

company has expanded rapidly. Since 1987, Starbucks has opened on average two new

stores every day. Starbucks had been profitable as a local company in Seattle in the early

1980s . but lost money on its late 1980s expansion into the Midwest and British Columbia.

Its fortunes did not reverse until the fiscal year of 1989-1990, when it registered a small

profit of $812,000. By the time it expanded into California in 1991 it had become

trendy. The first store outside the United States or Canada opened in Tokyo in 1996, and

overseas stores now constitute almost one third of Starbucks' stores. The company planned

to open a net of 900 new stores outside of the United States in 2009, but has announced

300 store closures in the United States since 2008.

1.1 History

Starbucks

Three friends, Jerry Baldwin, Zev Siegl and Gordon

Bowker, who all had a passion for fresh coffee, opened

a small shop and began selling fresh roasted, gourmet

coffee beans and brewing and roasting accessories. The

company did well, but things began to change in the

80s.

Leading retailer, roaster and brand of specialty coffee

in the world Sells drip brewed coffee, expresso-based

hot drinks, snacks, mugs and coffee beans Company

started in 1971 in Seattle in Washington, U.S.

Costa Coffee

Bruno & Sergio Costa set up their famous coffee

roastery in Lambeth, London in 1971, supplying local

caterers and Italian coffee shops with an exciting

coffee, slow-roasted the Italian way.People couldn’t get

enough of it and by 1978 the first Costa espresso bar

opened in Vauxhall Bridge Road in London.Today it is

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the second largest coffeehouse chain in the world behind Starbucks.

To this day they still use the same method of slow-roasting our coffee beans, serving the

brothers’ authentic blend of 6 Arabica beans to 1 Robusta in 500 coffee shops all over the

world.

“THE PERFECT CUP” IN FOUR “M”

1. Miscela Blend:

Costa has a unique blend we call the Mocha Italia

2. Macinatura Grind:

Every cup of Costa is made from freshly ground beans; ground to theexact

consistency to ensuring perfect extraction of flavors & aroma. We use

the Ferrari of grinders-the Mazzer–to ensure the “Perfect Cup”

3. Macchina Machine:

Costa shops use specially designed Italian espresso machines. They

have been tuned & perfected over the last twenty years to achieve high

volumes of perfect espresso [the heart of every coffee drink]

4. Manna Hand:

The skill of the Barista influences the “Perfect Cup” So they undergo extensive &

intensive training at our Coffee Academy to reach the excellence that’s Costa

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1.2 Market size

The Indian food industry stood at US$ 135 billion in 2012 and is expected to grow at a

compound annual growth rate (CAGR) of 10 per cent to about US$ 200 billion by 2015,

according to a report by KPMG.

Indian agricultural and processed food exports during April-May 2014 stood at US$

3,813.63million, according to data released by the Agricultural and Processed Food

Products Export Development Authority (APEDA). In 2013-14, the total processed/value

added agricultural products exported and the foreign exchange equivalent earned

therefrom stood at Rs 4,627.99 crore (US$ 752.39 million) as compared to Rs 3,689.26

crore (US$ 599.89 crore) during the previous year.

The branded quick service restaurant (QSR) market in India, which has attracted

international brands such as McDonald's, Subway, Nando's, Domino's and KFC currently

stands at US$ 13 billion and is set to get bigger with new emerging players.

Marine product exports from India touched US$ 5.01 billion during FY14, according to

MsLeena Nair, Chairperson, Marine Products Export Development Authority (MPEDA).

Investment

The foreign direct investment (FDI) equity inflows in food processing industries during

April 2000-July 2014 stood at US$ 5,949.21 million, as per data released by Department

of Industrial Policy and Promotion (DIPP). The following are some of the investments and

developments in the sector:

ITC Ltd plans to foray into new categories such as beverages that include fruit

juices, tea and coffee, and chocolates and dairy products. As a part of its plan to

enter the dairy sector, the company is constructing a milk processing unit at

Munger in Bihar.

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Bisleri International Pvt Ltd has launched its first branded soda in Hyderabad.

"This is our first experiment in the country. We will scale it up to other states in the

days to come," said MrSantosh AS Borkar, Director - South Zone, Bisleri

International Pvt Ltd. The company would also be setting up eight water plants in

Telangana and Andhra Pradesh.

Nissin, owner of Top Ramen Noodles, has launched a differentiated noodle -

Scoopies Mad Masala Short Noodle. The company commissioned its third factory

in Odisha earlier this year, with an investment of Rs 100 crore (US$ 16.25 million),

from where the product would be manufactured.

Food Bazaar plans to tap the under-branded food and beverages space in the Indian

domestic market with the help of private labels to offer more choice to the

consumers.

Hindustan Coca-Cola Beverages, the Coca-Cola Company's largest bottling partner

in India, plans to set up aRs 1,000 crore (US$ 162.48 million) bottling plant in

Telangana and has also sought land for the proposed venture.

Café Coffee Day (CCD), in a bid to expand its market in India, plans to add 150

cafes and 120 more Xpress outlets across the country during FY15.

Coffee Market in India

The humble cup of coffee that cheers up mood, initiates conversation and relaxes you from

a tiring day is brewing up a storm in India. The Indian ready-to-drink (RTD) tea and coffee

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market has picked up a great business in the last 5 years.

Reports say that the market is expected to grow to a whopping Rs 2,250 crore by 2017-

thanks to the cafe culture among urban youth.

The domestic market, which currently stands at an estimated Rs 1,100 crore, is dominated

by outlets like Cafe Coffee Day, Baristas, Costa Coffee, Coffee World, Lavasa, Coffee

Bean & Tea Leaf. The latest entrant is Starbucks and with many more in thepipeline.

More than 1,200 cafes have sprung up across India in the past decade, mostly from six

organized chains, clocking an average annual growth of around 40%. They have made the

cafe industry -currently capped at Rs1000 crore -one of the fastest growing organized

retails.

Let’s have a look at the major coffee outlets working in India

CAFÉ COFFEE DAY

Cafe Coffee Day or CCD is India’s largest cafe chain with its first outlet at Brigade Road,

Bangalore in July 11, 1996. As of August 2013 it has 1319 outlets spread across 28 states

ofIndia.

The man behind CCD is V.G. Siddhartha. He is the chairman of the Amalgamated Bean

Coffee Trading Company Ltd. (ABCTCL) which also grows coffee in its own estates of

10,000 acres. The cafe chain is a division of ABCTCL.

CCD is expanding their market reach through brand extension by launching mineral water,

cookies, and chips under their brand name. The brand plans to reach the 2000 outlet mark

by 2014.

BARISTA

Barista Coffee Co. Ltd, India’s second largest organized cafe chain with 225 outlets

(according to a 2010 report) and plans to launch 40-45 outlets a year in the next two-three

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years. This chain of espresso bars was established in February 2000 by the Barista Coffee

CompanyLimited.

A 34.3% equity stake was sold to Tata Coffee in 2001 and the remaining 65% stake was

bought by Sterling Group owned C Sivasankaran in 2004. Later, he also bought the

remaining Tata’s stake. In 2007 Sterling group sold Barista to Lavazza. Lavazza is an

Italian manufacturer of coffee products.

Barista Lavazza has estimated annual revenue of Rs 200 crores. In 2014, Lavazza sold the

coffee shop chain to Carnation Hospitality Pvt. Ltd. for an undisclosed sum

COSTA COFFEE

This is United Kingdom’s largest coffee brand, which entered India in September

2005 through an exclusive franchisee tie-up with Devyani International Ltd.

Andy Harrison, CEO of Whitbread PLC was quoted recently in an interview that

Costa Coffee wants to expand to 300 outlets in India. The brand has its presence in all

major cities of the country including outlets in Mumbai, Bengaluru, Delhi, Gurgaon,

Noida, Pune, Agra and Jaipur. Last year, Costa opened its 100th store in India, in

Mumbai.

STARBUCKS

The latest entry in India`s coffee chain industry is Starbucks. Starbucks came to India in

2012 in partnership with Tata Global Beverages.

The Seattle-based company, which has operations in 61 countries, was planning to open its

store in India for the last 5 years. Finally, the first outlet was open in Mumbai in October

2012.

Beginning with stores in Delhi and Mumbai in calendar 2012, the retail stores will be

developed in cities across the country.

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OTHER COFFEE HOUSES

Here are few coffee cafe chains that have their presence in India. They started with very few

outlets in the major cities of the country but are now branching out across the nation quite

fast.

Australian cafe chain Gloria Jean’s Coffees, which entered India in 2008 through the

Landmark Group’s hospitality section, Citymax, positions itself at the upper end of the

market. It plans to open 36-40 outlets in the next few years.

Other such coffee chain is the Coffee Bean & Tea Leaf which also ventured in India in 2008

with an outlet in Select CityWalk in Saket, New Delhi. CBTL worldwide has around 812

outlets but in India they have around 17 outlets.

Indian Market

Size of the market in 2012 - $230 Million

Expected market size in 2015 - $400 Million

Number of speciality Coffee Shops in India today – 2400

Expecded to increase to 4000 in 2015

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2. PESTEL Analysis

The various important elements or factors of the Starbucks Company can be examine,

understand and identify by using PESTLE analysis.

Political Factor:

Globalisation has resulted in the change in various pattern of doing business all over the

world. Now a days many companies find it very difficult to survive and last on their available

domestic market only. Taking into account the various countries political background and

studying other related issues, Starbuck manage to expand its business and today it has

knowledge of almost all countries political pattern.

Economic Factor:

Economic factor plays a vital role for this company because Starbucks coffee is considered as

a luxury product. If the interest rate increases, then it directly affects the Starbucks and their

suppliers various investment plans. This may result in decrease in the sales and which

ultimately affects expansion of the business.

Social Factor:

Starbucks should undertake some techniques or policies that help them to identify their

potential local customers and encourage them to come to the stores as frequently as possible.

Technological Factor:

Today technology is used everywhere. Considering the benefits of advance technology every

company is trying to incorporate it wherever possible. Starbucks also uses the advantage of

technology. In 1998 Starbucks has launched its website. It uses latest coffee machines in its

stores. In some of its stores internet facility is also provided within the stores.

Legal Factors:

Different countries has different laws and as Starbucks has its stores in various countries the

company should know all the laws related to product restrictions, trade, health, employment

and also safety regulation laws. It should also be aware of religious laws of the particular

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country in which they are doing business. Starbucks should take care that they do not break

any laws, rules and regulations of any country in which they are doing their business.

Environmental Factors:

Starbucks should also pay attention towards the various factors related to environment such

as pollution, disposal of waste, planning permission, etc. The company should apply some

techniques, which should be eco-friendly. As far as possible the company should try to use

the material that is recyclable.

At present Starbucks has become brand name for the coffee all over the world. Most of the

credit goes to its marketing strategies, which focus mainly on satisfying customer's needs and

their expectations. The credit also goes to their employees and other staff members. Starbucks

Company also takes care of their employees and considers them as the business partners.

Political Coffee beans are grown in developing countries. Discussions about

work conditions, child labor. Also political influence by tariffs and

taxes.

Economic The key business challenges for the industry as a whole firmly relate

to the economic recession from 2008, as consumers become much

more cautious with their discretionary spend due to the high

unemployment and personal debt.

Social/

Cultural

People spent more and more money on coffee (UK: Tea: £623m,

Coffee: £738m)5. Customers do not only go to coffee shops to drink

a coffee but also to sit down, and relax.

Technological Better and cheaper coffee machines are available for home usage

(Senseo).

Environment As raise of environmental awareness, coffee companies have to be

concerned about the way their coffee beans are produced, the way

they design their supply chain and the way they prepare and sell their

products.

Legal See Political

3. Competitive Analysis

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3.1 Porters Five Model:

In the industry environment the competition can be analysed by using Porter's five force

model technique. It consists of issues like threat of new entrants, bargaining power of

customers, bargaining power of supplier, threat of substitutes and competitive rivalry

within industry.

New entrant's threats:

The environment in which the Starbucks operates is very competitive. The company has to

compete with the other strong brands in the market such as burger king and Mc Donald's.

For the Starbucks to enter into the coffee market is comparatively low because it requires

less capital investment for renting or purchasing a store. In the market there are many new

entrants which operate in a single store. The Starbucks is able to reach its potential

customers through its various distribution services like supermarkets, grocery stores, mail

delivery and also through internet.

Customer's bargaining power:

The profit of the Starbucks Company is directly related to its number of customers. Earlier

the bargaining power of customer is less but now due to various brand competitors and

new entrants in the market the situation has been change. Also previously in coffee market

customers has less bargaining power because of the monopoly of Starbucks but now as the

number of coffee suppliers in the market has increased, it has increased the bargaining

power of the customers. Now the customers can easily switch between the companies

which are offering fewer prices. Starbucks has to maintain its uniqueness in order to

minimise the bargaining power of customers.

Supplier's bargaining power:

Suppliers that supply raw material to the Starbucks have very high bargaining power. As

this raw material such as coffee beans are very essential, Starbucks generally fixes the

prices with its suppliers. Also the companies which supply coffee machines and other

advanced machines as high bargaining power because within the industry there are very

less suppliers that supplies these machines.

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The other suppliers of Starbucks such as napkins and coffee cups have very less

bargaining power. Also the Starbucks has contract agreements with almost all of his

suppliers which ultimately reduce their bargaining power with the Starbucks.

Threat created by substitutes:

In the market there are many other products like energy drink, beer, smoothes, soft drinks,

fruit juices, etc which can replace coffee. All these products possess a threat to Starbucks.

Also in the market there are many other pubs, lounges and bars that provide the similar

environment as provided by the Starbucks. Starbucks has to deal with all these products

effectively and efficiently.

Competitive rivalry in industry:

All over the world the Starbucks is recognised as a brand name. The other competitors

such as Gloria Jeans coffee, De Bella and Mc Donald are also famous all over the world

and also has a brand image. All these increase the competition in the market for the

Starbucks. Also other coffee supplier such as burger king and dunkin donut further

increases the competition. All these competitors provide almost similar products which

further raised the competition between them.

The competition on the coffee market is quite high.

A unique strategy is important to attract customer.

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3.2 SWOT Analysis

STARBUCKS

COSTA COFFEE

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1.Strengths:

The biggest strength enjoyed by the Starbucks is that it is a brand name and highly

recognised worldwide. Almost 70 percent of world's population knows about this company

and their products. In 40 countries Starbucks have 15,000 stores and the consumers accept

all the services and products offered by the Starbucks. This increases the potential

customers and sales for the company and is considered as the biggest advantage. The other

strength of the company is that among the people they have a good impression. Starbucks

respect his employees and provide them good working environment. Starbucks is able to

reach the global market by globalisation. Starbucks is successful to satisfy the market

needs and changing demands through new innovations and by establishing new products.

Starbucks maintains good relations with their suppliers and are loyal to their customers.

Starbucks always provide their customers good quality services and products which have

helped them to achieve the good reputation in the market. Starbucks provide pleasant

environment for the people to hangout, socialise and talk with each other while enjoying

their coffee.

2. Weaknesses:

With the increase in the number of stores all over the world the Starbucks Company is also

lacking its internal focus. Also its pricing policy is considered as a major weakness. People

find the prices of the company really high as compared to its competitors and usually

consider Starbucks as a luxury item. Also the prices of the Starbucks are similar

irrespective of the different locations. The Starbucks depends heavily only on its coffee

business and therefore now they are required to look for other related products too. The

parent company which is in US controls all the stores as the company doesn't have any

franchisee system. The variety of coffee provided by Starbucks is fever as compared to

their competitors and therefore sensible growth policy should be applied instead of

aggressive expansion.

3. Opportunities:

Starbucks has many opportunities. Now, as the recession is almost over in United States,

Starbucks can again open its stores which got closed due to recession. Also the Company

can spread its business to various nations like India and Brazil in Asia and South America

where the competition in the market is also less related to coffee industry. There is also

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scope to improve in technological methods and retail operations. Many observers are of

the opinion that there is vast scope and potential to expand if the company co-brand or

franchise itself with other drink and food companies. Finally, it was the best opportunity

for starbucks to enter the new markets like China and India after building such a quality

brand image.

4. Threats:

The biggest threat that the Starbucks Company possess is the competitors in the market

like Mc Donald's which are entered into the coffee market. Mc Donald's has the similar

prices as set by the Starbucks but if the prices vary in future Starbucks will directly get

affected by it. Also the company can be affected by the heavy competition due to the

opening of new less costly coffee shops and restaurants. The company also have to be

inflexible with its pricing strategy especially in developing countries. There are also

chances that the price of products and services can be affected if there is an increase in the

price of raw material and dairy products.

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3.3SEGMENTATION

Targeting Starbucks:

• Age: Young adults

Nice place to relax, chat, chilly music

Trendy coffees which present their lifestyle

• Age: Middle age

Place to calm down, relax, chat, read a book

Possibility for a small (healthy) snack with a great coffee

• Psychographic: Coffee lovers

Trendy, fresh, high quality, new developed coffee (some: fairtrade)

• Psychographic: Atmosphere lovers

A great third place

Targeting Costa Coffee:

• While evaluating their consumer market the conclusion was that the ideal consumer’s

economic profile will be

– Upper Middle Class

– Privileged Class

• While the age demographics will be:

– Students and Youngsters

– Professionals

– Families

– Mature Consumers

• Gender and Ethnic/Religious Background was researched to have minimal or no effect

on thechoices concerning coffee made by consumers and their patronage of coffee houses.

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4. Marketing MIX

Product

Price

19

Place

Promotion

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CONCLUSION

Costa Coffee has been able to remain one of UK's leading coffee brewing companies for

more than a century now primarily because of the execution of the company‟s branding

and positioning strategies to perfection. Add to the mix the company‟s dedication to high

quality of service and the formula for success is at hand. Moreover, the utilization of the

appropriate knowledge management tools is necessary for their products to reach out to

people even in different cultures. However, certain points have to be taken into

consideration by Costa Coffee regarding knowledge management tools. Since their income

is relatively higher than most coffee brewing companies, the time for implementation of

their chosen knowledge management tools would take longer than usual, aside from being

expensive. But since the goal of Costa Coffee is towards a long-term dominance and

stability in the brewing industry, then the pursuit of these promotional campaigns will be

beneficial for the company in the long run.

It is seen that the revenue of Starbucks is quite higher when compared to other

established competetiors and has gained quite a significance in the recent market. It has

opened nearly 70 more shops as of now and is about to reach the target of 100. This

shows that Starbucks is at a Introduction stage in product life cycle and will mature in the

next few years showing a great potential in Indian Market. Starbucks has appealed to such

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a wide target market; it seems every product introduced will be an instant success (sodas,

teas, ice creams, pastries). As the most innovative company, it‟s no surprise that the new

technological addition, the Starbucks Card, boosted sales and helped growth during a time

when the economy was struggling. “Starbucks went back to basics, and they‟ve

approached the basics with a science and intensity that no one has ever done before.”

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Preferable Recommendations:

Starbucks has the strategy of opening more stores to get more sales. This should be

avoid. Instead the company should pay more attention towards satisfying customer

needs.

The cost of the products should be fixed which depends on the purchasing capacity

of the local customers.

Starbucks should discover new products before their competitors to gain more

market share and be leaders.

Various research should be made and the company should be able to find out new

deals and offers for their customers.

Maintaining proper relations with farmers so that they remain loyal with the

company and do not switch with competitors.

Knowing that consumption of tea has more health benefits as compared to coffee,

Starbucks should invent and introduce in the market various special drinks related

to tea.

Starbucks should reconsider its pricing policy and it must be flexible in different

countries.

Starbucks should concentrate more on its coffee making methods as majority of the

business depends on serving good quality coffee.

Promotion:

o Customers Engagement and Long Lasting Impact to make a winning

entry.This can be achieved by associating it with events & experiences. For

example Starbucks can celebrate a ‘Week of Joy’ between Christmas and

New Year. Christmas is considered a festival of giving gifts and New Year

for making new resolutions. These two emotional appeals can be used with

a slogan of ‘This time gift your time’. Through massive advertisements via

emails, Facebook etc. customers can be encouraged to spend time and gift

Starbucks mugs with personalized name and message for the loved ones

written.

o Discount coupons can be distributed in this week in outlets of Archies, with

slogan ‘This Time Give your Time’. In-store decorations can also be done

with ‘Hangout’ theme and small games can be organized like “how much

you know your friend?” and rewarding the winners with Starbucks coffee

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packs. This will help to have a long lasting impact on the customer’s mind.

Leveraging the Tata Network for Promotion

Tata owned enterprises such as Taj Hotels, Westside, Landmark Bookstore, Westland

Bookstores and Air Asia can be leveraged to promote Starbucks. The above mentioned

enterprises see customers from the premium category. It will be easy to reach out to the

targeted segment of the Stylists through the Tata Network that spans across the entire

country. This also goes in sync with the premium positioning strategy that we are

proposing for Starbucks.

Starbucks and Tata can come up with a two way Reward System, wherein each of the

enterprises under Tata can leverage from each other’s customer base. Customers visiting

these stores can be given reward points that provide them with discounts on selected

beverages served by Starbucks. Further, customers registered with Starbucks can be given

reward points based on consumption during each visit. These reward points can be used to

avail discounts at the above mentioned Tata enterprises.

Brand Communities – Creating bonds – Retaining Customers & Building

Relationship

Since Starbucks need not necessarily focus on volumes of customers, it is essential for it to

create brand loyalty in India just the way it has done in America. To be able to create

brand loyalty, creating a community of like - minded customers can work in favor of

Starbucks. While the reward system will also be a catalyst to the community creation,

Starbucks can organize various events targeting specific communities. For example,

devoting Saturday evenings as “Entrepreneur Saturdays”, an initiative that aims at

bringing together the busy “Stylists” and “Coffee Experts” working in the corporate sector

by organizing expert talks on varied subjects can be considered. Starbucks can provide the

much required exposure to people from different walks of life by leveraging on the Tata

network that will focus on the Stylists knack for interacting with people.

Loyalty Programs - Customer Retention & Relationship Building

In addition to the traditional loyalty cards where customers get free coffee in return of their

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loyalty, Starbucks can add a status element by introducing loyalty cards in different range,

like, low (bronze card), medium (silver card) , high (Gold card) and elite (Platinum card).

Customers will be promoted on spending a specific amount, which will vary for different

levels. Benefits will also vary among the different class of card holders. For example,

Executive/elite Block could be reserved only for Platinum and Gold card holders. Freebies

and discounts will not be of high priority for our target customer segment. This status

oriented loyalty membership scheme will cater to their status need.

Starbucks can also use online platforms like sending different types of emails to its

different loyalty card holders. It can send promotional “Green emails” highlighting new

products, discount coupons, time bound offers, etc to the bronze and silver card holders to

increase their visit frequency. It can also send “Star emails” to its elite and gold card

holders to inform them of their star counts, special offers and assortments exclusively

designed for them. It can also send “Black Hole emails” to these elite classes, depriving

them of certain benefits, in case there is a radical drop in their visit frequency.

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References

Financial Times: Costa tops table of coffee outlets (2007)

o http://www.allegra.co.uk/pdf-files/2007-05-28-ft.pdf

Allegra Strategies: UK Coffee Bar Market (2004)

o http://www.allegra.co.uk/pdf-files/2004-12-00-fs.pdf

Keynote: Market Assesment 2007: Coffee and Sandwhich Shops (2007)

Allegra Strategies: UK coffee bar market still growing despite recession (2009)

o http://www.foodbev.com/report/uk-coffee-bar-market-still growing-despite-

recession

Sunday Times: How Starbucks colonised the world (2008)

o http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/

article3381092.ece

Starbucks: A brief history of Starbucks (2009)

o http://starbucks.co.uk/enGB/_About+Starbucks/History+of+Starbucks.htm

London Evening Standard: Starbucks wakes up to £47m loss a year (2009)

o http://www.thisislondon.co.uk/standard/article-23748711 coffee-giant-pins-

hopes-on-bohoredesign-for-branches-in-capital.do

Marketing Magazine: Starbucks launches heritage branding in UK

o http://www.marketingmagazine.co.uk/News/MostDiscussed/ 964788/

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