Starbucks Hot Alcoholic Drinks

Kirk KaubishSuzanne SouvaChris TagliaviaLeina Rabanal

5-7-13

AgendaO ProductsO Market Needs/TrendsO Target MarketO Market Size/GrowthO PositioningO CompetitionO Marketing MixO FinancialsO Conclusion

Take a Look

Video

New ProductsO The Irish CoffeeO Spiked Hot Chocolate

Market NeedsO The Starbucks “experience”O Liquor demandO Where our product is offered

Market TrendsO Market TrendsO What our product does for existing

trendsO Starbuck’s and it’s differentiation

Target Market

21-28 29-39 40-50 51-61 62+0

5

10

15

20

25

30

35

40

45

Based on Age, Would You Buy Starbucks Alcoholic Beverages?

YesNo

Age

Responses

Market GrowthO Growth within the coffee industry

and its marketplaceO Correlation between coffee and

alcoholO Evenings MenuO Continuing market growth

Marketing ObjectivesO Survey results

O Goal

Marketing MixDistribution

PricingMarketing Communication

DistributionO Starbucks builds relationships with

its distributorsO Using this strategy, Starbucks’

distribution channel is:

PricingO Spiked Hot Chocolate $6.00

O 70% profit marginO Cost $1.78 (raw materials)

O Irish Coffee $6.25O 60% profit marginO Cost $2.49 (raw materials)

Spiked Hot ChocolateRaw Material Portion Size Calculation Cost Per

Portion ($)Baileys Irish Cream 2.5 oz. 1 oz. = $0.54 $1.35

Milk 6 oz. 1 oz. = $0.03 $0.18

Fontana Bittersweet Chocolate Mocha Sauce

3 tbsp. (1.5 oz.)

1 oz. = $0.11 $0.17

Whipped Cream 2 oz. 1 oz. = $0.04 $0.08

Total: $1.78

Irish CoffeeRaw Material Portion Size Calculation Cost Per

Portion ($)Baileys Irish Cream

3.5 oz. 1 oz. = $0.54 $1.89

Coffee 6.5 oz. 1 oz. = $0.08 $0.52

Whipped Cream

2 oz. 1 oz. = $0.04 $0.08

Total: $2.49

PromotionO Starbucks does not use national

advertising campaignsO There will be one party at each

locationO Each location will create hypeO Starbucks will provide sale incentives

Product PositionO More for the sameO Competitors cannot match

Competitors

Spiked Hot ChocolatePrice Per Unit $6.00    

Number of Units Sold 2850

Total Sales $17,100 100%

Less: Variable Production Costs $5,073 29.7%

Less: Variable Selling Costs $0 0%

Total Variable Costs $5,073 29.7% $1.78

Contribution Margin $12,027 70.3%  

Less: Fixed Production Costs $0 0%

Less: Fixed Selling and Administration Costs

$0 0%

Total Fixed Costs $0 0% $0

Income Before Taxes $12,027 70.3% $4.22

Irish CoffeePrice Per Unit $6.25    

Number of Units Sold 2850

Total Sales $17,813 100%

Less: Variable Production Costs $7,097 39.8%

Less: Variable Selling Costs $0 0%

Total Variable Costs $7,097 39.8% $2.49

Contribution Margin $10,716 60.2%  

Less: Fixed Production Costs $0 0%

Less: Fixed Selling and Administration Costs

$0 0%

Total Fixed Costs $0 0% $0

Income Before Taxes 10,716 60.2% $3.76

FinanceO Goal = sell 300 hot alcoholic drinksO There are no fixed costsO Design and produce new mugsO We expect sales to grow quarterly

Sales ForecastsMeasuremen

t of Time

Beginning on: Units Sold Sales

1st Quarter June 1, 2013 10,260 62,842.5

2nd Quarter September 1, 2013 11,970 73,316.25

3rd Quarter December 1, 2013 13,680 83,790

4th Quarter March 1, 2013 15,390 94,263.75

2nd Year June 1, 2014 68,400 418,950

3rd Year June 1, 2015 68,400 418,950

Thank youAny Questions

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