Brand dillution: Marketing analysis over the Starbucks current situation

1. Starbucks: is it still the third place? “Youand Starbucks. It's bigger than coffee” Gianpaolo | Lucas | Thomas

2. Agenda Starbucks’ positioning (what, who & how) “Every beginning has an end“ Morpheus (Matrix) Assumptions: analysis A) Who is drinking Starbucks: premium segmentB) The value proposition: the promise & what is being delivered Recommendations & Further questions A) Customer service: is going down?B) Starbucks’ Growth-strategy: until 2008, crisis and current A B

3. Who is drinking Starbucks: the premium segment Urbanization The rise of the middle class Ageing Population Female spending power Individualism & Single household Lifestyle changes Growth in education “To be sure of hitting the target, shoot first, and call whatever you hit the target” Ashleigh Brilliant The Premium Segment: Income > $ 28,000 PPP Fast growing segment Segment grows 72% in 2005-2015 By 2010, more potential premium consumers in China than Europe Source: Nestlé Investor Seminar 2008 (Premiumization)

4. Who is drinking Starbucks: the premium segment “To be sure of hitting the target, shoot first, and call whatever you hit the target” Ashleigh Brilliant Source: Nestlé Investor Seminar 2008 (Premiumization)

5. The value proposition: the promise… "For Starbucks, it's not just selling the coffee, but selling the experience“ Eileen Wall Distinctive product:Coffee Fresh, dark-roasted, full- flavored coffee "We will not pollute our high-quality beans with chemicals" "to build a company with soul" that will pursue the perfect cup of coffee Source: www.mhhe.com The Starbucks experience

6. The value proposition: what is beingdelivered… Consumers have toppled Starbucks from its No. 1 spot in favor of Dunkin‘ Donuts (2007) It is what the company does, not what it says, that reinforces the brand Howard Schultz CEO & Chairman Starbucks

7. Customerservice: isgoingdown? “A driving ambition is of little use if you're on the wrong road” Frank Tyger What do you like the least about the Starbucks in-store experience? Source: www.customerthink.com 19July 2010 (P. la Castellana, Madrid) Source: www.customerthink.com

8. The Growth Strategy: until 2008 “It was sofocusedongrowthby opening new stores thatit lost touch withits core customers” RohitDeshpandé, HBS Rohit Deshpandé Profesor Marketing Harvard BS

9. What about the global crisis? There might be an amplifying effect - No causality The Growth Strategy: the global crisis Starbucks rumoured to cut more jobs Source: es.finance.yahoo.com

10. The Current Growth Strategy “There’s tremendous opportunity to go much deeper in our existing markets” John Culver, VP Operations FOCUS FOCUS FOCUS New Strategy working? Share price goes up, future will tell

11. Recommendations “The great thing in the world is not so much where we stand, as in what direction we are moving” Oliver Wendell H. Centralize Marketing and closely tie it to the strategy (CEO involvement) Monitor what the customer wants in order to avoid gaps between what is delivered and what is perceived Deal with increasing local competition – Communicate what makes Starbucks different Consistently deliver on what is promised Monitor and evaluate service

13. Is the American coffee-way-of-living working in all countries?

14. Is the customer worlwide educated in the same way?

15. Does the customer values the same thing in different countries?

16. Is Starbuck opening new stores in strategic locations?