Starbucks Competitive Assessment BA 311 Presentation Team 3 (Hamza Khan, Tuan Le, Kassy Sepich, Amalya Sharyan, Joel Thannickal) February 7, 2008 Primary Competitive Issues  Sale Price Availability Customer Service Maintenance of a Positive Brand Image Various Styles and Flavors of Specialty Beverages Financial Employee Productivity International Markets Narrow Product Mix Volatile Coffee Markets  The “Hear” Music Label         Significant Trends in the Coffee Industry • Coffee reigns above energy drinks and soft drinks as the preferred caffeine beverage • American demographic groups show continual increase in coffee consumption • Large corporate competitors are innovating creative ways to take a piece of the Starbucks pie Starbucks’ Competitors • Locally owned coffee carts and shops • Northwest Based Chains - Peet’s Coffee - Stumptown - Java Bean - Tully’s - Dutch Brothers • Corporate Businesses - Mc Donald’s - Dunkin’ Donuts - Krispy Kreme Donuts Starbucks vs. The Little Man  Small businesses and coffee carts… - Connect with the community - Have diverse menus - Are good on the go - Create a reason to return  But Starbucks still controls the market because of… -Vast number of stores -Extra amenities small coffee retailers do not offer -Creative coffee blends -Strong marketing strategies SWOT Analysis Chart STRENGHTS: •Accessibility •Economies of scale •Financial growth •Positive brand image WEAKNESSES: •Low financial employee productivity •Narrow product mix •Weak compliance function •Corporate image •High price points OPPORTUNITIES: •Growth in new international markets •Expansion of new flavors and styles of coffee beverages •The “Hear Music” label THREATS: •Intense competition •Unstable coffee markets •Controversies and criticism •Possible over-saturation of the market Competitive Landscape  Product Form Competition  Product Category Competition  Core Benefit Competition  Budget Competition Feared Competitors: McDonalds 1) Cost Advantage 2) Strong Cash Flow 3) Strong Brand Feared Competitors: Dunkin’ Donuts 1. Cost Advantage 2. Complements the main Product. The critics say it best… “ If an MBA were a doctor and your company a patient, you’d be diagnosed with a most common syndrome of commercial success: maturity…. Memories grow fonder, knees sound noisier, and yeah, folks take you for granted.” - Ben Santaris and Laura Gunderson The Oregonian Words of Wisdom… “I have said for 20 years that our success is not an entitlement and now it's proving to be a reality. Let's be smarter about how we are spending our time, money and resources. Let's get back to the core.” - Starbucks CEO Howard Schultz Schultz saves the day… With the return of Howard Schultz as CEO, Starbucks will: • Cut food items from the menu that interfere with the coffee aroma • Close stores that are not meeting expectations • Focus on International Expansion • Return to a customer experience mindset They say this is what happens to Starbucks’ competitors….