Starbucks: A Look at Target Market, Positioning and Goals

1. Starbucks: A Look at Target Market, Positioning and Goals Akasha Beker, Brie Moore, Amanda Pounds, Dion Low

2. Who is Starbucks Target Market? Demographics • Gender: equally divided • Age: consumers 35 years and older tend to consumer coffee more often than the 18 - 25 age group • Income Level: mid-income levels were frequent buyers, grew substantially after $75K was reached • Education level: majority of consumers had some level of higher education experience • Starbucks does not choose their locations based on the demographic profiles of the area (clusters stores) Source: Mintel Reports

3. What does Starbucks provide that is attractive to consumers? • Variety: over 30 types of coffee blends • Alternatives: many non-caffeinated drinks and pastries, sandwiches • Quality: customer service and product • Ease and speed: drive-thru and counter • Atmosphere: comfortable, non-smoking environment that caters to their target market needs • Provides a third place between home and work Cup sizes ranging from espresso to Vente Source: Mintel Reports

4. Where is Starbucks Located? • Originated in Seattle, Washington in 1971 • First “traditional” coffee bar established in 1984 • Expanded to many West Coast locations in 1980’s • Currently operating over 15,0000 stores in over 35 countries (company owned and franchised combined) • Well saturated – Starbucks is located in airports, malls, bookstores, college campuses & grocery stores • Starbucks lives by the philosophy that in every nation and every culture there is a segment of the population who are a viable market Original Pike Place logo Seattle, Washington Source: Hoovers Online Reports

5. Starbucks Around the World

6. Why do consumers purchase Starbucks? • Psychographics • Product: enjoy taste, quality, variety • Status: branding • Convenience: “quick fix” • Purpose: contributions to a company involved with community • Comfort: welcoming environment: warm, friendly, and urban ambiance Source: Mintel Reports, Hoovers Online Reports

7. How does Starbucks keep their customers? Competitive Advantages • Extensive menu including specialty drinks, breakfast and lunch options • Followed the health conscious trend by reducing caloric and fat content in products • Offering organic, soy & rice milk, along with other organic options • Wifi available at many of Starbucks locations • Incorporated iTunes and CDs into their coffee shops and product line

8. Who are Starbucks Main Competitors? • #1 Coffee based competitor: Caribou Coffee(based in Minnesota) • McDonalds • 1,000 McCafes; planning to introduce 14,000 more within the next year • McCafe offers lattes, mochas, cappuccinos, coffee and iced drinks • Cheaper: charge $1 less per cup than Starbucks • Dunkin Donuts • Benefit from consumers positive perception about coffee • Only 8% of people surveyed who visited a donut house in the last month believe the donut shop coffee is better than other coffee offerings

9. “If you merged all of its rivals (that is, chains with more than three stores) into one patchwork coffee goliath, it still wouldn’t be even half the size of Starbucks.” –Taylor Clark, Starbucked

10. Coffee Industry Market Size Starbucks revenues (Million $) for Fiscal Year Ending September 2007: Starbucks is a leader in ready to drink beverages Starbucks has surpassed the expectations of coffee consumers by reaching out to the community Source: Starbucks: Company Financial NetAdvantage. 2008.

11. What are Current Market / Industry Trends? National Coffee Association’s National Coffee Drinking Trends (NCDT) The lifestyles of Starbucks consumers Starbucks customers continue to be the backbone of company’s success Starbucks accommodation

12. So what can Starbucks do to ensure future success?

13. Product Market Grid

14. Product Market Grid

15. Thank you Questions or comments?