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Starbucks Entertainment: Global Delivery of Music . Agenda. . 4%. Why?
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3. Starbucks Entertainment has the Potential to Effectively Complement and Further Develop the Company’s International Strategy Storyline
We are a very successful company that has been able to create an extensive and loyal customer base in the US and throughout the world
Starbucks stands for high quality coffee and best customer service
The Starbucks Experience
In the light of the recent challenges, we have set the ground for a transformation agenda that will again put us into the position of the „third place“ of our customers
Internationally, we have built up strong operations in the past which we now have to leverage more actively
One way of enhancing customer experience internationally and tap revenue potential is to follow the US entertainment strategy and provide music services to our customers
To understand the issues that have to be addressed throught this process, we should have a look at our Entertainment services in the US
Storyline
We are a very successful company that has been able to create an extensive and loyal customer base in the US and throughout the world
Starbucks stands for high quality coffee and best customer service
The Starbucks Experience
In the light of the recent challenges, we have set the ground for a transformation agenda that will again put us into the position of the „third place“ of our customers
Internationally, we have built up strong operations in the past which we now have to leverage more actively
One way of enhancing customer experience internationally and tap revenue potential is to follow the US entertainment strategy and provide music services to our customers
To understand the issues that have to be addressed throught this process, we should have a look at our Entertainment services in the US
4. Starbuck‘s Music Platform is Based on Four Elements Including the Recently Launched own Record Label Originally offered 5-20 CDs over the year; now, 20 CDs at a time ? they‘ve lost that „event“ thing
2005: Retail Partnership with Alanis Morissette: Exclusive sale of an acoustic version of “Jagged Little Pill” in Starbucks stores only
Originally offered 5-20 CDs over the year; now, 20 CDs at a time ? they‘ve lost that „event“ thing
2005: Retail Partnership with Alanis Morissette: Exclusive sale of an acoustic version of “Jagged Little Pill” in Starbucks stores only
5. Apart From CDs, Customers will Increasingly be Able to Purchase Music Via the new iTunes Wi-Fi Music Stores because there was so much press around McCartney's Starbucks relationship, Barros says 45% of the U.S. sales of "Memory Almost Full" were the coffee chain‘s
For a brand-new artist, it might be a lot higher initially, because the initial exposure is coming through Starbucks, but as the word gets out and the artist starts to develop a fan base, clearly that's going to change ... We're seeing that right now with Sia.“
360-degree deal:
"To carve up different revenue streams, you're getting Into a very complicated and thorny mess,"
he continues. "It's a much easier thing to say, 'Look, we're investing in you as an artist, and so all
of those revenue steams you're generating as an artist are going to go into one collective pot. You
get X, we get Y, and maybe that changes over time depending on how things go, but well be the
financing vehicle, we'll be the marketing a promotion vehicle, as music companies typically do,
and we'll figure out how to share it.'“
Lombart agrees. "The concept of 360, of a relationship With these artist, is a very cutting-edge
approach. It's a big part of our ongoing discussions with virtually every artist that we try to sign."
because there was so much press around McCartney's Starbucks relationship, Barros says 45% of the U.S. sales of "Memory Almost Full" were the coffee chain‘s
For a brand-new artist, it might be a lot higher initially, because the initial exposure is coming through Starbucks, but as the word gets out and the artist starts to develop a fan base, clearly that's going to change ... We're seeing that right now with Sia.“
360-degree deal:
"To carve up different revenue streams, you're getting Into a very complicated and thorny mess,"
he continues. "It's a much easier thing to say, 'Look, we're investing in you as an artist, and so all
of those revenue steams you're generating as an artist are going to go into one collective pot. You
get X, we get Y, and maybe that changes over time depending on how things go, but well be the
financing vehicle, we'll be the marketing a promotion vehicle, as music companies typically do,
and we'll figure out how to share it.'“
Lombart agrees. "The concept of 360, of a relationship With these artist, is a very cutting-edge
approach. It's a big part of our ongoing discussions with virtually every artist that we try to sign."
6. Hear Music can Affect Starbuck’s Bottom Line Both Through Direct Sales and Synergies Through Enhanced Customer Experience 4.4 m CD sales in the U.S. last year (22% growth)
? Assumed to correlate to only 2 CDs sold per store each day at company-owned stores
- Music can be varied tactically: Office workers on their lunch break will be in a rush and need up-tempo music. Exhausted shoppers may simply want to rest and chill out.4.4 m CD sales in the U.S. last year (22% growth)
? Assumed to correlate to only 2 CDs sold per store each day at company-owned stores
- Music can be varied tactically: Office workers on their lunch break will be in a rush and need up-tempo music. Exhausted shoppers may simply want to rest and chill out.
7. Starbucks Entertainment’s Success Builds on Both Starbuck’s Strong Brand and Network as well as the Ailing Music Industry
8. Starbucks Entertainment: Global Delivery of Music
9. Distinct Success Factors for an International Expansion Have Been Identified Which can be Measured by Key Performance Indicators Introduction of slide:
Based on strengths and opportunities implemented and leveraged by the US Entertainment strategy, we have conducted a country analysis for international expansion
Music revenue potential and opportunity to reap music potential based on customer/consumer behaviour
Introduction of slide:
Based on strengths and opportunities implemented and leveraged by the US Entertainment strategy, we have conducted a country analysis for international expansion
Music revenue potential and opportunity to reap music potential based on customer/consumer behaviour
10. Starting Point: All 41 Potential Countries Considered Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
11. Step I: Creating Long List by excluding countries with neglectable number of stores (23 countries remaining) Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
12. Step II: Creating Short List by excluding countries with low maturity index (presence, maturity, and awareness of brand; 5 countries remaining) Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
13. Step III: Selecting target countries out of short list by evaluating music revenue potential and opportunities to reap this potential Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
Step 1: “Others” not relevant
Step 2: Short list based on brand maturity and brand awareness
Step 3: Selection based on consumer behavior and Music consumption
14. UK and Japan are Identified as the Most Appropriate Countries for the Starbucks Entertainment Expansion
15. Starbucks Entertainment: Global Delivery of Music
16. To Successfully Enter the UK and Japanese Markets, Distinct Market Entry Strategies Have to be Developed
17. Market Entry Into UK With a Medium Level of Localization, the Focus on CD Sales, and Apple as a Strategic Partner for Digital Content
18. Market Entry Into Japan Requires High Level of Localization, Focusing Only on Mobile Sales Through a new Partnership That has to be Established
19. Starbucks Entertainment: Global Delivery of Music
20. With the Help of an Assumption-Based Approach, We Derived P&L Forecasts until 2012
21. Expected Effects on Total Net Income for Japan and UK Combined Will Slow Down to 7% in 2012
23. The Backup Slides are Geared to the Leading Questions…
24. Starbucks Entertainment Appeals to Adult Persons Often Buying Impulsively
25. After Having Stepped in the Music Industry by Acquiring Hear Music in 1999...
26. ... Starbucks Launched its own Record Label together with Concord Music Group in March 2007
27. 360-Degree Deals as an Innovative Concept for Signing Artists
28. With an Exclusive Music Partnership with Apple, Starbucks Enters the Digital Music World
29. Currently, 4 Hear Music Coffeehouses Exists in the U.S.
30. The Short List is Based on Brand Maturity, Brand Awareness, and Market Presence, Measured by 4 Different Categories That are Ranked and Weighted
31. The Short List is Based on Brand Maturity, Brand Awareness, and Market Presence, Measured by 4 Different Categories That are Ranked and Weighted
33. High Piracy Activities in Canada and South Korea; Medium Activities in Taiwan; Low Activities in Japan, United Kingdom, and USA
34. Taxes on Sound Recordings Vary Between 2 and 18 %
36. The Origin of the top 10 Albums in one Year can be an Indicator for the Degree of Acceptance for Foreign Music Within the Country
37. Localization of Content on a City Basis only for Large Cities or Cities with Especially Strong Local Music Scenes
39. Strong Digital Music Market in Japan
40. DoCoMo is the market leader of Voice Communication and Leading-Edge Mobile Multimedia Services in Japan