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
Competitive Landscape • Product Form Competition • Product Category Competition • Core Benefit Competition • Budget Competition
Feared Competitors: McDonalds • Cost Advantage • Strong Cash Flow • Strong Brand
Feared Competitors: Dunkin’ Donuts • Cost Advantage • 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….