Executive Summary

Starbucks is a coffee chain company, which started its business in Seattle that is situated in
Washington, United States. Now, Starbucks is recognized as an International Organisation,
which is famous all over the world for its quality coffee. It has almost 16,120 stores in 49
different countries, which makes it the largest coffee company in the world. Apart from
coffee Starbucks serves snacks with soft drinks and also espresso based hot drinks. It has
also started supplying some fancy items like coffee mugs with Starbucks logo on it. Later
on with the brand name of Hear Music Starbucks entered into music division. It has also
started selling some books and movies related to the locality of the stores along with some
seasonal and specific company products. Also in many countries at various grocery shops
Starbucks has started selling ice cream with its brand name. Today the Starbucks has
become the power brand for its coffee all over the world and is famous for its Italian style
of coffee, espresso beverages, teas and pastries.
In this report we will first discuss the corporate mission statement of the Starbucks
Company. Then based on Competitive analysis and PESTLE analysis we will analyze its
industry structure. Later on we will perform SWOT analysis and discuss Porter's five
forces model. After this we will discuss and analysis various core competencies of the
Starbucks company, its competitive advantages and its potential fallout. Also, based on the
two strategic models, we will discuss the various strategy recommendations for the
company. As a conclusion various other suitable recommendations and competitive
strategies for the further growth of the company will be discuss.

INDEX
SR.N
0.

PARTICULARS

PAGE NO.

Declaration Certificate
Evaluation Certificate
Assessment Marking
Acknowledgement
Executive Summary
1

Introduction

1-2

1.1

-History

2-3

1.2

-Market Size

4-9

PESTEL Analysis

Competitive Analysis

10-11
12

3.1

- Porters Five Model

12-13

3.2

- SWOT Analysis

14-16

3.3

- Segmentation

17

Marketing Mix

18-20

Conclusion

19-21

Recommendations

21-24

References

24

1.Introduction
2

In the last ten years, the coffee brewing industry has seen so much activity in terms of
massive changes in the landscape of coffee brewing companies. These changes range from
mergers and acquisitions to changing consumer tastes and finally, to different branding
strategies. These activities are expected to continue over the course of the next five years.
The Indian food industry is poised for huge growth, increasing its contribution in world
food trade every year. In India, food has become a high-profit industry by reason of the
scope it offers for value addition, particularly with the food processing industry getting
recognised as a high-priority area in this liberalised era. Accounting for about 32 per cent
of the country's total food market, the food processing industry is one of the largest
industries in India and is ranked fifth in terms of production, consumption, export and
expected growth. The total food production in India is likely to double in the next 10 years
with the country's domestic food market estimated to reach US$ 258 billion by 2015. So,
this report will attempt to demonstrate the marketing strategies that aided Starbucks to
grow in India quite significantly when compared to the other brands in this industry. It will
also recommend some suggestion that will aid Starbucks to even grow wider via bringing
some changes in its promoting and marketing strategies.
Starbucks Corporation, generally known as Starbucks Coffee, is an American
global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is
the largest coffee house company in the world ahead of UK rival Costa Coffee, with
20,737 stores in 63 countries and territories, including 11,910 in the United States, 1,496
in China, 1,442 in Canada, 1,052 in Japan and 772 in the United Kingdom.
Starbucks locations serve hot and cold beverages, whole-bean coffee, micro ground instant
coffee, full-leaf teas, pastries, and snacks. Most stores also sell pre-packaged food items,
hot and cold sandwiches, and items such as mugs and tumblers. Starbucks Evenings
locations also offer a variety of beers, wines, and appetizers after 4pm. Through the
Starbucks Entertainment division and Hear Music brand, the company also markets books,
music, and film. Many of the company's products are seasonal or specific to the locality of
the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.
From Starbucks' founding in 1971 as a Seattle coffee bean roaster and retailer, the
company has expanded rapidly. Since 1987, Starbucks has opened on average two new
3

stores every day. Starbucks had been profitable as a local company in Seattle in the early
1980s . but lost money on its late 1980s expansion into the Midwest and British Columbia.
Its fortunes did not reverse until the fiscal year of 1989-1990, when it registered a small
profit of $812,000. By the time it expanded into California in 1991 it had become
trendy. The first store outside the United States or Canada opened in Tokyo in 1996, and
overseas stores now constitute almost one third of Starbucks' stores. The company planned
to open a net of 900 new stores outside of the United States in 2009, but has announced
300 store closures in the United States since 2008.

1.1 History
Starbucks
Three friends, Jerry Baldwin, Zev Siegl and Gordon
Bowker, who all had a passion for fresh coffee, opened
a small shop and began selling fresh roasted, gourmet
coffee beans and brewing and roasting accessories. The
company did well, but things began to change in the
80s.
Leading retailer, roaster and brand of specialty coffee in
the world Sells drip brewed coffee, expresso-based hot
drinks, snacks, mugs and coffee beans Company started
in 1971 in Seattle in Washington, U.S.

Costa Coffee

Bruno & Sergio Costa set up their famous coffee

roastery in Lambeth, London in 1971, supplying local
caterers and Italian coffee shops with an exciting
coffee, slow-roasted the Italian way.People couldnt get
enough of it and by 1978 the first Costa espresso bar
opened in Vauxhall Bridge Road in London.Today it is
the second largest coffeehouse chain in the world
behind Starbucks.

To this day they still use the same method of slow-roasting our coffee beans, serving the
brothers authentic blend of 6 Arabica beans to 1 Robusta in 500 coffee shops all over the
world.

THE PERFECT CUP IN FOUR M

1. Miscela Blend:
Costa has a unique blend we call the Mocha Italia
2. Macinatura Grind:
Every cup of Costa is made from freshly ground beans; ground to theexact
consistency to ensuring perfect extraction of flavors & aroma. We use
the Ferrari of grinders-the Mazzerto ensure the Perfect Cup
3. Macchina Machine:
Costa shops use specially designed Italian espresso machines. They
have been tuned & perfected over the last twenty years to achieve high
volumes of perfect espresso [the heart of every coffee drink]
4. Manna Hand:
The skill of the Barista influences the Perfect Cup So they undergo extensive &
intensive training at our Coffee Academy to reach the excellence thats Costa

1.2 Market size

The Indian food industry stood at US$ 135 billion in 2012 and is expected to grow at a
compound annual growth rate (CAGR) of 10 per cent to about US$ 200 billion by 2015,
according to a report by KPMG.
Indian agricultural and processed food exports during April-May 2014 stood at US$
3,813.63million, according to data released by the Agricultural and Processed Food
Products Export Development Authority (APEDA). In 2013-14, the total processed/value
added agricultural products exported and the foreign exchange equivalent earned
therefrom stood at Rs 4,627.99 crore (US$ 752.39 million) as compared to Rs 3,689.26
crore (US$ 599.89 crore) during the previous year.
The branded quick service restaurant (QSR) market in India, which has attracted
international brands such as McDonald's, Subway, Nando's, Domino's and KFC currently
stands at US$ 13 billion and is set to get bigger with new emerging players.
Marine product exports from India touched US$ 5.01 billion during FY14, according to
MsLeena Nair, Chairperson, Marine Products Export Development Authority (MPEDA).

Investment
The foreign direct investment (FDI) equity inflows in food processing industries during
April 2000-July 2014 stood at US$ 5,949.21 million, as per data released by Department
of Industrial Policy and Promotion (DIPP). The following are some of the investments and
developments in the sector:
6

ITC Ltd plans to foray into new categories such as beverages that include fruit
juices, tea and coffee, and chocolates and dairy products. As a part of its plan to
enter the dairy sector, the company is constructing a milk processing unit at
Munger in Bihar.

Bisleri International Pvt Ltd has launched its first branded soda in Hyderabad.
"This is our first experiment in the country. We will scale it up to other states in the
days to come," said MrSantosh AS Borkar, Director - South Zone, Bisleri
International Pvt Ltd. The company would also be setting up eight water plants in
Telangana and Andhra Pradesh.

Nissin, owner of Top Ramen Noodles, has launched a differentiated noodle Scoopies Mad Masala Short Noodle. The company commissioned its third factory
in Odisha earlier this year, with an investment of Rs 100 crore (US$ 16.25 million),
from where the product would be manufactured.

Food Bazaar plans to tap the under-branded food and beverages space in the Indian
domestic market with the help of private labels to offer more choice to the
consumers.

Hindustan Coca-Cola Beverages, the Coca-Cola Company's largest bottling partner

in India, plans to set up aRs 1,000 crore (US$ 162.48 million) bottling plant in
Telangana and has also sought land for the proposed venture.

Caf Coffee Day (CCD), in a bid to expand its market in India, plans to add 150
cafes and 120 more Xpress outlets across the country during FY15.

Coffee Market in India

The humble cup of coffee that cheers up mood, initiates conversation and relaxes you from
a tiring day is brewing up a storm in India. The Indian ready-to-drink (RTD) tea and coffee
market has picked up a great business in the last 5 years.
Reports say that the market is expected to grow to a whopping Rs 2,250 crore by 2017thanks to the cafe culture among urban youth.
The domestic market, which currently stands at an estimated Rs 1,100 crore, is dominated
by outlets like Cafe Coffee Day, Baristas, Costa Coffee, Coffee World, Lavasa, Coffee
Bean & Tea Leaf. The latest entrant is Starbucks and with many more in thepipeline.
More than 1,200 cafes have sprung up across India in the past decade, mostly from six
organized chains, clocking an average annual growth of around 40%. They have made the
cafe industry -currently capped at Rs1000 crore -one of the fastest growing organized
retails.

Lets have a look at the major coffee outlets working in India

CAF COFFEE DAY
Cafe Coffee Day or CCD is Indias largest cafe chain with its first outlet at Brigade Road,
Bangalore in July 11, 1996. As of August 2013 it has 1319 outlets spread across 28 states
ofIndia.
The man behind CCD is V.G. Siddhartha. He is the chairman of the Amalgamated Bean
Coffee Trading Company Ltd. (ABCTCL) which also grows coffee in its own estates of
10,000

acres.

The

cafe

chain

is

division

of

ABCTCL.

CCD is expanding their market reach through brand extension by launching mineral water,
cookies, and chips under their brand name. The brand plans to reach the 2000 outlet mark
by 2014.

BARISTA
Barista Coffee Co. Ltd, Indias second largest organized cafe chain with 225 outlets
(according to a 2010 report) and plans to launch 40-45 outlets a year in the next two-three
years. This chain of espresso bars was established in February 2000 by the Barista Coffee
CompanyLimited.
A 34.3% equity stake was sold to Tata Coffee in 2001 and the remaining 65% stake was
bought by Sterling Group owned C Sivasankaran in 2004. Later, he also bought the
remaining Tatas stake. In 2007 Sterling group sold Barista to Lavazza. Lavazza is an
Italian manufacturer of coffee products.
Barista Lavazza has estimated annual revenue of Rs 200 crores. In 2014, Lavazza sold the
coffee shop chain to Carnation Hospitality Pvt. Ltd. for an undisclosed sum

COSTA COFFEE
This is United Kingdoms largest coffee brand, which entered India in September 2005
through

an

exclusive

franchisee

tie-up

with

Devyani

International

Ltd.

Andy Harrison, CEO of Whitbread PLC was quoted recently in an interview that
Costa Coffee wants to expand to 300 outlets in India. The brand has its presence in all
major cities of the country including outlets in Mumbai, Bengaluru, Delhi, Gurgaon,
Noida, Pune, Agra and Jaipur. Last year, Costa opened its 100th store in India, in
Mumbai.
STARBUCKS
The latest entry in India`s coffee chain industry is Starbucks. Starbucks came to India in
2012 in partnership with Tata Global Beverages.
The Seattle-based company, which has operations in 61 countries, was planning to open its
store in India for the last 5 years. Finally, the first outlet was open in Mumbai in October
2012.
9

Beginning with stores in Delhi and Mumbai in calendar 2012, the retail stores will be
developed in cities across the country.
OTHER COFFEE HOUSES
Here are few coffee cafe chains that have their presence in India. They started with very few
outlets in the major cities of the country but are now branching out across the nation quite
fast.
Australian cafe chain Gloria Jeans Coffees, which entered India in 2008 through the
Landmark Groups hospitality section, Citymax, positions itself at the upper end of the
market. It plans to open 36-40 outlets in the next few years.
Other such coffee chain is the Coffee Bean & Tea Leaf which also ventured in India in 2008
with an outlet in Select CityWalk in Saket, New Delhi. CBTL worldwide has around 812
outlets but in India they have around 17 outlets.

Indian Market
Size of the market in 2012 - $230 Million
Expected market size in 2015 - $400 Million
Number of speciality Coffee Shops in India today 2400
Expecded to increase to 4000 in 2015

10

2. PESTEL Analysis
The various important elements or factors of the Starbucks Company can be examine,
understand and identify by using PESTLE analysis.
Political Factor:
Globalisation has resulted in the change in various pattern of doing business all over the
world. Now a days many companies find it very difficult to survive and last on their available
domestic market only. Taking into account the various countries political background and
studying other related issues, Starbuck manage to expand its business and today it has
knowledge of almost all countries political pattern.
Economic Factor:
Economic factor plays a vital role for this company because Starbucks coffee is considered as
a luxury product. If the interest rate increases, then it directly affects the Starbucks and their
suppliers various investment plans. This may result in decrease in the sales and which
ultimately affects expansion of the business.
Social Factor:
Starbucks should undertake some techniques or policies that help them to identify their
potential local customers and encourage them to come to the stores as frequently as possible.
Technological Factor:
11

Today technology is used everywhere. Considering the benefits of advance technology every
company is trying to incorporate it wherever possible. Starbucks also uses the advantage of
technology. In 1998 Starbucks has launched its website. It uses latest coffee machines in its
stores. In some of its stores internet facility is also provided within the stores.
Legal Factors:
Different countries has different laws and as Starbucks has its stores in various countries the
company should know all the laws related to product restrictions, trade, health, employment
and also safety regulation laws. It should also be aware of religious laws of the particular
country in which they are doing business. Starbucks should take care that they do not break
any laws, rules and regulations of any country in which they are doing their business.
Environmental Factors:
Starbucks should also pay attention towards the various factors related to environment such
as pollution, disposal of waste, planning permission, etc. The company should apply some
techniques, which should be eco-friendly. As far as possible the company should try to use
the material that is recyclable.
At present Starbucks has become brand name for the coffee all over the world. Most of the
credit goes to its marketing strategies, which focus mainly on satisfying customer's needs and
their expectations. The credit also goes to their employees and other staff members. Starbucks
Company also takes care of their employees and considers them as the business partners.
Political

Coffee beans are grown in developing countries. Discussions about

work conditions, child labor. Also political influence by tariffs and

Economic

taxes.
The key business challenges for the industry as a whole firmly relate
to the economic recession from 2008, as consumers become much
more cautious with their discretionary spend due to the high

Social/Cultura

unemployment and personal debt.

People spent more and more money on coffee (UK: Tea: 623m,

Coffee: 738m)5. Customers do not only go to coffee shops to drink

Technological

a coffee but also to sit down, and relax.

Better and cheaper coffee machines are available for home usage
(Senseo).

12

Environment

As raise of environmental awareness, coffee companies have to be

concerned about the way their coffee beans are produced, the way
they design their supply chain and the way they prepare and sell their

Legal

products.
See Political

3. Competitive Analysis

3.1 Porters Five Model:

In the industry environment the competition can be analysed by using Porter's five force
model technique. It consists of issues like threat of new entrants, bargaining power of
customers, bargaining power of supplier, threat of substitutes and competitive rivalry
within industry.
New entrant's threats:
The environment in which the Starbucks operates is very competitive. The company has to
compete with the other strong brands in the market such as burger king and Mc Donald's.
For the Starbucks to enter into the coffee market is comparatively low because it requires
less capital investment for renting or purchasing a store. In the market there are many new
entrants which operate in a single store. The Starbucks is able to reach its potential
customers through its various distribution services like supermarkets, grocery stores, mail
delivery and also through internet.
Customer's bargaining power:
The profit of the Starbucks Company is directly related to its number of customers. Earlier
the bargaining power of customer is less but now due to various brand competitors and
new entrants in the market the situation has been change. Also previously in coffee market
customers has less bargaining power because of the monopoly of Starbucks but now as the
number of coffee suppliers in the market has increased, it has increased the bargaining
power of the customers. Now the customers can easily switch between the companies
which are offering fewer prices. Starbucks has to maintain its uniqueness in order to
minimise the bargaining power of customers.
13

Supplier's bargaining power:

Suppliers that supply raw material to the Starbucks have very high bargaining power. As
this raw material such as coffee beans are very essential, Starbucks generally fixes the
prices with its suppliers. Also the companies which supply coffee machines and other
advanced machines as high bargaining power because within the industry there are very
less suppliers that supplies these machines.
The other suppliers of Starbucks such as napkins and coffee cups have very less bargaining
power. Also the Starbucks has contract agreements with almost all of his suppliers which
ultimately reduce their bargaining power with the Starbucks.
Threat created by substitutes:
In the market there are many other products like energy drink, beer, smoothes, soft drinks,
fruit juices, etc which can replace coffee. All these products possess a threat to Starbucks.
Also in the market there are many other pubs, lounges and bars that provide the similar
environment as provided by the Starbucks. Starbucks has to deal with all these products
effectively and efficiently.
Competitive rivalry in industry:
All over the world the Starbucks is recognised as a brand name. The other competitors
such as Gloria Jeans coffee, De Bella and Mc Donald are also famous all over the world
and also has a brand image. All these increase the competition in the market for the
Starbucks. Also other coffee supplier such as burger king and dunkin donut further
increases the competition. All these competitors provide almost similar products which
further raised the competition between them.

14

The competition on the coffee market is quite high.

A unique strategy is important to attract customer.

3.2 SWOT Analysis

STARBUCKS

15

COSTA COFFEE

1.Strengths:
The biggest strength enjoyed by the Starbucks is that it is a brand name and highly
recognised worldwide. Almost 70 percent of world's population knows about this company
and their products. In 40 countries Starbucks have 15,000 stores and the consumers accept
all the services and products offered by the Starbucks. This increases the potential
customers and sales for the company and is considered as the biggest advantage. The other
strength of the company is that among the people they have a good impression. Starbucks
respect his employees and provide them good working environment. Starbucks is able to
reach the global market by globalisation. Starbucks is successful to satisfy the market
needs and changing demands through new innovations and by establishing new products.
Starbucks maintains good relations with their suppliers and are loyal to their customers.
Starbucks always provide their customers good quality services and products which have
helped them to achieve the good reputation in the market. Starbucks provide pleasant
environment for the people to hangout, socialise and talk with each other while enjoying
their coffee.
2. Weaknesses:

16

With the increase in the number of stores all over the world the Starbucks Company is also
lacking its internal focus. Also its pricing policy is considered as a major weakness. People
find the prices of the company really high as compared to its competitors and usually
consider Starbucks as a luxury item. Also the prices of the Starbucks are similar
irrespective of the different locations. The Starbucks depends heavily only on its coffee
business and therefore now they are required to look for other related products too. The
parent company which is in US controls all the stores as the company doesn't have any
franchisee system. The variety of coffee provided by Starbucks is fever as compared to
their competitors and therefore sensible growth policy should be applied instead of
aggressive expansion.
3. Opportunities:
Starbucks has many opportunities. Now, as the recession is almost over in United States,
Starbucks can again open its stores which got closed due to recession. Also the Company
can spread its business to various nations like India and Brazil in Asia and South America
where the competition in the market is also less related to coffee industry. There is also
scope to improve in technological methods and retail operations. Many observers are of
the opinion that there is vast scope and potential to expand if the company co-brand or
franchise itself with other drink and food companies. Finally, it was the best opportunity
for starbucks to enter the new markets like China and India after building such a quality
brand image.
4. Threats:
The biggest threat that the Starbucks Company possess is the competitors in the market
like Mc Donald's which are entered into the coffee market. Mc Donald's has the similar
prices as set by the Starbucks but if the prices vary in future Starbucks will directly get
affected by it. Also the company can be affected by the heavy competition due to the
opening of new less costly coffee shops and restaurants. The company also have to be
inflexible with its pricing strategy especially in developing countries. There are also
chances that the price of products and services can be affected if there is an increase in the
price of raw material and dairy products.

17

3.3SEGMENTATION

Targeting Starbucks:
Age: Young adults
Nice place to relax, chat, chilly music
Trendy coffees which present their lifestyle
Age: Middle age
Place to calm down, relax, chat, read a book
Possibility for a small (healthy) snack with a great coffee
Psychographic: Coffee lovers
Trendy, fresh, high quality, new developed coffee (some: fairtrade)
Psychographic: Atmosphere lovers
A great third place

18

Targeting Costa Coffee:

While evaluating their consumer market the conclusion was that the ideal consumers
economic profile will be
Upper Middle Class
Privileged Class
While the age demographics will be:
Students and Youngsters
Professionals
Families
Mature Consumers
Gender and Ethnic/Religious Background was researched to have minimal or no effect
on thechoices concerning coffee made by consumers and their patronage of coffee houses.

19

4. Marketing MIX
Product

Price

20

Place

Promotion

21

CONCLUSION

Costa Coffee has been able to remain one of UK's leading coffee brewing companies for
more than a century now primarily because of the execution of the companys branding
and positioning strategies to perfection. Add to the mix the companys dedication to high
quality of service and the formula for success is at hand. Moreover, the utilization of the
appropriate knowledge management tools is necessary for their products to reach out to
people even in different cultures. However, certain points have to be taken into
consideration by Costa Coffee regarding knowledge management tools. Since their income
is relatively higher than most coffee brewing companies, the time for implementation of
their chosen knowledge management tools would take longer than usual, aside from being
expensive. But since the goal of Costa Coffee is towards a long-term dominance and
stability in the brewing industry, then the pursuit of these promotional campaigns will be
beneficial for the company in the long run.

It is seen that the revenue of Starbucks is quite higher when compared to other
established competetiors and has gained quite a significance in the recent market. It has
22

opened nearly 70 more shops as of now and is about to reach the target of 100. This shows
that Starbucks is at a Introduction stage in product life cycle and will mature in the next
few years showing a great potential in Indian Market. Starbucks has appealed to such a
wide target market; it seems every product introduced will be an instant success (sodas,
teas, ice creams, pastries). As the most innovative company, its no surprise that the new
technological addition, the Starbucks Card, boosted sales and helped growth during a time
when the economy was struggling. Starbucks went back to basics, and theyve
approached the basics with a science and intensity that no one has ever done before.

23

Preferable Recommendations:

Starbucks has the strategy of opening more stores to get more sales. This should be
avoid. Instead the company should pay more attention towards satisfying customer

needs.
The cost of the products should be fixed which depends on the purchasing capacity

of the local customers.

Starbucks should discover new products before their competitors to gain more

market share and be leaders.

Various research should be made and the company should be able to find out new

deals and offers for their customers.

Maintaining proper relations with farmers so that they remain loyal with the

company and do not switch with competitors.

Knowing that consumption of tea has more health benefits as compared to coffee,
Starbucks should invent and introduce in the market various special drinks related

to tea.
Starbucks should reconsider its pricing policy and it must be flexible in different

countries.
Starbucks should concentrate more on its coffee making methods as majority of the

business depends on serving good quality coffee.

Promotion:
o Customers Engagement and Long Lasting Impact to make a winning
entry.This can be achieved by associating it with events & experiences. For
example Starbucks can celebrate a Week of Joy between Christmas and
New Year. Christmas is considered a festival of giving gifts and New Year
for making new resolutions. These two emotional appeals can be used with
a slogan of This time gift your time. Through massive advertisements via
emails, Facebook etc. customers can be encouraged to spend time and gift
Starbucks mugs with personalized name and message for the loved ones
written.
o Discount coupons can be distributed in this week in outlets of Archies, with
slogan This Time Give your Time. In-store decorations can also be done
with Hangout theme and small games can be organized like how much
24

you know your friend? and rewarding the winners with Starbucks coffee
packs. This will help to have a long lasting impact on the customers mind.

Leveraging the Tata Network for Promotion

Tata owned enterprises such as Taj Hotels, Westside, Landmark Bookstore, Westland
Bookstores and Air Asia can be leveraged to promote Starbucks. The above mentioned
enterprises see customers from the premium category. It will be easy to reach out to the
targeted segment of the Stylists through the Tata Network that spans across the entire
country. This also goes in sync with the premium positioning strategy that we are
proposing for Starbucks.
Starbucks and Tata can come up with a two way Reward System, wherein each of the
enterprises under Tata can leverage from each others customer base. Customers visiting
these stores can be given reward points that provide them with discounts on selected
beverages served by Starbucks. Further, customers registered with Starbucks can be given
reward points based on consumption during each visit. These reward points can be used to
avail discounts at the above mentioned Tata enterprises.

Brand Communities Creating bonds Retaining Customers & Building

Relationship

Since Starbucks need not necessarily focus on volumes of customers, it is essential for it to
create brand loyalty in India just the way it has done in America. To be able to create
brand loyalty, creating a community of like - minded customers can work in favor of
Starbucks. While the reward system will also be a catalyst to the community creation,
Starbucks can organize various events targeting specific communities. For example,
devoting Saturday evenings as Entrepreneur Saturdays, an initiative that aims at
bringing together the busy Stylists and Coffee Experts working in the corporate sector
by organizing expert talks on varied subjects can be considered. Starbucks can provide the
much required exposure to people from different walks of life by leveraging on the Tata
network that will focus on the Stylists knack for interacting with people.

Loyalty Programs - Customer Retention & Relationship Building

In addition to the traditional loyalty cards where customers get free coffee in return of their
25

loyalty, Starbucks can add a status element by introducing loyalty cards in different range,
like, low (bronze card), medium (silver card) , high (Gold card) and elite (Platinum card).
Customers will be promoted on spending a specific amount, which will vary for different
levels. Benefits will also vary among the different class of card holders. For example,
Executive/elite Block could be reserved only for Platinum and Gold card holders. Freebies
and discounts will not be of high priority for our target customer segment. This status
oriented loyalty membership scheme will cater to their status need.
Starbucks can also use online platforms like sending different types of emails to its
different loyalty card holders. It can send promotional Green emails highlighting new
products, discount coupons, time bound offers, etc to the bronze and silver card holders to
increase their visit frequency. It can also send Star emails to its elite and gold card
holders to inform them of their star counts, special offers and assortments exclusively
designed for them. It can also send Black Hole emails to these elite classes, depriving
them of certain benefits, in case there is a radical drop in their visit frequency.

References
26

Financial Times: Costa tops table of coffee outlets (2007)

o http://www.allegra.co.uk/pdf-files/2007-05-28-ft.pdf
Allegra Strategies: UK Coffee Bar Market (2004)
o http://www.allegra.co.uk/pdf-files/2004-12-00-fs.pdf
Keynote: Market Assesment 2007: Coffee and Sandwhich Shops (2007)
Allegra Strategies: UK coffee bar market still growing despite recession (2009)
o http://www.foodbev.com/report/uk-coffee-bar-market-still growing-despiterecession
Sunday Times: How Starbucks colonised the world (2008)
o http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/articl
e3381092.ece
Starbucks: A brief history of Starbucks (2009)
o http://starbucks.co.uk/enGB/_About+Starbucks/History+of+Starbucks.htm
London Evening Standard: Starbucks wakes up to 47m loss a year (2009)
o http://www.thisislondon.co.uk/standard/article-23748711 coffee-giant-pinshopes-on-bohoredesign-for-branches-in-capital.do
Marketing Magazine: Starbucks launches heritage branding in UK
o http://www.marketingmagazine.co.uk/News/MostDiscussed/964788/Starbu

cks-launches-heritagebranding-UK/
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