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Comm 401 - Starbucks  Specialty Coffee Industry Divided into 2: Specialty coffee and basic coffee  Highest echelon of quality coffee available  Gourmet coffee  Growing at 15% per year  Suppliers  Exporters  Cherry or parchment  5x change hands before it reached the specialty coffee seller  Farmer collectormiller exporterimporterspecialty coffee seller  HQ Arabica beans  premium prices  Robusta beans lower quality (commercial industry)  Consumers  1.7 cups/day per person vs 2 to 3 cups in 1960s-70s  Decrease due to poor product dev’t, packaging and position  4 Consumer trends: 1. The adoption of a healthier lifestyle has led North America to replace alcohol with coffee 2. Coffee bars offered a place where people could meet 3. People liked affordable luxuries and specialty coffee fit the bill 4. Consumers were becoming more knowledgeable about coffee PROFILE

 22% US purchased specialty coffee  Urban areas and annual income of $35K  2 Parent with stay at home mom (41%)  Single people (39%)  College degree (49%)  Female urchased more (30-59 > 20-29)  Once a consumer learned to appreciate a high quality specialty coffee, he or she did not go back to his older favorite average quality brew COMMUNITY GATHERING PLACE  Outside the home entertainment  Social catalyst  Life style need  Turning into living rooms  relaxed with their friends or business associated  COMPETITION PRODUCT-BASED COMPETITION  Specialty coffee vs Basic Coffee  Competed with tea, juice, softdrinks, alcohol and other coffee and non-coffee related drinks  Flavoured coffee – not offered by specialty coffee  Specialty coffee originating from basic companies in the grocery chain RETAIL-BASED COMPETITION  LOW BARRIERS TO ENTRY  3485 competitors in the market SECOND CUP  Primary a franchiser  Cash flow positive

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 Benefit of taking little operating risk at the store level  Offers specialty coffee drinks, varietals, flavored coffee and snack items  Growth oriented and believed in growth via acquisitions  2nd largest player  Alliances with other food service companies STARBUCK’s STRATEGY  1000 retail loca

WHERE DO WE COMPETE? UNIQUE VALUE? Resources? How to maintain?

PORTERS -help us go down from industry levls, rivals, new entrants, threats, sup, cons INDUSTRY LEVEL BARRIERS TO ENTRY PEST FRAMEWORK -new product launch -general sense of fit -new market -how do u see yourself

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INTERNAL Environment – TODAY TOPIC  Internet wasn’t a threat  Newspaper industry  Why do firms failed? STARBUCKS  ACCESS to beans  Operations  Distributions (outbound)  Marketing and Sales QUESTION 1:

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