starbucks_coffee-in_bangladesh-marketing.doc

7/24/2019 Starbucks_Coffee-In_Bangladesh-Marketing.doc

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INTRODUCTION

Starbucks is known to be the worlds largest coffee company. With over 17000 locations in over

50 countries the brand has positioned itself in customer mindset through its uality product!

service and environment.

"he marketing plan is going to investigate the possible launch of the franchise of Starbucks

#offee shop in $haka! %angladesh. "he focus of the report is the analysis of the marketing and

the financial forecast of the pro&ect to determine the success and return of the proposed pro&ect.

MISSION AND VISION

"he mission is to introduce Starbucks as a franchise of the original Starbucks of Seattle

Washington in %angladesh in order to deliver the signature coffee and uality e'perience that hadalways been the trademark of Starbucks. We will focus on making our (msterdam store

successful by adapting to the needs of the local customers while keeping the core Starbucks

strengths intact. "his store will set a positive e'ample of corporate social responsibility by

adhering to our high environmental standards and create a positive e'perience for customers to

create repeat business.

)ision* We see a world in which we inspire and nurture the human spirit + one person!

one cup and one neighborhood at a time.

,ission* "o introduce Starbucks! the most recogni-ed and respected brand in the world!

in %angladesh with the highest uality whole bean coffee.

Starbucks thrives to provide the world with &oy and inspire the people to see what we see. We

continue to be the most recogni-ed and respected brand of coffee in the world and will never stop

providing our consumers with the highest uality of whole bean coffee. ur mission and vision

provides our consumers! partners and prospective sponsors with our beliefs and morals with no

room for misinterpretation.

CURRENT MARKETING SITUATION

"he international market of Starbucks #offee #ompany is in / countries with more than 1500

stores. Starbucks was based on the idea that en&oying a cup of coffee is a social e'perience. ur

pro&ect aims on delivering the same e'perience in $haka by franchising "he Starbucks #ompany

and hence utili-ing its brand euity. %angladesh has recently encountered a boost in the

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entertainment sector of its economy where social hangouts with friends and peer have recently

captivated the youth culture. With a few competitors like 2loria 3eans and #offee World the

consumer group is not left with much of option to diversify their e'perience. Since Starbucks had

always stuck with the motto of delivering the most e'pensive coffee in the world our target

consumer group is the elite social group that either reside or work in %anani! which is euivalent

to the %everly 4ills in %angladesh.

MARKET DESCRIPTION

We would segment our market based on $emographic segmentation. or $emographic

segmentation we would primarily focus on the age group discrimination. "he targeted age groups

that lie between 1765 are more concerned about the environment and the service that comes

with the product. 8t is much easier to develop brand loyalty among this targeted segment.

"herefore the venue should provide incidental services like free Wi6i -one and couch seatingarrangement as they usually accompany in groups. "he 56/0 group is all working class and

therefore are more concerned about the product than the e'perience. 4ence in order to satisfy

this consumer group we should offer take6away coffee in disposable Starbucks #up.

ANALYSIS OF STARBUCKS THROUGH SWOT ANALYSIS

SW" analysis is an e'cellent tool in evaluating the strength! weakness! opportunity and threat

of the proposed pro&ect particularly because the pro&ect involves the risk of penetration of a

foreign franchise into the domestic market.

Strength

%rand euity* (ll across the globe Starbucks is well established as a pioneer in the #offee

#ompany. "his well established brand euity can be easily liuidated to customer euity through

awareness.

8t provides a range of different uality coffee that has been its 9niue Selling :oint in

%angladesh market because the concept is still not dispersed in the %angladesh market and it has

to survive through few competitors who include 2loria 3eans and #offee World.;'tended worldwide network and community helps to generate insight into consumer behavior

and uality e'pectation thereby giving it an edge against its competitors.

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Weakne

"he premium price charged against the product


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SWOT ANALYSIS

OB%ECTIVES AND ISSUES

O&'e(t$)e

We have set aggressive but achievable ob&ectives for the first and second years of market entry.

irst6year ob&ectives. $uring 01/ initial year on the market! we are aiming for

unit sales volume of %$" 5!000!000.

Second6year ob&ectives. ur second6year ob&ectives are to sell a combined total of

one million units and break even early in this period.

I#e

8n relation to the product launch! our ma&or issue is the ability to establish a well6regarded brand

name linked to meaningful positioning. We will invest heavily in marketing to create a

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memorable and distinctive brand image pro&ecting innovation! uality! and value. We also must

measure awareness and response so we can ad&ust our marketing efforts as necessary.

MARKETING STRATEGY

Seg*entat$"n+

"he segmentation part will be similar to the standard Starbuck segmentation. We will use

demographic! psychographic and behavioral segments. irst of all! the demographic

segmentation will focus on age! income and occupation. We see the 156/0 group as our main

customer. "his correlates with our own observations in rench and Swiss Starbucks. "his group

can be divided in two other groups. "he group 1565! and the group 56/0. "he first group will

have a lower income! and probably be students. "his is the youngest generation! and for this

segment Starbucks has to be hip and modern. "he other group is probably working and has ahigher income. "he difference between the groups is also that the first group will probably use

the sitting space whereas the second will most likely be customers who make purchases and

consume them outside of the store.

8n the psychographic segment we have focused primarily on lifestyles segmentation. "his is very

similar to the demographic segment above. "he students will have another lifestyle than the

working group. (nother lifestyle segment will be the people who drink coffee! and those who do

not drink coffee. "his is a crucial segment! because Starbucks has to have an image that you

dont have to be a coffee drinker to en&oy Starbucks.

"he behavioral segment is the most interesting one! and also the segment that can be the most

influenced. 8t is strong because we can create new segments. irst of all! we will segment

customers with respect to benefit and usage. %enefit segmentation is for the customers who go to

Starbucks because of the Starbucks products or Starbucks service. So the segmentation here will

be


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Target Market+

Starbucks strives to provide it consumers with a product that best fits the consumers needs. "o

do this we have selected a specific target market to provide for*

,ale and emale

(ge 156A5

8nner city residence

White collar ambiance career

;nvironmentally friendly consumer

2enerally purchase more than &ust coffee

Batte! specialty flavors! reusable cups

P"$t$"n$ng Strateg,

Starbucks has already brand euity therefore the ob&ective is to convert the established brand

euity in international market into customer euity in %angladesh market. ur marketing will

focus to deliver the signature coffee and uality e'perience that had always been the trademark

of Starbucks.

:roduct :ositioning

Cuality

(mbiance

rame of Deference*

E:D;,89, C9(B8"FG

Pr$($ng Strateg,

Starbucks already has a reputation of having the most e'pensive coffee in the marketplace.

"herefore we try to retain the Starbucks ideology by following the ,arket skimming pricing

which focuses on setting high initial prices to skim revenues layer by layer from the market. "he

premium price is &ustified for the Starbucks uality and image. (lso the demographic location of

its launch in %angladesh is consistent with the companys primary ob&ective.

Pr"-#(t Strateg,

"he main product of Starbucks is its coffee line therefore the primary ob&ect for our promotion

would be the Starbucks signature coffee. (ll different coffee variations that are popular in

Starbucks would be included in the initial product portfolio. 4owever! depending on sales

response amendments could be made. (nother important group of products that are served as

incidentals in the various outlets of Starbucks include light snacks particularly donuts and

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muffins. "hough the popularity of such snacks is still limited but during initial promotion these

line of products would be included in the product portfolio.

"he Starbucks franchise in %angladesh would also allow takeaways as the classic disposable

coffee mugs bearing the logo of Starbucks will serve as promotion and create awareness amongst

potential target customers.

D$tr$t$"n Strateg,

"he coffee shop is located in the posh area of $haka city where the demographics of the target

customer is highest. Since Starbucks is popular for its high uality and high premium price the

venue chosen for its launch comply with the overall success of the pro&ect. We have selected

%anani! 2ulshan! $hanmondi and 9ttara as our primary locations.

A(t$"n Pr"gra*

3une 01/

We will launch a sales promotion campaign of %$" 10!00!000 to educate our target customers

through ma&or advertisement in %illboards in the rush areas of %anani! 2ulshan! $hanmondi and

9ttara. (lso promotion can be done through distributing invite to the ;mbassys situated in the

vicinity including other multinational companys #; or other influential people. "he invite can

be accompanied by complimentary coffee sample to hook the target customer to pay at least a

single visit during its launch.

3uly 01/We would increase our sales promotions by crowd sourcing were our customers would be asked

to submit a snap of their most nostalgic memories with their friends in their favorite hangout

place at the companys new website hosted. "his return response will help us reali-e our target

consumers perception of an ideal environment to en&oy coffee e'periences. "he promotion will

create a bu-- and would also create awareness of the launch of the product. "he contest would

run for 1 whole month! thereby giving time to disperse the news to our target group. "he winner

will be rewarded with a free one month subscription of Starbucks "all Batte.

(ugust 01/

(fter analy-ing the responses from the mob of contestants! an analyst group will try to evaluate

the psychology of the participants. "hey would try to formulate what ma&ority of consumers find

appealing in a hangout place. "his information will be processed into the interior of our venue.

September 01/

"he promotion will run simultaneously with the interior work of the pro&ect.

ctober 01/

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Starbucks franchise will be inaugurated with a great response from our target group.

B#-get

"otal first6year sales revenue for the franchise is pro&ected at %$" 75 million! with an average

wholesale price of %$" 150 per unit and a variable cost per unit of %$" 100 for 500!000 units.

%reak6even calculations indicate that we will become profitable after the sales volume e'ceeds

50!000! which we anticipate early in the products second year. ur break6even analysis of first

smartphone product assumes wholesale revenue of %$" 150 per unit! variable cost of %$" 100

per unit! and estimated first6year fi'ed costs of %$" A!500!000. %ased on these assumptions!

the break6even calculation is as follows*

%$" A!500!000 >


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snack products could become a bottleneck as sales could be disappointing. 8n other words! this

product category poses a challenge as the ob&ective is to launch Starbucks in $haka and serious

decreases in any of the product categories could seriously harm this ambitious goal. Keedless to

say! an adaptation within this snack product category should be made to fit our uality standards!

behavior and culture. $onuts and muffins could easily stay in the product portfolio! but they

should not be characteri-ed as breakfast or lunch products. "hey should be seen and promoted as

side snacks. $ifferent sorts of cakes could also be added! as they are very popular in %angladesh

to go with a cup of coffee or tea. :roducts that could be served as lunch could be healthy

sandwiches and salads. Sweet products should never be promoted as lunch products as they are

normally seen in %angladesh as snacks as opposed to lunch food. n the other hand! one should

never change a winning formula. 8t is wise to slightly adapt the Starbucks formula to fit the

%angladesh market! but this should not be overdone! because then Starbucks would run the risk

of becoming like Iothers. 8n other words Starbucks should keep its identity and make slight

ad&ustments to serve the %angladesh market best.

:roduct

Cuality

)ariety

Si-es

%rand

4igh Cuality coffee 6 #omes from (sia :acific and other places! offering only the %;S".

)ariety* Wide selection of coffee! food! tea and more L to provide customer satisfaction.

Si-es* We offer all si-es from tall! 2rande! venti and more to accommodate our customers

needs.

%rand* ES"(D%9#?SG M our name is our brand EStarbucksGH premium uality which is also

our strength

(nother product category consists of the products that are not immediately consumed at the spot.

Starbucks merchandise! like coffee mugs! and coffee in packages are important products here. (

regular Starbucks customer can purchase his or her own coffee mug or buy the real Starbucks

coffee to create the same kind of coffee at home to get a consumption e'perience that matches

the one at Starbucks. air trade products are uite popular in %angladesh and one of the mostconsumed fair trade products is coffee. (nother opportunity within this product category is

formed by a link with the other! direct consumption! products. "his link is given shape by the

possibility of launching a saving and bonus system. (lmost every popular store in $haka uses a

saving and bonus system. Starbucks could! for instance! give customers that freuently order

coffee at Starbucks the opportunity to save certain saving units


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adding of services to make a product a more complete one! one could be given to opportunity to

customi-e his>her own coffee mug. ;vidently! this service should be launched later on and only if

the coffee mugs prove to be a commercial success.

(nother aspect of the Starbucks Iproduct is the service part. ,aybe the biggest part of the

Starbucks service is the creation of a very cosy! home6like atmosphere that invokes social

interaction ,oney a "all Batte in Starbucks


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scalding 756cent generic &oe and the thin paper cupJ the convenience store with N1.00

fau' gourmet stuffJ and #osi! where a latte costs NA.5. nly after running this gantlet

could 8 enter Starbucks! where a &ava chip rappuccino runs N/.75.G

$. 2ross! ct. 5! 00/

:rice

:remium

)alue %ased :ricing

#ompetitors

:remium* #onsumer perception L physiological approach strategy6 the higher price products H

higher uality.

)alue %ased :ricing* %est Cuality and service

#ompetitors* :rice is slightly higher than our competitors because Starbucks offers more benefits

to blow away our customers.

P/a(e

"he first Starbucks in %angladesh will be opened in $haka! the capital city. "his choice is rather

obvious for several reasons. We uote the Starbucks ,arketing policy* 1 EStarbucks customers

are people of diverse ethnic! income and age groups with varying tastes and interestsG.

$haka is a very diverse! dynamic and busy city. "he city where history and future meet each

other! the city with appro'imately 0!000 students! 100 ethnicities! lots of large both global and

local firms! thousands of small firms! ten million tourists per year! and a city without Starbucks.

We see $haka as an opportunity for Starbucks! because of the striking similarity between the

marketing policy of Starbucks! and the characteristics of $haka.

:lace

#onvenience

Speed

Desponsibility

Kumber

#onvenience* Cuick and efficient. 76 ;levenSupermarkets* Sells brewed and whole bean Starbucks coffee such as ShawPs! :eapod! Whole

oods.

$iscount Stores* "arget L Starbucks mini cafQ while also selling their products.

Kumber* 8ntensive distribution


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Whereas the decision of first city in %angladesh to launch Starbucks was not a problem! it is a lot

harder to decide where in the city we can place the first Starbucks. (s you already may know!

$haka is a segregated city in which different customer groups are divided throughout the city.

"he large amount of the tourists can of course be found in the center of $haka. 8n %anani!

2ulshan and $hanmondi! there some business firms offices and universities. "he 2ulshan area is

known for its prime location! as most of the foreign officials are living in this area. (t first sight!

this looks the best area to place the first Starbucks. 8t is the most popular area! with alarge

amount of people! and therefore a large amount of potential customers. %ut it is also an area with

a lot of problems. Small


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4ave popular users recommend it to potential and current users

"he message we want to get to the buyer is! E Starbucks best suits your need! as

Starbuck is the bestG

?ey Success actors*

We cannot iterate enough how much Starbucks strives for success. We believe there are a couple

ESuccess actorsG that contribute to our accomplishments*

?ey Success actors

Cuality of the products

Speed of the buying process

(ccess of the Starbucks products

OUR OFFERINGS

Dr$nk+Kever a dull sip

We will offer the new )anilla ,acchiato. "his multilayered beverage offers a delightful

combination of freshly steamed milk! rich espresso and ,adagascar %ourbon vanilla.


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. Smoothies 6 Kourishing blends made with real fruit and other good stuff.

. "eas 6 ,ade from the worldPs most delicious teas and botanicals.

10. 8ced #offe

F""-+"hey will turn into anyone a morning person

rom classic flavors to inspired combinations! we will introduce a variety of breakfast

sandwiches to help you kickstart your day. $iscover our new )egetable @ ontiago! Slow

Doasted 4am @ Swiss! toasty Deducedat "urkey %acon and melty ;gg @ #heese.

1. %akery 6 ,uffins! scones and more were made to go with coffee.2. Starbucks :etites 6 :etitesi-ed treats.3. %istro %o'es 6 4ungry for lunchT ind the complete package here + all good stuff.4. 4ot breakfast 6 4earty! hot and full of flavor thatPs how to start a morning.5. Sandwiches and Salads 6 WePve added a little gourmet flair to the menu.6. Fogurt and fruits 6 ;n&oy the goodness of real fruit.

PRICING0 BREAK1EVEN0 AND MARGIN ANALYSIS

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$etermining price is one of the most important marketing6mi' decisions. "he limiting factors are

demand and costs. $emand factors! such as buyer6perceived value! set the price ceiling. "he

companys costs set the price floor. 8n between these two factors! marketers must consider

competitors prices and other factors such as reseller reuirements! government regulations! and

company ob&ectives. #urrent competing coffee shop products sell at retail prices between %$"

0 and %$" 500. Starbucks plans to introduce its products at a premium price in order to e'pand

the market and to gain market share rapidly.

Sett$ng Pr$(e Bae- "n C"t

We start with the cost6based approach to pricing. #ost6plus pricing


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D8 :rice H unit costU unit sales

H %$" 70 U


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(lthough it is useful to know the break6even point! most companies are more interested in

making a profit. (ssume Starbucks would like to reali-e a %$"5 million profit in the first year.

4ow many must it sell at the %$"A0 price to cover fi'ed costs and produce this profitT "o

determine this! Starbucks can simply add the profit figure to fi'ed costs and again divide by the

unit contribution to determine unit sales*

9nit volume H


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perating e'pensesRthe e'penses incurred while doing business. "hese include

all other e'penses beyond the cost of goods sold that are necessary to conduct

business.

perating e'penses can be presented in total or broken down in detail. 4ere!

Starbuck estimated operating e'penses include marketing e'penses and general

and administrative e'penses.

,arketing e'penses include sales e'penses! promotion e'penses! and distribution e'penses. "he

new product will be sold through Starbucks sales force! so the company budgets %$" 5 million

for sales salaries. 4owever! because sales representatives earn a 10 percent commission on sales!

Starbucks must also add a variable component to sales e'penses of %$" 1.5 million


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De(e*&er 970 8:7;

Ket Sales %$" 15!000!000#ost of 2oods Sold !500!0002ross ,argin %$" !500!000

,arketing ;'pensesSales e'penses %$" 17!500!000:romotion e'penses 15!000!000reight 1!500!000 /5!000!000

2eneral and (dministrative ;'penses,anagerial salaries and e'penses %$" !000!0008ndirect overhead A!000!000 5!000!000

Ket :rofit %efore 8ncome "a' %$" 1!500!000

Pr" F"r*a 5Pr"'e(te-6 Ba/an(e Sheet 4"r the 781M"nth Per$"- En-e- De(e*&er 970 8:7;

(SS;"S#urrent assets*#ash and cash euivalents %$" !17!00(ccounts receivable! net of allowances 7!A/!008nventories 5A!/7/!00"otal current assets !!00Bong6term investments 6;uity and other investments 10!/A!00:roperty! plant and euipment 5!5/!00ther assets !77!00ther intangible assets 5!7!00

""(B (SS;"S 15!/1!00B8(%8B8"8;S (K$ S4(D;4B$;DSP ;C98"F#urrent liabilities*(ccounts payable 15!/1!0Short6term borrowings 1!/A!00"otal current liabilities AA!//!0Bong6term debt 7A!00/!0ther long6term liabilitiesShareholdersP euity* !1A!00Detained earnings 6ther additional paid6in6capital A!A!00

"otal shareholdersP euity 6""(B B8(%8B8"8;S (K$ S4(D;4B$;DSP ;C98"F %$" 15!/1!00

MARKETING PERFORMANCE MEASURES

Kow lets fast6forward a year. Starbucks product has been on the market for one year and

management wants to assess its sales and profit performance. ne way to assess this

performance is to compute performance ratios derived from Starbucks profit and loss statement

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We pro&ected 015 and 01 profit and loss information to show that! we may have incurred loss

in initial stage! but our franchise will be profitable in future years.

Pr"'e(te- Pr"4$t an- L" State*ent 4"r the 781M"nth Per$"- En-e- De(e*&er 970 8:7

starbucks_coffee-in_bangladesh-marketing.doc

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