Starbucks in India and Czech

INDIA – CZECH REPUBLIC

STARBUCKS
OBJECTIVES
 To develop a good base for the future in this
challenging market.
 To establish a consistent brand globally.
 To develop a niche position with year on year
growth of 5% for the next 5years.
 To secure long term profitability.
 Budget is £2.5million.
STARBUCKS COFFEE COMPANY
 Founded: 1971 in Seattle, USA
 Main activity: Starbucks sells coffee, tea, food
Confectionery, Smoothies and pastries
through its specialty operations
 Subsidiaries:
Tazo Tea Company

Seattle's Best Coffee
Torrefazione Italia
Hear Music
Ethos Water
GLOBAL PRESENCE
Present in 49
countries
Global presence in
green
STARBUCK‘S FIGURES
In US $ in 2008
Revenue: 10.383 billion
Operating income: 503.9

million
Net income: 315.5 million
Total assets: 5.673 billion
Gross Profit Margin:

57.5 %
Employees: 176,000
PERFORMANCE (REVENUE)
GLOBAL COMPETITORS
INDUSTRY
 Beverage Industry
- Falls in largest disposable income spending
segment
- Steady growth in the segment in Europe and Asia
- Growth in restaurant and coffee culture

Industry Analysis – Czech
Republic
• Market structure
- Oligopolistic competition ( Few companies
dominate)
• Competitive activity
- Moderate competition
- Location, Product innovation, local adaptation,

Competitive Pricing and Promotion are important
PESTLE Analysis (Czech)
• Political
- Close business ties between the US & Czech
Republic
- Stable political conditions
- EU Member (2004)
• Economic
- Stable economic growth of about 3% per annum
- High GDP($261.777 billion)
- Good per capita income resulting in more
disposable income($25,118)
PESTLE (CZECH)
Social
High number of working class
Consumers like value for money
Dense Population in Prague (132/km2)
Technological
Technology lowers operational costs
PESTLE (CZECH)
Legal
No major legal barriers
Fair trade
Environmental
Lot of water is required for the production of
coffee
INDUSTRY ANALYSIS(INDIA)
Market structure
- Oligopoly (Few competitors)
Competitive activity
- Moderate competition
- Location, Competition is in Pricing and
Promotion
PESTLE (INDIA)
Political Economic
- Close business ties - High economic growth 6%

between the US & p.a
India - High GDP $2.965 trillion
- Largest middle class
population
- Stable political - Economy is based on
conditions Services.
- High consumption of tea
(70.2% of the market)
PESTLE (INDIA)
Socio-cultural Technological
- • High Technology
Consumer preference for
value for money
- Price sensitive population
- High population density
PESTLE (INDIA)
Legal Environmental
- Fair trade - high levels of

- No major legal greenhouse
barriers gases.
Low access to water
PORTER 5 FORCES
(CZECH)
Supplier
power (1)
Threat of
Barriers to
Rivalry (2) substitute
entry (2)
(2)
Buyer
power (3)
1----------2----------3----------4
Low Medium High
PORTERS 5 FORCES, INDIA
Supplier
power (1)
Threat of
Barriers to
Rivalry (2) substitute
entry (1)
(3)
Buyer
power (3)
1----------2----------3----------4
Low Medium High
MARKET ANALYSIS (CZECH)
 Accessibility:
The market is fairly accessible since FDI is encouraged
Main language is Czech but English is also spoken.
High bureaucracy in public administration.
 Competitive threats
Buyer Power is very high in the market
 Potential profitability
The prospects are high, Czech has a high number of travelers and tourists to
Prague and Bohemia and there is high middle class.
Risk Analysis (BERI INDEX)

 BERI index 72( average conditions)
MARKET ANALYSIS INDIA
 Accessibility:
The market is fairly accessible, Language is predominantly English
Inefficiencies in public administration
 Competitive threats
Buyer Power is very high in the market
 Potential profitability
The prospects are high, has a high number of travelers and tourists.
Population density in Delhi, Agra and Mumbai.
Risk Analysis (BERI INDEX)

BERI index 72( average conditions)
MARKET SIZING
INDIA Czech
2008 2013 2008 2013
$31.5M $652,000
CONTEXT AND DIFFUSION
RATE
Diffusion
FAST SLOW
HIGH CZECH INDIA,
Context
LOW USA
This is useful for Marketing Communication

Hofstede’s Variables
HOFSTEDE’s UNITED INDIA CZECH

VARIABLES STATES
INDIVIDUALISTIC HIGH LOW(COLLECTIVE) MEDIUM
POWER DISTANCE LOW HIGH HIGH
UNCERTAINTY LOW HIGH MEDIUM

AVOIDANCE
MASCULINITY MASCULINE MIXED BUT MORE FEMININE

TILTED TOWARDS
MASCULINE
Useful for marketing communications, as well

as marketing mix strategy
SEGMENTATION
CZECH INDIA
Target market: • Target market: Tourists,

Tourists, travellers, young travellers, young western
western oriented generation, young
oriented generation, young business professionals and
business university students.
professionals and University
students
Target cities:
• Dehli, Agra and Mumbai
Target cities: Prague , Ostrava,
Bohemia regions
• Target areas within these

Target areas within these cities: cities: Airports, train
Airports, train stations, tourist stations, tourist attraction
places, business centres,
attraction places, business motor way stops
centres,
MARKET POSITIONING
 Starbucks is more than just COFFEE, it is a
UNIVERSAL EXPERIENCE for the customer.
 Starbucks a social gathering place and good

for networking.
 Starbucks provides an escape into relaxing,

peaceful environment
MARKETING INFORMATION SYSTEM
 Given the budget of only £2.5m, the preferable
sources of marketing information are:
 Qualitative:
 Personal sources including government employees and
consultants,
 Customer records
 Quantitative:
 Primary Data collection through research.
 Data generated at the points of purchase from Starbucks;
 Data derived from marketing campaigns.
STRATEGY
Wholly owned subsidiary ( Czech Rep.)
 Less risky, more control
Licensing ( India )
 Good for sharing risk.
STRATEGY AND BRANDING
INDIA  CZECH
Promotions will capture world Promotions will capture

class world
service, Class service,
Indian adaptation, focus on Czech adaptation, focus on

nutrition and
nutrition and
Value. Endorsement by
Bollywood Stars Value. Endorsement
Special promotions during Special promotions during

festivals, festivals, Sports events
Cricket tournaments tournaments
THANK YOU

Starbucks in India and Czech

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INDIA – CZECH REPUBLIC

Tazo Tea Company

Revenue: 10.383 billion

Operating income: 503.9

Net income: 315.5 million

Total assets: 5.673 billion

Gross Profit Margin:

- Steady growth in the segment in Europe and Asia

- Growth in restaurant and coffee culture

- Location, Product innovation, local adaptation,

- Close business ties - High economic growth 6%

- Fair trade - high levels of

Risk Analysis (BERI INDEX)

Risk Analysis (BERI INDEX)

HIGH CZECH INDIA,

This is useful for Marketing Communication

HOFSTEDE’s UNITED INDIA CZECH

POWER DISTANCE LOW HIGH HIGH

UNCERTAINTY LOW HIGH MEDIUM

MASCULINITY MASCULINE MIXED BUT MORE FEMININE

Useful for marketing communications, as well

Target market: • Target market: Tourists,

• Target areas within these

 Starbucks a social gathering place and good

 Starbucks provides an escape into relaxing,

Promotions will capture world Promotions will capture

Indian adaptation, focus on Czech adaptation, focus on

Special promotions during Special promotions during

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