how and why a global brand starbucks failed in australia
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HOW AND WHY A GLOBAL BRAND STARBUCKS FAILED IN AUSTRALIA
PRESENTATION BY: VIREN BAID | LOHITHA LEKKALA | RAM VIGNESH S | JAYESH SRIVASTAVAMENTOR: MS. ZEYNEP ROBERTS
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AGENDA
BackgroundInformation Objective Research
ProblemResearchQuestions
ResearchDesign Literature Review Conceptualization
Data Analysis Conclusion Recommendations
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BACKGROUND INFORMATION
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World’s largest coffeehouse company
Over 21,000 stores worldwide
The Starbucks experience
2nd Most Valuable Brand in Fast Food Industry
Brand Value of $ 25.8 Billion
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RESEARCH PROBLEM & OBJECTIVES
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RESEARCH PROBLEM: Failure of Starbucks in Australia
OBJECTIVES: Starbucks hasn’t understood the coffee market in Australia
Australians preference towards Australian brands
Competition from McDonalds, Gloria Jeans & local coffee shops
High Price – Low Quality
Not enough stores to access
Cultural Differences
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RESEARCH QUESTIONS
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Starbucks Australia : What went wrong
Understand the Australian Coffee Market
Is Starbucks delivering what consumers need ?
What do consumers like & dislike about Starbucks?
How willing are consumers to buy from Starbucks?
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RESEARCH DESIGN
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LiteratureReview
Qualitative Research
QuantitativeResearch
Study existing academic journals and news articles on the history of Starbucks in Australia
Interview industry experts, consumers and representatives from various other coffee shops to understand their strategies
Conduct consumer surveys to understand what they feel about Starbucks and what changes Starbucks should make
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LITERATURE REVIEW
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Culture included smaller boutique type coffee shops
Coffee was more about relationships than a product
Australians like their coffee stronger without any
flavoured sugary syrups, unlike Americans
Highest consumption of instant coffee in the world
14,000 cafés generating income of $9.7 billion per year
Gloria Jean’s dominates coffee retailing market
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Number of stores in Australia
Year established in Australia
Business ModelPrice of an espresso (similar sized cup)
Gloria Jeans 500 1996 Franchise $3.25
McCafe 488 1993 Store-owned $3.25
Coffee Club 220 1989 Franchise $3.40
Wild Bean Café 105 2004 Franchise $3.40
Hudson’s 45 1998 Franchise $3.10
Starbucks 23 2000 Store-owned $3.60
Figure: Competition in the Australia speciality coffee chain market (2008)
LITERATURE REVIEW (CONTD.)
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LITERATURE REVIEW (CONTD.)
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What went wrong in the Australian market?
Unsustainable business model
Failure to communicate the brand
Late entry into a highly competitive market
Quick expansion
Declining service quality
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EXPERT OPINION
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Gloria JeansStraighter and Stronger coffee (less flavors)
Use only Soymilk
Franchise based model
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EXPERT OPINION
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StarbucksFlavor based coffee
Use Soymilk, skim and regular milk
Most selling coffee:
Frappuccino
Caramel Macchiato
Flat latte
Owned by 7/11
New stores to open
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CONSUMER SURVEY
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Gloria Jean's21%
McCafe/McDonald10%
Starbucks18%
Local independent coffee shops
8%
Doesn't matter44%
Brand Loyalty
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Beverages Food Ambience Customer Service
Starbucks Overall Experi-ence
Others
50.0%
12.5%
32.5% 30.0%25.0% 22.5%
What do Consumers Like about Starbucks
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30.0%
47.5%
20.0%
2.5%7.5%
17.5%
Consumer Beverage Consumption : Starbucks
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High Qual-ity
Unique Value for money
Bad Cus-tomer service
Over-priced
Poor Qual-ity
Good Cus-tomer service
46.2%
35.9%
17.9%
2.6%
38.5%
0.0%
35.9%
Consumer Feedback on Starbucks
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Taste
Price
Accessibility
Customer Service
Ambience
Value for Money
0.0 1.0 2.0 3.0 4.0 5.0
Consumer Expectation Vs Starbucks
GeneralStarbucks
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Coffee
Espresso
Tea
Frappuccino
Hot Chocolate
0.0 1.0 2.0 3.0 4.0 5.0
Consumer Preference Vs Starbucks
GeneralStarbucks
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Very Sat-isfied18%
Somewhat Sat-isfied26%
Neither Satisfied nor Dissatisfied
44%
Some-what
Dissatis-fied13%
Starbucks Overall Satisfaction
Series1
0.0 1.0 2.0 3.0 4.0 5.0
2.7
Willingness to Buy : Starbucks Products
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CONCLUSION
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There is NO Brand Loyalty
50% of consumers like Starbuck’s Beverages (47% liked Espresso/Coffee)
Consumer Feedback
46% - High Quality
38% - Overpriced
Consumer Expectation
Taste (Espresso & Coffee)
Price & Value for Money
Accessibility
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Fulfil Consumer Expectation
Taste (Espresso & Coffee)
Price
Create Value for Money
Increase Starbucks stores gradually
RECOMMENDATION
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THANK YOU!