RKC MM Febr Mid Exam complete

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StarBucksPersonas Positioning Maps and U.SMarket vs. Chinese Market

Robert Kennedy College Marketing Management


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Personas Positioning Maps and U.S Market vs. Chinese Market

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CONTENTS

Contents............................................................................................................................................................2

Executive Summary ...................................................................................................................................... ...3

Starbucks and Coffee Industry........................................................................................................................3

Persona 1 Sarah Jessica Bell......................................................................................................................4

Persona 2 Paul Hush.................................................................................................................................5

Persona 3 Anne Smith...............................................................................................................................6

Positioning Map................................................................................................................................................7

Direct Positioning Map.................................................................................................................................7

Indirect Positioning Map..............................................................................................................................8

Starbucks Personas Positioning Map..........................................................................................................9

Starbucks U.S vs. China..................................................................................................................................10

References and Bibliography...........................................................................................................................11

Appendix A - The Worlds Most Recognizable Coffee Brands................................................................... 12

Appendix B General Overview of Coffee Industry.................................................................................. 13

Appendix C Starbucks general Information............................................................................................14

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EXECUTIVE SUMMARY

Starbucks (founded Seattle 1971) is the worlds largest Coffee shop franchise with 16,858 shops in 50

countries and still expanding (China). Starbucks serves a wide range of products other from coffees, cold

drinks, beans, salads, sandwiches and items like mugs. They also involved in other initiatives like music,

videos and book marketing. They opened their first store outside U.S in Canada in the mid 90s and

opened a shop a day in the 90s.

The best way to stay on top is to evaluate and place various Personas on a positioning map (direct and

indirect) to indicate where Starbucks should improve or adapt. Sarah, a 54 year old writer from Dallas

Texas who goes to Starbucks for comfort and Tea or Roast is our first Persona. The other two being used

is Paul, a 33 year old Recruiter who enjoys it to meet the applicants at Starbucks over a Caf Latte and

being able to have Wi-Fi facility available and Anne, a 28 year old Personal Assistant who is always on

the move which her favorite Iced Coffee and an espresso in the morning.

Starbucks has been compared on a Positioning map with their direct Competitors like Caribou and Tullys

and compared to indirect factors that have an effect on their success. They have also been compared

directly to each other based on the 4 most important factors (Technology, Lifestyle, Comfort and Options),

whereas Starbucks is situated in the middle for a specific reason. The three personas has been placed onthe Starbucks map to give an direct indication if they suite their personas. Variation on these 4 factors

could have significant effect on loosing or gaining new customers.

Starbucks entered the Chinese market because of their large population and potential market. The

Chinese drink coffee as a fashion statement (similar to sushi in the U.S) but the ancient perception on

coffee changed over the years. Nestle entered the Chinese market first with Instant coffees which suites

the pockets of Chinese citizens better but Starbucks has adapted their strategy to suite the market as it

did in Japan.

STARBUCKS AND COFFEE INDUSTRY

Starbucks closed down hundreds of shops since 2008 due to under performance and economical strains.

Starbucks have also been targeted by protests on political views, labor relations, fair trade and

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competitive practice which forced them to change their status quo to stay on top of their competitors all

over the world. Appendix C gives more insight into this matter.

Starbucks select their consumers very carefully through positioning maps and understanding their clients

as will be indicated throughout this document.

PERSONA 1 SARAH JESSICA BELL

Sarah Jessica Bell is a 54 year old Book writer since 1992 and a

Journalist by Profession.

Sarah is a mother of 3 and has a very good adult relationship with all

her children where she sets a good example for them in life. She

enjoys their company over the weekends to discuss their careers and

studies. Sarah and her Family have been living in Dallas, Texas since

she met her husband in college. They have been living on a large

property (few acres) for more than 20 years, where they enjoy the

quiet life and the panoramic view to enjoy the creation around them for miles too see.

Anne is a stable, consistent, focused and very mature woman with an evaluating personality. She knows

what she want and will argue her point to understand and learn more, she is a good listener and even

better executer with daily challenges and tasks. She enjoys time with herself every now and again to

balance her life. Sarah has been enjoying writing since she can remember from a very young age.

Sarah loves the outdoors with her husband and good friends. She takes her health and those of her

family very serious and believes that a good days work needs a good days rest. Sarah loves to travel the

globe to experience different cultures and religions, her favorite country has been Russia and the most

respected and appreciated is the African continent. Sarah dislikes manipulative people and stubborn

people who is selfish in life and do not want to give others an opportunity.

Sarah writes Fantasy novels which are more focused on adults those people who has a desire to let their

minds go while reading. She uses all these experiences (her children, traveling, outdoor, views) to write

the perfect fantasy. Her ultimate goal in life would be to write a fantasy with global recognition (Similar to

Lord of the Rings).

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Sarah goes to town daily. She loves to stop at Starbucks on her way out when she want to leave the city

life behind her in a balanced coffee shop where she can enjoy her favorite tea with a piece of cake in an

calming atmosphere. Sometimes she also decides to meet friends or family at Starbucks to enjoy a good

chat. Sarah do not make use of the extra facilities like Internet at Starbucks due to her way of life which is

more old fashioned and view on outdoor creativity instead of being captured between walls and people.

PERSONA 2 PAUL HUSH

Paul Hush is a 33 year old, self employed business owner

(recruiting agency for his previous company) since 2008. Paul

has 10 years experience in freight and cargo handling and

administration. He started working at a bakery when he finished

school for two years, when his friends organized him a job at

the east docks of Miami, Florida as a assistant handler. He

worked his way through the various departments and levels

until he reached the section managers position. He got the

position due to hes broad skill levels within the company and

the industry. He is a result driven individual who has a way of

getting to motivate people in the workplace.

Paul is a peoples person and enjoys a beer after work, with friends and his fiance for 2 years. Most of

his friends have been around since high school. His fiance is an old work colleague which he fancied for

very long and this was part of the motivation to grow within the company. He is not a family man but will

visit his parents every now and again. He is the only child and do not have a good family based

relationship with his cousins and grandparents who lives in Ohio.

Paul does not have any hobbies or activities except watching sport and gambling every now and again.

He experienced with drugs when he was employed on the docks but realized that his life had to change to

avoid being dragged down and lowering is standards to much.

Paul is a pleaser and hustler and this is what makes him so popular with his friends and family. He is well

informed and good with numbers. He uses his mouth to convince people and to manipulate them to

understand where hes argument.

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Paul meets with his applicants at Starbucks. He enjoys Starbucks because everybody knows the shop.

Paul always orders a Caf Latte while he waits for the applicant. Paul makes use of the technology

provided by Starbucks to assist him in preparing for the interviews. He also enjoys Starbucks because of

their layout where the take away (busy) section is separated from the tables section, which means it is

always quiet and relaxing to work there.

PERSONA 3 ANNE SMITH

Anne Smith, a 28 year old Personal assistant since 2003 (8 years)

She studied Public law at (University of Chicago) but had to drop out due

to financial difficulties and below average results that she got for the time

and effort she put in (lost interest).

Anne found a job in Chicago and moved to the inner city almost a year

after she dropped out of college. She lives in a small one bedroom

compartment on the 2nd floor in Central Chicago two Blocks away from her

work.

She was broad up in a farming community in the Atkinson area. Her

parents werent able to give Anne everything she wanted and had to apply for loans to send her to

college.

Anne is an impulsive, easily distracting woman with high energy levels, which she uses to her advantage

in her daily live (social, physical and professional). She is easy going and straightforward with a good

sense of humor. Anne has a weak long term memory but excellent with short term memory? She likes

being involved and making decisions; she is not shy to give her opinion and will challenge other people on

their opinion.

She loves outdoor activities with fellow employees and city friends, her favorite being tennis, cycling and

jogging; she does not like the Gym at all for various reasons. In her spare time at night or over weekends,

she will read a good love story or fantasy. She has been single for more than 4 years and is not bothered

to be in a relationship.

Anne started buying from Starbucks just because of the International recognition and branding, but soon

changed her perspective when it became a habit too not go to Starbucks. She enjoys Starbucks for their

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modern but stylish coffee shop concept and their consistent on the go service. Her favorite beverage is an

Iced Coffee but starts every day with an espresso. She visits her local Starbucks at least twice a day, on

her way to work and then either lunch for some light meal and Iced Coffee or at night on her way home.

POSITIONING MAP

DIRECT POSITIONING MAP

Starbucks need to find the ideal positioning mapwhich will attract more consumers than their competitors

as indicated in the positioning map bellow. A selection of the (current) four most desirable categories

which will affect a personas choice of Coffee shop has been put down on the Graph. Currently most

Personas will make their decision based on the Technology available to them which will make their lives

easier when selecting a beverage and shop. Secondly, each persona has a different lifestyle and a coffee

shop need to consider various (as many as possible) lifestyles to buy form them. Thirdly and second most

importantly, the comfort provided by the shop or franchise will have a major effect on the personas

choice. Lastly but most important is the options available to select when a Persona enters a coffee shop,

the Quality and the price will have an additional effect within this category.

Starbucks have been put in the centre for a very specific reason. This is because they try to balance and

be most effective in all categories compared to their direct competitors. Maxwell House is the closest but

do not put a lot of focus on comfort and different lifestyles, but a grater concern on and options (branding

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like Kraft). Whereas Caribou coffee; focus much more on comfort and specific lifestyles but less on

technology and options. Tullys is similar to Starbucks on Comfort but with fewer options and lifestyles,

even though they are similar in technology they are far out from the middle meaning it has a very limiting

effect.

INDIRECT POSITIONING MAP

Appendix A discusses the worlds most favorite Coffee brands. This has an indirect effect on the

performance and selection of personas for Starbucks and their competitors. Coffee brands like Nestle

and Kraft foods changed their perspective over the last decade through vending opportunities and office

coffee machines. This has a significant effect on Coffee shops and coffee brands.

Other competitors like Coca Cola and Red Bull creates an interesting situation. It all boils down taste,

substance, energy and health as indicated by the positioning map bellow. Almost every person in the U.S

will enjoy some hot or caffeine beverage at least once a day, whereas with the above mentioned

competition it becomes a juice of health and like/dislike.

Starbucks and their competitors has been placed onto a positioning map (above) compared to their

indirect competitors based on the four axiss which distinguish them from each other and indirect

competitors when selected by their Personas.

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Dunking Donuts might have most of the nice fatty and tasteful options but they do not focus on health or

energy at all, this creates a very specific group of people who would support them.

Starbucks is way down left because it wants to be distinguished from fatty choices and weak tastes

(quality) but wants to focus on specific matters such as Health and daily (natural) energy. Most of the

competitors hang around to the centre, but this indicates that they try to play safe by balancing their

Personas.

STARBUCKS PERSONAS POSITIONING MAP

This map gives an indication of where each of the mentioned personas fits onto the Starbucks (first map).

As one can see, Anne sits on the Top right corner due to her like in the innovative options which fits her

on the move lifestyle. Sarah, is located on bottom left due to her need for comfort which suites her

lifestyle perfectly. Paul is somewhere in the middle on the lifestyle axis because of all the different people

he meets, this also includes the comfort level (to make his applicants at ease) and also because of the

technology being provided by Starbucks. It can be seen that he is not bothered by the options available.

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These 4 categories can have a significant effect on switching between shops. If one do not study the

market needs (local and global) and implement it into their positioning map, then they will easily push

consumers to select a new coffee shop which will suite them best. Starbucks is on top of their game in

executing their maps to fit most personas.

STARBUCKS U.S VS. CHINA

China is a third world country who discovered tea but only records a 100 year history on coffee. The

Chinese people find it difficult to adapt to the western drinks such as coffee. Majority of the 1.3 billion

people do not know coffee except in the larger cities where young westernized professionals live. Coffee

is still a fashion statement just like Sushi is for U.S citizens.

The majority of the people have a misperception on coffee due to old mythologies and medicine practices

(little knowledge). The majority coffee drinkers in China makes use of Instant coffee due to costs

compared to coffee shop prices.

Nestle (46%) entered the Chinese coffee market first with Maxwell House (20%) who followed. Starbucks

entered the Chinese market due to the strong effect China has on the Global market. Other reasons why

Starbucks entered the market include a population advantage (if every citizen can drink one cup a day =

1.3 billion compared to 400 million in the U.S) and Chinese people who are more informed on the western

world than the previous generation. Chinese economy is very stable and has a good currency to import /

export coffee and Chinese Personas differ from the U.S in the form of financial income (much lower) and

traditional (tea) believes. The biggest difference is the difference in lifestyles, where China is far from a

democratic government and limited choices to enjoy and adapt their lives. Starbucks adapted through fair

trading on a global scale, where labor laws are very different in China as in the U.S which makes it easier

to compete in a newly established market (China). More reasons on Chinese coffee can be found in

Appendix B.

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REFERENCES AND BIBLIOGRAPHY

Kotler, P., Keller, K.L., Marketing Management, 13 th Edition. 2009. Pearson International Edition.

Starbucks Plans Major Expansion into China - WSJ.com, APRIL 13, 2010.

Starbucks Coffee Company, Tuck School of Business at Dartmouth, no. 1-0023

http://news.bbc.co.uk/2/hi/7484563.stm, Starbucks to close 500 more Shops, 14:52 GMT, Wednesday, 2 July 2008 15:52 UK

http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html, Starbucks Corporation.

http://www.google.co.za/search?

q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-

IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAM , Starbucks Timeline.

http://www.starbucks.com/store-locator, Starbucks Store locator.

http://www.talkaboutcoffee.com/the-worlds-most-recognizable-coffee-brands.html, Worlds most recognizable coffee brands.

http://www.streetdirectory.com/food_editorials/beverages/coffee/us_coffee_shops.html, U.S Top Coffee shops.

http://www.itmonline.org/arts/coffee.htm, Coffee in China and the Analysis of Coffee According to Traditional Chinese Medicine,

Subhuti Dharmananda, Ph.D., Director, Institute for Traditional Medicine, Portland, Oregon.

http://www.franchiseek.com/Market_Trends_Coffee_China_1004.htm, Coffee brews a future in China?, Hope Lee , 13 Sep 2004.

http://seekingalpha.com/article/43330-starbucks-all-the-coffee-in-china, Starbucks: All The Coffee In China, Philip Davis, August

02, 2007.

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http://news.bbc.co.uk/2/hi/7484563.stmhttp://www.mhhe.com/business/management/thompson/11e/case/starbucks.htmlhttp://www.mhhe.com/business/management/thompson/11e/case/starbucks.htmlhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.starbucks.com/store-locatorhttp://www.talkaboutcoffee.com/the-worlds-most-recognizable-coffee-brands.htmlhttp://www.talkaboutcoffee.com/the-worlds-most-recognizable-coffee-brands.htmlhttp://www.streetdirectory.com/food_editorials/beverages/coffee/us_coffee_shops.htmlhttp://www.streetdirectory.com/food_editorials/beverages/coffee/us_coffee_shops.htmlhttp://www.itmonline.org/arts/coffee.htmhttp://www.itmonline.org/arts/coffee.htmhttp://www.franchiseek.com/Market_Trends_Coffee_China_1004.htmhttp://seekingalpha.com/article/43330-starbucks-all-the-coffee-in-chinahttp://news.bbc.co.uk/2/hi/7484563.stmhttp://www.mhhe.com/business/management/thompson/11e/case/starbucks.htmlhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.google.co.za/search?q=starbucks+history&hl=en&sa=X&rlz=1T4GZAZ_enZA351ZA352&tbs=tl:1,tl_num:50&prmd=ivns&ei=HaliTf-IKMKq8QO4ksnxCA&ved=0CIcBEMsBKAMhttp://www.starbucks.com/store-locatorhttp://www.talkaboutcoffee.com/the-worlds-most-recognizable-coffee-brands.htmlhttp://www.streetdirectory.com/food_editorials/beverages/coffee/us_coffee_shops.htmlhttp://www.itmonline.org/arts/coffee.htmhttp://www.franchiseek.com/Market_Trends_Coffee_China_1004.htmhttp://seekingalpha.com/article/43330-starbucks-all-the-coffee-in-china


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APPENDIX A - THE WORLDS MOST RECOGNIZABLE COFFEE BRANDS

Ever wonder if your favorite brand of coffee is a household name outside your household? Each year, Millward Brown compiles

BRANDZ, a report on the most recognizable brand names and brands internationally. This year, Starbucks ranks 35th worldwide for

brand recognition, behind such colossal names as Google (#1), Coca Cola (#3), Wal*Mart (#7) and McDonalds (#11). Its the only

coffee brand in the Top 100 most recognizable brand list, and it also ranks #4 on the chart of brands with the most upward

momentum for 2007. It is, surprisingly, not on the list of top ten most recognizable North American Brands.

According to the BRANDZ 2007 report, the five most recognizable coffee brands in the world are:

#1 Nescaf, from Nestle. Introduced in 1938, Nescafe instant coffee has been sold all over the world since then. During World War

II, the entire production of the U.S. plant was reserved for military use only. In the U.S., Nescafe was supplanted by Tasters Choice

instant coffee for years. In 2003, the company began using Nescafe Tasters Choice as the brands name. It is the single most popular

instant coffee internationally.

#2 Folgers, from Proctor & Gamble, is the second most recognizable coffee brand worldwide, due in part to its pervasive presence in

advertising. Some of the most well-known television ad campaigns of all time have been for Folgers coffee, and few tag lines are as

well known worldwide as The best part of waking up is Folgers in your cup.

#3 Maxwell House, from Kraft Foods, follows close behind Folgers for brand recognition. The Maxwell House slogan is one of the

most recognizable brand-associated slogans in history. The company has been using the slogan since 1917, when, according to an

apoctryphal story, Teddy Roosevelt declared that the cup of Maxwell House coffee he had just finished was good to the last drop.

#4 Jacobs is nearly unknown in the U.S. but in Europe it is one of the most well-known brands of coffee. Now marketed by Kraft

foods in Europe, Jacobs originated in Germany in the late 1800s, and is sold throughout Europe.

#5 Douwe Egberts, pronounced Dewey Egberts, began as a small coffee importer in The Netherlands and became one of the largest

European coffee roasters. Now a subsidiary of Sara Lee, Douwe Egberts is sold throughout Europe, and is the main supplier of coffee

pods for the Senseo Coffee System.

Some other interesting brand name coffee news that might interest you:

While Starbucks has been spreading its name around the world, U.S. rival Dunkin Donuts unseated the major coffee seller in a 2007

coffee loyalty survey produced by Brand Keys, a market research firm.

And as if that werent bad enough, when well-known magazine Consumer Reports tested for best coffee taste, Starbucks finished

behind are you ready for this? McDonalds premium blend. They get to share the misery, though. McDonalds coffee also beat

Dunkin Donuts and Burger Kings BKJoe.

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APPENDIX B GENERAL OVERVIEW OF COFFEE INDUSTRY

But can Chinese customers afford that? Yes:

#1 - They pay less than we do. Employees are Starbucks largest expense and cheap Chinese labor allows them to sell much

cheaper coffee over there. Dont forget, Starbucks is in the business of exporting coffee; the shops are just bonus money for them.

#2 - Its cool. Starbucks is the Als Diner (Happy Days) of China. Where the heck else are they gonna go? Heck, we go to Starbucks

and we have our own cappuccino machines at home with 60 TVs in our living room and cool stereos and stuff, yet still we go there!

China is like Happy Days with very few places for kids to get together so they all commune in the local hangout, which is starting to

be Starbucks.

#3 - Friends. On the TV show, those people spent their lives in the coffee shop. Chandler and Joey had money, but Phoebe and

Rachel were always broke - yet they could all hang out at the coffee shop all day long. Chinas disparate economic classes need a

common place to gather and Starbucks fits the bill as its cool enough for any yuppie, yet cheap enough for everyone to hang out and

spend whatever money they had.

Warren Guo, a 30-year-old who works in foreign trade, told the paper that he doesnt actually like coffee. He comes to Starbucks

because there are many girls. Runway model Fang Sun Yan started coming to Starbucks to meet friends. Now she says shes

grown a little bit addicted to coffee and visits as often as three times a week. We all have friends who are a little bit addicted to

Starbucks.

If Starbucks pulls back to $25, I will consider it a gift and load up on Jan 10 30 call options, which should fetch around $4.50. I will

hold that and sell the short calls for the next couple of years for a very nice income stream. At $5.25, Id rather buy the 09 $25s and

roll them back later but I can sell the Sept $27.50s for $1.05, not a bad initial return for 50 of my 540 days of ownership.

Starbucks had gone pretty much straight up from $2 in 1996 to $40 in April when they fell out of favor and took a 35% pullback

since. That leaves Starbucks trading at its 2005 high, although that year the company had $6.4Bn in revenues, making .61 per share

while so far in 07, in just 2 quarters, the company has $4.6Bn, making .46 per share thats outperforming the first half of 05 by

58%

This pullback is now in its 10th month, the same amount of time as it took to run up from $24 in Sept 2005. I see no reason this

stock wont hit $40 again in the next 10 months but Im giving it 18, just to be safe!

I will save some time writing another article that would be almost identical by just giving you the title: All the Diapers in China.

The biggest difference between Wal-Mart and Starbucks is that Wal-Mart ALREADY employs more people than the US Army!

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APPENDIX C STARBUCKS GENERAL INFORMATION

Coffee chain Starbucks plans to shut 500 stores in the US on top of the 100 closures it had already announced.

Up to 12,000 full and part-time jobs will go, although Starbucks will try to move staff into other stores.

While it is closing underperforming stores, the company is still opening new US outlets, although it is cutting back from 250 to 200next year.

Starbucks opened many stores in areas which have since been hard-hit by the housing slump such as Florida.

Feeling the pinch

About 70% of the outlets scheduled to be closed have only been open since 2006.

The company has been hard-hit by US consumers feeling the pinch and cutting back on their spending on expensive coffee.

The job losses would be about 7% of the company's global workforce.

Starbucks said it was closing stores that were either not profitable or likely to struggle in the future as economic conditionsdeteriorate.

"This makes our decision to close stores difficult because it is disrupting the lives of the people who have worked so hard to deliversuperior service to our customers," said chief executive Howard Schultz.

"At the same time, we recognise that it is necessary to make decisions that will strengthen the US store portfolio."

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