Nick EversMike Mydlach
Zach Voigtschild
Starbucks International Marketing Plan: South Africa
Starbucks Profile
• Founded in 1971 in Seattle’s Pike Place Market• Named after first mate in Moby Dick• Highest quality Arabica beans from coffee growing regions of Latin America, Africa/Arabia and Asia/Pacific • Started grocery sales in 1996 in Portland, OR• Also 1st opened overseas store in 96’ in Japan•Now currently more than 700 stores in Japan
• More than 15,700 stores in 43 countries
Starbucks Company VisionObjective: To become the most recognized
and respected brand in the world.
Offer simple service and comfort to the coffee experience.“You get more than the finest coffee when you
visit a Starbucks—you get great people, first-rate music and a comfortable and upbeat meeting place,” says Howard Schultz, Starbucks chairman, president and chief executive officer.
http://www.starbucks.com/aboutus/Company_Profile.pdf
Products OfferedOffers more than
-30 roasted high-quality blends and single-origin coffees-Espresso/Frappuccino Beverages-SOME Markets=Baked Pastries/sandwiches/Salads
Starbucks also-Sells whole bean coffee as well as accessories/equipment via retail stores-owner of their subsidiary, Tazo Tea Company
South African Demographics
47,900,000 pop. 9 Provinces , 11
official languagesEnglish remains the
main medium of instruction in schools and universities
Ethnic Breakdown79.5% Black9.2% White8.9% Coloured2.5% Asian
Racial tension and inequality still exists with the end of apartheid in 1994
Economy Currency: 1 South African Rand = .1143 USD
The South African rand (ZAR), is the most actively traded emerging market currency in the world. It has joined an elite club of fifteen currencies
GDP is ranked 25th in the WorldGDP based on purchasing-power-parity (PPP) valuation of
country GDP= $492.684 Billion USD http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx?sy=2006
&ey=2009&scsm=1&ssd=1&sort=country&ds=.&br=1&c=199&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC%2CLP&grp=0&a=&pr.x=53&pr.y=2
JSE Limited ( stock Exchange)Modern infrastructures supporting major
urban centersCape Town, Port Elizabeth, Durban, and
Pretoria/Johannesburg
Environmental Analysis Traditions/Customs
Only family members and close friends address each other by their first names
Like America, it’s important to use professional titles
Still remains as a male-dominated societyWomen often referred to as girls
Business CustomsPunctuality is viewed as vitalWhite South Africans typically are more to the
point than South Africans of other racesHigh pressure and strong emotions have little
place in dealing with most South African businesspeople
Growing South African Coffee Market
Market is ripe for a global coffee company South Africans insist on sitting down and enjoying
their coffeeOverseas domed lids are popular however not in
South Africa.“tea break” was worked into the weekday
“It’s a take a break culture, mainly in office or industrial parks there seems to be a tendency for them to look for an attractive environment to drink coffee” -Roman Cylkowski: Blitzforce Marketing-Johannesburg
http://www.brandchannel.com/features_effect.asp?pf_id=391
Existing CompetitionNovelty Coffee Shops
Seattle, Vida e Café, Dulce CaféNone are truly a global brand(R8) for a typical cup of coffee = $1
USD(R15) for a latte = $2 USD
Restaurants Offering instant coffeei.e McDonald’s
Instant Coffee Producers in Grocery StoresFolgers, Maxwell House
Key Competition
Seattle Coffee Company
25 Current stores
Offer coffee and WIFI similar to Starbuck’s
“We introduced this type of coffee culture to South Africa in 1997, before anyone had heard of lattes or skinny mochas” Sandy Barlow
http://www.brandchannel.com/features_effect.asp?pf_id=391
In the first eight months of Wi-Fi connection, Seattle Coffee Company has logged 2,735 sessions with customers going online from its ‘comfy bars’ for a total of 190,000 minutes. The popularity of the service is also gaining momentum with a growth rate of 25 per cent month on month.
http://www.hp.com/rnd/pdfs/seattle_coffee.pdf
Key Competition Cont.
Vida e CaféPortuguese-themed company serving coffee,
cappuccino, espresso, gelado, and muffins19 current stores within 5 yearsBright colors and loud music atmosphere geared
toward a trendier crowdPartnered up with like minded brands
Levis, Converse, Virgin, BMW MiniUse local popular personalities to advertise
product (A1 Driver, Pro Wake Boarder)
Market Entry MethodFRANCHISING
Already has a strong channel, passing process down is easy
Capitalize on market share in another country without spending a large amount on investment
Political risks for the right owner are very limited which would ease pressure to begin business
Target Market/CustomerPlan to target men and women 18-35
Students/business men & women looking for the weekday coffee break
Starting w/ a sprinkler effect in major cities1.Johannesburg 2.Durban3.Cape Town 4.East Rand5.Pretoria6.Port Elizabeth
SWOT Analysis I. Strengths
Its brand name Anticipation of Starbucks Experience in franchising
internationally Untouched by a global companyII. Weaknesses Overexpansion Some South African’s are only content
with the tastes they’ve been brought up on
SWOT cont.III. Opportunities
Market is growing and untouched as far as global coffee companies are concerned
Cheaper Brands have grasp of the lower class customers, leaving the middle to upper class customers wide open for Starbucks to hit
IV. Threats Current state of the downward economy
Downward economy will force many consumers to think about a cheaper alternative
Objectives1-Increase product awareness among the
target audience by 30% in our first yearAdvertising in newspapers, magazines, billboards, mass transit systems, and the Web
High volume areas like malls and business districts must be targeted
Even secondary schools and universities
WORLD CUP 2010 advertising
2- We would like to open our first location in Johannesburg producing $520,000 or 4.635 million Rand.Pricing our products just above Seattle and Vida at 8 Rands a cup while proving our competitive advantage over them using a price skimming strategy
Using the Johannesburg Star to advertiseAs well as mass transit, grocery stores, universities, business districts
3- Gradually open 5-10 main locations into the country’s major urban areas if Johannesburg seems to be a success.Trial and Error with products
Gradually introduce the people to our other products such as breakfast foods, salads, drive thru
Don’t push products upon people, adapt to their wants
Obtain a strong customer base and loyalty before expanding operations
Promotional Plans¼ page ad weeks in advance informing
people of grand opening as well as offering a buy 1 get 1 coupon
Product tasting at universities and shopping districts
After paper advertisement and commercials are embedded we won’t need to rely on coupons and we can use more of our budget on:BillboardsMagazine adsPerhaps hiring local celebrities
Marketing Plan Budget
Percent of Sales MethodJohannesburg projected to earn $520,000
USD or 4.635 million Rand15 % of sales will be used for
marketing/advertising2nd year of business would budget for
700,000 Rand on advertising ¼ page ad in the Star costs 2400
Rand/day @ 5 months would cost 360,000 Rand
ConclusionThere’s a need for a global coffee company
in South AfricaThe people embrace the sit down culture
that Starbuck’s offersStarbuck’s powerful global name will help
entry into South Africa as well as strength in support of distribution and marketing
Sourceshttp://www.starbucks.com/aboutus/Company_Profile.pdf
http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx?sy=2006&ey=2009&scsm=1&ssd=1&sort=country&ds=.&br=1&c=199&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC%2CLP&grp=0&a=&pr.x=53&pr.y=2
http://www.brandchannel.com/features_effect.asp?pf_id=391
http://www.hp.com/rnd/pdfs/seattle_coffee.pdf