How and Why a Global Brand Starbucks failed in Australia

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HOW AND WHY A GLOBAL BRAND STARBUCKS FAILED IN AUSTRALIAPRESENTATION BY: VIREN BAID | LOHITHA LEKKALA | RAM VIGNESH S | JAYESH SRIVASTAVAMENTOR: MS. ZEYNEP ROBERTS

AGENDA2

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BACKGROUND INFORMATION3

Worlds largest coffeehouse company Over 21,000 stores worldwideThe Starbucks experience2nd Most Valuable Brand in Fast Food IndustryBrand Value of $ 25.8 Billion3

RESEARCH PROBLEM & OBJECTIVES4

RESEARCH PROBLEM: Failure of Starbucks in AustraliaOBJECTIVES: Starbucks hasnt understood the coffee market in AustraliaAustralians preference towards Australian brandsCompetition from McDonalds, Gloria Jeans & local coffee shopsHigh Price Low QualityNot enough stores to accessCultural Differences

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RESEARCH QUESTIONS5

Starbucks Australia : What went wrongUnderstand the Australian Coffee MarketIs 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 DESIGN6

Study existing academic journals and news articles on the history of Starbucks in AustraliaInterview industry experts, consumers and representatives from various other coffee shops to understand their strategiesConduct consumer surveys to understand what they feel about Starbucks and what changes Starbucks should make6

LITERATURE REVIEW7Culture included smaller boutique type coffee shopsCoffee was more about relationships than a productAustralians like their coffee stronger without any flavoured sugary syrups, unlike AmericansHighest consumption of instant coffee in the world14,000 cafs generating income of $9.7 billion per yearGloria Jeans dominates coffee retailing market

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8Number of stores in AustraliaYear established in AustraliaBusiness ModelPrice of an espresso (similar sized cup)Gloria Jeans5001996Franchise$3.25McCafe4881993Store-owned$3.25Coffee Club2201989Franchise$3.40Wild Bean Caf1052004Franchise$3.40Hudsons451998Franchise$3.10Starbucks232000Store-owned$3.60Figure: Competition in the Australia speciality coffee chain market (2008)LITERATURE REVIEW (CONTD.)8

LITERATURE REVIEW (CONTD.)9

What went wrong in the Australian market?Unsustainable business modelFailure to communicate the brandLate entry into a highly competitive marketQuick expansion Declining service quality9

EXPERT OPINION10

Gloria JeansStraighter and Stronger coffee (less flavors)Use only Soymilk Franchise based model

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EXPERT OPINION11StarbucksFlavor based coffeeUse Soymilk, skim and regular milkMost selling coffee:FrappuccinoCaramel Macchiato Flat latteOwned by 7/11New stores to open

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CONSUMER SURVEY1212

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CONCLUSION20

There is NO Brand Loyalty50% of consumers like Starbucks Beverages (47% liked Espresso/Coffee)Consumer Feedback46% - High Quality38% - OverpricedConsumer ExpectationTaste (Espresso & Coffee)Price & Value for MoneyAccessibility20

Fulfil Consumer ExpectationTaste (Espresso & Coffee)PriceCreate Value for MoneyIncrease Starbucks stores gradually

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THANK YOU!