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MARKETING OF INNOVATION :

The Starbucks D-Table


Ahmad JAMMOUL, Zia LENNARD, Laziza SEBTI, Mehdi DAISSAOUI, Nawfal OUAADIL
University of Nice Sophia Antipolis

Chapter I : The exploratory desk research


Starbucks Coffee Company was founded in 1971, in Seattle - selling high-quality green
coffee beans; they opened their first store coffee bar concept in 1984, and from there
expanded over the years to become one of the most innovative companies when coming
to their marketing strategies.
Coffee shops market place:
The coffee industry and the coffee shop business has boomed in recent years,
especially with regards to specialty coffees. The market for specialty coffees has grown
as consumers become more educated about espresso-based drinks and how they are
made.
Some key numbers of the Coffee shops market place:
Coffee consumption has risen from 9 percent in 2000 to 16 percent in 2004
More than half of the adult population drinks
coffee, 108.9 million people.
United states accounts for 52 million of those
coffee drinkers.
While fast food chains are growing at a rate of
2 percent each year , coffee shops chains grow more
than 10 percent annually.
the market size of coffee grew from 7.53
billion $ in 1999 to 8.96 billion$ in 2003.
Today coffee shops annual sales= $13.12
billion
Figure1: Coffee shops Costumers Loyalt

In this figure we can observe that 25% of


the costumers seek out new caf and new
concepts to add to their repertoire, and 29%
of them think that the coffee shops are all
too similar and are not excited by them. Our
product will offer them a new concept and a
new framework of coffee shops that will
attract them and that can make of them
loyal customers. Further more our
innovation will also attract costumers that
are very loyal who represents 48 % of the
market.
Figure2: Most important extra for customers
Our innovation will provide all the important extra throw a new framework. It will also attract
customers that are not used to stay longer in coffee shops by offering them the possibility of
doing new things using our innovation.
Previously, coffee shops were often seen as places for coffee people to hang out and drink good
coffee, but they weren't seen as accessible to the average Joe. They had a strong association with
coffee snobs or, like, smoky rooms and beat poetry. Starbucks made fancy coffee accessible to
people by making their coffee easy to understand in how it is put together, easy to order and
removing the "you have to know coffee to enjoy this" idea.
Barriers to Entry: It is extremely hard for new companies to enter the market because the
barriers of entry are high. Starbucks is the leaders in the market and is hard to break into this
industry at the same level. There might be local specialty coffee shops but they can not be
compared to the size of a company such as Starbucks. Further more i twill be hard for other
coffee shops to invest in this kind of technology dur to financial issues further more we will have
the pioneer advantage and our R&D are already working on the hologram technology and other
technologies that will allow us to stay ahead of the competition.
The threat of new entrants is medium in that the coffee market is changing. The need for
ambiance and a place to share is losing edge to the on-the-go alternatives, and should a new
entrant come along with a different business model there is room for threat. However Starbucks
is the household name. Industry competitors is on the rise because of McDonalds creating the
McCafe line. Concerning D-Table the possibility of new entrants is very low due to financial
issues , a lot of our competitors dont have the money and the technology to follow us in this
innovation further more this kind of innovation has to fit to the core values and strategy of the
company.
Threats of substitude is slow as coffee is always going to be a desired drink and pastime of
choice. Further more D-table substitute products will cost as much as the initial table what makes
of it a product that cant be substitued.

Swot analysis :
Strenghts :
The main strengths of Starbucks come from the companys brand image as well as the high
visibility that the company has in various markets. Additionally, Starbucks also has experienced
and competent workforce that ensures that quality services are offered to the customers. The
existing relationship with supplies of coffee beans also means that Starbucks is able to get
quality coffee all year round.
Weakness :
Even though there are a few weaknesses, the main weakness can be argued to come from the
companys overreliance on its CEO since its inception implying that the company might struggle
if the CEO was to leave Starbucks.
Opportunities :
One of the major opportunities for the company is that there exist various high potential markets
that the company can expand its operations into.
Threats :
The ever increasing number of the competitors in what can be described as an already
overcrowded market can be argued to be one of the major threats to Starbucks.
The Desired target market :
Starbucks Coffee Company was founded in 1971, in Seattle - selling high-quality green
coffee beans, they opened their first store coffee bar concept in 1984, and from there expanded
over the years to become one of the most innovative companies when coming to their marketing
strategies.
Starbucks Marketing (and why the innovation may be suitable)
Starbucks has succeeded in bringing the Italian concept of coffee houses to USA and then to the
whole world. The idea was brilliant but the strategies were also outstanding:
-

Adaptation strategy: they always added new flavors, new drinks, new muffins and cakes.
They reached over 87.000 possible drink combinations and are even offering convenient
products in supermarket nowadays.

Consumer-oriented: Starbucks culture is mainly to make the customers feel comfortable,


to relax, to listen to their favorite bands, thats also why the baristas are always nice and
trying to remember their favorite drinks.
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Starbucks coffee shops became a place trendy to be: for ambiance and experience ,
through the warmth and comfort offered, the friendly baristas, the perfect cup of coffee

Starbucks promotion: This brand is not investing billions on advertisements on TV or on


billboards, its even very rare to find a Starbucks billboard, the company is counting on
their quality of products and services to speak for them, the mouth-of-word is their
special field and it works. Other channels have also been used by the brand (Product
placement in famous movies Fight Club for example).

Overall Starbucks has maintained a competitive advantage since creating its original blue
ocean of bringing quality, bistro-style coffee choices to the masses. In order to stay current it will
need to focus on its core competencies and avoid spreading themselves to thin. To avoid
competitors such as McDonalds and other coffee chains, they will need to create new value
innovation by enhancing the customer experience by investing in online content and
interactivity. Rather than creating more new products, I think their strength lies in their brand
and by enhancing the connection to their loyal customers, they will separate themselves from
McDonalds and others.

Chapter II : Presentation of the Product:


Origin of the Idea:
One night when having dinner in one of our favorite restaurants, the Starbucks R&D team found
out that the catering industry is too classical, and does not progress enough, customers angry
because of the long waiting time, children crying because of boredom So they decided to
create a new framework for Starbucks coffee shops.
The concept is simple, a Digital Interactive table that would offer to the costumers a big diversity
of uses.
D-Table is composed of a solid and easy touch screen that will offer the costumer the possibility
to customize their environment, using several functionalities.
D-Table Architecture:
The D-tables will be connected to
each
others
using
wireless
technology and connected to a WiFi spot that will connect them to a
server with database.

Figure3: D-Table Architecture


A multitude of Uses:
o Choose, personnalise and make an order,
o Control the number of calories your order has,
o Customize your table,
o Choose a song,
o Multimedia software
o Possibility to have a drink with a stranger somewhere in a starbucks shop in the world.
o Possibility to have a drink with someone you know in another starbucks shop.
o Internet Access.
o Internal chat application.
o Access to multimedia games for children.
o User accounts.
o Possibility to use a USB key.
o Possibility to credit your account and pay from your table.

Financials:
A D-Table will cost arround 2500 Euros
No advertising fees, web based advertising (Youtube,Facebook,Starbuck Web site)
Each Starbucks coffee shops will have to pay only 15*2500$ =37500$ to have 15 DTable.
Benefits are expected to double starting from the first year.
Factors that motivate Starbucks to invest in the D-table
Before deciding either to invest or not, the management should analyze either this project is
profitable or not and if it is an effective and efficient tool that support the business to achieve its
objectives also it should analyze the industry where it operates. There are many questions should
be answered before deciding:
Do competitors have this service or its a differentiation factor for us?
Does this service create value to customers or not?
Does it help us to target new segments or not?
Does it increase our profitability and volume of sales?
In this project, we are talking about the D-table, which is a new service that can be offered by
Starbucks. The D-table builds and maintains the profitable lasting customer relationship, because
there are many people who will benefit from its business and entertainment furthers, they dont
need to bring their heavy laptop with them, they can access their online accounts, listen to music,
watch movies, do business conversations while enjoying the tasty coffee and the amazing
environment of Starbucks shops.
This enjoyable environment will keep current customers coming to us and the number of
interested people to discover new technology as well as business people who want to do online
meeting will increase also. This increase in customers numbers will increase our sales which
increase our revenue and profits.
No competitor currently is using this new service, which will gives Starbucks a differentiation.
Starbucks will be the different enjoyable environment for students, families, couples, IT lovers,
business people and other.
The investment in this project is very expensive; it requires millions of dollars, which
makes the entrance and the competition with Starbucks very difficult. This investment increases
the industry level, because the new service combined with the tasty coffee will give Starbucks a
strong position in the market.
All satisfied people will talk about this new service; it will be the talk of people. These
positive conversations will improve the reputation of Starbucks. Moreover, it will participate in
the increase of share prices in the stock market.

Corporate Benefits
There are many benefits for Starbucks from the D-Table. It will be able to gather
information about customers in order to fill the Customer Relationship Management database,
which allows Starbucks to analyze the customers orders to launch targeted and direct marketing
campaigns by promoting what satisfies their expectations. Moreover, they will be able to receive
the customers feedbacks, which support Starbucks R&D team to improve their products and
services in order to offer what people expect.
The operations process at Starbucks shops will be more organized, because customers will not
take the line to order and the employees will not be pressed by the direct receiving of orders.
The D-table is an effective and efficient media to advertise what Starbucks has of new products
and services.
Costumers benefits
One of the most important costumer benefits is the fact that the consumers can easily
order and purchase the Starbucks products using the D- Table. Moreover, the contactless card
payment functionality. All of that allows customers to have an enjoyable time without having to
queue whether it is to make an order or to pay their bills.
Another great opportunity for costumers is that they can get more information about the
products nutritional value calculated directly by the table.
There is also a direct access to activities for both adults and children such as watch movies or
games directly from the D-Table and a variety of games for the children.
The table also gives the customers the opportunity the recreate and customize their coffee time
by simply modifying the color of the D-table or even more by take virtually a coffee with a
friend(s) in the other side of the globe enabling the Starbucks call application and the ID of the
participants.
Starbucks is offering:
-

Tangible products: coffee, beans, tea, food, cold drinks, bottles and mugs.
Intangible products: Relieved atmosphere, decoration, internet access within their coffee
shops.
Augmented products: By aiming for providing the best services and products, for
example they motivate the staff and the employees and encourage them to enhance
customers experience.

D-table technology enters within this category of products, because its a commodity that has
both the primary physical attributes and the non-physical attributes that are added to increase the
value of all Starbucks products it will then allow the company to attract more people, and to
make its brand image unique.
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D-table is going to change this already pleasant and enjoyable place into an extraordinary
spot where magic happens, where people can work, enjoy themselves, and easily take and pay
their orders etc This will definitely take the customers experience to a whole new level and
boost-up the mouth-of-word already operating over the company almost everywhere in the
world.

Chapter III : The launch strategy


The launch of the Starbucks D-Table will consist of several different elements. The first
of which is a viral video marketing campaign which intends to create a strong news-worthy buss
surrounding the product concept and universal appeal of the idea behind a digital table. Just a
few ideas can be to play with the fact that the D in the product name is used interchangeably
with the generic word The. In the video would be to highlight cultural trendsetters within
some of the many contrasting slang dictionaries found in daily communication globally.
Another idea could be to put the table in some peoples homes and ask the viewers to imagine
what would be at their D-Table. Finally, to equate the product with the Starbucks brand, a
commercial would be shot which uses hidden camera footage of a wide range of people using the
table for the first time at a Starbucks location. The objective of the campaigns will be to remain
entertaining and funny to ensure the virality, but also at the same time be informational about the
product and brand with real life applications. The actors in this last video could then go on to be
like brand ambassadors for Starbucks, allowing the brand to show the consumers that we are all
affected by technology whether we like it or not, so we might as well enjoy it! We would use a
panel of 10 diverse customer profiles played by unknown but carefully selected actors who all
have entertaining personalities and can help to educate and unite people around the Starbucks
brand. The tag line can be, We all speak the same digital language.
After the initial social advertising pushes would come the online sweepstakes contests
which aim at increasing buzz and customer engagement, educating consumers and stressing the
exclusivity of the product and brand. Some ideas for contests would be to guess which of the
existing 10 Starbucks retail locations already have D-Tables and receive 1,000 Star-Bucks (gift
certificates for Starbucks merchandise). Also, there could be a vote by the online users to see
which Starbucks location should install the D-Tables first, hopefully targeting a hometown spirit
competition which is a popular trend. D-Tables for the home can be given away to deserving
families as a donation by Starbucks, and they can implement a pull-and-win contest on Starbucks
cups which could ultimately give D-Tables away as well.
The soft retail release is for the purpose of low operational costs and ensuring the ability
to react to feedback and learn from any mistakes that arise. Eventually the goal would be to have
D-Tables at the major retail locations world-wide wherever the space and logistics can work.
However, to increase the demand only a few key flagship locations will start off receiving the DTables to be used by the public. People will travel to these locations only to experience a new
way to drink coffee, and since many people will now be aware of the tables existence people
will do whatever they can to say theyve touched this cool unique new product. This hits the
psychological elements of marketing in the fact that when youve told people they dont have it,
that makes them want it more especially if only a few other people have it or have tried it.
Overall the idea is to turn the experience of visiting a Starbucks into something much
more exciting and unusual that it already is, subsequently solidifying the brand as a key
technological player who is always putting the needs of the consumer first. Millions of people
have been to Starbucks before the D-Table but after to the D-Table all those plus millions more
have a new fun reason to go back.
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