Starbucks Hot
Alcoholic Drinks
Kirk Kaubish
Suzanne Souva
Chris Tagliavia
Leina Rabanal
5-7-13
Agenda
O Products
O Market Needs/Trends
O Target Market
O Market Size/Growth
O Positioning
O Competition
O Marketing Mix
O Financials
O Conclusion
Take a Look
Video
New Products
O The Irish Coffee
O Spiked Hot Chocolate
Market Needs
O The Starbucks “experience”
O Liquor demand
O Where our product is
offered
Market Trends
O Market Trends
O What our product does for existing trends
O Starbuck’s and it’s differentiation
Target Market
Based on Age, Would You Buy Starbucks Alcoholic
Beverages?
45
40
35
30
Responses
25
Yes
20
No
15
10
5
0
21-28
29-39
40-50
Age
51-61
62+
Market Growth
O Growth within the coffee industry and its
marketplace
O Correlation between coffee and alcohol
O Evenings Menu
O Continuing market growth
Marketing Objectives
O Survey results
O Goal
Marketing Mix
Distribution
Pricing
Marketing Communication
Distribution
O Starbucks builds relationships with its
distributors
O Using this strategy, Starbucks’ distribution
channel is:
Pricing
O Spiked Hot Chocolate $6.00
O 70% profit margin
O Cost $1.78 (raw materials)
O Irish Coffee $6.25
O 60% profit margin
O Cost $2.49 (raw materials)
Spiked Hot Chocolate
Raw Material
Portion Size
Calculation
Baileys Irish Cream
2.5 oz.
1 oz. = $0.54
Cost Per
Portion ($)
$1.35
Milk
6 oz.
1 oz. = $0.03
$0.18
Fontana Bittersweet
Chocolate Mocha Sauce
Whipped Cream
3 tbsp. (1.5
oz.)
2 oz.
1 oz. = $0.11
$0.17
1 oz. = $0.04
$0.08
Total: $1.78
Irish Coffee
Raw Material Portion Size
Calculation
Baileys Irish
Cream
Coffee
3.5 oz.
1 oz. = $0.54
Cost Per
Portion ($)
$1.89
6.5 oz.
1 oz. = $0.08
$0.52
Whipped
Cream
2 oz.
1 oz. = $0.04
$0.08
Total: $2.49
Promotion
O Starbucks does not use national advertising
campaigns
O There will be one party at each location
O Each location will create hype
O Starbucks will provide sale incentives
Product Position
O More for the same
O Competitors cannot match
Competitors
Spiked Hot Chocolate
Price Per Unit
$6.00
Number of Units Sold
2850
Total Sales
$17,100
100%
Less: Variable Production Costs
$5,073
29.7%
Less: Variable Selling Costs
$0
0%
Total Variable Costs
$5,073
29.7%
Contribution Margin
$12,027
70.3%
$0
0%
Less: Fixed Selling and
Administration Costs
Total Fixed Costs
$0
0%
$0
0%
$0
Income Before Taxes
$12,027
70.3%
$4.22
Less: Fixed Production Costs
$1.78
Irish Coffee
Price Per Unit
$6.25
Number of Units Sold
2850
Total Sales
$17,813
100%
Less: Variable Production Costs
$7,097
39.8%
Less: Variable Selling Costs
$0
0%
Total Variable Costs
$7,097
39.8%
Contribution Margin
$10,716
60.2%
$0
0%
Less: Fixed Selling and
Administration Costs
Total Fixed Costs
$0
0%
$0
0%
$0
Income Before Taxes
10,716
60.2%
$3.76
Less: Fixed Production Costs
$2.49
Finance
O Goal = sell 300 hot alcoholic drinks
O There are no fixed costs
O Design and produce new
mugs
O We expect sales to grow
quarterly
Sales Forecasts
Measuremen Beginning on:
Units Sold
Sales
t of Time
1st Quarter
June 1, 2013
10,260
62,842.5
2nd Quarter
September 1, 2013
11,970
73,316.25
3rd Quarter
December 1, 2013
13,680
83,790
4th Quarter
March 1, 2013
15,390
94,263.75
2nd Year
June 1, 2014
68,400
418,950
3rd Year
June 1, 2015
68,400
418,950
Thank you
Any Questions
Comments