PGDM TRI-2

BEHAVIORAL ECONOMICS
ASSIGNMENT: 02 CEC COMPONENT
CASE STUDY ANALYSIS

“CASE STUDY ON STARBUCKS”

Submitted by:
Name: Ashutosh Sompura

Roll No. 07
Batch: Alpha

Under the Guidance of

Dr.Hardik Brahmbhatt
December 2023
QUESTIONS AND ANSWERS

1. Prospect Theory in Starbucks:

Prospect theory suggests that people make decisions based on potential gains or losses rather than absolute
outcomes. In the case of Starbucks, this theory might apply to customer behavior. For instance, customers may be
willing to pay higher prices for Starbucks coffee due to the perceived gain in quality or experience. Starbucks
capitalizes on this by emphasizing the premium quality of their coffee, creating a perception of gain in terms of
taste, ambiance, and status associated with the brand.

2. Priorities and Preferences in Marketing Strategy:

In marketing strategy, understanding priorities and preferences is crucial. Priorities refer to what's most important
to the target market. For Starbucks, this could mean prioritizing sustainability, quality, or customer experience.
Preferences are the choices people make based on their priorities. Starbucks, for instance, focuses on providing
ethically sourced coffee and a cozy ambiance, aligning with the preferences of customers who prioritize quality
and a unique coffee experience.

3. Decision Making on Franchising at Starbucks and Prospect Theory:

Starbucks' decision against widespread franchising might not align directly with prospect theory. The company's
choice could stem from its commitment to maintaining strict quality control and consistent brand experience
across all stores. Franchising might introduce complexities in ensuring uniformity, impacting the perceived quality
and customer experience, which goes against Starbucks' brand philosophy.

4. Evolution of Starbucks from 1971 to 2006:

-1971-1987: Starbucks was a local coffee bean roaster and retailer in Seattle, emphasizing quality coffee.
-1987-2006: Under Howard Schultz's leadership, Starbucks expanded nationally and globally, focusing on
creating a premium coffee experience and brand. They introduced innovations like Frappuccino’s and diversified
their offerings beyond coffee.

5. Present Scenario of Starbucks in India:

Starbucks in India has been steadily expanding its presence and refining its strategy to cater to the diverse market.
Since its entry into India in 2012 through a joint venture with Tata Global Beverages, Starbucks has gradually
increased its footprint in major cities.
The Indian market presented unique challenges and opportunities for Starbucks. To adapt to local preferences,
Starbucks introduced region-specific menu items, including beverages and food items tailored to suit Indian tastes
while retaining its global standards of quality.
They incorporated local flavors, such as spices, into their offerings while maintaining their commitment to high-
quality coffee.
Starbucks' growth strategy in India has been focused on strategic locations in bustling urban areas and expanding
its store count. They aimed not just at providing coffee but also offering a third-place experience where customers
could relax, socialize, or work.
Furthermore, Starbucks in India emphasized its commitment to ethical sourcing and sustainability. They engaged
in initiatives supporting local coffee farmers and communities, which resonated with Indian consumers
increasingly conscious of ethical and sustainable business practices.
The joint venture with Tata has been crucial for Starbucks' success in India, leveraging Tata's understanding of the
local market and their network. This partnership enabled Starbucks to navigate regulations, access prime
locations, and introduce products aligned with local tastes.
In essence, Starbucks in India has worked on striking a balance between its global identity and adapting to local
preferences. Its growth trajectory has been positive, leveraging partnerships, localized offerings, and a
commitment to quality and sustainability to cement its position in the Indian coffee market. However, for the most
recent updates and developments beyond January 2022, I would recommend checking the latest sources or news
outlets for the current Starbucks scenario in India.