A BRAND STUDYOn Starbucks
A BRIEF HISTORY
The first Starbucks opened in Seattle, Washington, on March 30, 1971.3 partners at the University of San Francisco: English teacherJerry Baldwin, history teacherZev Siegl, and writerGordon Bowker.They were taught a unique style of roasting beans by fellow coffee lover/store owner, Alfred Peet .Current CEO, Howard Schultz joined in 1982 who pressed for espresso drinks and coffee.
Initially slated to be called Pequod after a whaling ship that appears in Moby Dick.It was scrapped in favor of the ships chief mate Starbuck.As per Bowker, they were very close to naming it Cargo House.However Heckler suggested that names beginning with st were powerful.
This led them to base the name off of an old mining town named Starbo.The Starbucks logo is an image of a twin-tailed mermaid, or as per Greek mythology, a siren.The logo is based on a 16th century Norse woodcut.Its gone through various significant changes, such as changing the color from brown to green, which was a nod to the 3 founders alma mater.
THE 7 Ps: Product
Starbucks has 30 varieties of whole bean coffee.They sell coffee, Italian-style espresso beverages, cold blended beverages, as well as a selection of premium teas.Novelty items, music CDs etc. are also sold.In addition, they also sell coffee-related accessories and equipment.Tazo Tea is the Starbucks brand. Theres many, many different flavors: iced teas, lemonades, lattes, hot or cold.Some of the most popular teas fall in the Chai tea category: a spicy black tea with cardamom, cinnamon, black pepper and star anise.
Espresso: Strong, black coffee brewed by forcing hot water through coffee grounds. More concentrated, has more caffeine than regular.Starbucks Latte: Espresso with steamed milk and foam.Caramel Macchiato: Vanilla latte with less vanilla, extra foam and a caramel sauce on top.Starbucks Cappuccino: Similar to latte but with more foam.Starbucks Mocha: Espresso, steamed milk and chocolate with whipped cream on top.
Starbucks Coffee Frappuccino: Starbucks coffee, milk and blended with ice.Starbucks blended creams: Pumpkin spice frappuccino which includes pumpkin and traditional fall spices, mixed with milk and blended with ice, then topped with whipped cream and pumpkin spices.Starbucks conducts various surveys to determine what its customers prefer.In addition, ingredient research is outsourced to dedicated teams who determine what spice/flavor goes best with what, in accordance with Starbucks Guide To The Perfect Beverage.
THE 7 Ps: Price
Starbucks has a simple price strategy: High price, high quality i.e. the perceived upscale image.If customers feel they are getting a good deal, they are willing to pay more.A single coffee in India costs anywhere from Rs. 200 300, and $2.50 5.00Unlike the coffee however, tea prices arent based on the size, instead its based on the number of tea bags, since water is pretty cheap in non-bottle form.The price, according to Starbucks, is said to include the entire Starbucks experience: free WiFi, the unique ambience, and the food.
Source: Wall Street JournalPrices vary drastically, with India being the cheapest.
THE 7 Ps: Place
Starbucks has branches in Argentina, Australia, Chile, Singapore, Japan and the UK.Has in-store tie-ups with Barnes & Nobles and Target.Approximately 20 Starbucks cafes in Mumbai. Other cities are Pune, Delhi, Kolkata, Chennai etc.It had 165 stores when it went public in 1992. It surpassed its 10,000 outlets goal and plans for another 10,000, worldwide.They believe that by creating an intimate and welcoming environment, and providing great coffee, patrons will not only keep coming back for more, but will spread the word.
Starbucks has a controversial strategy: saturating the market.Typically, stores place their retail outlets in locations based on demographics, traffic patterns, location of competitors as well as the location of its own stores.The Starbucks strategy went against the grain. Instead of following the trend, Howard Schultz chose to go against conventional wisdom.The strategy was to blanket an area completely. Instead of worrying about stores eating up each others business, it focused on heavily increasing the foot traffic in one specific part of town.
Schultz knew that his strategy was a risk, but it was one he was willing to take. In the end it paid off.Clustering its stores in one area helped Starbucks quickly achieve market dominance.With over 20 million regular customers per week, no other American retailer can claim a higher frequency of visiting customers. Santa Fey Springs, CA has the highest density of Starbucks in the world. About 560 Starbucks outlets in 25 miles of land.
Whats amazing is the fact that the company spends less than 1% of its annual revenues on advertising, versus the typical 10% of most other retailers. Instead, the Starbucks strategy relies on word of mouth advertising.Store design, planning and construction are also part of the strategy. Locations are designed for customers to meet, relax or simply enjoy a peaceful interlude in their day.It is also notorious for buying out competitors leases and conducting operations at a deliberate financial loss. This intentional loss is designed to drive out local competitors.
THE 7 Ps: Promotion
Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers.My Starbucks reward program allows members to earn a free drink after every 15 purchases at participating Starbucksstores.Its rare to find a Starbucks ad on billboards, ad spaces, newspapers, posters.Starbucks stresses quality above price and other features it could emphasize.In 2001 Starbucks introduced the Starbucks Card, a stored-value card for customers to use and reload.
The company has gone to great lengths to create a community atmosphere among premium coffee lovers.Its a running joke on the Internet, wherein the premium coffee lovers, or hipsters as they are called, are usually depicted as having iPhones, MacBooks or any other Apple products.It is oft remarked that Starbucks should be renamed iCoffee for these privileged people who use only Apple products and wear vintage clothing to distinguish themselves.
A bus-stand troll in Los AngelesDont be an iDiot (clever Apple reference)
Starbucks has its unique home concept of writing its customers names on the cups.However theres more here than meets the eye. This is one more viral Internet sensation, where Starbucks baristas are perpetually getting your names wrong, eg. Abhishake.The often hilarious spelling mistakes in the customers names may be intentional or unintentional take your pick. This is the part of the whole Starbucks experience.A sense of intrigue and mystery is invoked, and in some cases extreme annoyance. But its all planned as part of a shrewd promotion strategy.
INDIRECT PROMOTION: The best and shrewdest form of promotion.Whether it is out of annoyance or wanting to share your name being misspelled humorously with the world, it ultimately leads you to tweeting or sharing about it in any way on social media.Virality is necessary to survive and retain yourself today, and Starbucks cashes upon that brilliantly.
THE 7 Ps: Process
Starbucks operates primarily through joint ventures and licensing arrangements with consumer products business partners.International specialty operations comprise retail store licensing operations in more than 40 countries and foodservice accounts in Canada and the UK.US specialty operations include licensed retail stores, food service accounts and other projects related to Starbucks main business strategy.They have a contact less payment service that is available on iOS as well as Barclay card. An Android app is in the works.
Starbucks accepts store license applications online, with the initial information centering on the type of operation being run by the applicant.Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers.A dedicated team works specially on these recommendations. The feasibility of the suggestions is gauged and efforts are done to maximize it.Thus Starbucks process is overall, pretty customer-centric.
THE 7 Ps:Physical Evidence
Starbucks provides information on its products, business partnerships, and career opportunities on its website .The famous Starbucks Logo (which is green and features a siren) has stayed largely unchanged since its origin, however it has been altered to adjust to international sensibilities.The latest change was made when Starbucks opened in Saudi Arabia.Starbucks stopped using pre-ground beans in its stores in so that the grinding of whole bean coffee will "bring aroma, romance and theater" to American stores.
Starbucks offers a combination of product and service and does a good job in giving customers the best experience, so they want to try it again and again.Customers pay not just for cup of coffee or tea, but for overall enjoying their time. When you enter the caf you see a clean, friendly environment, with cozy chairs, sofas, tables, book shelves, bright show cases with alluring pastries, menus with tempting coffee pictures.The smiling welcoming staff in the green uniforms, with soft music in the background complements the atmosphere.
THE 7 Ps: People
Howard Schultz: Chairman, Chief Executive Officer for Starbucks.Olden Lee: Interim Vice PresidentBarbara Bass: Director, Non Executive BoardCliff Burrows: President, Starbucks Coffee USAuthor Rubenfeld: Global DevelopmentTroy Alstead: Chief Financial OfficerJohn Culver: President, Global Consumer Products
Happy customers start with a happy