Case Study of Starbucks: Creating a New Coffee Culture

Is it possible to convince ordinary Americans who routinely open 3-pound value cans of coffee, shovel the grounds into a paper filter, push a button, and go about their business to suddenly change their ways? Will they be willing to spend $2 or more per day on the same item? Will this eventually evolve into a $1400 per year habit of a latte and a scan each day? The answer to these questions, according to Starbucks, is “absolutely!”

Starbucks began as a coffee importing firm. Howard Schultz, an employee in the organization, toured Italy in the early 1980s and watched as crowds of city dwellers began each morning with a stop at a coffee bar. Schultz tried to convince the owners of Starbucks to do something similar in the United States and was roundly rejected. Quitting the firm and launching out on his own quickly turned into a lucrative decision for Schultz. He raised money from a variety of investors and opened a café in Seattle using the name ii Giornale. Success came rapidly. Schultz wound up buying the original importing business and renaming his cafes to Starbucks.

Within 15 years, Starbucks Coffee Company expanded to over 1200 retail outlets. The firm achieved this remarkable growth because of several key marketing ideas. The product itself, location, employees, sourcing, and effective marketing communications all worked together to help the firm prosper in a saturated marketplace. The nonchalance of major competitors was also a factor.

The product itself, coffee, had been a rather banal commodity for most consumers. Purchase price was traditionally the primary decision variable. Starbucks needed to convince prospective buyers of the difference in its offering. By studying the basics of coffee (flavor, acidity, and body), the company’s leadership sought the best beans in the world. Then, other aspects of the product changed, including steaming milk and brewing coffee in a plunger pot. Espresso in an acquired taste for most mist consumers. To reach the market, Starbucks offers it both straight and diluted in creamy drinks such as caffe latte, which is espresso mixed with steamed milk and covered with a topping of milk form. Other products include cappuccino and caffe mocha. When any one of these Starbucks products is sold, the basic ingredient, caffe, is never more than an hour old.

Locations are key ingredients in Starbucks success. Cafes must be easily accessible an commuter routes and in other places where people can gather to socialize. In each cafe there are numerous enticement, including jazz music in the background and other merchandise to examine, such as stainless steel thermoses, commuter mugs, filters, natural hairbrushes for cleaning coffee grinders, and home espresso machines.

Starbucks attracts employees who enjoy coffee. They are retained through a variety of motivational program including buy-in options. Workers are called baristas, Italian for bar person.” Starbucks continually encourages these baristas to provide high-quality, pleasant services service to patrons. Extensive training helps ensure they become experts in all aspects of coffee vending. The company also insists an diverse workforce reflecting the makeup of the local community.

Starbucks holds a major advantage of sourcing. The firm is vertically integrated and relies on quality suppliers from around the word. Each region grows beans with distinct flavors for coffee connoisseurs, and Starbucks brings all of the flavors to a single location for purchase.

The most impressive aspect of Starbucks may be its marketing communications program. The firm had to convince price-conscious buyers to shift away from old purchasing decision rules in order to part with a great deal more money each day.

Questions to Discuss

  1. How does Starbucks take advantage of each stage in the consumer purchase decision making process?
  2. How does Starbucks attract consumer?
  3. To attract its prospective buyer what were the unique features in its offerings?
  4. How does Starbucks segment its market to achieve greater market share?
  5. Describe how new trends in society affect purchasing process.

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