Discussing the Starbucks Case study was the most enjoyable thing in this class, probably because I am a big fan of coffee, and coffee in my country is ritual, is an old culture. Therefore, the Starbucks strategies for being successful I can be able to understand in essence.
It is interesting how Howard Schultz became inspired to change the coffee culture of US by bringing the Italian coffee experience in the Starbucks coffee. More interesting is that from an Italian culture idea he made Starbucks, the most popular and the largest coffee in the world. Today Starbucks is the brand leader.
When Schultz traveled to Italy with the Starbucks team, in 1982, he became fascinated with the coffee culture of Milan. He was inspired with great innovation ideas, to set up an espresso bar in the downtown. Shultz wanted the bar to become a long-term vision prototype:
“The idea was to create a chain of coffeehouses that would become America’s “third place.” At the time, most Americans had two places in their lives—home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves. I envisioned a place that would be separate from home or work, a place that would mean different things to different people.”
These changes Schultz reached by:
Coffee quality – Offer the best coffee quality in the world by keeping full control of its products and services.
Special Service – partners ensured product quality, speed and connect with customers in order to create the friendly environment. This connection makes the customers feel valued. Starbucks understand their customer and make them king
Atmosphere – Starbucks idea was to change “Buying coffee as a drink” to “the experience of enjoying coffee”
Partner satisfaction – Howard has made clear that “partner’s satisfaction leads to customer satisfaction”. Starbucks partners were among the highest hourly paid workers. Their policy was giving partners health insurance and stock options.
No other company changed the drinking coffee experience in US. Starbucks efficiently filled a psychological need, which they didn’t even know they needed, until they got it. The great market leader Schultz, made their customers identify with its brand. Things that Starbucks customers value in coffee are: the very high-quality coffee, the service or the “customer intimacy”, the comfortable atmosphere and the cleanliness.
The difference of the early Starbucks customers vs. the more recent one
The recent Starbucks customers have more disposable income and they value the high-quality coffee, the best tasting coffee, the brand they trust and the high quality brand. They judge that is worth paying more for these qualities. However the early Starbucks customers were less well-educated and with lower disposable income, who valued lower prices.
Starbucks is very successful in USA but not us much in Europe
In my opinion the crucial difference is that in USA coffee is seen as a metaphor of working, being more productive while in Europe it is seen much as gathering with friends, relaxing and fun. Furthermore, for Starbucks, getting European customers on their stores won’t be easy because of their old cafe’ tradition.
Another big challenge lies in adjusting the Starbucks experience to appeal to a variety of European tastes and needs, such as trendier atmospheres, variety models of stylish bars, taste sensitivity when it comes to the beverages in which coffee is a main sensitivity and so on. In Europe the most consumed coffee is espresso.
Below is a photo how a typical Coffee Bar looks like in Europe.