
Starbucks Marketing Strategy
How To Introduce An Old Product To The New Market
- Owns 39.8% share of US Coffee Market
- Earns $24,72 billion worldwide
- Has 29,324 stores worldwide in 72 countries
- Over 14,000 of total stores in United States / over 27,000 worldwide
- Conducts over 90 million transactions per week
- So popular in China, a new store opens every 15 hours
- Following McDonald’s as the most valuable fast food brands worldwide (valued at $44.5 billion)
THE BACKSTORY: The Starbucks Idea


“He knew the coffee industry inside-out, especially the gourmet end. He was the most educated guy in the country at that time.” — Zev Siegl Click To TweetThe name Starbucks stuck because it’s easy to say, impossible to misspell, and has a vaguely British overtone to it. Really, we picked it because our lawyer called and told us we had to submit papers and needed a name. We didn’t know at the time, but Starbuck is the name of the first mate on the Pequod in Moby Dick. That might explain the siren logo. Some might even say it comes from Mount Rainier’s Mining company Starbo. According to Gordon Bowker, they were initially going for the name Cargo House Coffee. In 1971, the three friends opened the roastery and bean shop in Pike’s Place, Seattle’s famous tourist destination known for the Pike’s Public Market Center. Peet helped the young entrepreneurs by providing them with beans and connecting them with reliable bean providers. The business was successful enough for the trio so they opened 4 more shops in Seattle. However, no coffee drinks were being served. This was still a roasted bean retail shop intended for home use.

CHAPTER 1: The Inclination for Grit and Determination Fix Social Injustice
Howard Schultz was a child raised in poverty. After seeing his father injuring himself doing grueling manual labor, he decided he wanted to get rid of the injustice of the working class. An idea of creating and striving for an environment where employees are fairly compensated and taken care of has been set in. In Masters of Scale interview with Reid Hoffman, Schultz described seeing his father stretched out on the sofa after suffering an injury. Howard Schultz swore to himself to make a company his father had never worked for. “I saw my father losing his sense of dignity and self-respect. I am sure that this was caused mostly by the fact that he has been treated as an ordinary working man.” – Howard Schultz, AstrumPeople article Schultz started working at the age of 12 selling newspapers. Since he was being athletic, Howard earned an athletic scholarship at Northern Michigan University where he received his Bachelor’s degree in Communications in 1975. After his graduation, Howard Schultz spent three years as a sales manager at Xerox, and then he started working at a Swedish company Hammarplast, where he was selling home appliances, including coffee grinders to businesses like Starbucks. The Starbucks founder trio took him amidst to grow the company. In 1983, Howard Schultz gets an epiphany. He travels to Milan, Italy for some sort of conference and what he sees there changes his perception of coffee forever. In certain European countries, especially Italy, coffee was one of the more important things in life. It served as a social lubricant and the third place of dwelling between home and work. Schultz discovered what it means to have a high-quality espresso served in a proper way in a relaxed environment.

KEY TAKEAWAY #1 — Change is good. The determination and unrelenting belief to change the current situation is not just a helpful attribute but a prerequisite for cultural change. Staying true to the “one thing” without flinching will be the cause and the driver of change.
CHAPTER 2: “An Old Product in the New Market”
I’ll go a little on a limb here, but you can see examples of this everywhere. Whenever something works out in incredible scale in one market, there’s a potential of seeing it succeed in a new one. This is called introducing an old product to a new market. For example, Uber and Lyft built an incredible business about ride-sharing. Because they have to contain the growth before they are spread too thin, that gives the opportunity to copy-cats in different markets. In the United Arab Emirates, you have Careem (just recently acquired by Uber), in Slovenia and Croatia you’ve got have Cammeo and in India, you’ve got sRide. After something experiences great success, there is only a matter of time before someone else sees the potential and brings it back to the new market and starts eating out the market share Coffee was a big opportunity in the United States at that time. Howard Schultz saw it with his own eyes how effective and important it is in Italy and he knew he could do something similar in the United States. To perform a similar innovative (for the new market) service you would need to take the entire concept and localize it to the new market. Even the trends from 2004 to this day shows an upward trend of coffee: This go-to-market product strategy was first introduced In 1957 by Russian American mathematician and business manager Igor Ansoff. The Ansoff Matrix was published in Harvard Business Review in the article “Strategies for Diversification”. In his opinion, there are only two ways to develop a growth strategy — varying what is sold (product growth) and to whom it is sold to (market growth).
Market Development — New Market, Existing Product
The Starbucks go-to strategy was to bring the already established product in different cultural and geographical space into the new market — the coffee-culture deprived United States. Howard Schultz’s task was to closely observe how Italians treat the product and figure out a way to bring it home with minor changes. It was impossible to expect that the new market is going to slurp macchiatos from tiny espresso cups but everyone could understand comfort and better quality. That was going to be Starbucks’s trump card.Market Penetration — Old Market, Old Product
The most obvious strategy is to sell the existing product to the existing market. With this concept there’s a little risk since the companies don’t have to educate the market with the new product, however, the growth is inhibited by competition or the decreasing trends.Diversification – New Market, New Product
By far the riskiest approach is introducing a new product in new markets. Not only the product needs to provide clear values, but it also has to educate its use in the new market. Imagine bringing augmented reality technology in a country where there’s no practical use for it yet. Since there’s a great risk, it can also result in amazing success where you’re the only provider in the blue ocean market. Most of the startups are banking on this strategy.Product Development – Old Market, New Product
This strategy is most often used by established brands who are already known as leaders in their field. If a washing machine company introduces a new technology that also folds your clothes after washing and drying, that would be much easier to understand and adapt to their existing users.KEY TAKEAWAY #2 — Do market research.>When developing the new market, learn as much as possible about the product itself in the location where it’s mostly used and established. Identify all the major benefits and think of the most significant values that would succeed in the new market.
CHAPTER 3: Eco-Conscious, Friendly People, and Profitable — Starbucks’ Triple balancing act
Howard Schultz had an idea to build something that is almost impossible to imagine and can exist only in Utopia. From the start, he wanted to serve with equal importance towards customers and employees. This is almost impossible to achieve since on one end the business investors want to see money coming in, which in most cases means lean running staff with lower wages and higher priced products. The staff, or “partners” as Howard Schultz calls its employees, are not only compensated a fair wage (between $10 to $15/hour according to Glassdoor) but also have healthcare insurance and discounted stock options for company shares. Howard went even further, offering full tuition coverage through Arizona State University’s online degree program. This idea was most likely outrages to shareholders. Everyone will get a piece of the company’s pie? In a Tim Ferriss interview with Jim Collins, the author of Built to Last and Good to Great mentioned the final lesson of his mentor and all-around management superhero Peter Drucker:“The management isn’t about being more efficient all the time, but it’s also being more humane at the same time. Click To TweetStriving for workplace quality for the employees was thus one of the main values the CEO implemented in the company. The interesting analogy is the Jordan Peterson’s theory of order and chaos (yin and yang) where one side represents the profit that company must achieve by ruthlessly cutting back the cost in the workforce and the other side where the conscience of doing the right thing for your people brings satisfaction and peace to the workplace which is a proven necessity for customer-facing businesses.
KEY TAKEAWAY #3 — Happy employees make happy clients.Treat your people well. When you’re in the service industry the customer satisfaction and treatment is at times more important than the actual product. And happy employees make happy clients.
CHAPTER 4: The Product
Better Coffee
To coffee drinkers, there are not a lot of things more important than a good coffee in the morning or during the day. While in today’s standards Starbucks drinks aren’t at the level of barista artisans and coffee aficionados. On the contrary, many smug noses scrape the ceiling even when someone mentions Starbucks. But when the shops started opening in the early 70s, 80s and 90s, the espressos and lattes were vastly different than all the other stuff people were drinking.
Coffee Quality Comparison
Starbucks predominantly uses dark roast coffee which also represents the majority of the coffee that is being consumed in North America. As mentioned, the coffee quality was much better than instant abominations in the early 80s; however, it definitely cannot measure up to artisan roasters.


The Offer
Later on, Starbucks adapted to the marketing with something called “horizontal offer”. It wasn’t just about the dark roast and espresso shots. Young budding students wanted something sweet and mocha just hit the note between coffee and rich chocolate fudge. Why not having both in one product? Later on, Starbucks started offering teas and snacks. Snack is bringing in a substantial amount of revenue. The shops are using the display of sweet pastry or savory egg sandwiches like any expert pastry shop in Europe. And there are not many people who can resist a croissant or a blueberry muffin with their americano or latte.
The Price of a Cup
Most of the coffee shops live well because they can afford hefty margins. An 80% markup is a standard in the coffee business, especially on the higher-end brews. According to the Small Business Development Center’s 2012 report, food costs take up about 15 percent of revenues on average. The average coffee shop then has a gross margin of 85 percent. Starbucks margins must be pretty loaded then since they buy tons of coffee from a few sources. According to Coffee Makers USA, the actual coffee in a grande Starbucks cappuccino costs about 31 cents.
Product Differentiation
By having a strong and recognizable brand, the company can afford to put out merchandise. Starbucks holiday-themed mugs and localized artwork on them are a big part of the exposure. The merch cabinets and tables are usually near the counters or areas where there’s a longer dwelling time. The revenue isn’t coming just from the beverages alone. Starbucks did an amazing job of offering non-caffeinated beverages including kids drinks and teas which were introduced after partnerships or acquisitions of Tazo and Teavana.
KEY TAKEAWAY #4 — Diversify and expand.While the product is one of the key components of a successful business think about the potential upgrades of it. Keeping the core you can diversify the offering (and acquire new revenue channels) by expanding into different verticals but staying inside your core company values.
CHAPTER 5 – Experience is More Important That The Product Itself
With a distinctive brand identity, Starbucks shops are easily recognizable anywhere in the World. For a global brand, this is one of the mandatory element. As seen by Trader Joe’s, each franchise is slightly different than the other — Starbucks in the posh downtown area will have a different feel than the one on Student campus or at an airport.
- Indie playing music
- Comfortable (community) tables for remote work
- Reliable wireless connection
- Charging Outlets
SMELLS AND SOUNDS
Starbucks Sounds Chances are when you go to Starbucks you don’t ever hear the music. But it plays an important role nevertheless. Starbucks playlists are carefully curated to help create that ambiance of a neighborhood coffee shop. It has been a piece of the Starbucks experience for over 40 years already. The songs and tracks are carefully curated way ahead of the time. These handcrafted playlists usually consist of indie, feel-good songs, pop, alt-country to season-themed or even classical playlists during holidays. In 1999, Starbucks even acquired a Bay Area music store to launch its own branded coffeehouse and later on, even a record label. In the early 2000s, Starbucks sold CDs in the store until the format decline. In 2016, Starbucks partnered with Spotify. Through the mobile app integration, Spotify plays music as part of the app. In-store listeners can take a look inside to identify the artists and save the tracks to their playlists.
The Interior Design
The design of the shop confirms the neighborhood areas. Similarly, as Trader Joe’s, the Starbucks cafe’s become neighborhood go to places. But it goes beyond that. Every piece of furniture and interior is carefully planned to conform to the standards of the homey coffee place. To get their store right, Starbucks interviewed hundreds of coffee drinkers to get as much information which they could use to build a perfect coffee shop. The overwhelming consensus actually had nothing to do with coffee; what consumers sought was a place of relaxation, a place of belonging. If we go back to Howard Schultz’s deciding moment from the Milanese coffee shops, it shows he managed to do just that. Create a community space as a second home. It’s somewhere where people meet, it’s where you can take someone for a first date or even get some work done at the large community table. In the book Starbucked, freelance journalist Taylor Clark claims, that “The round tables in a Starbucks store were strategically created in an effort to protect self-esteem for those coffee-drinkers flying solo. After all, there are no “empty” seats at a round table.” If we looked at the interior, the counters, chairs, and wardrobes are built out of natural materials like warm woods and stone. In some stores, you would find cozy armchairs as well. With Shared Planet initiative they doubled down with environmental sustainability in mind and employing local craftsmen to do the job. The stores are built from reused and recycled materials wherever possible. Most of the new stores that are being built are a part of the LEED Certification program (Leadership in Energy and Environmental Design). Starbucks differentiates from three general looks with the addition of concept designs:- Heritage coffee houses reflect the history of the place where the store is located. At the Pike Place, the coffee shop reflects the merchant trading roots with worn wood, stained concrete or tiled floors, metal stools and factory-inspired lighting. Even more sophisticated is the New Orleans inspired coffeehouse showing the rich music history.
- A “Louisian merchant in the early 1900s” inspired heritage coffeehouse with vintage trombones light fixtures. Located in French Quarter, New Orleans. | Source
- Artisan stores echo the industrial past of urban markets, taking inspiration from the Modernism of the 1930s. This motif celebrates simple materials like exposed steel beams, masonry walls, factory casement glass, and hand-polished woodwork in a creative gathering place for culture and the arts.
Starbucks Artisan store in University Village, Seattle | Source
- Regional Modern are localized stylized coffee shops. The interior is spacious. comfortable and welcoming. The bright, loft-like, light-filled spaces punctuated with regionally inspired furniture and culturally relevant fabrics to create a calm and contemporary respite from the clamor of the fast-paced world.
Regional-inspired Starbucks store in Copenhagen, Denmark | Source
- Experimental — with growth and a plethora of locations comes more daring and innovative designs. Unique designs such as the reimagined drive-thru in Colorado, the Swiss Train contemporary mobile coffee space from Geneva Airport to St. Gallen or one of the beautiful Shinto shrine-inspired coffee shops in Japan
Starbucks Reserve
To combat the upscale coffee market which ironically has to thank Starbucks for creating a fertile grounds of demand for premium coffee, Starbucks started opening up so-called Starbucks Reserve stores. These are luxurious, beautiful and magnificent stores where they roast premium, rare beans and experiment with different brewing techniques.
Coffee Shop Locations
In any high-traffic area in the city where Starbucks is located, you almost have a feeling their shops are everywhere. You would be partially right — Starbucks are strategically located in areas with high appeal. In big cities, you almost have a feeling someone carpet-bombed the stores in the downtown area. Similarly, as Walgreens chose the concept of the convenience store, always located in an area of larger foot-traffic

KEY TAKEAWAY #5 — Spoil your customers.Think beyond the product and identify what else can you do for the customer to add you in their daily, weekly routine. Customer support excellence is mandatory, so think further and in the direction of the place’s ambiance including smells and sounds.
CHAPTER 6: Breaking down the Brand and Messaging
Bill Macaitis, former CMO of Slack said it best – “The brand is the sum of all customer touchpoints your customers have with you at any point”. With the food and beverage category, this is even more important. By introducing and creating a culture of coffee drinking, Starbucks had a major opportunity to create intimacy with the customer. In Italy, coffee culture is a part of every day and the same culture was slowly getting familiar to the new audience (just like Borgs slowly assimilate Captain Kirk). Because of the personal nature of coffee and frequency of visits, this relationship-bonding happened much faster than in other fast-food joints, especially since in the early years of Starbucks there was no competition.
Brand and Product
The bright white cups with the green siren is the first noticeable brand. But it goes beyond that. You will notice that Starbucks never offers any sort of discounts or actions like buy-one-get-one-free. That’s sort of action dilutes the premium feel of the brand. You can get a free coffee drink for your birthday, but the underlying reason for that is for a customer to develop a positive connection with the brand and company. The MVP of the regular Starbucks coffee shop can be broken down: ☕Free reliable Wifi – besides oxygen, water, and sleep, the online connection has become a necessity in modern civilization. If you think about it, the coffee shop without wifi is like a local watering hole without beer. Whenever you’re in a new place and you need to connect, one of the first options would be a Starbucks shop. ☕Comfortable seats and community tables – whether you’re there to take a breather or putting some hours of online work or organizing an impromptu study group, there’s a Starbucks location that can provide those demands. Most of the Starbucks are generously equipped with charging outlets as well, so you can get another drink after your focus is starting to drop… and then another… And another… ☕Friendly baristas – customer service is ingrained in the retail work description yet rarely done the right way. With L.A.T.T.E. method (Chapter 8 – Disciplined Action) and general training of Starbucks partners, each interaction with the customer is there to provide a positive experience. Calling people by their name, timely service and the patience of crafting ridiculously complex/obnoxious drink orders (“half caramel, half vanilla latte, decaf espresso heated only to 100° with nonfat milk and caramel drizzle on top” anyone?) ☕Brand colors and materials — the nature-influenced interior with dark colors and wood finishes are giving a feel of hominess. Sometimes a Starbuck visit is just a pause you take in a day to relax your eyes. ☕Music and smells — coffee and snacks just smell amazing. Let’s take that for granted. The music serves a purpose as well as bringing an ambiance that is great for having a conversation or focusing on work (or your date).KEY TAKEAWAY #6 — Positive interactions.The brand is the sum of all touchpoints the customer has with the company. This goes beyond the product and customer service. Think about every single interaction customers have with you and make them positive.
CHAPTER 7: Starbucks Master Example of Mobile Retention and App Rewards
Starbucks mastered the mobile game at the right time. Dabbling with mobile technology since 2007, Adam Brotman spearheaded the platform to maximize the effect. The big challenge was to align it with the brand. “We don’t look at mobile in a vacuum. We have an overall digital strategy that’s all about building relationships with our customers, and that strategy runs across a number of digital touch points. We’re looking at mobile, Web and social to think more holistically about how we engage with our customers and tell our story.” — Adam Brotman, Chief Digital Officer In the Manifest survey in 2018, 500 smartphone owners rated their satisfaction using food apps. Starbucks had the most popular and regularly used loyalty rewards app — 48% of users used it on a daily basis.
Ordering ahead of time and User Experience
For a food mobile app to be successful, it must bring value to the user, be easy or even fun to use and it should have an entertaining, dynamic content. User-friendly – This is the most minimal and easiest thing to leverage on. With a strong brand, it should not be hard to create an appealing visual interface and create logic flow and transitions or continuation to the desired action.
Out of this world Personalized experience
When the Starbucks app is down so I gotta order at the counter like it’s the dark ages ?
— Braedi Zielinski (@braedi) February 28, 2019
Ordering and paying ahead of time
User experience (This is a must, it must be easy to use and appealing to look at) Digital Engagement paid tremendous dividends for the company Starbucks CFO Scott Maw said almost all of the company’s same-store sales growth has come from customers that have digital relationships with the company and those that are in the Starbucks Rewards program.User-friendly design
This is the minimal and easiest thing to leverage on. With a strong brand, it should not be hard to create an appealing visual interface and create logic flow and transitions or continuation to the desired action.Engaging Loyalty Program
Retention is the name of the game. If a customer trusts you well enough to download your app, you have a unique opportunity to convert him or her to be a regular user. Starbucks has a similar strategy with the reward system. Every day there’s a slight reward, whether it’s collecting points or showing the current mouth-watering warm drink inside the app. It’s sticky and you can’t help but wish for a warm beverage.Mobile pay and ordering
North American market is known for heavy mobile use. By prepaying and using the device to quickly go through the ordering process, the customers feel more efficient and slightly more an advantage than the other poor souls who still buy their coffee with credit cards or cash (losers!!!!).Integration with other platforms and services
Partnerships are ways to get tons of new users with one big swoop. Spotify acquired one million users a few days after partnering with Facebook (Source) and Facebook had one sexy product update from it as well. For similar reasons, Starbucks used Spotify to enrich the experience of the mobile app. Now playing highlight in Starbucks stores (Music is a big part of the brand and having perennial “Shazam” embedded brings seemingly insignificant, yet positive experience.
UX/UI — Breaking Down the Mobile App Design
Out of this world Personalized experience
The app remembers your favorite order (This is ingenious. We’ve mentioned how coffee for Java bean drinkers represent a daily habit – if Starbucks manages to infiltrate itself into your habit loop, they’ve won. They have become a part of your daily routine. Stacy always stops at the same drive-through Starbucks, orders her Grande Latte with Soy Milk at 6:15 am before she checks-in at her job. When that’s her daily or even only a few time per week routine, the LTV for that kind of customer is absolutely amazing!) Every little detail counts. For instance, here’s the customized greeting each time a user opens the app’s Home tab.
Gamification
Most addictive phone games always give you something to do if you’re not using it for a while. From Candy Crush Saga to Supercell’s engineered mobile drugs like Clash of Clans and Boom Beach, the mechanics of engagement are carefully predicted for maximum time and cash spend. These games start with low difficulty. They are fun, colorful and offer an entertaining introduction to its mechanics. But you can play all day, and after a while (on a free tier) you’re locked out of the game. To continue playing, you can either (literally) buy your time or increase your chances of success with extra loot, power levels or something similar. Starbucks uses a similar principle of gamifying their mobile apps. There’s a lot of value up front (pay with a card, skip the line, earn credits for free drinks) but it serves the company’s profit. You get hooked to those stars (credits) which are stacking in your beautifully designed mobile app.

STARBUCKS LOYALTY PROGRAM on triple-caffeine nitro power
The Starbucks Rewards are dead simple – the more you spend the more stars you get. The mo’ money, mo’ honey approach quickly identifies a segment of customers that are willing to spend more for their coffee/Starbucks addiction. The Rewards program besides the stars, offers birthday rewards, phone payments, paying ahead, free in-store refills (I WANT MOAR KOFFEE) and special offers and events for members. As expected the experience is personalized for each user. The Rewards work like gangbusters! More than 14.2 million active members in the U.S. are invested in the loyalty program and the mobile strategy has seen an 11% growth in users in Q2 2018. The gamification of the program and “spend more, earn more” in some cases represent 39% sales of the entire chain. Here’s what’s ingenious about the mobile program. Even though there are people (like myself) who prefer to have the minimum number of apps on their phone and think thrice before opening the doors for the elite club on their smartphone storage, the Starbucks app is a trojan horse of benefits – even if you don’t care about collecting stars, it’s tough to say no to the free birthday drink or the convenient mobile pay. Online Ordering and easy payments flatten the friction of getting the product. Just like the Amazon 1-click purchase or Slacks dope-sauce onboarding sequence, the same goes for picking up your mocha and Petite Vanilla Bean Scone. At first, Starbucks had some issues, since the mobile members had to wait in line just like regular chumps, but Starbucks responded by adding dedicated stations for mobile order-ahead customers. Members can skip the waiting line and enjoy the jealous looks from the regular mortals while feeling elite of themselves. The beauty of the app isn’t giving one big benefit of quicker caffeine shot to the member, but it serves as an ingenious upsell marketing tool. Just like Trader Joe’s introduces new products in their email newsletter and unique brochures (Fearless Flyers), Starbucks app is a delivery method for presenting new items ahead of time. These generate interest ahead of time and coupled with email notifications, it gives their customers something to look forward to.
KEY TAKEAWAY #7 — Think APP.Mobile app for a product that is being used on a daily basis and is in the lifestyle category is not a nice to have, but almost mandatory. If you want to stay a part of your customer’s daily lives, bring the entertainment, rewards, and gamification to keep the retention and customer satisfaction high. You will be rewarded with increased LTV.
Chapter 8: The Success Flywheel of Starbucks
The easiest way to figure out and identify the success of a company is to apply the try-and-true framework. Jim Collins, the author of Good to Great, Built to Last claims all mega-successful companies have to figure out the Flywheel principle. To become an unstoppable juggernaut in its own field, Starbucks had to align 5-6 different elements in three categories:- Disciplined People
- Level 5 Leadership
- First Who… Then What
- Disciplined Thought
- Face the Reality
- Hedgehog Concept
- Disciplined Action
- Culture of Discipline
- Leveraging the Technology

Disciplined People – Starbucks Level 5 Leadership

Disciplined Thought
Face the Reality — When stuff gets hard, leaders don’t turn away from the problem or worse, get busy with mundane tasks, deceiving themselves they are working. Closing your eyes to the reality means you’re on a great way to a downward spiral. In 2008, Howard Schultz got reinstated by the board as CEO. The sales and shares were dropping. The brand and the culture of Starbucks were deteriorating rapidly. The magical experience was a shadow of its former self. Schultz decided on a radical idea to close all the stores and retrain in order to inflict the importance of the Starbucks vision and mission. Tied into this transition was closing numerous shops and letting go of hundreds of employees. The ordeal cost the company 6 to 7 millions dollars. In 2018, Starbucks closed the doors again in order to put the staff through racial anti-bias training. The temporary closure cost the company between $15 – $20 million dollars
The Hedgehog Concept

- The Elite Skill – You will have to be the best in your area of expertise. Constant learning, innovating and moving the boundaries are expected from the movers and shakers of the world.
- Deep Passion – Someone who grows a business will eventually (and continuously) encounter major obstacles where the skill isn’t going to be enough. The grit, powered with a deep passion and a reason why is arguably even more important than the knowledge alone.
- Ability to generate revenue – Understanding of what drives the economic engine is the third piece of the puzzle that completes the concept. No business can survive without sustaining itself and its people financially.
Disciplined Action
Culture of Discipline The success of anything in our lives is in the hands of people. It always is the #1 element in any company. “In determining the right people, the good-to-great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience.” When the quality of the work started slipping. Schultz had to close down hundreds of shops for training day. It was a necessary decision to refocus, restructure and boost Starbucks employees to work and deliver on the right things and to deliver the experience as it was intended in the first place. When faced with a difficult customer or a problem, the Starbucks partners (employees) are taught the customer service by using a L.A.T.T.E. system. The acronym helps baristas deal with any situation in the store.- Listen to the customer
- Acknowledge the problem/situation
- Take actions and solve the problem
- Thank the customer
- Explain what you did


KEY TAKEAWAY #8 — The Flywheel concept.Successful companies that persevered and thrived with time have found and adopted the Flywheel concept. Focusing on essentials of the business, working with the right people on the right places and maintaining the discipline is the only way for continued sustainable growth.
CHAPTER 9: Starbucks Vs the World
Competitors
Just as Lululemon Athletica carved its own niche in the marketplace as the premium athleisure retailer, so did Starbucks enjoy the blue ocean marketplace as premium coffee culture experience-provider. Not facing the competition while enjoying filling out the gap shoots you at the front immediately. But as soon as competitors noticed Starbucks discovering a new opportunity they had to react quickly. McDonald’s and Dunkin’ Donuts were the big ones that introduced their own versions of coffee-to-go. Better than instant coffee and convenient while on the go, the two competitors did enjoy new revenue stream of introducing coffee; however, as companies, they had to keep the focus on what they are good at — McDonald’s with their fast food burgers and fries and Dunkin’ Donuts with well… donuts. DD does serve coffee but had no intention to put more emphasis on it until the late 1990s. Starbucks kept the lead in coffee concept because of its focus on the coffee culture and holistic concept of their brand, especially customer service. This point can be seen as soon as you look at international markets. Dunkin’ Donuts’ international revenue in 2018 contributed less than 4% of total sales, while roughly 30% of Starbucks’ consolidated net revenues in the same period were attributed to markets outside America.When International Expansion Goes Right
When you get it right and you know you have the brand, processes, and culture down, you can move outside. When Starbucks expanded its adopted “Coffee culture” to new markets they could follow its own tracks again. In many countries, especially Asian nations the idea of a coffee culture was new, fresh and exciting. To overcome the culture gap, Starbucks sought partnership through direct investments and joint ventures instead of direct franchising. This solved two major problems. First, they relied on local retailers who already had experience and experience in the local markets. They married the coffee culture idea with market research of the new areas to discover regional customers’ tastes and preferences. After that, they just had to deliver the employee training, workflows and the product itself. Secondly, they acquired and absorbed the entire pieces of coffee markets, such as Coffee Partners in Thailand and Bonstar in Singapore. All in one big swoop. But even today a Starbucks café is opened every 15th hour in China. It already operates more than 3,000 stores in China and plans to add 2,000 more by 2021. Seoul has the most Starbucks cafes in any city (284). Starbucks is present in 6 continents and in more than 72 countries and territories. But it wasn’t always smooth sailing for the old Starbuck.
And when it doesn’t go so well
While Starbucks had amazing success in Asian countries, they hit a snag in Australia. In 2008, they closed two-thirds of all stores. The reason? Australia is already known as one of the hardest markets to get into in the first place and they are very proud of their coffee culture. The flat whites, coffee art in ceramic lattes have been served for dozens of years at beloved local cafes and from baristas who knew what they are doing. What Starbucks was doing in the United States was introducing the coffee culture in the new market because it was non-existent before. But in Australia, this model didn’t fit in at all. In 2008, Starbucks closed two-thirds of all the stores. The prices of Starbucks’ relatively common-tasting coffee (compared to established coffee shops) was pricier than the local solutions and managed by young students who didn’t have the level of appreciation of either the coffee culture and/or Starbucks as a brand.
KEY TAKEAWAY #9 — Establish yourself.Follow the winning formula of developing the markets first and turning into a product innovator after you have established yourself. Forcing the innovation where it’s not perceived as such, is waging a losing battle.
Bonus Chapter 10: Starbucks on Social Media
The website is simply designed with an intention to present the latest seasonal product in the Starbucks shops in the first fold. The focus of the homepage is also on advertising Starbucks Rewards program. According to SimilarWeb, it attracts 15.8M visits per month, with an average of 2 minutes and 3.7 page views per session. Starbucks site is the 11th top ranked site for Food and Drink category in the worldYOUTUBE







KEY TAKEAWAY #10 — Delegate your resources.When using social media, identify which social media platform brings the best results. If your users are primarily on mobile devices, Instagram would be a smart choice. Delegate your resources to the best performing channel.
Save your eyes, bud. Get this article as a printable PDF