Starbucks Case

1. What factors accounted for the extraordinary success of Starbucks in the early 1990’s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?

The success of Starbucks in the early 1990’s can be attributed to Howard Schultz’s vision of the Starbucks brand. Schultz inspired of a company, which would make the customer the centre of its success and would change the coffee drinking experience in the U.S. In order to achieve this, Schultz successfully utilized his human resources by establishing benefits that would force those resources to create value in the process of the coffee drinking experience. Starbucks was successful because it placed value to the customers first in its value proposition.

Following is a number of factors that accounted to Starbucks success in the early 1990’s:

a. Atmosphere: Schultz’s idea was to make Starbucks America’s “third place”. By recreating the Italian coffee culture he met in Milan, he managed to make Starbucks a place where people can enjoy their social interactions, relax, or just spent some time by themselves. In essence, the Starbucks idea changed the norm from “buying coffee as a drink” to “the experience of enjoying coffee”. People viewed Starbucks as a place they wanted to be at and they spent as much time as they could in the stores. It was an uplifting experience that was complemented with the layout designed to provide an inviting environment.

b. Coffee quality: Starbucks strategy was to open only company‐owned stores and avoid franchising. This enabled the company to keep full control of quality of its products and services. At the same, Starbucks tried to control as much of the supply chain as possible in order to keep the quality of coffee at high and consistent levels by working with growers and enforcing coffee standards. These two strategies enabled Starbucks to deliver on the first component of its value proposition; quality.

c. Service: Partners were trained on both “hard skills” and “soft skills” when hired to work for a Starbucks retail store. This equal emphasis on the “hard” and “soft” skills further highlighted Starbucks strategy to make the experience pleasant for the customer. The “soft skills” were a way to teach the partners on how to connect with the customer, by establishing eye contact, smiling and greeting them with their names when the customers were regulars. In addition to that there was also the “Just Say Yes” policy for which the partners went beyond company rules in order to satisfy the customers. These again created a friendly environment for customers who felt special and in combination with the two points mentioned above increased their customer satisfaction.

d. Partner satisfaction: Schultz’s belief was that if the Starbucks employees were happy, then this would