Starbucks: Growing Big While Staying Small

Starbucks: Growing Big While Staying Small

        Starbucks has been mainly successful to-date by effectively creating lasting relationships with its customers through customer connection and value. This is most expressed by Starbucks’ mission statement – “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”, which shows the focus in each individual customer. Starbucks is able to do this by allowing customers to personalize their drinks which create a sense of ownership and customer connection, training staff on building relationships with regular customers through genuine conversation, and the ritual of writing each customer’s name on a cup and calling his/her name also serves to target the human need for affirmation. Starbucks has also positioned itself as a “third place”, a place of comfort and familiarity between the home and the office by focusing on the store design, overall ambience, and experience through careful use of details, such as comfortable seats and couches, overall interiors, and even the music being played. Furthermore, Starbucks has been able to penetrate into different overseas markets by changing its drinks in stores to suit local tastes, while at the same time maintaining the consistency of the coffee buying experience which Starbucks has been known for. Hence, Starbucks is able to deliver value to consumers as it is able to address a variety of different consumer needs. For some customers, it is able to provide an excellent cup of coffee that suits their tastes, for some, it is a place to meet and chat with friends and colleagues, for students and professionals, it is akin to a library or office with Wi-Fi where they may study and work, and for others it is a nice place to hang out and relax. Whichever of these needs a customer may have, Starbucks is able to provide value to them by addressing it.

        However, during 2009, Starbucks’ same-store sales had been declining. A SWOT Analysis (Figure 1.) best explains the business situation which had led to Starbucks’ performance.

Figure 1. SWOT Table for Starbucks

Starbucks is well known for its great quality of premium coffee and customer service at a premium price. However, the recession has lowered people’s income levels and has led to increased price-sensitivity among its customers, causing some to try lower-priced competitors, who in turn have seized the opportunity to grab more customers through intensified competition and increased advertising spending. However, there exists a large potential for overseas growth for Starbucks, but this comes with the challenge of becoming relevant to different customer profiles with different tastes and cultures amidst growing international competition.