It is so Much More Than Coffee (Part 1)

Starbucks was created around the idea that customer service is key to driving a successful business. The story of its creation is quite fascinating. In 1982 Howard Schultz came to work one day with a passionate idea. He wanted to recreate the spirit of Italian coffee-drinking rituals at the wholesale coffee company he worked for. He tried to persuade the owner of the company to offer traditional espresso beverages in addition to the whole bean coffee they were already selling. Unfortunately, the idea was squashed and Schultz decided to quit and start his own coffee shop. In his new coffee shop customers could choose from a wide variety of coffees and make their own special cup. Two years later he bought the company that he originally worked for and this is how the first Starbucks emerged in Seattle.

Twenty-five years later, Schultz expanded his coffeehouse with 9,000 stores in 48 countries, all united around the idea that delivering great customer experience is paramount for successful business development.

Starbucks’s business model is less about providing a great cup of coffee and more about providing a great coffee experience. Starbucks has built a brand image that is consistent with those unique consumer experiences that the coffee shops have delivered to customers over the years. The powerful application of emotional and experience-based branding has transformed Starbucks into a brand that is associated with hospitality, relaxation, and ambiance.

The essence of the brand is not about coffee-drinking, it is about the coffeehouse experience. It is the homey coffeehouse experience and the inane versatility of the products that are behind the highly successful performance of Starbucks internationally. Another unique attribute is the local character of the brand. Despite the fact that Starbucks has more than 9,000 coffeehouses around the world, it is not a mass brand. Starbucks shies away from traditional mass advertising, building instead brand loyalty by delivering great in-store experiences.

The signature Starbucks branding consists of unconventional, one-on-one, small-scale campaigns, very much tailored to the local consumer, and aimed at relationship-building, rather than massive brand recognition. In 2006 Starbucks spent only $95 million on advertising, which includes billboards, print advertising, and online advertising. (Allison, 2002) For comparison, Coca-Cola spent $2.5 billion, and Nike spent $1.7 billion. Instead of spending its marketing dollars on TV ads, Starbucks uses in-store experiences as its main marketing tool. To be continued…..