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What Starbucks can do for your business

Written by: Jim Kayalar

Article Overview: How can you build in an experience into your business model, which would allow you to up-sell, cross-sell, increase the time and money spent by your customers at your point of business?

What Starbucks can do for your business

We all know the epic journey across the country that ended in Seattle Washington and that led to the creation of the world’s most famous coffee brand Starbucks.

I doubt that the original business plan envisioned a billion dollar business, thousands of Starbucks spanning nearly all the countries of the world. There is even one in the infamous Great Wall of China! Talk about success, from Seattle to Beijing.

As a business owner/manager, how can you use the Starbucks success to increase your profits?

What can Starbucks do for your business?

Why do millions of people everyday, voluntarily make their way to a Starbucks to buy a $5 coffee that costs all of a maximum of 40-50 cents for the cuppa Java?

Sure, the coffee tastes good. The bells and whistles and frills of a latte are enchanting. The caffeine rush helps to pick up in the morning, in the afternoon and after dinner. The same coffee product without the bells and whistles, stripped down to its commodity form, plain old coffee also has the same pick up effects, doesn’t it?

The dirty little secret behind Starbucks success is not the taste of their coffee. Starbucks is not selling coffee, they are selling an experience.

The whole Starbucks design is geared to providing the patron with an experience. The furniture, the layout, the music, wireless access, music CD sales. If you are old enough you will remember the hamburger that ended with “Where is the beef”. Well, where is the coffee, because all the above stated are complimentary attributes to the coffee that they serve.

Starbucks has positioned itself as the second home away from home. After the lengthy explanation which was necessary to understand their model, how can you use the Starbucks model to grow your business?

How can you build in an experience into your business model, which would allow you to up-sell, cross-sell, increase the time and money spent by your customers at your point of business?

As a management consultant I help clients that need to fine tune their business models to grow their bottom line. At Business Tune Up, we recently worked together with a main street boutique that had difficulty in competing with its competitors. We applied the Starbucks experience model to the boutique and came up with complimentary attributes that were perceived by clients as adding greater value to the high end fashion items that they purchased. We changed their business fundamentals from selling clothes to selling the experience.

Think out of the box to see how you can add the ‘experience’ factor to your business model. Sell up, sell cross, and differentiate your product or service from the rest of your competitors. And don’t worry about your competitors copying your ‘experience’. All you need to be assured is to see the bustling Starbucks coffee shops and its half empty ‘me too’ competitors. It’s called first mover advantage.

The bottom line: Use the Starbucks experience to grow your bottom line.

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Article Tags: business model, business thousands, coffee product, coffee Starbucks, Starbucks, Starbucks coffee



Related Forum Posts
The Starbuck's experience - [quote="Sebastien":3j66y8cv]Being French, I don't really understand what you call the Starbucks experience. We didn't have coffee shops in France until a couple years ago when (surprise!) Starbucks came in. So what's the Starbucks experience? Waiting in line 10 minutes for a cup of coffee? haha I think I understand what you're saying though. I think Starbucks has had tough competition lately with a bunch of coffee shop brands popping up and this is a natural move away from their core business (an actual coffee shop). We're seeing that Starbucks are actually not as profitable as everybody thought. As a side note, I've always said that some day there will be a huge financial scandal about Starbucks. A company just can't grow that fast in a healthy way. Anyways. So Starbucks is calling back founder and old CEO (I'm too lazy to look up his name on Google) to put Starbucks back on track and these vending machines might be some of his first projects. I think it is great to take advantage of such a good brand and do extend it further than a coffee shop.[/quote:3j66y8cv] Hi Sebastien, According to branding expert Martin Lindstrom, "Starbucks' objective is to create an intimate and even romantic atmosphere...The lighting is subdued to keep it cozy. The chairs and floor may be a little scuffed, but that makes it feel comfy and homely, and less intimidating...The music is soothing and sophisticated" (BRANDsense 158). So the Starbucks experience is essentially founder Howard Schultz's recreation of the coffee bar culture in Milan and the reason why they feel they can charge people outrageous prices for coffee. In fact, Starbucks isn't selling coffe, they're selling a unique and memorable brand experience to their customers.
Starbucks: Licensing vs Joint-Venture - Hello there i have a few questions, i would like to hear from you some ideas and opinions for my case study... 1) Why do you think Starbucks has recently elected to expand internationally primarily through local joint-ventures, to whom it licenses its format, as opposed to a pure licensing strategy? 2) And I was also wondering, what are the advantages of a joint-venture entry mode for Starbucks over entering though wholly owned subsidiaries? On occasion, Starbucks has chosen a wholly owned subsidiary to control its foreign expansion, e.g. uk or thailand? why? 3)And which theory of FDI best explains the international expansion strategy adopted by Starbucks? Thanks for helping me... Best Guy
Re: Advantages with Social Media Sites - Social Media sites make good business for you, if you know how to use them. I learnt that Starbucks has more that 20 million likes on Facebook. This shows that it is easy for Starbucks to interact with these people. Lady Gaga has 17 million followers on twitter. She can market to them easily with a singe tweet.
Re: Why isn't Starbucks instant coffee selling? - I believe that's their strategy... Starbucks is making breakfast sandwiches and bagels now. They're definitely preparing for battle. Maybe there will be Starbucks Diners in the future?
New McDonalds McCafe concept... - It will be interesting to see whether this idea takes off in Japan. Here in Hiroshima there are at least 4 Starbucks that I can think of, and probably more, and several MacDonalds... as well as a lot of home-grown competition. Of course, MacD already sells coffee, and I'm not sure that expanding will dent Starbucks because I guess they appeal to different market niches... Could hurt MadDonalds more...


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