Starbucks: Crafting an Experience Beyond Coffee - Essay Sample

Introduction

Starbucks strategy was to create more than just a coffee shop. Starbucks was a 'third place' where people would go after work to share their experiences (Rothaermel, 2019). To provide unique customer experience, Starbucks invested in comfortable chairs and music in the background, which would create a serene environment for the customers as they partook in their beverages. Starbucks also had a unique set of coffee full of variety, including 30 blends served by a barista (Rothaermel, 2019). To create quality coffee, the baristas would grind coffee all day long whenever a new pot was to be made, which produced grinding sounds and fresh aroma. The interaction of customers with baristas was also unique, adding to its excellent experience. Also, Starbucks stuck to one main product line, coffee, which enabled it to ensure quality and create a brand. By adopting these strategies, Starbucks earned customer loyalty, which helped gain a competitive advantage. What made the uniqueness successful was that other coffee shops offered just coffee, but Starbucks offered coffee in addition to a unique experience.

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Loss of Starbucks' Uniqueness

Starbucks grew exponentially up until 2000 when it lost its uniqueness (Rothaermel, 2019). The management focused more on increasing revenue and let go of Starbucks core competency, the Starbucks experience. The number of stores increased from 8,500 to about 17,000 (Rothaermel, 2019). It also started offering other products besides coffee, which was its core business, such as snacks, ice cream, and alcohol. The introduction of other products on its menu made Starbucks lose the quality of the coffee. In a blind taste-test, Starbucks coffee came last with coffee from Supermarkets outscoring them (The Seattle Times, 2007). Starbucks coffee was deemed as ordinary and referred to as 'burnt and bitter' despite its higher price (The Seattle Times, 2007). Such reviews painted a negative image of Starbucks whose coffee was on average, more expensive at $1.55 than McDonald's $1.4, who was the winner of the test (The Seattle Times, 2007). The interaction between the barista and the customer was also reduced and blocked due to the presence of tall machines. Baristas were also so busy that they stopped grinding coffee throughout the day and started grinding in the morning and storing it for use. This change might explain why Starbucks lost its blind-taste-test. Overall, Starbucks lost its competitive advantage as it lost what made it so unique.

Maintaining Starbucks Competitive Advantage

Starbucks gained a competitive advantage and in 2000, lost it, forcing Schultz to come back from retirement (Rothaermel, 2019). The new CEO, Johnson, thus has the key responsibility of ensuring the company maintains its competitive advantage. First, Johnson has to ensure Starbucks produces superior products and services. Starbucks now produces a variety of products, and Johnson has to ensure that the products stand out in terms of differentiation and quality. Starbucks cannot afford to lose another tasting competition. Starbucks also has to ensure dynamic capabilities. The environment is changing, and Starbucks needs to upgrade its core competency and adapt to the changes to avoid its core competencies turning into core rigidities.

Starbucks growth opportunities are in the form of investing in foreign markets. In Africa, for instance, Starbucks has only opened one branch in South Africa (Business Insider, 2016). With 54 countries and a growing economy, Starbucks should consider opening new branches in these countries. One recommendation when exploring new markets is to embrace the culture. Because a certain blend of coffee is loved in the United States does not mean it will be the favorite in Africa or Asia. Starbucks needs to study the market and respond to its unique needs. Starbucks also needs to come up with new blends of coffee and use trade secrets to protect them.

References

Business Insider (2016). Starbucks opens first cafe in sub-Saharan Africa. Retrieved from https://www.businessinsider.com/afp-starbucks-opens-first-cafe-in-sub-saharan-africa-2016-4?IR=T

Rothaermel, F. (2019). Strategic Management. New York, NY: McGraw Hill.

The Seattle Times (2007, Feb 3). A bitter shot for Starbucks: McDonald's wins taste test. Retrieved from https://www.seattletimes.com/nation-world/a-bitter-shot-for-starbucks-mcdonalds-wins-taste-test/