Starbucks: The Ultimate Customer Experience: Background Information

Starbucks: The Ultimate Customer
Experience
Submitted by: Antonio. Raz. Tolosa (GROUP 2)
Background Information
Starbucks Corporation is the world’s leading roaster, retailer and marketer of specialty coffee.
As of early 2019, its operations consist of more than 30,000 coffee shops and kiosks worldwide. Its
very first store was opened across the street of the historic Pike Place Market in Seattle back in 1971.
It was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegel who all loved coffee and tea. They
decided to name the store after “Starbuck”, the coffee-loving first mate in Herman Melville’s classic
novel Moby Dick then designed a two-tailed siren for a logo as known today. At first, the three
founders started out by selling coffee beans roasted by Peet’s, a gourmet coffee company. However,
they began roasting their own later on. This lasted for a decade and it was not only until 1982 that the
first Starbucks store, which sold brewed coffee opened. In the same year, former CEO, Howard
Schultz, was hired and it was at his urging that Starbucks opened its first espresso bar two years
later. He left Starbucks for a while but returned in 1987 to purchase the company with the help of a
group of local investors. Since then, Starbucks has continued to thrive and has now established a
name for itself. Today, it offers not only high quality coffee beans but also a variety of specialty coffee
drinks, teas, hot chocolate, merchandise and a limited menu selection of food items. With its strong
brand name and customer base, Starbucks has arguably turned as the most successful coffee
company in the world.
Vision-Mission Statement
Vision Mission
To establish Starbucks as the premier purveyor of the To inspire and nurture human spirit- one
finest coffee in the world while maintaining our person, one cup, and one neighborhood
uncompromising principles while we grow. at a time.
Starbucks employs product differentiation strategy in their operations to make themselves

distinguishable from their contemporaries in the same industry. It continues to utilize innovation in its
products and services in order to gain competitive advantage in the market. In line with their vision of
serving the best coffee in the world and mission of inspiring and nurturing the community, the brand
positioned itself as a flexible and adaptive company as they modify their products and services in order
to cater to the different preferences of their customers by providing elegant tasting and high quality
coffee, aesthetic branch designs, and friendly environment. They have gone beyond just one person,
one cup, and one neighborhood throughout the years as they appeal to international market, always
maintaining and improving their principle of providing the best service as they continue to expand.
Indications of Product Differentiation Strategy
Product differentiation strategy strives to distinguish a company’s products or services from those
of its competitors. It aims to highlight and promote the unique attributes of a company’s offerings while at
the same time emphasizing what good or advantage it poses to its customers and prospective customers
in comparison to its substitutes in the market.
In the case of Starbucks which offers coffee as their mascot beverage, a product with many
available and cheaper substitutes, they differentiated their products by serving more than just a cup of
hot or cold beverage, but by also providing special services along with it. The whole idea of Starbucks is
for their customers to purchase beverage along with an ultimate customer experience that no other
coffee place offers. Below are the indications of product differentiation strategy evident in the operations
of Starbucks:
 Price
Starbucks offers drinks which are more expensive, even overpriced in the views of other, but they
have many loyal patrons who are willing to pay extra pesos to get a cup of coffee. They have
established an image of luxury which consumers dig, making them glad in taking a few more bills out
of their wallets.
 Service and Product Innovation
The underlying principle for the seemingly overpriced drinks they offer lies on the service the
customers take along with the drinks. As opposed to big brands such as Dunkin Donuts, J.Co, Krispy
Kreme, Coffee Bean, and Coffee Project which serve similar products, Starbucks is the pioneer in
putting the name of customers in their cup of coffee which delivers a more personalized experience to
their customers. Also, Starbucks takes pride in letting their customers customize their drinks
according to their liking- choose the type of milk they want or request for some extra pumps for those
who cannot tolerate strong caffeine. They also boast the atmosphere every Starbucks branch has
which includes a laidback interior design with the additions of cozy furniture to induce the feeling of
warmth where people cannot just only drink coffee, but also hold gatherings with their friends and
acquaintances. Starbucks also offers free WiFi with reasonable speed, enabling the customers to do
their work, whether for business or school, or to just simply post on their social media accounts that
they are chilling in Starbucks.
 Brand Reputation
From the packaging alone, one can recognize a cup from Starbucks. The company has established a
strong brand reputation, creating a positive perceived value in the minds of their customers. They
earned recognition through their unchallenged service, community involvement, customer feedbacks,
and marketing. Also, Starbucks is not out for franchising in a 100% franchisee world as the CEO
believes that franchisers are middlemen that disconnect them to their customers (Forbes, 2016).
Forbes. (2016). Starbucks is Maintaining Its Competitive Edge. Retrieved from https://www.forbes.com/sites/greatspeculations/2016/10/13/how-is- starbucks-
maintaining-its-competitive-edge/#7b5c506e759c
 Customer Relations
Baristas in Starbucks are not just trained to prepare drinks, they are molded to build relations.
According to a Starbucks manager, “Good attitude, curious into what the customer
needs/wants, outgoing, and conversational without overstepping any boundaries. This type
of person is not only an asset to the team, but the customer as well.”
Success Stories
Starbucks aimed to be the Third Place in the daily lives of their customer –Home, Work or
School, and then Starbucks. Their goal is to create an environment similar to the comfort a home
offers while enabling people to also sit in nice chairs, talk on their phone, look out the window, surf
the web, and of course drink coffee [ CITATION Dol08 \l 13321 ], and they managed to do that
successfully.
As they continue to provide elegant products

and wholesome services, Starbucks started to grow
and expand internationally. As of June 30, 2019
Starbucks has a total of 30,000 stores across 80
markets. In addition to their growth and expansions,
Starbucks also gained multiple awards and
recognitions throughout the years, some of those
are: One of the “World’s Most Admired Companies”,
“Top 10 Millennial Brands”, and “Top 10 Growing
Global Brand”,[ CITATION Sta20 \l 13321 ].
Also, in order for them to further develop their

uniqueness and provide new type of experiences to their
customers, the company started to develop Starbucks
Reserve Roastery which differs from an ordinary Starbucks
such as by having a much larger and wider venue, brewing
exclusive coffees, offering other drinks such as cocktails or
wine and providing fresh pastries and savory-foods. But what
makes the Starbucks Reserve differ the most is the new wholesome experiences: like having to see
the brewing techniques and roasting processes of coffee beans to enjoying some wine and beer at
the bar and a lot more.
Their success was made possible due to effectively managing the strategy and never straying
away from their vision and mission. They effectively distinguished the company’s brand image and
reputation from their competitors by selling not just high-quality food and beverages but also
providing an astonishing ambiance and gives their customers a wholesome experience which sets
them apart and on top from the rest.[ CITATION Dol08 \l 13321 ]

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Starbucks: The Ultimate Customer

Starbucks employs product differentiation strategy in their operations to make themselves

As they continue to provide elegant products

Also, in order for them to further develop their

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