BUSINESS PHILOSOPHY AND STRATEGY OF STARBUCKS

BUSINESS PHILOSOPHY

1. "Every company must stand for something." Starbucks stood for Dark Roasted flavour profile and nothing else for their coffee. 

2. "Don't give the customers directly what they ask for. If you offer something else, something more superior, you excite them, create a sense of discovery and then loyalty." Americans didn't know about fine arabica coffee, so when they found high quality espresso based drinks it was obviously something new for them. In fact, this desire to keep serving something new, brought about the invention of Frappuccino. 

3. "To mean something to customers, you should assume intelligence and sophistication and inform those who are eager to learn. If you do, what may seem to be a niche market could very well appeal to far more people than you imagine." The baristas explained to the new curious customers what the beverage was, in sophisticated and knowledgeable manners and the customer believed that they could walk in everytime and learn something or experience something new. 

INNOVATION 

Howard, as an entrepreneur, has been a strong pioneer of Innovation. He felt this was needed to change with the times and yet stay true to their roots. To look at it from a pinhole point of view, the rapid urge of expansion is what brought about the different bouts of innovation.

When they were opening stores far away from their roasting sites, they needed to transport their coffee beans to far distances and yet retain their freshness. A brand new Ziplock technology was developed as a solution.

They started an instant coffee brand called VIA which would replicate the taste of freshly brewed coffee without the hassle.

Started coffee flavoured beer, ice creams, bottled beverages all from the high quality coffee concentrate the R&D team of Starbucks developed. 

EMPLOYEES

Howard always emphasizes on the importance of reaching the finish line with everyone and not alone, because he believes in winning together. Because of this reason, he loved his employees dearly to the core. He always treated them with utmost respect and everyone in the company, right from the warehouse workers and part time workers to high executives, everyone was meted out the same kind of treatment. He hates cutting off people. He never viewed employees as objects that eat into his profits and he believed treating them well acted as an energizer. Howard prioritised his employee's trust on the company. He wanted to give them a safe and secure place where they would be treated with equality and be proud of working. Also, Starbucks was the first company to give health benefits to every worker associated with them right down to even the part time baristas AND gave every employee, read it once again, EVERY EMPLOYEE shares. His philosophy was that if he linked everybody in Starbucks to the performance of the whole company, every employee would bring in the same attitude as the CEO who himself is a shareholder as well. In fact, he wanted to make the work environment of Starbucks of such a kind where he wished his father could have worked. 

PARTNER SELECTION

Starbucks didn't chase partners, partners chased them and they would single out people from hoards of offers. 

Howards had a policy - when you take on a partner and when you select an employee, be sure to choose people who share your passion and commitment and goals. If you share your mission with like-minded souls, it will have a far greater impact. 

So the procedure of selecting high quality partnership in the goal of letting people have coffee everywhere went something like as follows:

1. Brand name and recognition of P

2. Good reputation of P in its field

3. P has a strong commitment towards quality and customer service

4. P must have people who understand the values of Starbucks

5. P must promise to protect the Starbucks brand and must be equally rigorous over the quality of coffee

I believe something of this sort went behind the Starbucks and Tata partnership that brought Starbucks stores to India. Given Tata's reputation of being a venerable man, it is a no-brainer Starbucks is brought to India under The Tata Alliance. 

MARKETING STRATEGY

NOT A FIRM BELIEVER OF TRADITIONAL ADVERTISING

Posters, banners, pamphlets, TVCs, radio ads were not the Starbucks style. Starbucks believed in setting their brand as a marketing strategy. Starbucks is not  marketing driven, it is people driven, it is product driven and value driven.

According to them great brands had a formula :

Create a distinctive memorable identity 

A product that makes people look or feel better

A strong and comfortable delivery channel, i.e, Starbucks Store

And to Succeed :

Be in a category large enough to be robust and vibrant and clear with an original vision.

Starbucks always wanted to build brand loyalty. Build brand loyalty one cup and one customer at a time, communicate through their own people in the setting of their company owned retail stores. 

However with changing times, they have had to resort to making their presence felt online, leading to digital marketing and even had a couple of TVCs here and there. But finding Starbucks billboards is going to be something of a rare find. 

Marketing Strategy : 

1. Educate Customers about Coffee through Baristas 

2. Build a relationship between Baristas and Customers through their service

3. Spread everywhere and choose Retail Locations in highly visible, high traffic downtown sites, residential neighbourhoods, lobbies and on the going-to-work side of the street. - treat the Stores as their Billboards

4. Build a reputation through Retail Stores with high elegance, relevant local influential designs - treat Ambience Building as Brand Building

That is, use the Starbucks Experience as their Selling Point

They lived mostly on word-of-mouth advertising and the procedure they imagined is something s follows : 

Customer enters the store 

“Wow”

“I am treated so well over here”

“The Baristas know my name and my favourite drink when I come back the next time”

“I can sit here”

“That’s some great Jazz playing at the back”

“Can just close my eyes and relax a bit”

“I can get this entire experience for just $1.5 or $2”

“Can’t go to Hawaii but can treat myself to this”

Marketing Strategy While Opening In A New City

Every time they opened their doors to the public of a new city, they had a market entry strategy :

 1. Hire a PR to understand heritage and concerns of a city

2. Pick a flagship site, a very visible location in a busy part of the city

3. Build a swanky, high profile store exuding the elegant and classic signature Starbucks decor

4. Creative people designed artwork that celebrated each city's personality in their merchandise or store decor or even the cups. For example - a peach shaped coffee cup for Atlanta, or the Statue of Liberty drinking coffee and many more

5. They would send out invitations to Investors and Partners and the regular mail-order customers from that city to the Store Launch. 

6.They always opened their store on a famous community event

7. Before opening they always assembled a list of people who could serve as local ambassadors and that list would include : 

a. Partners and their friends

b. Local Shareholders

c. Mail order customers

d. Sponsors of charities they supported with their opening night proceeds

8. Held tastings with local reporters, food critics, chefs and owners of restaurants

9. Printed material to educate people about coffee

Drafting the Mission Statement 

For a man like Howard, who entwined emotions with his business to a great deal, drafting the mission statement for Starbucks was something very close to his heart.  

It was a part of the Strategic Planning Process and aimed to articulate a powerful message of purpose and translate that into a set of guidelines to help them gauge the appropriateness of each decision they made at all levels of the company. In fact a draft was submitted and circulated for all to review and make changes if they desired.