In the United States, when you talk about coffee, you talk about Starbucks. The surprising American coffee shop chain is on the road to achieving what its main driver and strategy director, Howard Schultz, proposed one day: to become the most well-known and respected brand on the planet. Based on a very specific customer service concept and propelled by an aggressive national and international expansion, the company made its popular logo shine brightly in half the world, and it is known by the majority of the population.
It all started with a coffee shop in Seattle in 1971, and not long afterwards it began its local growth, entering the coffee importation business and roasting beans from its own plants. The business made a 180-degree turn in 1982, when Howard Schultz joined the company, charged with handling marketing tasks and managing the retail business. The director took a trip to Italy in 1983, where he discovered the charm of Milan coffee shops, the taste of “espressos”, and the pleasure of stopping for a cup of coffee in a pleasant environment. Convinced that the European way could work in the United States, he made efforts to apply it to his business.
Schultz’s vision translated into cozy shops, where customers could sit on chairs and couches and have their drinks while listening to music or reading the newspaper. One of the company’s main efforts was to personalize the consumer’s experience. This was achieved, first, by offering a wide variety of flavors, which currently surpasses 35 varieties of coffee. The proposal even offers something for those who prefer other types of drinks, such as chocolates, juices, or iced drinks with whipped cream.
Secondly, customers could individualize their choice even further by specifying the temperature, size, and extra ingredients: whipped cream, the coffee’s strength, caramel… All of that seasoned with a friendly and expert treatment that fully justified the cost of service. The company has also created a pre-pay card to cut down on lines at the counters, speed up the purchase process, and improve the image of the establishments for new customers. With the company’s success and consumers’ perception of the company as a premium brand, that is, that the brand itself brought a value and prestige to the product that competitors lacked, it discovered an extensive market of devoted customers. This allowed Starbucks establishments to be not only places for drinking coffee, but also points of sale for other types of products: coffee makers, mugs, CD’s, and even the company’s own packaged coffee.
Starbuck’s growth strategy has relied on several key factors. The most important of all has been the chain’s massive growth. Currently, the company has close to 9,000 establishments worldwide, the majority in the United States. In that country, there is scarcely a city where the Starbucks sign doesn’t shine. This trend has also moved to Asia, Europe, the Middle East, and South America. In Spain, it has more than 25 shops in Madrid, Barcelona, and Seville, where the company is growing through an alliance with the Vips Group.
The company has also established new sales channels, approaching its customers through other mediums: it is on American supermarket shelves thanks to an alliance with Kraft, it is on several airline menus, its label is on Frappuccino and Pepsi drinks, and the ice cream it began manufacturing with Dreyer’s achieved extraordinary acceptance.
Starbucks is experimenting with new alternatives, incorporating new products such as sandwiches and salads into their product line. It has even tried another concept for establishment, such as Café Starbucks in Seattle – where food is served- or Circadea coffee shop in San Francisco, with different decoration and live performances.
With the creation of its web page, the company confirmed its decision to focus on personalized treatment, close to the customer. From this on-line enclave, the consumer can find information on the world of coffee, the company’s new products and services, the address of each location worldwide, and of course, they can purchase its products.
The results are spectacular. In 2004, it reached revenues of 5.3 billion dollars, while profits increased to more than 390 million dollars. The company has more than 9,000 establishments worldwide, and its growing quickly. However, analysts fear that this pace will lead the company to the saturation point in many areas, as well as devalue the brand name. Meanwhile, Starbucks continues its expansion, which, for the moment, does not include Italy. Is it not yet the time to sell sand in the desert?