Starbuck's

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“We desperately need to look into the mirror and realize it’s time to get back to the core” says Howard Schultz, chairman of Starbucks Corporation who is considered responsible for building the company into the coffee empire it is today. He is referring to “the dilution” of the Starbucks experience and the “commoditization of the brand”.

Starbucks is a Seattle based company whom Mr. Schultz joined in 1982. He envisioned expanding the niche brewer of strong coffee beyond the Pacific Northwest by bringing the romance of Italian coffee bars and their espresso to Starbucks so that it would be an enticing gathering place. This concept took off and resulted in steady sales and earnings growth that have made the company’s shares soar since it went public in 1992.

Mr. Schultz’s vision took a niche coffee brand and evolved it into an established market leader. This was performed by providing high quality coffee into an atmosphere that allowed people to drink and enjoy their coffee for an unlimited amount of time in the store. In the store the barista’s would grind the coffee, pull the espresso shots by hand creating a “romance and theatre” atmosphere to a customers visit. Starbucks has been described as “having a more homely feel with dim lighting and soothing music playing in the background to make you feel good. I always feel the atmosphere at Starbucks is better than Dunkin Donuts” (Reference 1)

Since that initial vision Starbucks has grown exponentially and its goal is to become one of the worlds most recognized brands. Currently it has 13,000 locations but it’s goal is to have 40,000 locations around the globe. Starbuck’s stock has continually risen until last year when shares fell by 9%. It is felt that in the process of keeping up with pace of growth and efficiency in order to serve the many customers that visit a Starbucks site on a daily basis, the company has unintentionally watered down the Starbucks experience.

Currently at Starbucks they use automatic espresso machines and use coffee “in flavor locked packaging” thereby eliminating the task of scooping fresh coffee from bins in stores and grinding it in front of customers. Even more damaging was that the these new automatic machines blocked the visual sight line the customer previously had to watch the drink being made, and for the intimate experience with the barista. Two other practices that starbucks has adopted have made it appear like a Fast Food restaurant. This includes sandwiches on the menu and a drive through window. From one aspect these sandwiches had issues with regards to the way they were made. The sandwiches were made in ovens resulting in a strong odor of burnt cheese taking away from the customers relaxing experience. This was eventually remedied by switching ovens and telling workers to clean them regularly. It was not the sandwich themselves that was the issue since starbucks did try to position themselves on a higher level by offering fancier sandwiches than a fast food restaurant with options such as eggs Florentine and tomato parmesan. As one customer put it “The taste of the sandwich is fine, it just didn’t fit the experience”. With regards to the drive through window which starbucks currently has in one-quarter of their stores and hopes to increase up to one-third of their stores, this method of purchasing coffee creates a distance with the customer since they may not experience the same warmth employees of starbucks try to convey inside the stores. Starbucks has worked very hard to create Brand Equity which is reflected in the way consumers think, feel and act with respect to the brand. The consumer would come into the store not just for the high quality coffee but to see the barista make the coffee. The consumer wanted to experience drinking that cup of coffee in an environment of warmth, friendliness where employees were kind with stimulation of the sense of sound of coffee grinders breaking down the coffee bean and the...
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