The Starbucks Value Proposition
Starbucks’ brand strategy was centred on its ‘Live Coffee’ mantra. Starbucks created an experience around the consumption of coffee. The three main components to this branding strategy were:
Channels of Distribution
Starbucks had stores in North America in high-traffic, high visibility settings such as retail centres, office buildings and colleges. Product mixes varied according to the store’s size and location.
The retail product mix in North-American Company operated stores is given in the following diagram.
Starbucks sold coffee through non-company-operated retail channels too which were called ‘Speciality Stores’ and accounted for 15% of its revenues, out of which the various sources contributing to the speciality store revenues is as given in the following diagram.
Realizing that many customers (almost 40%) had tried Starbucks earlier before entering their company owned stores; they focussed on these speciality stores to establish relationships with the customers and establishing their brand amongst them.
The employees at Starbucks are referred to as Partners. The number of employees was 60,000 worldwide, out of which 50,000 were in North America. Hourly-waged employees at Starbucks are called Baristas.
Employee satisfaction is the point of concern at the firm. They are provided with health insurance and stock options. The company encouraged people promotion and thus the higher manager ranks were occupied by employees who had been working at the company since a long time. This encouraged the partners to work for a longer duration and work well in the firm.
Employee turnover rate at Starbucks was just 70% compared with industry average of 300%. And the employee satisfaction level was 80%-90%. ‘Manager Stability’ was the key to these favourable results and it also helped in serving the customer in a much better way.
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