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Great house Krauss, Nicole. NW Smith, Zadie. Selection day Adiga, Aravind. Treat your people well. And happy employees make happy clients. To coffee drinkers, there are not a lot of things more important than a good coffee in the morning or during the day. On the contrary, many smug noses scrape the ceiling even when someone mentions Starbucks.
But when the shops started opening in the early 70s, 80s and 90s, the espressos and lattes were vastly different than all the other stuff people were drinking. In a light roast, you would notice a fruity and acidic taste. Coffee beans are actually considered fruit and are sometimes called cherries.
That is the reason you taste light roast as acidic with fruit notes. In Medium roast, the coffee tastes the sweetest.
The glucose levels reach the point where the glucose starts to break. Starbucks predominantly uses dark roast coffee which also represents the majority of the coffee that is being consumed in North America. As mentioned, the coffee quality was much better than instant abominations in the early 80s; however, it definitely cannot measure up to artisan roasters. Similarly to green tea, the light roast-worthy beans are grown in shady, high-altitudes where it produces the most sweetness.
High-quality matcha powdered green tea leaves is intentionally kept in the shade so it produces more photosynthesis and better taste.
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Since Starbucks has to supply tens of thousands of shops, they have to bring the mass supply to the cafes. With dark roast, the flavors of the beans are getting covered up in the same way as overseasoning a dish or overcooking a steak. The branding kicks in and people pay for something they want to eventually become.
Drinking Starbucks drinks meant they are sophisticated, culturally progressive individuals who enjoyed the premium experience of coffee-drinking culture from fashionable Milano streets. The slim and elegant takeaway cups proudly wore the green siren logo so the passers-by noticed the person drinking that exact coffee.
These cups were different than styrofoam cups in the office or fast food joints. The similar tactic was used by Apple with the launch of iPods and white earbuds. The iPod was a cool new gadget you had to wear to be relevant in modern society. Apple made it in such a way that people noticed which users had iPods — because they plugged white earbuds into them. This was a genius idea because the users were immediately differentiated from other less-cool mp3 gadget-using people.
Secondly, this was a perfect silent word-of-mouth strategy. If local influencers were seen using white earbuds, everyone else wanted to get on that trend. Young budding students wanted something sweet and mocha just hit the note between coffee and rich chocolate fudge. Why not having both in one product?
Later on, Starbucks started offering teas and snacks. Snack is bringing in a substantial amount of revenue. The shops are using the display of sweet pastry or savory egg sandwiches like any expert pastry shop in Europe. And there are not many people who can resist a croissant or a blueberry muffin with their americano or latte. Blueberry muffin life hack — offer to split the muffin with your date Source. The pasty was the start, but the company followed up with offering breakfast sandwiches. The adaptation to the market goes even further. With the recent diet trends in health and fitness, Starbucks has you covered with gluten-free, protein-rich snacks so even your most obnoxious Californian friend has something to show down the throat without having a smirk reaction.
And they would be right, it has become that because their system of sourcing beans has to ensure the stock supplies for thousands of shops. The need for coffee has increased substantially with the introduction of better coffee, so it created another pocket of niche providers of premium roasted bean roasters. Most of the coffee shops live well because they can afford hefty margins. The average coffee shop then has a gross margin of 85 percent.
Starbucks margins must be pretty loaded then since they buy tons of coffee from a few sources. Breakdown of the profit per latte sold. Historically, Starbucks has been raising the prices per cup over the years. Instead of losing the price-sensitive customers, Starbucks differentiates itself from before-mentioned companies and thus keeping the brand image of a premium java provider. The high-margin items have stayed the same.
By having a strong and recognizable brand, the company can afford to put out merchandise. Starbucks holiday-themed mugs and localized artwork on them are a big part of the exposure. Starbucks did an amazing job of offering non-caffeinated beverages including kids drinks and teas which were introduced after partnerships or acquisitions of Tazo and Teavana. Once the market is established you switch from market development to market innovation role. Starbucks started to diversify its products and pushed them in retail space and also added teas.
While the product is one of the key components of a successful business think about the potential upgrades of it. Keeping the core you can diversify the offering and acquire new revenue channels by expanding into different verticals but staying inside your core company values. With a distinctive brand identity, Starbucks shops are easily recognizable anywhere in the World. For a global brand, this is one of the mandatory element. The typical Starbucks Experience Source. But each store follows certain guidelines which are prescribed.
In tech and startups, product development follows a concept called minimal acceptance criteria. In other words, what are the lowest common denominators the dev team need to do before it can be rolled out as a published version. For Starbucks Cafes, even though the store managers have a certain freedom to run and maintain the facility, they have to ensure to deliver the core Starbucks qualities.
People love some sense of predictability in their lives. How many times have you been on a lookout for Starbucks when visiting a new country just to take advantage of their wi-fi connection and use of restroom? The main idea is, coffee is not the product that is being sold at Starbucks cafes — the whole thing is a social experiment of creating a meeting place between people. It serves as some sort of oasis for meeting up with friends, having a snack and a cup of coffee in a comfy chair while listening to the latest Indie playlists.
But it plays an important role nevertheless. Starbucks playlists are carefully curated to help create that ambiance of a neighborhood coffee shop. It has been a piece of the Starbucks experience for over 40 years already. The songs and tracks are carefully curated way ahead of the time. These handcrafted playlists usually consist of indie, feel-good songs, pop, alt-country to season-themed or even classical playlists during holidays. In , Starbucks even acquired a Bay Area music store to launch its own branded coffeehouse and later on, even a record label.
In the early s, Starbucks sold CDs in the store until the format decline. In , Starbucks partnered with Spotify. Through the mobile app integration, Spotify plays music as part of the app. In-store listeners can take a look inside to identify the artists and save the tracks to their playlists. Holly Hinton and David Legry, the in-house music curators, are responsible for what gets played.
What sounds like the best job in the world, it actually is. Their sole work is searching for the right tracks and artists that they can see are fit to be played in the coffee shop. In an interview with Fast Company , Holy Hinton said:. We want them to hear interesting, cool music that they might not hear when they turn the radio on. To localize the experience, every region is slightly customized regarding the music, while still carrying the same vibe Starbucks customers are used to.
This way, whenever a customer comes to the cafe, within the first few seconds, they feel accustomed based on the music alone. The design of the shop confirms the neighborhood areas. But it goes beyond that. Every piece of furniture and interior is carefully planned to conform to the standards of the homey coffee place. To get their store right, Starbucks interviewed hundreds of coffee drinkers to get as much information which they could use to build a perfect coffee shop. The overwhelming consensus actually had nothing to do with coffee; what consumers sought was a place of relaxation, a place of belonging.
Create a community space as a second home. If we looked at the interior, the counters, chairs, and wardrobes are built out of natural materials like warm woods and stone. In some stores, you would find cozy armchairs as well. The stores are built from reused and recycled materials wherever possible. To combat the upscale coffee market which ironically has to thank Starbucks for creating a fertile grounds of demand for premium coffee, Starbucks started opening up so-called Starbucks Reserve stores.
These are luxurious, beautiful and magnificent stores where they roast premium, rare beans and experiment with different brewing techniques. Source: unsplash. In any high-traffic area in the city where Starbucks is located, you almost have a feeling their shops are everywhere. You would be partially right — Starbucks are strategically located in areas with high appeal.
In big cities, you almost have a feeling someone carpet-bombed the stores in the downtown area. Similarly, as Walgreens chose the concept of the convenience store, always located in an area of larger foot-traffic. Source: FlowingData. Think beyond the product and identify what else can you do for the customer to add you in their daily, weekly routine. With the food and beverage category, this is even more important. By introducing and creating a culture of coffee drinking, Starbucks had a major opportunity to create intimacy with the customer.
In Italy, coffee culture is a part of every day and the same culture was slowly getting familiar to the new audience just like Borgs slowly assimilate Captain Kirk. Because of the personal nature of coffee and frequency of visits, this relationship-bonding happened much faster than in other fast-food joints, especially since in the early years of Starbucks there was no competition.
The bright white cups with the green siren is the first noticeable brand. You will notice that Starbucks never offers any sort of discounts or actions like buy-one-get-one-free. You can get a free coffee drink for your birthday, but the underlying reason for that is for a customer to develop a positive connection with the brand and company. If you think about it, the coffee shop without wifi is like a local watering hole without beer. Most of the Starbucks are generously equipped with charging outlets as well, so you can get another drink after your focus is starting to drop… and then another… And another….
Sometimes a Starbuck visit is just a pause you take in a day to relax your eyes. The music serves a purpose as well as bringing an ambiance that is great for having a conversation or focusing on work or your date. The brand is the sum of all touchpoints the customer has with the company. This goes beyond the product and customer service. Think about every single interaction customers have with you and make them positive.
Starbucks mastered the mobile game at the right time. Dabbling with mobile technology since , Adam Brotman spearheaded the platform to maximize the effect. The big challenge was to align it with the brand. The mobile switch paid dividends with time. For a food mobile app to be successful, it must bring value to the user, be easy or even fun to use and it should have an entertaining, dynamic content. User-friendly — This is the most minimal and easiest thing to leverage on.
With a strong brand, it should not be hard to create an appealing visual interface and create logic flow and transitions or continuation to the desired action. The design has to adhere to rules of the brand, achieve a consistent visual look and continuity across all touchpoints. Chase Bratton , the product designer at Starbucks, explained the Android redesign functionality.
This is the minimal and easiest thing to leverage on. Retention is the name of the game. If a customer trusts you well enough to download your app, you have a unique opportunity to convert him or her to be a regular user. Starbucks has a similar strategy with the reward system. North American market is known for heavy mobile use. By prepaying and using the device to quickly go through the ordering process, the customers feel more efficient and slightly more an advantage than the other poor souls who still buy their coffee with credit cards or cash losers!!!!
Partnerships are ways to get tons of new users with one big swoop. Spotify acquired one million users a few days after partnering with Facebook Source and Facebook had one sexy product update from it as well. For similar reasons, Starbucks used Spotify to enrich the experience of the mobile app. Spotify in the Starbucks app photographed on Fridday, January 8, Joshua Trujillo, Starbucks.
The app remembers your favorite order This is ingenious. They have become a part of your daily routine. Stacy always stops at the same drive-through Starbucks, orders her Grande Latte with Soy Milk at am before she checks-in at her job. Every little detail counts. These games start with low difficulty. They are fun, colorful and offer an entertaining introduction to its mechanics. To continue playing, you can either literally buy your time or increase your chances of success with extra loot, power levels or something similar. Starbucks uses a similar principle of gamifying their mobile apps.
You get hooked to those stars credits which are stacking in your beautifully designed mobile app. Yes, there are levels on Starbucks app. Through the app, Starbucks gets you to try new products and thus incentivize a range of products you are consuming AND it gives the company an opportunity to increase the average order revenue per customer. And at the same time, they have to be very strategic on the number of features offered. Sean Ellis , the OG Growth hacker said the product is ready to ship once all the unnecessary features are taken away kind of the same mentality as per good design.
Personalization goes even further — it tries to give a similar experience as to visiting the store source. The Starbucks Rewards are dead simple — the more you spend the more stars you get. As expected the experience is personalized for each user. The Rewards work like gangbusters! More than Online Ordering and easy payments flatten the friction of getting the product. At first, Starbucks had some issues, since the mobile members had to wait in line just like regular chumps, but Starbucks responded by adding dedicated stations for mobile order-ahead customers.
Members can skip the waiting line and enjoy the jealous looks from the regular mortals while feeling elite of themselves. These generate interest ahead of time and coupled with email notifications, it gives their customers something to look forward to. Taking advantage of location-based triggers Source. This psychological trick, known as The Endowment Effect , helps to nudge those people who are affected more about losing something they already have uhmmm like all of us :. The Mobile part is one of the main drivers of customer retention and has proven to raise the average order size per customer.
Since the frequency of orders and visits is so high, the LTV per customer contributes to that impressive double-digit growth in the first years. Mobile app for a product that is being used on a daily basis and is in the lifestyle category is not a nice to have, but almost mandatory. You will be rewarded with increased LTV. The easiest way to figure out and identify the success of a company is to apply the try-and-true framework.
Jim Collins, the author of Good to Great, Built to Last claims all mega-successful companies have to figure out the Flywheel principle. To become an unstoppable juggernaut in its own field, Starbucks had to align different elements in three categories:. Imagine the concepts as drivers of one giant flywheel.
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