starbucks case study

Starbucks Corporation is an American coffee chain that was established in 1971 in Seattle, Washington. By mid-2019, the organization had a presence in over 30,000 areas around the world. Starbucks has been depicted as the fundamental delegate of "second wave espresso," a reflectively-named development that advanced high-quality espresso and specially simmered coffee. Starbucks now uses robotized coffee machines for proficiency and well-being. Starbucks serves hot and cold beverages, entire bean espresso, micro-ground moment espresso known as VIA, coffee, caffe latte, full-and free leaf teas such as Teavana tea 

products, Evolution Fresh squeezes, Frappuccino refreshments, La Boulange baked goods, and bites (for example, chips and wafers); some offerings such as the Pumpkin Spice Latte are explicit to the territory of the store. Numerous Starbucks outlets sell pre-bundled nourishment items, sweltering and cold sandwiches, and drinkware such as cups and tumblers. Furthermore, there are Select "Starbucks Evenings" areas that offer brew, wine, and appetizers. Starbucks first ended up productive in Seattle in the mid-1980s. Despite an underlying financial downturn with its venture into the Midwest and British Columbia in the late 1980s, the organization experienced rejuvenated success with its entrance into California in the mid-1990s. Starbucks opened an average of two new stores every day between 1987 and 2007. On December 1, 2016, Howard Schultz reported he would leave his position as the CEO and would be supplanted by Kevin Johnson. Johnson accepted the role of the CEO of Starbucks on April 3, 2017, and Howard Schultz resigned to end up as the 'Chairman Emeritus', effective from June 26, 2018

For Starbucks, it's more than the coffee

In some blind taste tests, the Starbucks coffee finishes middle of the pack.  However, there is something about the Starbucks experience that has consumers lined up, and ready to pay twice as much for that average cup of coffee.  

The brand views itself as being in the “moments” business. They stress the importance of the culture with its staff. Employees wear their green aprons with pride. Clearly, Starbucks uses service values to deliver incredible guest experiences. 

Starbucks had tremendous success in growing its brand in the 1980s and 1990s. By 2000, people viewed Starbucks as one of the most modern beloved brands in the marketplace. They had earned a very healthy position, so it began looking for new opportunities to grow beyond coffee. Nonetheless, that healthy position created an ego-driven thought that they could do anything. 

Starbucks case study

Starbucks took their eye off the ball

For consumers, Starbucks offers the perfect moment of escape between home and work. To spark pleasant moments, they offer a unique combination of Italian coffee names, European pastries, relaxed and friendly staff, comfortable leather seats, and indie music. Overall, they creates a warm atmosphere, all in support of a fabulous experience. Indeed, the amazing consumer experience they create sure makes the coffee taste great.

In 2003, their brand ego got a bit of control. Starbucks created its own music recording company, won eight Grammys, then launched a movie, and started a partnership with William Morris to scout for music, books, and films. Consequently, Starbucks even opened an “entertainment” office in Los Angeles.

Within five years, Starbucks had lost focus of who it was. 

These new businesses had become a significant distraction; their core coffee brand suffered dramatically. Without the inspired leadership on coffee, sales plummeted, and the stock price had fallen from $37 to $7.83. Moreover, the company had to cut 18,000 jobs and close 977 stores. The Starbucks brand was in a complete free fall. Obviously, we started to wonder if this would be yet another trendy brand that would fade off into the sunset?

To illustrate, click on the falling stock performance of Starbucks.

Starbucks was the darling brand with steady growth through the 1990s. New brand fans every day. Around 2003, Starbucks started to lose their focus, and their results started to wobble. By 2008, they were facing a situational crisis. Our Starbucks case study outlines what they did to turn it around.

1. Set a vision of what you want

Starbucks wished to become a cherished favorite moment of the day. The question for Starbucks was how to build smartly around the consumer experience to drive significant growth in same-store sales.

2. Invest resources in a strategic program

They needed to regain its strong bond with consumers, to refocus on the consumer experience and build the brand through its culture-led essence, supported by a phenomenal team of employees. Importantly, Starbucks wanted to bring this culture to the forefront of the consumer experience.

3. Focused Accelerator creates an identified opportunity

In 2008, Starbucks refocused to shift the coffee ritual beyond mornings. It wanted to build an all-day gathering place. The company broadened the portfolio around coffee by adding desserts, snacks, and sandwiches. Importantly, they saw an opportunity in its under-utilized retail locations, which remained relatively empty after 11 a.m. Undoubtably, they wanted the broader portfolio to boost lunch and dinner sales, and earn a higher share of the consumer’s wallet and higher same-store sales.

4. Leverage a breakthrough market impact 

Starbucks closed every store for a day to refocus on its service, then built a broader portfolio around coffee. Importantly, the company successfully reconnected with most loyal brand fans. It was able to turn the morning coffee routine into an all-day life ritual, allowing them to focus on becoming a consumer experience brand, and a gathering place to savor moments with friends and colleagues. 

5. Performance result that pays back

Without a doubt, they were no longer seen as a destination just for morning coffee, but rather an escape at any point in the day, they saw double-digit growth for five straight years. Meanwhile, the stock price increased 10-fold over that period.

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