Case Study: The Worldwide Sensation of Starbucks

Starbucks Continues to Exceed Expectations

Do you know many individuals who aren't aware of this well-established brand name? Probably not. Starbucks has positioned its name in a nice, little sweet spot with its consumers. That is because its coffee and expresso-based beverages are attractive to affluent consumers who are able to manage the price increases the chain has implemented within the past 3-4 years. Those who frequently dine out want to visit stylish venues where the positive experience gives customers a sense of value, despite the comparatively high prices. However, despite Starbucks' knowledge of past success, their drive does not stop here. Through innovation in both food and beverages, the company has expanded the times of day when it appeals to customers. They have also taken advantage of new mobile payment technologies as well as older technologies, such as drive-thru windows. While appealing to each type of customer preference, this firm has soared. Proof?

The proof is summarized through the earnings report. Starbucks' same-store sales have increased by 5 percent or more for the past 18 quarters. In the last quarter it reported a 6 percent global sales increase, which one third of was attributed to increased traffic. You may be wondering how Starbucks was able to generate even more traffic than they already have. The answer is relatively simple. Starbucks opened 679 new stores just in the first six months of the year 2014. In addition, Starbucks has introduced a variety of new items intended to get customers through its doors after the morning rush. Smart, very smart move. To bring in afternoon traffic, Starbucks introduced beverages more likely to be purchased during lunch and hours later, including Teavana iced tea and Fizzio sodas. These drinks are made to order, fitting in precisely with Starbucks' desired experience allowing for customers to customize menu options while still making their trip "in and out". 

Lunchtime sandwiches and panini offerings have contributed to increased afternoon traffic. To help drive evening traffic, Starbucks has actually introduced beer and wine in about 30 locations, along with a wider food selection available after 4 p.m. Starbucks is also working on their locations, intended to drive more traffic strategically. The chain wishes to focus more on high-targeted retail store development, as well as drive-thru options. A reported 12 million people in North America have downloaded the chain's mobile app, and the company stated that mobile payment now accounts for about 15 percent of all transactions. Wow. What a significant shift. Customers are able to order and pay from their mobile devices and then pick up their meals. 

The moral of the story? Starbucks is exceeding its customers' expectations tremendously. This has proven financially successful for the company, as they continue to innovate their offerings and operations to meet consumer tastes and preferences. Specifics that are working? New day-parts, customization options, and the lovely convenience that Starbucks has to offer. What do you think? Will Starbucks continue to 'wow' its customers? Let us know, we would love to hear your feedback on this topic!

Source: THORN, B. (2014). CASE STUDY: STARBUCKS. Nation's Restaurant News, 48(18), 18.