Kim MinGyung, Cho Seungsoo, Giang Hanh, Kim Min jeong
BIZ2120 Starbucks Case (1)
1. What factors accounted for the success of Starbucks in the early 1990s? What was so compelling about the
Starbucks value proposition?
Howard Schultz focused on expanding Starbucks coffee stores since the early 1990s. There are three
factors of branding strategy that took accounts for the success of Starbucks in the U.S. coffee retail
market: coffee itself, service and atmosphere.
Starbucks tried to produce the highest-quality coffee in the world. It also tried to maintain coffee
standards by controlling the supply chain such as producers of green coffee beans and coffee-roasting
To satisfy customers, there was a balance in “hard skills”: workers that know how
to use the cash register and
roast coffee; and “soft skills”: were connected with “customer intimacy.” With the customer intimacy, it helped
made the customers feel like they are part of the Starbucks family. Starbucks also hired experience managers that
know how to resolve client issues and know how to handle and motivate workers. Starbucks tried to satisfy their
workers. Its belief is that partner satisfaction leads to customer satisfaction. For instance, there were a generously-
given health insurance and promotion chance.
Starbucks tried to make its stores to be a place where customers wanted to stay in with comfortable
seating areas. Its lounging area gave the place character and privacy so that customers feel more
comfortable and will most like come again.
Among these three value propositions, ‘service’ was the most compelling. As we think of STP, the target
market of the Starbucks was “affluent, well-educated, white-collar patrons (skewed female) between the ages of
25 and 44.” To expand the target market share, Starbucks practiced its marketing strategy by improving its
differentiated service. To create loyal customers who were likely to visit Starbucks more than 18 times a month,
Starbucks tried to give the best service. Starbucks succeeded with its strategy, touching customers. Marketing was
not a term for just selling the product. It was selling product and service. Moreover, it was delivering some value
2. How does the Starbucks of 2002 compare to the Starbucks of 1992?
In 1992, the Starbucks went public and began to expand its stores widely. By 2002, Starbucks became the
influential specialty-coffee brand. The Starbucks of 2002 was different from that of 1992 in six aspects:
retail expansion, product innovation, service innovation, revenue and profit, customer change and
In 1992, Starbucks had 140 stores in the Northwest and Chicago.
[Exhibit 2] By 2002, with aggressive expansion for years, there were 5886 stores around the globe.