Unformatted text preview: e U.S. In the early 1990’s Starbucks did not face fierce competition. The absence of the above concept helped Starbucks succeed. Starbucks value proposition is compelling because it places the customer and the service delivered to the customer above everything else. Even though Starbucks is a retail‐coffee store, the value proposition is not about the coffee exclusively but about the coffee culture and the experience of drinking coffee. With its value proposition, Starbucks moves away from the tangible benefits that the coffee offers, such as taste, stimulation, alertness and concentrates on the quality of its coffee and the intangible benefits of the experience of drinking Starbucks coffee. Starbucks value proposition is not about coffee, it is about the experience of drinking coffee in a Starbucks store integrating the product with the emotional benefits. Service Coffee Starbucks Atmosphere 2. How does the Starbucks of 2002 differ from the Starbucks of 1992? The Starbucks of 1992 marked the beginning of the establishment of the brand. In 1992, right when the company became public, Starbucks had 140 stores located in the Northwest and Chicago. Ten years later, in 2002, Starbucks had over 4500 stores scattered throughout the U.S and internationally. During those ten years, Starbucks established itself as the “number one” coffee store in the U.S by following an expansion strategy. Starbucks had locations in 42 of the 50 states and was continuing this expansion strategy in order to capture new markets and cluster existing markets. Starbucks retail expansion strategy consisted of the company selecting locations based on whether the demographics of an area matched the profile of a typical Starbucks drinker, the level of coffee consumption and the nature and intensity of competition. An important component of this strategy was that Starbucks did not mind cannibalizing the sales of its stores as long as the incremental sales resulting from the opening of a new store were higher than before. The retail expansion has led...
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- Spring '14