Starbucks Business Model

Starbucks Corporation is a company founded in 1971 by three Americans (Baldwin Siegl Bowker). The company’s headquarters is in Seattle, Washington. However, it operates in over 23,700 locations around the world. In 2016, sales were more than 22 billion dollars.

Starbucks is a leading coffee roaster, retailer and marketer. The coffee they serve is of high quality, and the service they offer to customers is what sets them apart. Starbucks’ rapid growth in the US and around the world began only in 1990. Howard Schultz decided to copy the Italian coffee shops he visited during his Italy trip. He was inspired by his trip to Italy to later bring the social experience he had in Italian coffee shops to American society. His business and market expertise helped him recognize the possibility of using the desired customer experience. His business and marketing expertise helped him to identify the opportunity to use the customer experience he wanted to create. This included adding products to menus, improving the employee relationship with company, and creating a comfortable seating area for customers. Starbucks is not just about the coffee anymore. It’s also about the experience. Starbucks’ unique value propositions depend on which customer segments are targeted. Starbucks, for example, offers coffee drinks of unique quality to satisfy coffee lovers. Starbucks is a great place for professionals to meet with colleagues or partners. Starbucks is a great place for students to hang out and socialize with classmates, friends or even to do homework. Starbucks’ main sales channels are their official and partner/merchandised store in more than 70 countries. Nevertheless, supermarkets are using them to reach more customers. Starbucks vending devices are said to fail to provide the Starbucks experiences that can be found in stores, like chatting up the baristas about the day. In a crowded, chaotic store environment, it’s impossible to get the same experience. Starbucks maintains long-term and close relationships with customers from all segments. The loyalty program has helped to create a sense loyalty among its members. They can now pay using their loyalty card or mobile app. Starbucks is able to create value propositions because of the key activities they are pursuing. The activities include marketing communications, supply chain management, R&D, and all other related activities. Three main resources are used to support these key activities. Starbucks’ people, including employees, suppliers and customers, are loyal because of how they are treated. The company also has a brand that is highly valued around the world. Starbucks’ cost structure is not just about delivering coffee, but also providing a unique experience to customers. The costs of raw materials such as coffee and milk are only a small part of the total costs. Rent of buildings and stores, salaries of employees, health care packages, etc., also make up a large percentage. But its main revenue source is from in-store coffee sales, as well as pastry and accessories. Starbucks also makes money from online sales, merchandising deals and partnerships around the globe. Starbucks has no doubt taken advantage of emerging markets like Mexico, Brazil and India, but there is still room for further growth. To dominate emerging markets, it is essential to introduce local products and customize services to local tastes and needs. Starbucks also needs to expand its product range (e.g. tea, juices, and healthy snacks), since customers’ tastes are shifting towards healthier products. Starbucks offers “Starbucks apps” that allow customers to pay and order before coming into the store. This helps them retain and attract their loyal customer base. This allows customers to save money and time. Starbucks, which only offers these services in the US and a few other countries, should look into introducing them worldwide in order to maintain their relationship. Starbucks is more than just coffee. It’s also about the atmosphere, the staff, and the products. Starbucks is known for its friendly staff, their relaxing music and decor, as well as the smell of coffee.