How has Starbucks been so successful?

Starbucks is a world-renowned specialty coffee maker. It is the leader of the coffee market. As an individual company, it controls several times more market share than any of its competitors. More than just a high-priced coffee shop, Starbucks offers a combination of quality, authority and relative value.

It offers several blends of coffee, handcrafted beverages, merchandise, and food items. Starbucks also offers a range of consumer products in coffee and tea, readymade drinks, and Starbucks ice cream.

Starbucks is widely known by most of the people because of its continuing competitive in the market place. Starbucks business strategies are generally used to ensure the effective flow of the business operations.

Starbucks sets its prices on a simple idea: high value at moderate cost. When people feel like they are getting a good deal for their money, they are more likely to pay a higher cost. Quality is key. Starbucks has to maintain strict quality controls in its coffee sourcing as well as in its customer service and peripheral products to justify its costs.

Starbucks also spends a lot of time and energy differentiating itself from the competition. You can see this in the design of its coffee shops, the music played there and the types of products it sells, such as coffee-brewing equipment and jazz CDs. Starbucks makes sure to keep current on the latest technology, often times being the first to introduce the newest advancements to its customers. For example, Starbucks was one of the first companies to adopt location-based promotions and mobile payments.

When Starbucks went public in 1992, it had only 165 stores spread throughout Seattle and its neighboring states. Today, it has surpassed its 10,000 goal and is planning on adding another 10,000 outlets worldwide. What was the Starbucks strategy that enabled this initially West Coast yuppie fad to become a global phenomenon? It is simple: saturate the market.

Typically, stores would place their retail outlets in locations based on demographics, traffic patterns, the location of competitors as well as the location of its own stores. However, the Starbucks strategy went against the grain. Instead of following the trend, CEO Howard Schultz had a different idea. He decided that the Starbucks strategy would be to blanket an area completely. Instead of worrying about stores eating up each other’s business, the Starbucks strategy focused on heavily increasing the foot traffic in one specific part of town. Schultz knew that his Starbucks strategy was a risk, but it was one he was willing to take. In the end, the unique Starbucks strategy paid off. Clustering its stores in one area helped Starbucks quickly achieve market dominance. With over 20 million regular customers per week, no other American retailer can claim a higher frequency of visiting customers. What makes this Starbucks strategy all the more amazing is the fact that the company spends less than 1% of its annual revenues on advertising, versus the typical 10% of most other retailers. Instead, the Starbucks strategy relies on word of mouth advertising. They believe that by creating an intimate and welcoming environment in their stores, as well as providing a great cup of coffee, patrons will not only keep coming back for more, but will tell all their friends and family about it too. 


As a matter of fact, store design, planning and construction are also part of the strategy. Locations are designed for customers to meet, relax or simply enjoy a peaceful interlude in their day.

The Starbucks strategy has always involved thinking outside the box. In addition to clustering its outlets, the Starbucks strategy involves engaging in smart joint ventures with the right companies, such as their successful alliance with Pepsi-Cola Co., and rolling out fresh, new initiatives, including a new product line of hot sandwiches and breakfast food and new drinks such as coffee liqueurs. The Starbucks strategy is now also expanding online, allowing customers to pre-order and prepay for products via the Internet. 



Starbucks continues to keep its customers happy and rely on non-traditional means of attracting new customers: that is the Starbucks strategy.