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Value propositions


Visual brand language






Venturing to new markets


Intelligent product & rights


Ethical sourcing


Reducing environmental impact


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Part 2

Dam van, R. (Rik) Liebregts, J.M.F. (Joost) Smeets, R.P.J. (Roel) Sommen van der, C.J.D. (Charlotte) Tibosch, R.W.H.A. (RoĂŤl) Part 1







Customer journey




Opportunity - Advantage


Business model




Final reflection




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VALUE PROPOSITIONS “Create an experience around the consumption of coffee, an experience that people would weave into their lives”

“Create an uplifting experience in customer intimacy”

“Create an ambiance based on the human spirit, sense of community and the need for people to come together”

The combination of these values is an entirety on its own. These values enable Starbucks to appeal to many different kinds of costumers. Ranging from travelers, to hippies, to the coffee connoisseur Starbucks has the ability to please many.

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BRAND FOOTPRINT At Starbucks we try to expand our global footprint by entering new markets. We make sure to integrate the local culture, traditions and customer needs into our coffee houses. In this way we can supply the world with the Starbucks experience that is tailored to the local wishes and needs.

BRAND PURPOSE Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.

BRAND HERITAGE Throughout the years we have made Starbucks into a leading brand with a rich heritage. We have created an iconic line of coffee cups that is recognized all over the world. We are proud of our “Siren” who has been with us from the start and has welcomed our customers throughout the years. In the future we will expand to new business areas and enrich our heritage.

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2D To protect our brand we have trademarked our logo, word mark and our iconic green color. We do this to keep our coffee houses recognizable and give them a key spot in your community. In this way we can provide you with the unique experience that only Starbucks can provide.

3D Our specially designed cups and holders provide Starbucks Coffee with a unique look and feel that captures the essence of our brand. A prime example of this is our Frappuccino cup that is recognized all over the world.

SENSORIAL At Starbucks we like to provide our customers with a special taste and smell that you will only find at Starbucks. Our coffee houses welcome you to sit down and enjoy your coffee. To improve your coffee drinking experience further we have partnered with Apple iTunes and Concorde Music Group to provide you with high quality music.

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PROMOTION Starbucks is much more than just a coffee house. We like to give something back to the community by organizing several events throughout the year. The annual “Hot Java, Cool Jazz� show is a good example of how we like to enrich the community we have created around our brand

PRODUCT Apart from our baseline we are also very interested to invest in new kinds of Starbucks coffee. Our special holiday beverages are a tread that our customers wait for all year. These specially brewed beverages give our shops that special feeling during the holidays.

PLACE At Starbucks we like to give our coffee houses a prominent place in your community. We make sure that our coffee houses get the best locations to make sure it is accessible for everyone. We also recognize that visiting our coffee houses is a unique experience for people. We can only encourage people to share this experience with their friends and family via social media.

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Starbucks has got a lot of partnerships with a wide variety of companies. Overall the other companies love starbucks, as it is a succesful and inspiring company. Starbucks provides healthcare benefits for their employees so they represent wellness which attracts a lot of companies for partnership. Here are some examples of great partnerships.

Since July Starbucks started a new partnership with Google. Google will provide Wi-Fi service in Starbucks’ U.S. locations. This leads to approximately 10 times faster internet service than they were used to. Starbucks was intentionally not looking for a new partnership as they already had an internet providing partner in AT&T but was in constant conversations with Google about possible ways to partner up. Starbucks and Google also will be working to upgrade the Starbucks Digital Network, the page where users are directed when accessing Wi-Fi in the coffee shops.

+ PEPSI In 1994 Starbucks and Pepsi have formed a joint venture to produce ready-to-drink coffee beverages. The Pepsi/Starbucks Coffee Partnership has planned to make coffee-based drinks that will be packaged and sold in the same outlets as Pepsi’s soft drinks. The partnership allows Starbucks to capitalize on Pepsi’s wellestablished distribution network. The new venture doesn’t provide for Starbucks coffee to be distributed to PepsiCo restaurants - such as Taco Bell or Pizza Hut - and doesn’t involve Starbucks’ retail outlets or direct-mail business.

+ APPLE In 2007 Starbucks and Apple started a partnership that lets customers wirelessly browse, search for, preview, buy and download music from the iTunes WiFi Music Store. When a customer enters a participating location, their device will automatically recognize the iTunes Wi-Fi Music Store using a high-speed WiFi wireless network with no connection fee or hotspot login. Customers have a new “Now Playing” service which displays the name of the song playing in the Starbucks store at that moment. Prices and selection on the iTunes WiFi Music Store are the same as on the regular iTunes Store.

+ DREYERS In 1995 the Starbucks Premuim Ice Cream was introduced. Starbucks and Dreyers hooked up to produce five to eight coffee/chocolate ice-cream flavors. They agreed on a 20 year joint venture. The ice cream will feature Starbucks’ logo.

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Starbucks has a lot of competitors, both worldwide as well as locally. As Starbucks is a large company with a popular, global image, they have the ability to use their international appeal to attract customers. This strategy is not always sufficient, so to ensure their position as a primary coffee seller, they will use some unethical strategies to strongarm competition into surrendering.

Starbucks is continuously expanding its reach to new areas of the world. To successfully introduce their brand at these locations, they make use of the knowledge and expertise of local, already established businesses.

Known techniques are buying out competitor’s lease contracts, oversaturating an area with Starbucks coffee houses and running coffee houses at a loss. These techniques are the deathblow to small, private coffee business. It will devastate most competitors as these companies do not have the same amount of resources as Starbucks does.

CHINA An example of an expansion gone right, is Starbucks going to China. In China, Starbucks invested in the partnership with local businesses. Together with these businesses, they launched a considerable market study. Starbucks combined the use of popular local ingredients with their global image to attract all sorts of Chinese people to their coffee houses. As the popularity of Starbucks rose, so did the popularity of the consumption of coffee.

AUSTRALIA As opposed to China, Australia is an area Starbucks has yet to succeed in the promotion of their brand. Local, privately owned businesses occupy about 95% of the market, leaving 5% for the global companies. In 2000, Starbucks opened 84 coffee houses. In 2008, 61 of these coffee houses had already been closed. Reasons for this inability to promote their brand have been listed by several coffee connoisseurs. The Australian people seem to enjoy small, specialty coffee shops over the global image of Starbucks. These small ,home away from home, shops are the gems the Australian coffee enjoyers like to tell their friends about. These shops are placed in the non-touristic areas of the city and attract all types of non-tourist people.

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INTELLIGENT PRODUCTS & RIGHTS Starbucks is actively working towards a more environmental friendly company. That is why they have put a lot of time and effort in taking out patents on recyclable cups’ designs. Starbucks has even got a patent on “a recyclable, insulating beverage container holder”, meaning a cup holder which insulated the heat. Besides it being recyclable, it also saves about 45% of the material that would be used when using a second cup to insulate the temperature. In the latest version of the Starbucks emblem (2011) it no longer says “STARBUCKS COFFEE”. Although they still have a word mark (since 1971) on it, they no longer include it because the siren logo nowadays is so strong that it represents Starbucks coffee. Starbucks even got a color mark on their specific touch of green. Another, and even bigger, reason is that Starbucks wants to expand its market; no longer focusing on just coffee.

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Starbucks ethically sources its products as much as possible- from the coffee, tea and cacao to the green aprons worn by the baristas. This means the products are responsibly produced and ethically traded. Starbucks wants a good relationship with the coffee farmers and other partners involved in the process towards the final products in the coffee houses. Also for all items in the stores are set strong standards for the suppliers regarding social responsibility. Then, Starbucks has several farmer support centers at different places over the world. These centers collaborate with the coffee farmers to help them to grow responsibly.

Starbucks is much concerned with its impact on the environment. They are working on reducing their impact on the environment at all aspects of their business. Starbucks has set several goals to realize this reduction. By 2015 they want to have achieved the following goals:

Starbucks set goals for the future to still improve. By 2015 they want to ensure 100% of Starbucks’ coffee is ethically sourced. Furthermore they want to invest in farmers and their communities by increasing farmer loans to $20 million by 2015. So the next few years Starbucks will increase its support to coffee farmers even more.

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- Build all new, company-owned stores to achieve LEED® certification - Reduce energy consumption by 25% in their company- owned stores - Reduce water consumption by 25% in their company-owned stores - Purchase renewable energy equivalent to 100% of the electricity used in their global company-owned stores - Implement front-of-store recycling in their company-owned stores - Serve 5 percent of beverages made in their stores in personal tumblers

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The communities of Starbucks are every place its business touches, from the neighborhoods of the customers to the neighborhoods of the coffee farmers. Starbucks wants to help these communities in several ways to become stronger. Also they want to reach as many places as possible all over the world and thereby expand every year. Starbucks has some own projects and also supports other projects to improve their communities. They are helping to create a better life in the less developed areas by strengthening the local economic and social development, ensuring education and improving the health of the people. Furthermore Starbucks has community stores at various places all over the world. These community stores play a central role in supporting revitalization efforts to address education, employment, health, housing, and safety issues in their neighborhoods. Starbucks has a Starbucks Foundation, which is a separate charitable organization, to which it donates a lot of money every year. This foundation supports a lot of nonprofit organizations. Moreover it has its own projects. In its “Youth Leadership Grants� program the foundation invests in organizations which develops young people to become extraordinary leaders and get the required skills for the changing global economy. The program is mainly for youth that is not engaged in employment, education, or training. To continue with improving their community Starbucks has set future goals. One is that they want to mobilize their partners (employees) and customers to contribute 1 million hours of community service per year by 2015. The next few years they will be working to realize this ambitious goal.

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Starbucks is the world’s leading roaster and retailer of specialty coffee. Through its global network of owned and franchised coffee retail outlets, Starbucks offers a wide range of products like high-quality whole bean coffees, freshly brewed coffees, Italian-style espresso beverages, cold blended beverages, food items like sandwiches, premium teas and coffee making equipment. Starbucks’ own stores are located near offices and residential areas and are larger in size, compared to its licensed stores that are much smaller and mostly located at airports and supermarkets. Starbucks also sells its packaged coffee and tea through retail channels such as grocery stores, warehouse clubs, convenience stores and US food service accounts.

Starbucks recently signed a deal with a start-up called Square which allows customers to use their smartphones to pay through an account directly linked to their credit cards. As part of the deal, Starbucks will also invest $25 million in the start-up.

In one year Starbucks has grown revenue from 11,7 Billion dollar to 13,3 Billion dollar. They have reduced percentage of sales devoted to selling, general and administrative costs from 37.08% to 35.38%. They grew from 1,2 billion dollar to 1,4 billion dollar. In the graph below you can see the growth of the last 5 years and the expected growth for the upcoming year. Starbucks’ biggest commodity input is coffee. The company sources a large amount of high quality arabica coffee. Coffee prices are currently hovering around $1.90 a pound which is significantly lower than last year’s prices of as high as $3 per pound. With prices in 2012 significantly lower than that witnessed in 2011, Starbucks’ margins are bound to witness an improvement. Since Starbucks hedges its coffee costs by entering into long-term coffee contracts, the lower input costs might not immediately reflect in its margins. Nonetheless, the subdued prices would lead to margin improvement in the medium-term.

The deal is likely to help Starbucks boost customer retention as well as notify users of the daily specials. Besides this, the deal will also help Starbucks save on credit card transaction fees and processing. Although it is hard to quantify how much of the rise in the number of customers is attributable to the agreement between Starbucks and Square, it looks like a step in the right direction.

HEALTHY COMPARABLE SALES GROWTH For its third quarter, Starbucks’ global comparable sales grew 6% helped by strong performances in Americas as well China/Asia Pacific. A healthy comparable sales growth ensures the company’s top-line growth continues to outpace its overall costs. Moreover, the coffee chain is doing more than its bit to keep these numbers high, and its agreement with Square, as mentioned above, is one such example. The coffee chain keeps expanding its menu offerings continuously to adapt to changing consumer tastes and to appeal to a wider base of customers.

CUPS A YEAR Starbucks had an average of 563 visitors per store every day in 2012, which probably means that they sell 563 cups of coffee a day. Starbucks has about 20.891 stores which means they sell 563 times 20.891 is 11.761.633 cups of coffee a day in total. That makes it so about 4 billion cups of coffee a year.

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FUTURE The high recognition degree of its logo will unconscientiously impose Starbucks’ brand image to its new products. Due to consumers’ trust and loyalty, it will lead to success in popularize its other products, like smoothies and food. Starbucks is hinting on exploring the market beyond the coffee market, it is highly possible that they will be venturing into the lucrative tea market as of today tea is becoming more and more popular than ever, and it is the second most consumed drink in the world, losing only to water. They do already have tea, but not as much different tastes as coffee. Starbucks recently launched a pilot mobile payment scheme that allows customers to use their smartphone as a wallet. Who know they might go into the mobile services market. Furthermore Starbucks has waded into the highly competitive grocery and music sales business. So they will possibly go into those businesses.

“Starbucks is selling more food with its new menu, and that Americans are lured by its digital capabilities–like paying with their mobile phones.” - Starbucks’ CEO Howard Schultz

“Once a coffee shop, now a café, Starbucks is also catching the attention of younger generations with its technology capabilities.” - Starbucks’ Chief Digital Officer, Adam Brotman

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After a week of research on Starbucks the group got the assignment to create something new for Starbucks which will result in a bigger revenue stream.

We have made the personas of Buck and Irene Otjes. They are young parents, with children aged six and eight.

Next to the revolution of tea within Starbucks and the new technology of paying your Starbucks goods with your mobile phone, mentioned in the previous chapter, the group came up with three directions in which Starbucks could expand. The first direction would be to attract parents of young children. We noticed that young parents with children would experience a threshold to come into the shop. We thought we could think of something that could increase the threshold. The second direction is to let Starbucks extend to new parts of the world like Africa or Greenland. With off course a adapted vision to that places. The third direction was to extend Starbucks in a way that they start selling more than only the Starbucks mugs in order to increase the Starbucks identity by expanding their assortment of like sweaters, tableware etc. We went to a the Starbucks at the station of Eindhoven where we observed the shop and the customers and we saw a mother with two little children outside the shop doubting whether to go inside or not. This was for us a reason to choose our first direction. One of Starbucks’ value propositions is to create an experience around the consumption of coffee an experience that people would weave into their lives. We thing parents should also be able to have that opportunity.

Buck is thirty years old. He is a businessman and works over forty hours a week. Buck is a smart man, who is very pro-active. If he does not know anything, he immediately asks it to someone. Furthermore he is a practical thinker who can solve many problems. Finally he is impatient and really straight to the point. Irene is twenty-eight years old. She is a secretary and works part-time. Irene is someone who waits till the dust has settled, so she is biding. She is very organized and she wants everything to be clean. If one of the children drops something in the house where it does not belong, she gets angry and ensures it gets where it belongs. Moreover Irene is a very energetic woman who talks a lot. For Buck and Irene one thing is the most important in their lives: their children. This has a big influence on the choices they make.

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During the week

Customer journey The lives of Buck and Irene on weekdays are very different than during weekends. Therefore different customer journey are tracked, one on weekdays and one during weekends. First the customer journey of Irene on weekdays is discussed. Normally she wakes up at seven o’clock. She first goes downstairs to prepare the table for breakfast and subsequently have breakfast with the family. At this breakfast, she enjoys a cup of coffee. Then she goes upstairs to prepare herself; brush her teeth, do her hear, etcetera. Also she helps the children with doing these things. When she and the kids are ready, they get in the car and Irene first drops the children at school before she goes to work. At half past eight she starts working with a cup of coffee next to her. During the day she has a few more cups of coffee until she stops working at five o’clock. She leaves work and takes her children from the school care. At this moment she wants a coffee and she prefers Starbucks coffee, but she doubts to go there or somewhere else to get a quick coffee. She doubts because of the children, Starbucks is not really a nice place to go to with children. Subsequently she goes home. At home she prepares and has dinner, does some household activities and relaxes on the couch, before she goes to bed at around half past ten. In the weekend Buck and Irene often have a nice trip with the children. On such a day they wake up at nine o’clock. They first prepare themselves; have a shower, do their hair, etcetera. Then Buck goes to the bakery to get some rolls while Irene is preparing the table. The children are already downstairs, so when Buck is back they immediately have breakfast with of course a cup of coffee. After breakfast Buck and Irene prepare the kids and get in the car. At the tracked day, they went to a nice city. At around half past ten they arrive and walk through the city till about half past twelve. They want to have lunch somewhere and certainly a coffee. They doubt whether they should go to their favorite place, the Starbucks, or to another one. They doubt because of the children; is Starbucks a good place to go to with children? After lunch they do some more activities in the city and at around half past three they have done what they wanted and go home. At home they play a bit with the children, have dinner, relax on the couch and at around twelve o’clock go to bed.

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During the weekend

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Opportunity - Advantage

In our research we discovered a threshold for parents with young children to enter the Starbucks. Instead our target group opted to go to several competitors. Competitors which do not necessarily specialize in coffee appeal to our customers with quick coffee services, or no set atmosphere which parents think their kids might disturb.

Brand Core The core of Starbucks has always and will always be the coffee. We believe that the Starbucks coffee and the experience that is created around the consumption of this coffee is the reason why young parents want to come to the store. By reaching out to this target group Starbucks can enrich their brand purpose which is: nurture and inspire the human spirit; one person, one cup and one neighborhood at a time. We believe that young parents are one of the most important parts of a community or neighborhood because they are raising the community of tomorrow. In addition there are also opportunities to expand the brand heritage by creating products specifically for this target demographic.

If we look at our competitors closely, we see they all, but one, have quick coffee services with no to low atmosphere based stores. On the other side, Starbucks high-atmosphere coffee houses are the base of a threshold that keeps out parents and their kids.

rand Equity If we look at the first ring of the brand diamond we see clear advantages in terms of the sensorial experience of the Starbucks brand. By inviting young parents and their children into the stores you create a look and feel that communicates coziness and a pleasant atmosphere.

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Brand Activation On the second ring we see opportunities to create limited/premium edition that are focused on the new target group of young parents. To recognize the entry of this new consumer we could also expand the baseline of Starbucks cups with a special cup specially designed for children. Apart from this we also see opportunities for Starbucks to create a marketing campaign on the integration of young parents into the Starbucks experience. This would not have to be restricted to TV commercial and printed media but could expand to special events organized for young parents and their children. By incorporating aspects of Starbucks like fair trade and sustainability it might also be a learning experience for the children.

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Business Model If Starbucks decides to reach out to the young parents it will have a positive effect on several aspects. In general, the value proposition is focused on bringing everyone a high quality beverage with focus on customer intimacy. By doing so, Starbucks hopes to create a sense of community. Young parents and their children are a core part of any community and adding them to the Starbucks community will make it even more believable. Apart from the value proposition the customer base is increased as well. We believe that the customer relations would increase greatly if Starbucks were to give special attention to the children. The children will associate their store with a fun experience. And we believe that they will keep coming to Starbucks when they have grown up to be coffee lovers. They associate the store with good memories and maybe even a little sense of nostalgia. Experiences like this will great increase customer loyalty.

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Final reflection

Starbucks is mainly for adults, this differentiates them from competitors, why would they change this? Does Starbucks actually want to focus on children (as a separate target group)?

Overall it has been two exhausting weeks. None of us had expected that the new assignment setup would work out as it did. There was little time between the assignment meetings and this provided us with little time to come up with, work out, prepare and present our ideas.

Starbucks focuses on the entire community, so why would they leave the young parents (and their children) out of this picture? Besides that, if the children come in contact with the brand from early age, they will still go there when they grow up. It is like an investment for the future. Parents will have to consider whether or not they will disturb the cozy ambience by bringing their children into that relaxed atmosphere. And if the Starbucks stores are filled with parents and their children, would students still go there?

It resulted in chaotic teamwork during the team meetings. We needed a lot of time to discuss the feedback, our plan, the division of tasks etc. Because of this we lost a lot of time that could have been spent on the creation of the deliverables and all activities around that. We believe this is mainly due to the fact that we had such a large team. In a group of five designers it is hard to get to a consensus when everyone wants to put in their five cents on every topic. But it is our responsibility to make it work. In hind sight, the appointment of a group leader would have been very beneficial for the productivity of the group. We needed a person who set things in stone and made sure that we moved on.

It was our goal to look and design for the opportunity to lower the threshold of young parents to enter Starbucks with their kids. After all, especially these adults need their boost of coffee from time to time. In order to do so, we wanted to make subtle changes to the existing formula of Starbucks, so it would interfere with the existing ambience as less as possible but still has the desired effect. Children become energetic when they are surrounded with food. A different approach could have been to split the children from the crowd in Starbucks’ stores (e.g. a play corner) so they won’t affect the ambience. As we already mentioned, we only wanted to make subtle changes, and not rebuild the entire framework of the stores in order to provide the children their own in-store space. Besides that, this solution of splitting children from adults is a path we chose not to take, as this concept is not new. Some overall feedback everybody got was that we should not beat around the bush; make sure the clients can relate to the topic – and keep short, strict and punctual – in order to keep their interest. This is a very good pointer, as some presentations really stated the obvious and didn’t come to conclusions for a while. You have to remember that the clients know their business, and as a council you have to convince you found a the solution within an opportunity in THEIR business. The story has to be short, but convincing and should be unique. We should have focused more on how we could convince the parents that their children would not have any impact of the atmosphere in the stores, but still provide the children a reason for willing to enter a Starbucks store. Perhaps we have chosen the wrong direction by not separating the children from the crowd, so they would not interfere with one another.

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Final report  

Final report making business ID's