Friday, 16 August 2013

Starbucks "blue ocean" strategy

Starting as a single shop in Washington that specialized in high quality coffee to be the largest and the most well-known coffee shop all over the world. Starbucks experienced rapid growth in the early 1992, with wide range of locations around the United States, Japan and Singapore. Starbucks then began expanding its brand. In the beginning, it started offering Starbucks coffee on United Airlines flights and using their official website to offer people the option to purchase Starbucks coffee online. Starbucks also sold CDs in their retail stores to provide customer with more information about their products and different coffee beans they used in preparing their drinks. This strategy makes Starbucks to use minimal advertising and has grown on word of mouth and brand recognition.

 Their mission statement, from the company profile, is: “Our mission is to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” Their competitive advantage is the high quality coffee and products at reachable locations and reasonable prices, provided a community to share the coffee drinking experience.

Recently, as stated in The Social economy: Unlocking value and productivity through social technologies 2012 by McKinsey Global Institute, companies have started using social technologies to gain more customers, improve performance and eventually increase their profit margin. Starbucks realized that they must apply social technologies to compete with others and to create an effective relationship between their customers and the company. They added a crowd source process innovation called, “MyStarbucksIdea” in which customers can co-create/develop new products if they have any idea that Starbucks could apply in purchasing coffee beans or suggesting new coffee combination. The customers can submit idea, view others ideas and importantly follow up what happened to these ideas. To handle one of the biggest problem of crowd sourcing is to ask people to submit idea without any later response of “What happened to my idea?” Starbucks have established “Ideas in Action” to publish idea’s updates.
Additionally, social technologies increase collaboration, communication and interaction by entertaining people. They activated Gamification  which aims in adding a real time, competitive gaming element to any task. People gain points by submitting or even rating an idea. They display top ten point scorers in the “leaderboard” to encourage other people to communicate more in this community. Product innovations not only make the business potentially more profitable, but keep them far away against any competition.
My suggestions would be to create more customization by allowing customer to create new flavours and drinks above and beyond the options they currently have. This would incorporate with the other creation of online user experience. Users could go on to the online Starbucks interface and have complete control to create their own drink. Users could post their favourite drink combination and others could vote on it. Also involving the user experience could be in having mobile application, putting in drink orders, favourite drink and store finder to enhance the Starbucks brand in the new digital environment.

Overall Starbucks has maintained a competitive advantage since creating its original “blue ocean” strategy of bringing quality, bistro-style coffee choices to the masses. In order to stay current it will need to focus on its core competencies and create new value innovation by enhancing the customer experience by investing in online content and interactivity. Rather than creating more new products, I think their strength lies in their brand and by enhancing the connection to their loyal customers, they will separate themselves from others.

Now, I invite you to enjoy this coffee and feel free to share your thoughts :)


  1. Interesting blog post, I wasn't aware that Starbuck has such crowd-sourcing strategies in place. You are quite right that providing feedback on the users' idea submission is an excellent motivator. It would be also interesting to read about the long-term effectiveness of the adoption of the ideas that were suggested by the customers.

    Please have a look at my blog post on this topic, I'm curious of your opinion:

    1. Thanks for your comments. I appreciate that you found it interesting.

  2. Great flow of information about Starbucks' strategies. From their mission statement you can tell how steady they want their business to continue growing and they're delivering on that. I read about how much they work on offering their employees high level of training and also provide them with good funding to allow them continue their education.

    1. Thanks for your comment.
      Starbucks one of the smartest companies that put the target to accomplish and create a well-studied plan to achieve this target.

  3. If you are struggling to make social media work for you then you are not alone. Above 90% business owners are facing same dilemma, as the challenge of this industry is that, it is constantly changing.