Cand.Merc.International Marketing and Management
Centre for Business History
Master Thesis
The Story of Starbucks
Ea Elisabeth Finn Nielsen 201180 2470
Tina Holm Mortensen
291282 1644
Date of Hand-in: 28.11.2008
Name of Supervisor: Per H. Hansen
Copenhagen Business School 2008
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
Table of Contents
Part I
1. Preface
2. Problem Area
2.1 Branding as the Root Cause
3. Literature Review
3.1 A Holistic Approach
3.2 Brand Attachment
3.3 A Historical Approach towards Starbucks and their Role in the Market
3.4 A Critical Perspective on Starbucks’ Branding
3.5 Locus as Promoter
3.6 Communication Strategy
3.7 Summary
3.8 Reflections upon the Literature Review
4. Thesis Approach
5. Methodology
5.1 Theoretical Foundation
5.1.1 Cultural Branding
5.1.2 Meaning Transfer
5.1.3 Flock and Flow 5.1.3.1 The Flows
5.1.3.2 The Flocks
5.1.4 Cultural Categories
5.1.5 Flocks and the Social Network of the Brand
5.1.6 Cultural Meaning and Identity Projects
5.1.7 The Consumer Culture
5.1.7.1 The Evolution of the Consumer
5.1.7.2 From Modernity to Hypermodernity
5.1.7.3 The Post-modern Consumer
5.1.7.4 The Character of the Post-modern Consumer
5.1.7.5 Authenticity and Consumption
5.1.7.6 Hypermodernity 5.1.7.6.1 Fear of the Future
5.1.7.6.2 Ethical Responsibility
5.2 Method
5.3 Research Design
5.3.1 Introduction to Starbucks
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5.3.2 Starbucks within the Industry and the Competition
5.3.3 Brand Genealogy
5.3.4 The Consumer Culture
5.3.4.1 Meaning Transfer and Identity Projects
5.3.4.2 The Brand’s Social Network
5.4 Empirical Evidence
5.4.1 The Industry and Competition
5.4.2 Blogs and Fora
5.4.2.1 Who are the Bloggers?
5.4.3 Consumer Culture and Identity Projects
5.4.4 Critique of Data Collection
5.5 Delimitation
Part II
6. Introduction to Starbucks
6.1 Description of Starbucks’ Business
7. The Industry in which Starbucks Emerged
7.1 Starbucks Revolutionising the Industry
8. Current Conditions of the Specialty Coffee Industry
8.1 The Specialty Coffee Market and the Competition
8.1.1 The Coffeehouses
8.1.2 Specialty Coffee Going Mainstream?
8.1.3 The Threat of the Fast Food Restaurants
8.1.4 The Evolution of the Specialty Coffee Industry
8.1.5 Starbucks in the Kauffman Continuum
Part III
9. Brand Genealogy
9.1 Starbucks’ Branding Strategy
9.1.2 Emotional Branding
10. The Narratives
11. The Narrative of Howard Schultz
11.1 The American Dream
11.2 The Father Figure
11.3 Development of the Narrative of Howard Schultz
12. High Quality
12.1 The Italian Coffee Traditions
12.2 Service
12.3 The Control of the Supply Chain
12.4 Development of the Narrative of Quality
12.5 Development of the Narrative of Service
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13. The Third Place
13.1 Is Starbucks Still a Third Place?
14. The Narrative of Corporate Social Responsibility
14.1 The Good Place to Work
14.2 Starbucks Still Strives to be the Good Place to Work
14.3 Fair Trade
14.4 Development of the Fair Trade Narrative
15. What has Become of the Starbuck Experience?
15.1 Standardisation and Expansion Strategy
15.2 Efficiency Focus
15.3 Change in the Meanings
15.4 Can You Grow Big and Stay Small?
15.5 Authenticity
16. Consumer Culture
16.1 The Initial Subcultural Consumer of Starbucks’ Coffee
16.2 Identity Projects
16.2.1 The Original Identity Projects of Starbucks’ Customers
16.2.2 The Identity Projects of Today
16.3 The Disappearance of the Bobos
16.3.1 New Meanings Attached to the Starbucks Brand
16.3.2 Why the Bobos Left the Brand
16.4 The Social Network of the Brand
16.5 The Starbucks Consumer and Hyper Modernism
17. Conclusion
17.1 Implications of the Conclusion
18. Implication for Further Research
19. References
20. Appendixes
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Part I
1. Preface
As the neo-classic theory, the information model (McCracken, 2005) within advertising is based
on the idea of homo economicus – the rational human being or the rational consumer. According to
this theory the consumers evaluate products on a rational basis and buy the goods which are assessed to optimise their self-interest. Thus the cultural context surrounding the good is not taken
into account when planning a branding strategy. This indicates that the consumer at any given
time will select a product on the basis of an objective evaluation upon the good’s utility regardless
of any other factors. However, how does the information model explain that that the consumer’s
actions deviate from what is dictated in the theory and hence that the consumer does not always
act rational? Consumers buying patterns and decision making seem to be controlled by other factors than rational evaluations and hence the information model appears to face limitations when
trying to give explanation to why expensive branded goods are chosen rather than similar goods
without brand value – choices, which are inherently irrational. So what triggers the consumer to
make these choices? And if the consumers based their consumption on rationality would some
luxury goods not battle to survive in the market place? Therefore, when looking into the specialty
coffee1 market it could be argued that the similar cheaper coffee product now supplied by fast
food chains such as McDonald’s or Dunkin Donuts, would easily substitute a product such as coffee
from Starbucks Corporation2?
However, it seems like the consumers act less rationally than predicted by the neo-classic economic theory and thus base their consumption choices on other factors than for instance price – it
is not rational to buy a tall latté in Starbucks when a product with similar product-property can be
bought in McDonald’s for less than half the price, but nevertheless numerous consumers do buy
their latte at Starbucks. Then it is arguable that the quality and taste were what differentiated
the Starbucks latte from the McDonald’s latte, which would justify the more expensive purchase.
But according to specialists the price premium of coffee at Starbucks cannot be justified anymore
(Schwaner-Albright, 2008) again indicating that something other than pure information is controlling consumers buying decisions. McCracken (2005) explains these irrational choices with the
so-called transformation model, the counterpart of the information model, which operates within
another paradigm not explaining consumer choices on the basis of information but on the basis
of consumers being surrounded by culture – culture which affects the consumption patterns and
that products possess intangible benefits or meanings which can be transferred from the products to the consumer, meanings which the consumers need to construct their identity. For this
Speciality coffee: “Sometimes called “gourmet” or “premium” coffee, Specialty Coffees are made from exceptional beans grown only
in ideal coffee-producing climates. They tend to feature distinctive flavours, which are shaped by the unique characteristics of the soil
that produces them” (SCAA, 2008)
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Starbucks Corporation will be referred to as Starbucks in the rest of the thesis.
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
reason rational choices are not always made – brands possess intangible meanings which results
in consumers making irrational choices based on emotions and feelings and which to some degree
may explain the success of the Starbucks until now.
2. Problem Area
Investigating the state and direction of Starbucks leaves one with the impression of a very successful company – it is an almost unbelievable success story about the coffee chain and a brand
which changed the Americans’ coffee and café culture. Since 1987, when this success story took
its departure, Starbucks has attained immense growth results. The coffee shop chain has been
growing with more that 20% a year (Bonamici & Fortune, 2004) and in five years the chain almost
tripled the number of stores worldwide, from 5,886 in 2002 to 15,011 in 2007 (Harrer, 2008) resulting in an almost global omnipresence (Starbucks, 2008a). Thus, Starbucks is developing rapidly
which is reflected in the fact that the chain until last year opens approximately five new stores a
day worldwide. According to the corporation, the intention is to let this development continue and
the plan is to add approximately 6,500 stores to the total store count by the end of 2011 (Starbucks, 2008b)
However, in the media, Starbucks is criticised for this rapid growth and analysts do not seem to
doubt that the expansion objective of a total number of 40,000 stores is to stretch the expansion
too far, as it is estimated that it might be difficult to maintain a profitable turnover in the long
run (Nocera, 2008). Furthermore, if continuing this fast, some analysts expect that the corporation eventually will destroy what they have built up and what have become to be known as their
unique characteristics. Hence, analysts believe that Starbucks have lost focus and track of the
Starbucks Experience3 which has always been the cornerstone of the corporation (Nocera, 2008).
These statements are particularly interesting as Starbucks’ growth rate seems to have been slowing down the past year (Starbucks, 2008d). To this, it is seen how Starbucks is not able to meet
the expectations of the market, which is reflected in dropping stock prices in particular, and in the
fact that Starbucks struggles to retain the same costumer traffic as before. Starbucks believes
that increasing competition from quick-service restaurants, which have started offering coffee
and the decrease in the American economy, are the main explanations for Starbucks’ inferior results (Starbucks, 2008c). Naturally, it cannot be rejected that some of Starbucks’ decline is connected to the US economic slowdown as the tendency is seen across the industry, but comparing
Starbucks’ stock prices to the overall index, Starbucks has experienced a steeper fall the past year
(Factiva, 2008). Therefore, the decline may have other explanations. Although Starbucks is far
from economic crisis at this moment, it can be argued that potential crisis are lurking.
Starbucks strives to provide customers with a special and theatrical experience in a comfortable and inviting environment when
buying their coffee beverage. This is referred to as “The Starbucks Experience” which will be elaborated on later as the experience
comprises of many different factors.
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Extending the knowledge of the Starbucks Corporation, there is no doubt that the future is challenging to Starbucks, especially since it has been presumed that the golden days of Starbucks is
over (Gilbert in Nocera, 2008). In this context, it is essential to be aware of the growing tendency
of customers deselecting Starbucks deliberately and especially the growing number of customers
actually avoiding Starbucks (Thompson et al., 2006; Thompson and Arsel, 2004). The growing
number of customers dissociating themselves from Starbucks, expressing their negative attitudes towards the corporation, cannot be ignored as they can be seen as an expression of Starbucks struggling with the trustworthiness of their brand.
2.1 Branding as the Root Cause
Due to the growing dissociation from Starbucks and the questioning of their narratives, we argue
that branding can be at the root of the problems Starbucks is facing currently. Thus, Starbucks’
approach to their branding is questioned. The dissociation from Starbucks can furthermore be
understood as an expression of Starbucks not delivering what the consumer of today demands
– thereby arguing that the Starbucks brand struggles in corresponding with the cultural desires
in society. The purpose of the thesis is therefore to investigate how Starbucks has handled their
branding and hence narratives. In relation to branding we have come across Holt (2004) and McCracken (1986; 2005) who both take a cultural approach to branding and thus focus on the importance of brands relating to the cultural context. Holt (2004) and McCracken’s (1986; 2005) theories
analyse brands attached with meanings which consumers adopt when they buy the brand, thereby
the brand’s meanings and values are transferred to the consumer’s identity. Thus, these brands
can be characterised as identity brands. Starbucks is identified to be such an identity brand, seeing
that customers apply the meanings of Starbucks’ brand in creating themselves (Thompson et al.,
2006). Therefore, branding is about creating narratives which correspond with the desired image
of the consumers. This requires an understanding of the historical and cultural context. The point
is that if the narratives are not continuously related to the changing cultural context, hence the
desires of the consumers, the brand will be in trouble as the narratives lose their trustworthiness
(Holt, 2004).
Based on Holt’s (2004) theory about iconic brands, it can additionally be argued that Starbucks has
reached iconic status as they achieved to become a symbol representing the desires of consumer
culture when they entered the market. They were able to comply with the subcultural desires of
that time, exemplified by the “bobo-culture”, which will be elaborated on later (Thompson et al.,
2006). This may leave one with the impression that Starbucks has pioneered in applying a cultural
branding strategy. However, this does not seem to be the case since it is suggested that they do
not change in line with the context yet, time after time, they intimate that they pursue an emotional branding strategy (Schultz & Yang, 1997; Michelli, 2006). Consumers’ doubt in Starbucks’
trustworthiness indicates conflicts in the image of Starbucks, and furthermore that the narratives do not correspond with the identity that consumers desire.
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McCracken (2006) points out that all trends and concepts emerging as cultural innovations over
time will be perceived as an ordinary standard; hence they lose what made them distinctive and
interesting in the beginning, as well as their initial novelty value This is furthermore an interesting
approach to Starbucks’ decline as it may be the case that Starbucks has difficulty in retaining the
same position in the mind of the consumers seeing that the concept of specialty coffee might now
be perceived as a mainstream concept.
The cultural branding approach complies with and overcomes the shortcomings of emotional
branding (Holt, 2004) which will be outlined as the branding strategy of Starbucks in the Literature Review. Therefore, the following Literature Review will serve as a justifying foundation for
applying a cultural branding approach to the understanding of the Starbucks brand.
3. Literature Review
The Starbucks corporation has been discussed in various articles, books, and TV shows and it
seems that a large amount of writers have an opinion about the company which they wish to
express in one way or another. However, only few articles and books have taken the discussion
and analysis about the famous company to an academic level, and quite a few of these apply Starbucks as a case example and hence are not focussed on Starbucks alone. In the following review,
we will outline the tendencies towards Starbucks’ branding. We have chosen to include academic
research, consultancy work, and more descriptive analyses. We are aware of the fact that in the
case of the consultancy literature, it appears to be weaker in its argumentation due to the fact
that it is not based on thorough research. However, since only a little literature analyses Starbucks
on an academic level, consultancy literature is included to give a more comprehensive image of
the branding of Starbucks as it is found to provide a useful insight into how Starbucks have gone
about their branding – knowledge which can be applied later in the thesis.
Academic research includes, among others, Thompson and Arsel (2004), Thompson et al. (2006),
Lyons (2005), Rindova in Lerpold et al. (2007). We define consultancy books as literature written
with the purpose of giving the business-world’s suggestions on how to go about branding by applying Starbucks as a prime example. In the Literature Review, they are represented by Michelli
(2007) and Scott Bedbury (2002). Lastly, there has been identified descriptive literature upon
Starbucks’ branding. This is mainly written by Koehn (2001), Pendergrast (2001) and Luttinger
and Dicum (2006), who include Starbucks in the historical context of the specialty coffee sector’s
development.
In general, it can be argued that the literature found shows an agreement in that Starbucks’
branding strategy is emotional, though some only imply this implicitly. We attempt to identify
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gaps in the existing literature on which to base our argumentation of choosing a cultural branding
approach. Moreover, most of the literature is written with the purpose of explaining Starbucks’
current troubles – therefore the gaps identified should not be seen as a criticism towards the existing literature as it has not been its purpose to analyse Starbucks from a cultural and contextual
approach. Moreover, all texts have been composed before the crisis of Starbucks and therefore it
seems logical that Starbucks’ poorer performance has not been investigated. Nevertheless, the
fact is that only few authors have taken Starbucks’ lack of cultural branding up for evaluation and
we will apply knowledge from these authors as foundation for the further research.
3.1 A Holistic Approach
Michelli (2007) describes through an internal analysis of the corporation how Starbucks revolutionised the coffee industry, gained high growth rates, and success worldwide. Michelli
(2007) points out that the company has followed five principles, and that these have lead directly to their success. The principles are all focused on how the company can differentiate
from other coffee shops and, through the principles, create a special coffee experience for the
customer. The key to this special experience is to create a connection between the partner4
and the customer and through this connection create a relation that emotionally attaches the
customer to the brand.
Michelli (2007) does not intend to describe the branding strategy of the company, and the purpose
of his book is not to demonstrate the branding of Starbucks, but to develop a generic framework
for success by indicating that any company can gain success applying the five principles. However,
we argue that Michelli (2007) through the book, although maybe not consciously describes the
branding of Starbucks, and that the five principles described in sum, constitute the branding strategy, or at least part of it. Implicitly, it can be argued that the strategy Michelli (2007) is describing
is an emotional branding strategy as it is evident that emotions are the pivotal point of the strategy, and thus that the goal is to create an emotional relationship with the customers through the
five principles. Thereby, focus seems so be shifted from a product benefit-driven approach to an
emotional appeal (Roberts, 2004 in Thompson et al., 2006). What also seems clear is that the five
principles shall not be deviated from. This indicates a consistency that is in line with the thoughts
of emotional branding. Hence, the principles should be kept consistent in all the brand activities of
the company over time.
Michelli’s (2007) focus is predominantly internal. It is the CEO, managers, and partners who, from
a top-down perspective, deliver the five principles and hence the brand to the customer. As mentioned before, the key is to connect with the customer and create a relationship, which according
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Partner is a Starbucks term used for employee
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to Michelli (2007) seems to be done very easily – not taking into consideration the rapid servings
and the many different partners. This leaves us wondering if it is really possible to connect to
every single customer and whether this is the explanation to the success of Starbucks. Also the
internal view of the brand can be argued to be a problematic way to describe the brand and explain
its success criteria. Michelli (2007) may have what by some authors (Schultz et al., 2005, Davis
& Dunn, 2002) is described as a holistic approach to the branding of the corporation taking the
whole company into consideration when delivering the brand to the consumer. Thus, in order to
connect emotionally with the customers it is imperative that all parts of the organisation understand how to express the intended narratives and emotions. This is especially true in the case of
the employees delivering the brand to the customers, which is no doubt of high priority. However,
this approach is not found to be sufficient due to the fact that leaving out the demand side, the
consumers, can in fact be very problematic. Holt (2004) and McCracken (2005) point out that the
context in which the corporation exits cannot be left out of the branding process as it plays an
active role in the branding.
The methodology of Michelli (2007) should be questioned as it results in the brand being described
only from a positive and at times unrealistic angle, thereby lacking a critical position towards
Starbucks. The analysis is purely internal and done through various interviews of CEO’s, leaders,
partners and most important Chris Gorley, head of Global Brand Communication at Starbucks.
Therefore, it can be argued that the analysis is one-sided and positive towards Starbucks’ brand
due to Starbucks huge involvement in the book. Only a few times are the five principles questioned which leaves the reader with an extremely positive perception of the brand. Again, it can
be concluded that the analysis of the brand lacks a more objective perspective, and Michelli (2007)
does not take into consideration that external factors such as the consumers as well as media
functioning as co-branding. Furthermore, the holistic approach to the brand is not sufficient to
explain the contents of the Starbucks’ brand.
Due to the book being published in 2007, where the company was on their highest opening an average of five shops a day (Rubin, 2008) it obviously does not consider the current crisis Starbucks
is facing or reflect on the danger the brand could likely be facing with the huge expansion level.
The former head of marketing in Starbucks, Scott Bedbury’s book “A New Brand World” was published in 2002. The book does not only focus on the branding of Starbucks but does in general describe how branding should be carried out. Due to Scott Bedbury playing a large role in Starbuck’s
marketing, it can be assumed that the points of view on branding are highly relevant in regards to
the Starbucks branding strategy.
Like Michelli (2007), Bedbury (2002) has developed, in this case, eight principles as to how a brand
can become successful. Most importantly is that the brand must be relevant to the customer
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and hence the customer’s needs must be understood. In general, the customer’s influence on the
brand is less ignored than, for instance by Michelli (2007), who leaves out this external factor of
the branding process completely. Bedbury (2002) mentions that the customer more than ever has
control over the brand, and that the customer in many ways is in the driver’s seat. This is mainly
due to the Internet where word of mouth spreads positive as well as negative narratives which
in many ways are incontrollable for the company at stake. However, this fact is only mentioned
shortly and is not further discussed in relation to Starbucks. Later in the review we will get more
into how literature has analysed on how the consumer can and have affected the Starbucks brand,
however mostly in the negative way.
Also the emotional connection with the brand is underlined and, just like Michelli (2007), the connection is achieved by communication through firstly the employees and also the artefacts in the
coffee shop, such as design, music, the quality of the coffee and even down to the number of
toilet paper plies, as everything matters when expressing the wanted brand image. In regard to
this, Bedbury (2002) mentions that one of the main reasons for Starbucks’ brand success is the
way they extend their brand – all extensions are focussed on the main mantra quality; whether
this is in music, extension of coffee menu, products sold etc. This everything matters approach
and hence focus on all possible aspects of the company to express the image, reflects Bedbury’s
(2002) holistic view upon the branding process that he shares with Michelli (2007). Again focus
is on the employees and how they connect and create a special experience. Even though customers are stated to have some influence on the brand image, this is not the main factor leading the
brand to what it is perceived to be.
Moreover, the brand DNA or brand karma, which is the term Bedbury (2002) uses, is emphasised.
The brand core is to be identified and is not supposed to be changed over time. However, this
statement contradicts Bedbury’s (2002) emphasis on being of relevance to the customer by always living up to their needs – don’t the customers’ needs express the current context in which
they interact? Therefore, this statement should in our further research be questioned, as cultural
brand management theory in particular explains failing brands with brands which do not take
changes in culture, and hence consumer demands, into their consideration and thus fails to keep
up with the movements in the contemporary society (McCracken 2005; 2006; Holt, 2004).
3.2 Brand Attachment
Park et al. (2006) take the brand connection to another level and describes how attachment to a
brand can be achieved. They compare the attachment process to how a parent develops the relationship to its child through gratification of basic needs, enabling actions, and through giving the
child a sense of security and trust. In this same way, the consumers attach to brands when the
brand gratifies the consumer by offering aesthetic pleasure, enriching the consumer by expressing
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their actual or desired self – similar to what McCracken (2005) describes as the consumers identity
projects. Park et al. (2006) do not analyse the Starbucks brand but apply the coffee chain as an
example of a brand which creates attachment through mainly aesthetic/hedonic experiences5.
Park et al. (2005) underline that Starbucks is a good example of a brand, which is build upon a set
of visually and aurally pleasing atmosphere factors, which allow relaxation and self-indulgence.
This aesthetic/hedonic experience is according to Park et al. (2006) supposed to gratify the self
and thus to evoke an emotional connection. Again we are introduced to the emotional branding
though Park et al. (2006) who have chosen a different term but the concept of aesthetic/hedonic
experiences cover the same aspects as the notion of emotional branding introduced by the authors in this literature review (cf. Thompson et al., 2006; Michelli, 2007; Bedbury, 2002) – here the
emotional connection to the brand is evoked by a pleasing retail atmosphere.
Again we are introduced to a text, which even though not focussing on Starbucks, has a positive
approach to the firm and apply Starbucks as a prime example of conducting business. Moreover,
the text does not go into detail about how Starbucks creates this attachment to the consumers
and the argumentation about possessing a pleasing atmosphere seems rather weak. Park et al
(2006) do not go further into any detail about how Starbucks has gone about their branding strategy and moreover, how Starbucks has ran into difficulties lately. Therefore, it is important to be
aware of the text’s insufficiency in explaining the rise as well as the fall of Starbucks.
3.3 A Historical Approach towards Starbucks and their Role in the Market
Both Koehn (2001), Pendergrast (2001), and Luttinger and Dicum (2006) have written about the
history and development in coffee focusing on the American market. A characteristic shared by
them all is that attention is attached to how Starbucks has influenced the history and development of the US coffee market.
Koehn (2001) does however, in the chapter on Starbucks, differentiate her approach to why Starbucks has become the brand they are today from Michelli (2007) and Bedbury (2002). She argues
that Starbucks gained considerable success and set industry standards by introducing a whole
new concept at the right time in the American context. Furthermore, she links Starbucks’ success
to socio-economic reasons, both changes in income and lifestyles; hence changes in consumerism.
The 1980s spurred economic growth resulting in higher disposable incomes which made consumers demand luxury goods and since Starbucks was perceived as an affordable luxury; Starbucks
became more or less an overnight success.
Koehn (2001) follows Starbucks and their success but lacks to explain, having set the industry
standard, why and how the brand in the end of the day differentiates itself from their competitors.
Starbucks is a good example of a company applying aesthetic/hedonic elements as it “...evokes pleasure from multiple sensory
modalities (e.g. hot, strong tasting coffee with a pleasant aroma) set in a visually and aurally pleasing retail atmosphere that allows
for relaxation and self-indulgence...” (Park et al., 2005:204)
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The brand as explained by Koehn (2001) does not consist of something that the rising amount of
other competitors does not also posses. These include qualities such as a clean relaxing place for
conversation and/or business where premium coffee is served, and hence demarcates the brand
to be about social interaction, belonging and identity etc. and hence also how the brand leads to a
sustained competitive advantage (Barney, 1991).
Moreover, Koehn (2001) describes Starbucks from a predominantly positive angle – Starbucks had
yet not, according to Koehn (2001), experienced any serious threats and was peaking growth by
opening two stores a day in the domestic market. However, Starbucks must have already in the
late 1990s encountered some opponents who have anti-branded the coffee chain especially due
to the fact that the corporation expanded heavily. This one-sidedness leaves one with a very positive perception of Starbucks, which even though being followed in their most successful years also
must have encountered some antagonists. Therefore, Koehn (2001) lacks to describe how the
consumers perceived the brand, and not only what Starbucks intended to express with their brand.
Also a reflection on how the context is not only a factor which contributes to a brand’s success but
also that a changing context can affect the Starbucks brand negatively if the brand is not capable
of adapting to changes in the society (Holt, 2004). However, this is probably due to the text being
written ex ante the crisis of Starbucks.
Koehn (2001) is able to outline how Starbucks is incorporated in the industry and context as they
emerge. Luttinger and Dicum (2006) is much like Koehn (2001) in their way of delineating facts
and relate Starbucks to their cultural fit into the context. Similar to Koehn (2001), Luttinger and
Dicum (2006) describe the success of Starbucks and hence the specialty coffee industry from a
historical perspective, thus the role of Starbucks is related to the development of the coffee industry and the American culture. Even though the story of Starbucks is only a small part of their
description of the history of coffee, Luttinger and Dicum (2006) still point out reasons for Starbucks being successful. They do not, however, go as far as Koehn (2001) to connect the success
with economic reasons. On the other hand, they also point to the fact that Starbucks emerged at
the right time just as Koehn (2001), drawing attention to the essential criteria of meeting cultural
needs in society to becoming a successful brand.
Apart from the fact that Starbucks was leading the way in introducing the high quality of specialty coffee to the masses, it is also stressed how Starbucks was able to meet a cultural need in
society, identified as the need for the so called Third Place. A Third Place is an informal public place
between home and work where people can meet and gather – a place which encourages customers to relax and linger (Oldenburg, 2001). However, Luttinger and Dicum (2006), and Koehn (2001)
are not alone in this viewpoint of labelling Starbucks as a Third Place, as it seems to be generally
believed that providing the customers with a Third Place is one explanation for the success of
Starbucks, and thus is supported by Pendergrast (2001), Thompson and Arsel (2004), and Thomp-
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son et al. (2006), which will be discussed later. Still, Koehn (2001) does not seem to follow up on
how these factors, giving rise to the initiating success of Starbucks developed in line with the development of the company. Starbucks is still referred to as a Third Place as if it is a fact, but it can
be argued that Starbucks has changed during the years and no longer fulfils the criterion of being
a Third Place (Oldenburg, 2001). Hence, there seems to be a tendency to disregard the fact that
Starbucks may no longer be the same company as it was when it emerged. Therefore, the text of
Koehn (2001) can be criticised for not critically evaluate the factors leading to the initial success. It
appears that Koehn (2001) focuses on conditions which were current at the time of the emergence
of Starbucks and leaves out a critical discussion regarding the current presence of these factors. In
comparison, Luttinger and Dicum (2006) point out how the development of Starbucks may have
led to a loss of the initiated Third Place. Indirectly, Luttinger and Dicum (2006) criticise Starbucks
for having stirred away from their origin and that they have sold out their core essence in order to
gain profit. Furthermore, they are able to draw attention to some negative consequences of the
development Starbucks has gone through. Thus, they are alert to the fact that the way Starbucks
has conducted business is not without side effects, and that their exploding expansion strategy
and product standardisation have challenged Starbucks to preserve the initial soul of the company
and the brand.
Like Koehn (2001) and Luttinger and Dicum (2006), Pendergrast (2001) acknowledges how revolutionising Starbucks has been to the specialty coffee industry. However, like Luttinger and Dicum
(2001) he pricks a hole in Starbucks’ story of success and tries to point out what is happening
beneath the surface of Starbucks. His criticism is mainly pointed at the father figure of Starbucks,
Howard Schultz, and how the genuineness of the image he is trying to create of himself may be
questioned. Pendergrast (2001) gives Howard Schultz credit for his route to success but at the
same time he implies that appearances are deceptive. Thus, he indicates that Howard Schultz is
trying to brand the company by creating a positive and engaging image of himself, portraying him
as a fine example of the American Dream come true. Pendergrast (2001) is critical of how Howard
Schultz tries to depict himself as a hero whose main goal is to bring something to the society
through fair trade, engagement in caring organisations and especially by providing community to
the American people through his establishment of the Third Place. Hence, Pendergrast (2001) argues that one must not be fooled by the branding of Howard Schultz and Starbucks as it is evident
that Howard Schultz is not in the business to provide community. “He is in it to win.” (Pendergrast,
2001:306). Pendergrast (2001) exemplifies this winning instinct in how Starbucks has used their
position of being larger and financially stronger compared to the competitors to force them out
of the market. Starbucks has shown a strategy of wiping out competitors by buying them out,
or otherwise to employ predatory retail tactics as Pendergrast (2001) calls it to outperform competitors. Pendergrast (2001) seems critical of the image of the Starbucks brand and indirectly he
alludes to the reality of Starbucks living up to the brand image of Starbucks as a corporate titan
circulating about the brand.
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3.4 A Critical Perspective on Starbucks’ Branding
Luttinger and Dicum (2006) call attention to the fact that Starbucks is loosing their touch of
the market, but they do not directly link Starbucks’ risk of loosing their soul with their emotional
branding strategy. Thompson et al. (2006) and Thompson and Arsel (2001), on the other hand,
draw this parallel, pricking another hole in the success story of Starbucks. This literature, being
discussed below, shows criticism towards the way Starbucks is conducting business and hence
identifies drawbacks of Starbucks’ branding strategies that initially have led to success. Thus, the
way to success may not be questioned but instead the future plans and goals of the company.
Whereas the earlier mentioned authors only implicitly allude to Starbucks conducting an emotional branding strategy, Thompson et al. (2006) take the fact that Starbucks has conducted an
emotional branding strategy as their point of departure. Even though Thompson et al. (2006),
with reference to other authors, acknowledge the fact that Starbucks is one of the most evident
examples of a successful emotional branding strategy, it is not their intention to investigate how
emotional branding has led to Starbucks’ success and how the company has succeeded in creating
emotional relations to the customers. However, they do point out how Starbucks was able to fit
into a subculture at the time they emerged, and how this was vital in leading towards success. Instead Thomson et al. (2006) focus on the drawbacks of emotional branding. Thus, the purpose of
their article is to illustrate how emotional branding can become a drag to the brand if the brand is
not able to live up to its brand promises – using Starbucks as a case example. They do so by introducing the term doppelgänger brand image which can be defined as a cultural backlash, i.e. negative narratives told about the brand by the conditions which emerges when a brand is not able to
live up to its brand promises. The essence of the article is thereby that Starbucks is not living up to
their brand promises and Thompson et al. (2006) point to a mismatch between the identity, which
Starbucks wishes to express and how they are actually perceived. This gap is expressed mainly
through the Internet, where communities against corporations like Starbucks are formed with the
purpose of sharing negative opinions and experiences with each other.
What is interesting to notice about Thompson et al. (2006) is the attitude towards branding and
how this must be related to the cultural context to gain success. Myths are a central point to the
branding and thus the ability to use storytelling to cater to customers. Thompson et al. (2006)
point out that Starbucks’ initial success is based upon their ability to deliver the right myth to a
specific customer segment at the right time. This segment is identified as the Bobos, bohemians
bourgeois who “attempted to meld the bourgeois values of hard work, career success, and material
affluence with the bohemian values of creativity, expressiveness, anticonformism, and antimaterialism”. (Thompson et al., 2006:60). Starbucks’ myth was able to allay the cultural conflicts of appreciating both bohemian and bourgeois values, which characterised the corporate bohemians,
and Starbucks then catered to this segment. However, Thompson et al. (2006) argue that the circulating doppelgänger brand image is an expression of the myth no longer being authentic to this
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customer segment, as Starbucks is no longer able to fulfil the promises of the branding narrative.
In general, authenticity seems to be a central theme in the article of Thompson et al. (2006), as a
brand’s authenticity is understood as a key to success. Contempt is revealed towards the branding
of Starbucks, as the imaging of them providing the customers an authentic, coffee experience, in
a comfortable and homelike environment can be understood as a marketing gambit on the plea of
Starbucks’ real identity as a corporate titan. Thus, if the customers feel put upon, the authenticity
of the branding stories is taken away.
Thompson et al. (2006) opens up the other side of the glamorous success story of Starbucks but
on the other hand they leave out that this, by the company incontrollable co-branding, does not
necessarily have to be negative. Co-narratives could also be positive and serve as brand strengthening narratives. Thus, it can be argued that positive narratives about Starbucks circulate in the
popular culture which improves the image of the brand. However, the article of Thompson et al.
(2006) can be seen as a call for Starbucks to take immediate action on their branding while the
doppelgänger brand image still has not destroyed the branding of the company. Thus, Starbucks
is encouraged to create new narratives, emotional branding stories, and to create agreement between brand promises and what is provided.
Thompson and Arsel (2004) do, in a predecessor to the above article, underline that brands and
also Starbucks will be imposed to different meanings when introduced to other cultures – what
is a hip brand in the US may reflect the opposite in another country, as global brands take on
a variety of localised meanings. But also within the national boarders a brand can be perceived
differently due to cultural differences in, for instance, different states. Moreover, the anti-Starbucks discourse is analysed and two distinct groups of anti-Starbucks café guests are recognised.
Thompson and Arsel (2004) dig a bit deeper into the reasoning of the two groups and why they
are avoiding Starbucks. However, the analysis lacks to explain the anti-Starbucks discourse with a
more cultural approach and so does the former analysis (cf. Thompson et al., 2006). Though both
analyses seem to consider culture to affect the brand in general, neither links the anti-Starbucks
discourse with a potential change in the American culture. Of course the objective of the analysis
has to be considered as well, and as Thompson and Arsel (2004) are not trying to map the branding strategy of Starbucks but seek to analyse the different meanings and actions which emerge in
a given context, one cannot expect to find all aspects of the Starbucks branding in their article.
3.5 Locus as Promoter
Lyons (2005) underlines that Seattle is the core identity of Starbucks marketing and that the
city Seattle defines where Starbucks stems from – an origin that imbues the identity of the coffee chain. Additionally, Lyons (2005) focuses on how Starbucks has applied product placement in
its marketing efforts not only to generate increased brand awareness but also to accommodate
harming critique from the media.
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Lyons’ (2005) main focus is on how Starbucks has branded themselves through the use of location
especially of the first coffee shop at Pike Place, and how Seattle has become a part of Starbucks
identity. However, other factors must be included when analysing how Starbucks has branded
themselves. Moreover, it may be questioned whether the consumer is aware of Seattle being a
part of the corporate identity and a main factor to their branding strategy as Lyons (2005) argues.
Therefore, it can be questioned whether Seattle takes this central role in Starbucks’ current branding not least due to the large distributions of coffee shops all over the world, where the consumers
most likely would not associate Seattle with the same degree as an American would associate
with the city with. Therefore, it can be concluded that Lyons (2005) is missing out on other factors
regarding Starbucks’ branding. But still, Lyons (2005) addresses a branding factor, which has not
been in focus of other Starbucks brand analyses
3.6 Communication Strategy
Rindova (in Lerpold et al. 2007) analyses the communication strategies in the specialty coffee industry in the US. These strategies are extremely important for the coffee chains as they present
the company, their values, and hence how the consumers perceive them. Rindova (in Lerpold et al.,
2007) explains how the communication strategy has a decisive role for leadership in the specialty
coffee business and exemplifies how Barnies’s Coffee Shop did not keep the leading position in
the market, even though they were the first to introduce several new concepts before Starbucks
did, (such as for instance a flavoured coffee). Barnies’s Coffee was not able to create sustainable
competitive advantage when only focussing their communication on the rational communication
strategy and product development. The key to success is, according to Rindova (in Lerpold et
al., 2007), to combine four communication strategy modes and develop, what she describes as a
multiplex communication strategy, which facilitates engagement of stakeholders on many levels
– creating a more elaborate perception of the firm which does not only communicate their rational
benefits but also plays on a cognitive and thus on a feeling based level.
It is explained how firms do not only compete on their resources but also how competition is on
the perception from the stakeholders. Here we would like to add an argument that the perception, and hence the way the business communicates, is a part of the brand which is a resource – an
intangible one though, which according to Barney (1991) quite so will lead not only to competitive
advantage in the short run but to long-run sustained competitive advantage due to its intangible
character and thus its resistance to be imitated by competitors (Barney, 1991). However, Rindova
(in Lerpod et al., 2007) does not link communication strategy and branding strategy together. This
would have made good sense as the communication of the firm, as to how Rindova (in Lerpold et
al., 2007) describes it, is directly linked to what is perceived as being branding of a firm. Therefore,
it may be concluded from Rindova’s text (in Lerpold et al., 2007) that the root cause to Starbuck’s
success is their application of a multiplex communication strategy, which is highly linked to their
branding strategy as well – a strategy which does not only speak to the rational level of the con-
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sumer and hence their rationale behind preferring Starbucks, but a communication strategy that
appeals to the values and beliefs of the consumer as well. In this way Starbucks has differentiated
themselves from their competitors who have not applied a multiplex strategy and hence have left
the leading role in the speciality coffee business, to Starbucks.
3.7 Summary
To sum up, there seems to be a clear consensus in the literature that Starbucks have conducted
an emotional branding strategy (Michelli, 2007; Bedbury, 2002; Thompson et al., 2006; Park et al.
2006; Rindova in Lerpold et al., 2007) though some only imply this implicitly. Thus, there seems
to be agreement about Starbucks capabilities to create an emotional connection to the customers, which is found to be the key to their success. Moreover, the emotional branding strategy is
argued to be supported by a holistic approach to the brand – meaning that the whole corporation
is responsible of delivering the brand through what Karmark (2005) would describe as a “living the
brand” strategy. However, it is apparent that some literature takes the context into consideration
as well (Koehn, 2001; Lyons, 2005, Luttinger & Dicum, 2006) and also external impact on the brand
is described by Thompson et al. (2006) and Thompson and Arsel (2004) – this being influence
from anti-corporate groups. Additionally, Thompson et al. (2006) argue that the Starbucks brand
has evolved around one single narrative being the authenticity narrative which we will argue is
not broad enough to explain the contents of the Starbucks brand and the reason to why the brand
presently is in trouble.
Both socioeconomic factors (cf. Koehn, 2001) making it possible for Starbucks to fit into the context at the time they did are touched upon, as well as the product in itself and the innovative
thoughts and management behind the company, are pointed out to be central to the success.
Nevertheless, the arguments for especially the external reasons (i.e. the contextual part of the explanation for the success) are not thorough enough and could require a more careful investigation.
Furthermore, as mentioned above, the existing academic material on Starbucks seems to lack
reflections on how the company gradually has related to its success factors. Hence how customers’ increasing knowledge of Starbucks, the company’s expansion level, and the changing context
as more and more similar concepts have emerged, collectively have changed the conditions for
Starbucks throughout the years.
3.8 Reflections upon the Literature Review
What has caught our attention in the investigation of the material about Starbucks is in particular
the attitude shown by Thompson et al. (2006) towards Starbucks and their branding. Thompson
et al. (2006) point out that the way Starbucks carries out their branding is not optimal for the
brand. In other words, they criticise Starbucks for being stuck in their emotional branding story.
At the same time, they indicate that the decline in consumer traffic may be due to Starbucks not
being capable of corresponding with the needs of society. Thus, they imply that Starbucks cur-
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rently lacks a cultural insight. The way Thompson et al. (2006) imply that Starbucks should handle
their branding is very much like the viewpoints of Holt (2004) and McCracken (1986; 2005; 2006).
The essence of Thompson et al. (2006) is that there is a gap between Starbucks’ brand image and
the culture currently, due to Starbucks not corresponding with the culture. We find this gap very
interesting and believe that it may be a valid explanation for Starbucks experiencing decline currently. The findings of Thompson’s et al. (2006) cannot be ignored in this thesis as they seem very
applicable for further investigation of Starbucks’ cultural branding – especially since Thompson
et al. (2006) do not dig further into the underlying cultural reasons for this mismatch, thus, only
demonstrating its appearance. Thereby, the reasons for Starbucks’ emotional branding stories not
being in line with the brand promises delivered are not investigated. This fact sets the scene for
our further investigation.
Thompson et al. (2006) point out the cultural conflicts experienced by “the bobos” in the mid
1980s to be the element which secured Starbucks a foothold within the context. Their analysis
does not go any further, however. In general, it can be argued that the analysis of the existing
literature about Starbucks lacks explanations for the further developments of Starbucks’ success. Seeing that Holt (2004) explains a brand’s sustained success with the brand’s ability to correspond to the cultural context, it could have been interesting to carry out a similar analysis of
how Starbucks has related to the cultural context since their initial success. Thereby, investigating
how they have been able to correspond to subcultures’ cultural conflicts to preserve their success
throughout their time. In this light, it would have been obvious to make this approach the pivotal
point of the thesis, especially with regard to clarify the causes for Starbucks no longer experiencing the same success as before - hence, emphasising the cultural and contextual factors. Even
though this approach appears very appealing, it may have been outside the scope of our thesis
due to the necessary requirements which would have had to be undertaken to fulfil the research
required. Therefore, we leave out this contextual analysis of the American market. Nevertheless,
as the literature review has opened up to the possibility that Starbucks’ current situation may be
related to the lack of cultural branding this approach will still be the pivotal point of this thesis and
it will therefore be based upon the following problem statement:
To what extent can Starbucks’ current decline be explained
by the meanings attached to the brand?
Hence, the purpose of the investigation of the brand revolves around the current decline which
Starbucks is facing. This will be based on a research within the scope of cultural branding. Firstly,
the investigation will be concentrated about Starbucks’ narratives and how Starbucks is able to
live up to their brand promises and hence whether they are perceived to be authentic. Due to literature (Thompson et al., 2006; Gilmore & Pine, 2007) arguing that gaps between brand promise
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and brand delivery lead to a lack of authenticity, and due to authenticity being argued to be essential for competitive advantage in the current context, investigation of authenticity or lack thereof
is found to be essential to out research. Additionally, the investigation will focus on whether the
narratives have developed during time, and in which direction. Secondly, how Starbucks has been
perceived by the consumers over time – has there been a development in the perception?
4. Thesis Approach
Several factors may be able to explain Starbucks’ decline, for instance the decrease in the American economy, shifts in the market conditions, such as increased competition and changes in the
industry structure. However, branding is found to be one evident explanation for the growing
dissociation from Starbucks, which furthermore is supported by the previous investigation and
analyses of the company (cf. Literature Review, Section 3). Thus, the focus of the thesis will be
delimited to branding. The approach is cultural branding due to literature in the Literature Review
pointing to the emotional branding strategy which Starbucks has conducted being too consistent and hence not being tenable to a brand like Starbucks. Furthermore, the status of Starbucks’
brand indicated to be iconic (Holt, 2004; Thompson et al., 2006) implies a cultural approach to the
investigation of the brand, as Holt (2004) points out a continuous assessment of the context as
well as a cultural understanding as central for an iconic brand to stay successful. The approach
in the thesis can also be identified as the pre-understanding on the subject (Gadamer in Gilje
& Grimen, 2002). Thus, it is with knowledge about the insufficiency of emotional branding and
the potential appropriateness of culture branding for Starbucks that we initiate our investigation.
Therefore, we will have a prejudiced approach to Starbucks and how they should go about their
branding in the future and, when construing literature regarding the subject, this will be done with
the underlying pre-understanding of branding. Also our general experiences and knowledge will
affect our approach to the thesis and how we interpret literature and hence to outcome and our
findings (Gilje & Grimen, 2002:173-176).
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5. Methodology
5.1 Theoretical Foundation
Firstly, the theory chosen is based on the cultural approach. Hence, we are applying theory within
this paradigm. Moreover, the research and hence the conclusion of the thesis will take its starting point in the following theory. Thus, the theory will function as an explanatory foundation for
Starbucks’ current situation.
5.1.1 Cultural Branding
Holt (2004) has developed a counterpart to the traditional mindshare-, viral-, and emotional branding models. These cannot, according to Holt (2004), secure sustained branding success contrary
to his cultural branding approach. This approach is based on the idea that the cultural context in
which the identity brand is positioned plays a decisive role in the consumers’ demand for the brand.
Therefore, it is essential that firms behind brands have a cultural understanding but also have
historical awareness and hence possess an ability to look backwards in the history of the culture
in which the brands are interacting – the identity brand is according to cultural branding theory a
historical entity. The adaptation to historical change is therefore essential for the identity brand
to be successful and it must therefore never become consistent in its narratives. Hence meanings
but must always be dynamic in its existence and relate to the current context (Holt, 2006).
The identity brands are different than other brands as they compete on the so-called myth markets. A myth is a narrative which targets a contradiction in society’s subculture or what Holt
(2004) characterises as the populist world. The populist world is defined to be a subculture of community, which is constructed and articulated through myths and expressed through icons. What
is interesting about these brands is the fact that they are “identity creating” to their customers.
Thus, they are appealing to the customers due to the content of the brand’s myth which enables
customers to maintain their wished identity in spite of the conflicts posed by society. There can
be many different populist worlds within the general society and when a brand’s narrative are
targeted towards a populist worlds’ anxiety, the brand will achieve what Holt (2004) identifies as
iconic status. The populist world is in contrast with the national ideology, which represents the
moral view of the world which glues a country together and creates a sense of community in a
society. A society will undergo different breaks through time, and decades will be different from
others due to innovation and the general evolution of society. Changes in society leave certain
population groups outside this society evolution creating a subgroup, or populist world, with anxiety regarding their future. Therefore, when the context changes so must the myths concurrently
otherwise there will be a risk of the brand being stuck in their myth. Not being up-to-date with the
current stir in society will consequently lead the brand to failure (Holt, 2004).
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Holt’s theory (2004) can be problematic to apply considering our problem statement as we do not
focus on the whole American culture as such, hence, a national ideology as well as subcultures will
not be pointed out. Therefore, all aspects of the theory will not be applied but the theory will used
as an analysis tool to explain the speciality coffee chain’s current myths and whether these have
changed over time, to whom they have appealed in the past, and to whom the myths currently appeal. Thereby, it will be analysed whether Starbucks may or may not have changed their narratives
to be concurrent with their cultural context, and whether this has been done deliberately or not.
5.1.2 Meaning Transfer
Consumption of products and goods says something about who you are – one’s identity is developed through consumption, as meanings from the products we consume, are transferred from
the product to the consumer (McCracken 1986). Not all products are what can be identified as
identity products – meaning products attached with meanings which facilitate identity creation
for the consumer. Starbucks’ coffee is an identity brand, which is filled with meanings which are
expressed through extensive storytelling. McCracken’s (1986) theory upon meaning transfer of
consumer goods will be applied to explain why Starbucks has achieved success but also why they
currently are facing difficulties. This is important as the cultural categories such as gender, sexuality, and age etc. to a greater extend are blurred in today’s society and hence the consumers’ identity are sought through consumption, consumption of goods which expresses meanings which
the consumer applies to express their identity (McCracken, 1986). The meanings attached to the
Starbucks brand are essential to clarify due to the argument that the product Starbucks is selling
does not differentiate much from the other competing speciality coffee chains in product features. Hence a clarification of the meanings of the brand might explain how and why Starbucks
has obtained more success than the rest of the market for speciality coffee. Therefore, there must
be some other underlying reasons for Starbucks’ being able to reach superior expansion levels
they have experienced for the last two decades. McCracken’s (1986) theory will also be applied in
regards to how the brand’s narratives and hence meanings have changed during time from being
praised a well-reputed brand to being a brand in decline.
However, the theory on meaning transfer must be critically evaluated for the purpose of analysing
Starbucks’ brand and the meanings associated with the brand. Some of the categories that McCracken (1986) lists to be important when transferring meaning may not be sufficient and comprehensive enough to explain the meaning transfer of a consumer good as Starbucks. Considering
that the consumer goods sold in Starbucks are perishable food products there may not be the
same rituals linked to the product as there would be with non-perishable consumer good. Nonperishable consumer goods may have a stronger exchange ritual for instance where the product
are given as presents that both express how the giver want to be perceived through the present
and how the giver perceive the receiver match the identity of the present. Starbucks products
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can of course be used in the same way but the period of identity expression of the products has
a limited period of time before the products are consumed. McCracken (1986) does not mention
this gap in his theory, which may lead to a less sufficient explanation of meanings attached to
perishable products. However, the theory is still found suitable to explain how and which meanings the Starbucks narratives and brand are attached and how the meanings may have changed
during time.
McCracken (1986) has developed a model which seeks to explain how meanings are transferred
from the cultural constituted world to consumer goods, and again from the products to the consumers, who apply the meanings to carry out their identity projects.
Advertising is one way of transferring meanings from the culturally constituted world to the product. This transfer could for instance be done through for instance storytelling, applying a story
to the product that cohere with the cultural constituted world or by using celebrity endorsement
or opinion leaders, which results in the product being associated with the qualities the celebrity
stands for. Especially the last factor of meaning transfer, celebrity endorsement, is a part of what
McCracken (1986) identifies as being a part of the so-called fashion system. Other factors are also
linked to the fashion system as being a carrier of meaning such as for instance product placement
– displaying products in a certain environment on the cultural constituted world and in this way
the product will be associated with the values of these surroundings. (McCracken, 1986).
When the meanings have been transferred from the cultural constituted world to the good the
question is; how then are the meanings being transferred from the good to the consumer? McCracken (1986) identifies symbolic actions or rituals to be powerful tools to get cultural meanings
transferred from the good to the consumers’ identity. A ritual is defined to be a social action done
for the purpose of collective or individual communication and cultural categorisation (McCracken,
1986). These rituals are not important for answering the problem statement and cannot be applied as explaining Starbucks’ brand troubles. Therefore, the rituals will not be further explained,
as the important point in McCracken’s theory is that meanings are transferred from the culture to
the good and then again to the consumer.
5.1.3 Flock and Flow
In McCracken’s newest book he presents a new perspective on the changes in the market resulting in change in consumer demands (McCracken, 2006). This theory on Flocks and Flows will be
applied to Starbucks and, in this way, used to explain the reasons why the speciality coffee chain
struggles in the US market. The theory will be combined with Holt’s (2004) brand network theory
to more precisely be able to explain why the consumers currently deselect the otherwise so acclaimed and successful brand.
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20
5.1.3.1 The Flows
Grant McCracken (2006) explains the changes in the market by applying the Kauffman Continuum
depicted beneath in figure 1. The change, being a new trend, a product range or another innovation, pours into the culture at the chaos end of the continuum and will compete against a myriad
of other similar innovations. Only one or few of the innovations will be accepted by the consumers
and thereby leave the chaos. Eventually, the innovations end up being rigid and leave the culture
in the other end of the continuum. Schumpeter (in McCracken, 2006) also explains this evolution
of an innovation as creative destruction – if a concept does not re-innovate itself it will at some
point be outperformed or destructed by a more innovative or creative concept. Hence, no product
or concept can survive being static and without changing to the demands of the market. A product
or a concept must therefore at some point reinvent itself over time so it does not end up in the
rigid part if the continuum that sooner or later will be outmatched by more creative competitors.
However, when considering Holt’s (2004) approach to branding, in which it is implied that branding
is as necessary to reinvent as product features, one can question the adequacy of McCracken’s
(2006) theory. Thus, products or concepts do not necessarily have to change, but the meanings
attached to the product must be adapted to the context.
Additionally, a corporation must consider not only when to enter the continuum or market – when
is the market ripe for a concept or a new product line? – But also when to exit – when is the market
saturated, or has the environment/culture changed?
Figure 1 | Kauffman Continuum
Chaos
Rigidity
Direction of progress
Source: McCracken (2006)
The trick is to enter the flow at the moment the change begins to create value and get out when
value opportunities is being extinguished (McCracken, 2006). However, in some industries the
movement down the continuum is faster than in others. For instance, the restaurant business
which includes the speciality coffee sector moves with high velocity down the continuum, hence
a restaurant only has a certain time of living before flock 5, to be described below, adapt the
concept and this becomes rigid. The reasons for this is that the trends within the restaurant industry change, and follow new trends, rapidly demanding high adaptability and innovative skills
of established restaurants to be able sustain a profitable position in the continuum. Therefore, it
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21
is extremely important to be aware of the business in which the company is operating in and how
fast trends and thus the surroundings are changing. Still, firms should not chase the trends and
thereby change their brand all the time. This will confuse the consumers and this kind of so-called
“cool hunt” will only cause the brand to loose its authenticity and in the end their loyal consumers
(McCracken, 2006).
5.1.3.2 The Flocks
One may criticise McCracken’s Kauffman Continuum argument to be very similar to a simple PLC
curve (cf. Baker & Hart, 1999), where products have a certain lifetime before the products become
obsolete and new innovations take over. However, it differentiates on at least one very important
factor, which is the dynamics of flocks. Flocks represent clusters of consumers who follow a certain flow of innovation. McCracken (2006) divides flocks into five groups of consumers. Flock 1 is
the early adopters who quickly embrace a new trend or innovation. Flock 1 is the most risk-taken
and devoted to an innovation. They want what is pure new. Flock 2 is the consumers who will
only try something which has been in the market for some time. Hence, they are willing to take
on some risk but not the same deal as flock 1. As we move down the continuum the flocks of consumers are more and more risk averse in their behaviour ending up at Flock 5 who is not willing to
take any risks at all. Flock 5 will according to McCracken (2006) buy the product without having
any idea of Flock 1 buying the product earlier that year. This fact may, however, be questioned as
we will later argue, applying Holt (2004) that consumers are interacting through a social network.
Moreover, McCracken implies in his earlier work that the fashion system communicates meanings
of products and hence across all consumer ranges, and thus it can therefore not be completely
rejected that Flock 5 is aware of Flock 1 buying a similar product (McCracken, 1990). Thereby, McCracken (2006) argues that flocks will always follow each other as illustrated in figure 2, Flock 2
follow Flock 1, Flock 3 follow the lead of Flock 2, etc.
Figure 2 | Flocks and Flows within the Continuum
Chaos
< Flock 1
< Flock 2
< Flock 3
< Flock 4
< Flock 5
Rigidity
Direction of progress
Source: McCracken (2006)
5.1.4 Cultural Categories
McCracken (2006) underlines that brands of today must be diverse in their meanings due to the
fact that flocks, and hence the consumers, are not bound to a certain class as they used to be.
Consumers are not locked into one class such as being a worker but declare themselves middle-
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
class, while the old declare themselves young (McCracken, 1986). Only rarely do segments solely
belong to one category – but more often they belong to different categories according to the
context in which they interact. Therefore, a worker cannot necessarily be recognised on the blue
Kansas and the husband might, as well as the wife, be doing the house chores at home – the categories are blurred in the present society (McCracken 2006; 2005), which results in the segments’
need to create their identities through consumption.
5.1.5 Flocks and the Social Network of the Brand
In the following, the Kauffman Continuum and the flocks apparent in this will be linked to Holt’s
(2004) analysis of the brand’s social network. In this way the two theories will be combined as we
argue that the two theories can complement each other in a constructive way.
According to Holt (2004), the customers of an iconic brand are loyal not because they have a
one-to-one relationship with the brand as the emotional branding paradigm claims (Gobé, 2001;
Michelli, 2007) but because the consumer is locked into a social mechanism, the so-called social
network of the brand. This mechanism, which determines the overall loyalty of a brand, divides
consumers of a brand into three distinct constituencies: insiders, followers, and feeders who comprise the brand’s social network.
Insiders represent the legitimacy makers of a brand that by consuming a brand leverage some of
their personal values and identity to the brand. They are not risk-averse and are ready to be the
first to try a new product or a brand. The insiders are not necessarily the largest group of consumers of, for instance, Starbucks’ coffee, but they are those consumers who assign legitimacy to
the brand. They will drink the coffee, not because of the brand, but because of the product itself
– they believe that the coffee chain has the best coffee that live up to their connoisseural expectation. Moreover, the insiders are influencing the followers segment to consume the brand too due
to the followers wanting to identify themselves with the insiders. Furthermore, the followers can
be characterised as the segment which finds the greatest value in the brand’s myths which provides them their identity needs and through the brand they obtain a feeling of community with
the other followers. The followers are also seen as the bearer of the identity myth.
The feeders, on the other hand, are not genuinely loyal to the brand. They, as the name implicates,
feed on the brand’s narratives but are, on the other hand, a large segment that the firm needs
capture in order to be able to survive economically – these are the real cash cows for a company
and hence loosing this segment will be a substantial loss for a firm’s earnings. However, the feeders only have a superficial connection to the values of the brand, and often merely use the brand
temporarily – this can be as a status symbol or to achieve credit from their surroundings such as
friends and colleagues. The feeders are not truly loyal and often lose interest in the brand quickly
and latch on to something more trendy and hip in the market (Holt, 2004).
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23
In short the flock and flow theory seeks to explain how the context and the evolution of this play
a decisive role for the success of a brand or a product, and how a brand must adapt to the changing context. McCracken (2006), however, does not make new groundbreaking discoveries with
his flock and flow theory, which seems to be an extension on Schumpeter’s ([1946], 2005) idea
of creative destruction. Moreover, the theory seems to be relatively one-sided and simplifies the
society and the consumers by not taking general consumer behaviour into account. Therefore, the
flock and flow theory has been modified and thus extended with factors from Holt’s (2004) social
network of the brand. Additionally, it must be mentioned that McCracken (2006) does not mainly
focus on the brand and its movement down the Kauffman Continuum. Added, the theory has a
more general viewpoint on the market place and consumer trends within this. However, in this
thesis the theory will be applied with focus on the brand, how the consumers perceive the brand,
and how the industry has developed during time.
McCracken’s (2006) view upon the consumers or flocks is very simplistic and does not explain how
loyalty plays a role in the brand’s survival. This generic model assumes that all brands go through
the Kauffman Continuum though with different speed regarding the brand’s characteristics. It
does not take the underlying reasons of the flocks’ behaviour into consideration, which on the contrary is in focus of Holt’s (2004) brand network theory. Therefore, we argue that the two theories
can complement and support each other when combined. In this way, the continuum can be seen
as including the social network of the brand. However, it may be argued that the social network
only can exist in the first flock which actually use the brand. McCracken argues that after a while
the brand will be adapted by other companies copying the brand to meet demands from less risktaking consumers. However, if the idea of the continuum is modified slightly, and the same brand,
without being changed and copied by competing companies moves down the continuum, this
would signify that the brand lost its values and slowly turned rigid due to the brand not adapting
to its surroundings. The network of the brand would, as the brand turned more and more rigid,
leave the brand and especially the followers unable to identify with the identity myth. Nor would
the feeders be able to find a rigid brand sufficient to assert them. The figure below illustrates the
combination of the two theories:
Figure 3 | Flock and Flows and the Social Network of the Brand
Chaos
< Flock 1
Insiders
< Flock 2
Insiders
Followers
Feeders
< Flock 3 < Flock 4
< Flock 5
Followers Followers Followers
Feeders
Direction of progress
Source: Holt (2004), McCracken (2006) and of own construction
Rigidity
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
As illustrated in the figure above, the two concepts of Holt (2004) and McCracken (2007) respectively have been combined, thereby providing a more comprehensive tool for analysing Starbuck’s
situation. The idea is to illustrate how flock 1 only consists of the insiders, who are the most risk
seeking and the first who discover a new brand. Shortly after, the followers follow the insiders’
lead. Hereafter, the feeders who feed on the narratives and meanings do so in order to attempt to
gain status. As the brand gradually becomes rigid and thus the narratives are not appealing to the
insiders’ identity projects the insiders will leave the brand and so will the feeders who were feeding on the legitimacy which the insiders attached to the brand. Now only followers are left, and it
is only a question of time before these turn their backs on the brand too.
5.1.6 Cultural Meaning and Identity Projects
According to McCracken (1986) cultural meaning is carried by products, which express these meanings through for instance storytelling. The consumers, in their identity projects, apply meanings
to construct their identity thereby implying that the human being does not possess an essential
identity but this is created and recreated according to the person’s current identity project – identity is hence socially constructed. These projects are getting more important due to, as before
mentioned, the cultural classes being less sharp and divided and hence identity projects preoccupy us on a continual basis and change during different periods of our lives. Currently, it is not
sufficient to have an identity as being only a blue collar, white collar, or house wife. The identity
of consumers can be manifold and their identity is increasingly sought in products that they buy.
The consumers are looking for meanings in the products they can use in their construction of
themselves (McCracken, 2005). Thereby, the products are the locus of meaning, which they express and through the products the cultural meanings are made concrete and tangible. However,
the meanings are not innate qualities of the products, but meanings that have been ascribed to
the products through different marketing tools (McCracken, 1986). Moreover, it is important to be
aware of the fact that when the context is changing, so will the identity projects of the consumers. Therefore, firms must acknowledge the changes in the context so that meanings of products
can be regulated according to the consumers’ identity projects and the context.
5.1.7 The Consumer Culture
This section has the purpose of accounting for the change in consumer culture in a broader perspective thereby not only focussing on the American consumer culture but the shift in consumer
culture in general. The consumer culture is decisive when branding, and the branding approach
must be adapted to the current consumer culture stirs to be effective (Holt, 2002). Thereby, the
argumentation of taking the shifts on consumer culture into consideration is based on the dialectic interaction between consumer cultures and branding as represented by Holt (2002) where he
argues that consumer culture and branding can be seen as an elastic band. By this it is meant that
when the two factors near eachother, and the consumer become knowledgeable about the con-
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ventional branding techniques developed within the culture, they gradually loses their efficiency
and a new branding paradigm will be developed corresponding to the apparent consumer culture
(Holt, 2002:80). This mechanism can serve as an explanation for the change from modernism to
post-modernism in the consumer culture.
Recently a new school of thoughts has been pioneered by the French philosopher Gilles Libovetsky (2005). This regards the new hyper-consumer who can be seen as an extension of the postmodern consumer and demonstrates that the consumer culture might have changed since the
post-modern consumer culture. Additionally Rifkin (2000) supports the notion of a continuously
changing consumer culture and therefore it also has to be underlined that no sharp lines can be
drawn when discussing consumer cultures. The image made of the modern-, post-modern-, and
the hyper-consumer are all archetypes, and therefore it cannot be rejected that a society consists
of more than one consumer culture as the changes do not happen overnight, but are in constant
evolution (Rifkin, 2000), especially when considering the size and diversity of, for instance, the US
market.
Firstly, a short overview of the consumers’ evolution will be accounted for, resulting in a definition
of the consumer culture, and afterwards the different consumer culture periods will be elaborated
on more in-depth.
5.1.7.1 Evolution of the Consumer
Holt (2002) describes how the consumer has become more critical and how the marketing approach to the consumer has changed drastically over the last decades. Horckheimer and Adorno (in
Holt, 2002) possessed this locus classicus marketing approach evolving around a classic stimuli-response idea, where the consumer was perceived to be uncritical in reacting on cultural authorities
such as marketing. The firm was perceived to be able to, through classic marketing tools such as
“The 4 P’s” (Kotler, 2003), meet and to some degree shape the consumers’ needs (Holt, 2002:70).
The marketers were portrayed as cultural engineers shaping the tastes of the consumers on their
demand (Holt, 2002:71). However, this approach to the consumer was, 40 years later, modified and
the consumer was re-defined to be able to decode and reflect on the marketing messages and as
a result reject a firm or brand, which did not live up to their expectations or needs (Murray and
Ozanne, 1991 in Holt, 2002). Also the thought of labelling the consumer as being segmented within
a certain group was broken up with. This acknowledgement of the critical consumer was not least
due to the fact that consumer resistance against brands became more and more apparent as a
problem (Klein, 2000; Holt, 2002; Thompson et al., 2006; Brown, 2006), which form the basis of
Holt’s (2002) dialectic thought and hence foundation for his branding approach. In this way, the
market power shifted from being marketer hegemony to being a market in which consumers took
over the control via consciously taking consumption choices, making it apparent that the consum-
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er of today possesses the market power and not the firms (Firat and Dholakia, 1998). The firms
cannot uncritically expose the consumer of today with classic marketing tools based on the idea
of for instance the simple AIDA model6, expecting behavioural response through consumption,
as the consumer will not tolerate the lecturing tone of the post war modernity (Holt, 2002; Buhl,
2005). Therefore, the consumer culture can today be defined as: “…the ideological infrastructure
that undergirds what and how people consume and sets the ground rules for marketers’ branding
activities. “(Holt, 2002:80).
5.1.7.2 From Modernity to Hypermodernity
The economy has changed from being agricultural to industrial and it is argued that we have now
entered the service economy (Lund et al., 2005). This evolution has had an effect on society and
hence on the consumer culture and consumer values. The evolution can be juxtaposed to the modernity, post-modernity and the hypermodernity which will be presented below.
The modernity is not very relevant for the situation of Starbucks as this period took place before
Starbucks entered the market. However, this period, just after the Second World War, was the
era in which the mass culture industries such as TV, film, music and advertising blossomed and it
was here the marketers started to use these industries as channels for reaching the consumers.
As before mentioned, in this era the marketers used traditional marketing tools and dictated how
the consumer should live their lives in a paternal voice as Holt (2002) describes it. Holt (2002) also
describes how the American citizen was struck by the urbanisation which resulted in the citizens
not knowing their new neighbourhood, their neighbours and hence a level of anxiety was present
at this time. The national brands therefore provided a security as they instructed on how to live
the good life and acted as social glue which helped bringing these neighbourhoods of strangers
together. The modern consumer was also described as a more static consumer who was characterised by remaining within a certain category such as being the housewife or worker (Rifkin,
2000: 202). The era of modernity and the branding paradigm, which was outplayed within this
period, came to an end as the consumers wanted to be able to experience their consumption as a
volitional site of personal development – they did not want to be controlled by the marketers and
their selling propositions and thereby a transition to the post-modern era in which the consumer
did not obey the markets dictations began (Holt, 2002).
5.1.7.3 The Post-modern Consumer
The early post-modern consumer was considered as more critical towards marketing than the modern consumer as, especially in the 1960s, personal freedom to choose ranked highly. This was the
era of the cultural revolution of sex, drugs and rock and roll. The revolution was personal and there
6
Pavlovian marketing model developed according to: Attention, Interest, Desire, and Action. (Kotler, 2003)
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was a great deal of personal experiments. After the 1960s, the consumers viewed consumption
more and more like a way to express their identities – they did not lose their interest in the brands
they just did not want to be dictated by the marketers and hence wanted to apply the brands in
their own identity projects in their own way (Holt, 2002). The post-modern consumers were and are
characterised by consumers defining their identities through consumption and those experiences
attached to the consumption (McCracken, 2005; Firat and Venkatesh, 1993:235). Rifkin (2000)
names the post-modern consumer the protean, thereby underlining the ever-changing character
of the post-modern consumer, who has many dramas going on in his life. In this way, the most
important goal for the post-modern consumers is to reproduce and represent themselves with an
image – the buying decision of the consumers is hence driven by a deeply psychological desire to
develop and enhance their sense of self as Lewis and Bridger describe it (2000). The consumer’s
identity is fragmented, meaning that many different identity projects are carried out during different periods of life, and also on a daily basis – this means that many different subcultures in
the post-modern consumer culture are apparent. The choice of identity is not as easy as it was 50
years ago where one for instance could be either hippie, disc’er listening to rock music. Additionally,
a consumer can consume price premium products one day and consume according to a lower live
standard the next. Today even gender can be questioned in post-modernity, which especially was
manifested when David Bowie was playing with the androgynous in the 1970s – the consumers
became fragmented and discontinuous in their identities and their identity projects follow that
lead leaving the consumer with various identity options and projects (McCracken, 2005; Popcorn;
1994; Buhl, 2005) precluding the classic use of segmentation in the post-modern society (Buhl,
2005). This fragmentation of the self-approach has been further developed by McCracken’s latest
book release in which the transformation process of the individual is analysed. Here, McCracken
(2008) emphasises that not only can the consumer have different identities referred to as the new
individualism where many different roles are outplayed, an opinion shared with Buhl (2005), but
the consumer does as well transform himself during time. In short, McCracken thereby argues that
the consumers transform their identity through their whole life and just because one is born into a
gender, a social class etc. one will not necessarily have to stay in this category – the consumer is a
self-inventor, who is responsible for his own personal transformation(s) (McCracken, 2008:280).
This, as Rifkin (2000) describes the post-modern era as an “age of access”, intensifies the fragmented consumer’s identity by facilitating networking through the Internet where multiple identities can be outplayed (Rifkin, 2000:12). The branding paradigm corresponding to this form of
consumer was to approach the consumer without being too commercial and to express authenticity (Holt, 2002). Added to this, the experience and authenticity term gained a footing, which especially Gilmore and Pine (1999) see as being essential when communicating with the post-modern
consumer. The brand must be an experience in which the consumer is engaged in a personal and
memorable way (Gilmore and Pine, 1999:3). This is how Starbucks has tried to brand their product
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and service since the beginning, even referring to their concept The Starbucks Experience, thereby
indicating that the café was more than just the average coffee shop. Also Rifkin (2000) underlines
that the post-modern era is marked by, what he calls cultural and lived experiences, where the
world is a human construct that we create through stories which we concoct to explain it through,
and also by the way we choose to live in it. Thereby, Rifkin (2000) shares a social constructivist
approach to the post-modern period with the cultural branding approach (McCracken, 2005; Holt,
2002).
5.1.7.4 The Character of the Post-Modern Consumer
Moreover, the post-modern consumers have been characterised as being individualistic and
independent. They want to create and express their own style and take their own choices between brands (Buhl, 2005; Lewis and Bridger, 2000). Holt (1998) emphasises that consumption in the US society today is not about structuring social class and status, thus, it is not
only about buying the right brands. Thereby, not saying that the US consumers do not create
their identity through consumption, or do not need to express individuality – cultural capital7
still becomes objectified in consumption objects (Bourdieau in Holt, 1998). The post-modern era
is characterised by a breakdown of the hierarchy distinguishing what is high culture and what is
considered low culture, which is coursed by accessibility in the sense Rifkin (2000) refers to but
also due to the diffusion between what is mass culture and what is haute – all is to some degree
accessible for all social strata. Consumer objects are therefore not accurate representations of
status but they allow a variety of consumption styles. Holt (1998) still distinguishes between
high and low cultural capital, this being consumers transforming or attaching cultural capital to
objects. Due to this dilution of status, the high class of cultural capital instead seeks authenticity
in the products as authenticity expresses a subjectivity, which cannot be found in mass-produced
products (Holt, 2008). Therefore, artisanal and hand crafted goods are preferred by this often
upper-well-educated-class to avoid contact with mass culture. Also the idea of connoisseurship is
emphasised as a factor that can produce individual subjectivity in goods for the consumers possessing higher cultural capital. Thereby, the consumers demonstrate that they possess extensive
knowledge regarding the object, which is ignored by other consumers. Hence, the level of connoisseurship can be argued to heighten status and create superior identity which differentiates the
consumers with higher social capital from the consumers with a lower level of social capital (Holt,
1998).
5.1.7.5 Authenticity and Consumption
In the thesis, the concept of authenticity will be further analysed in relation to Starbucks and it
will be applied as a principle-explaining factor for Starbucks’ current struggles in the US market.
Cultural capital (le capital culturel) is a sociological concept that was first articulated by Pierre Bourdieu in Cultural Reproduction
and Social Reproduction, 1973. It can be explained as the knowledge, experience and/or connections one has had through the
course of their life that enables them to succeed more so than someone from a less experienced background.
7
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Therefore, we have found it necessary to explain the concept in further detail here.
Like McCracken (1986; 2005) Gilmore and Pine (2007) have a social constructivist view of the consumer – thereby perceiving the consumer as an individual not born into a predetermined identity
but an individual who creates and develops their identity over time through the interaction with
other individuals and by consumption of goods which can express the wanted identity.
Due to the rise of the experience economy the concept of authenticity has increasingly been used
in marketing of consumer goods. Being real and authentic is apparently paramount for success
in the market place of today. Being perceived as being authentic is therefore one of the primary
sources of competitive advantage according to Gilmore and Pine (2007). According to Gilmore and
Pine (2000) it is no longer sufficient to compete on the basis of goods and services. In today’s
experience economy, companies must go beyond goods and services and compete on feelings and
experiences8. What the consumer of today wants has to be a real and genuine product from transparent sources and hence everything consumers buy at present is evaluated to make sure that all
which is phoney and fake is avoided.
The role of authenticity is also emphasised by Lewis and Bridger (2000) and Holt (1998) who all
emphasise the role of the authenticity element when the post-modern consumer selects brands.
However, Bridger and Lewis (2000) generalise when explaining that the consumers reject massproduced and mass-marketed commodities, in favour of products and services which claim to be,
in some way, authentic (Bridger and Lewis, 2000:4). This statement is furthermore supported by
the notion that the consumers’ basic needs in the post-modern society are satisfied and therefore
the consumers are more concerned about original, innovative and distinctive products and services. We have found this assertion problematic, as it is extremely generalising in its character. The
society is changing over time and it can only be concluded that the tendencies in the consumer
culture suggest that authenticity in general is more in focus than during modern consumer culture
(Gilmore and Pine, 2007). Also the generalisation of the concept authenticity must be questioned
as Gilmore and Pine (2007) also mention that authenticity is perceived differently from consumer
to consumer – what may be perceived as inherently authentic for one person might be perceived
as fake for another and the concept of authenticity is hence socially constructed. Brought to a
head, one may perceive Starbucks as authentic if sipping on a Frappuchino in Pike Place, Seattle
where the whole Starbucks adventure started, but it may be perceived inherently inauthentic if
located in Milan, Italy; the coffee Mecca. Therefore, the authenticity concept is constructed within
the culture and the consumer and it is very difficult to define what is authentic and what is not as
this is based on the consumer’s own reflections and life stages. On the other hand, consumers de-
Experiences are defined as: ”…memorable events that engage customers in inherently personal ways like going to a theme park,
visiting a museum, or engaging in a sporting event.” (Gilmore & Pine; 2000:19).
8
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mand real offerings, meaning that brands will appear real to consumers if they are able to deliver
what they say they are. As Gilmore and Pine (2007) argue that authenticity is a social construct,
they have developed a model with the purpose of making the concept of authenticity tangible.
The model is based on a brand’s ability to live up to the two principles: “Is it what it says it is?” and
“Is it true to itself?”. This creates a matrix drawing up and ranking different levels of realness. This
is illustrated below.
Figure 4 | The Real/Fake Matrix
Is what it says it is
Real-fake
Real-real
Is not what it says it is
Fake-fake
Fake-real
Is not true to itself
Is true to itself
Source: Gilmore & Pine (2007:97)
The X-axis describes the self-directed relationship between the company and its own output, and
the Y-axis describes the relationship between the company and its customers – is there a correlation between the narratives told and what the brand really is? Thereby, the two principles can be
seen as the thought and actions of the company, firstly the importance of being earnest and consistent in the foundation of the company and secondly the importance of being trustworthy and
honest in the company’s actions. (Gilmore & Pine, 2007:95-97). Thereby, the matrix has a more
operational approach to the notion of authenticity.
5.1.7.6 Hypermodernity
As of late there has been debate about the successor of the post-modernity where it is discussed
whether post-modernity is about to develop into a hypermodern society. This discussion is especially interesting in regards to Holt (2004) as he argues that a brand must correspond to the
culture in which it interacts. Therefore, if the society in general is changing so will the consumer,
which will have an effect on how brands are perceived (cf. Holt, 2002). However, as indicated
earlier, changes in society and consumer culture do not happen overnight and post-modernity
will still be apparent and it is argued that the post-modern consumer and the hypermodern consumer currently live side by side. According to the French philosopher and professor at University
of Grenoble, Gilles Libovetsky (2005), the post-modern form of society and consumption gradually
transform into a hypermodern society characterised by hyper-consumption, hypermodernity and
hyper-narcissism.
Libovesky (2005) perceives modernity and post-modernity as representatives of different consumption phases in the history of the consumer society. And the third phase of consumption is
described as a hyper-consumption, where everyone consumes first and foremost for his or her
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own pleasure rather than out of rivalry of status with others (Libovetsky, 2005:11) – thereby indicating the difference between the post-modern consumers and the hypermodern consumption
patterns. Whereas, the post-modern consumer to a high degree consumed to express status and
to stage himself, the hypermodern consumer consumes for more personal reasons – the postmodern consumer can be said to be more extrovert in his consumption patterns while the hypermodern consumer is more introvert in his consumption hence goods are not purchased to achieve
social distinction but more towards personal satisfaction and amusement. For instance consumption of luxury goods was previously argued to be bought to achieve social status and prestige
– a phenomenon known as conspicuous consumption (Veblen, 1994 [1899]). In the hypermodern
society, consumption of luxury goods are argued to be motivated by the satisfaction, which is attained by possessing and using the good and the motivation for buying is hence less motivated for
formatting ones identity (Libovetsky, 2005:11). Consumption is in this society more about creating
introvert meaningful individual experiences – the hyper-narcissism.
Moreover, the resistance towards marketing and advertising and hence also to some extend
brands which Klein (2000) indicates seem to have developed to an even more distinctive level.
The hyper-modern consumer seems to be neutral towards the messages of advertising and the
consumer has developed a resistance towards marketing in general. Thus, companies must emphasise entertaining values as well as experiences, which seem to be even more important for the
hyper-modern consumer, as experiences are seen as facilitation to elevate the consumer on an
individual basis (Libovetsky, 2005).
5.1.7.6.1 Fear of the Future
The hypermodern consumer is moreover characterised by something defined as paradoxical individualism. This is for instance apparent by being condemning towards materialism but still expressing joy towards consumption. The hypermodern consumer is also characterised by showing
anxiety of what the future holds. In the hypermodernity, one is focused on the present moment in
fear of what will happen in the future. These anxieties have developed due to for instance globalisation, terrorism, pollution and the technological evolution – factors which force the hypermodern
consumer to think and act in the present moment and act selfishly (Libovetsky, 2005:39). The
anxiety for the future is also argued to influence the consumption of experiences, which will be
of higher importance for the hypermodern consumer – good experiences evoking a sensation of
living in the present moment.
5.1.7.6.2 Ethical Responsibility
Being socially responsible has been stirring in society for a while, however, Libovetsky (2005)
seems to acknowledge that acting ethically correctly is something more emphasised by the hypermodern consumer than for instance the post-modern consumer. Nevertheless, corporate social responsibility and corporate governance have been on the agenda for a while and also before
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Libovetsky (2005) introduced his concept of hypermodernity. Libovetsky (2005) argues that the
hypermodern consumer to an even larger degree than before witnessed, demands that people act
ethically and morally responsibly.
5.2 Method
The underlying reason for initiating this cultural branding approach to the investigation of Starbucks are the gaps found in literature which cannot appropriately explain Starbucks’ troubles (cf.
Literature Review, Section 3). The thesis will hence take its point of departure in the cultural
branding theory and empirical evidence will be analysed to support the theory’s suitability to explain Starbucks’ recent difficulties. Therefore, the approach in the project is deductive reasoning
that the argumentation takes its point of departure in cultural branding theory and that conclusions are drawn on the basis of this theory (Andersen, 2005).
Additionally, we have a hermeneutical perspective in the thesis. As the area of research is not of
natural scientifically character but about interpreting social actors and their attitudes and perception of the Starbucks brand through time, it is not possible to analyse the problem statement with
a positivistic perspective (Saunders et al., 2007). Thereby, we endeavour to interpret assertions
from social actors such as the consumers and the media, applying cultural theory, and thereby to
deduce why Starbucks brand currently is facing trouble. Thereby, we will attempt to elucidate and
understand Starbucks’ difficulties by interpreting data with the principle that social actors cannot be analysed on the basis of definite “laws” as in natural science but must be interpreted. The
perspective taken in the thesis also affects the data collection, this being qualitative, which will be
construed and analysed (cf. Empirical Evidence, Section 5.4).
5.3 Research Design
As mentioned in the Research Statement, the pivotal points of this thesis are Starbucks’ ability
to deliver their brand promises, and further to investigate how Starbucks’ narratives and attached
meanings have changed during time as well as how changes in the consumer culture have made
customers relate differently to Starbucks. The following Methodology has the purpose of outlining how the Research Statement will be investigated. When explaining the methodology of the
thesis, delimitations of the research will be carried out during the presentation. Moreover, the following will be organised according to the structure of the Thesis.
5.3.1 Introduction to Starbucks
In order to understand the rise and decline of Starbucks from a cultural branding approach it is
found essential to clarify the context and how well Starbucks has fitted into this. However, before
any comparison can be made, it is essential to gain knowledge of the brand and the whole concept
of Starbucks. The analysis will therefore begin with an introduction of Starbucks, the Starbucks
concept, and the emergence of the brand. The essence is to gain a historical understanding of the
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concept of Starbucks, the brand, and what context they initially introduced the concept in. Moreover, the decline and success of Starbucks will be illustrated. Therefore, the primary focus will be
on Starbucks’ initial success in the early 1990s compared to their current situation thereby, giving
the reader a sense of the current situation of Starbucks and in which context Starbucks gained
their initial success. The reasoning behind taking this historical approach to Starbuck’s rise and fall
is due to our application of Holt (2004) who underlines that one must understand the breeding
grounds and historical development to explain the success or struggles of any identity brand.
5.3.2 Starbucks within the Industry and the Competition
Even though the focus of this thesis is on branding, it is, nevertheless, found relevant to include
some current market conditions in the analysis. This is due to how significant radical changes in
the competitive conditions, the industry structure and coffee trends may be to the perception
of the Starbucks brand. In the light of this, McCracken’s (2006) Kauffman Continuum will be included, illustrating how the specialty coffee concept has changed its character from being revolutionising and innovative into a much more common concept, thus how it has passed through the
continuum. The essence of this is that Starbucks’ position within the industry must have changed
during its 20 years in business. We will also deduce how consumers take a different position on the
concept today than the position when Starbucks first emerged. Changes in the view on the specialty coffee concept as well as changed competition are factors which Starbucks maybe should
have taken into account when branding. Thus, how Starbucks strategically is positioned within
the industry is found relevant to be included in the analysis, clarifying the environment in which
Starbucks operates.
However, in order to illustrate the strategic position of a company, Porter (2005) suggests a full
industry analysis to be carried out to be able to lay down a competitive strategy. Porter’s full
analysis would include several industry factors but the purpose of our analysis is not to make a
competitive strategy for Starbucks. Therefore, we are aware of the necessity of a whole industry
analysis if wanting to give strategic recommendations regarding a competitive strategy, but due
to the scope of the thesis the competitive environment will be included only to illustrate Starbucks’ position and their evolution in the market as an explanatory factor for their decline. Therefore, the analysis of the competitive environment will focus on the competitors.
5.3.3 Brand Genealogy
Empirically, it is argued that Starbucks in the early 1990s was able to correspond with cultural
contradictions in the American context (Thompson et al., 2006). Furthermore, Thompson et al.
(2006) point to the probability that Starbucks is trapped in their old narratives as an explanation
for the company’s struggles in maintaining the same level of success as before. Therefore, we
approach the analysis from the assumption that Starbucks’ branding revolves around old narratives. The narratives filling the brand with meanings will therefore be clarified, thereby applying
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the principles of Holt (2004) and McCracken (2005) who underline that storytelling, or the brand’s
myths, constitute the brand. Additionally it has to be mentioned that Starbucks do not themselves categorise their narratives, and the narratives analysed in the thesis are those we have
interpreted to revolve around the Starbucks brand.
Brand genealogy refers to how the brand has changed or developed during time (Holt, 2004). The
narratives intended to be told by Starbucks will found the basis for further research of these and
how they have developed during the last two decades. The analysis of the narratives has been
found necessary to be able to clarify whether the meanings which Starbucks intends to attach
to the brand correlate with how they are perceived. Furthermore, it is found necessary to analyse
whether the reason for Starbucks’ difficulties can be deduced to be the narratives and the changes
in these (Holt, 2004). In order to analyse whether the narratives have developed during time, the
stories told by the external surroundings will be looked into – what stories are told which Starbucks cannot control? Thereby we will seek to conclude whether the narratives have been consistent or not, and whether the narratives have been harmed or strengthened by narratives told by
media and consumers. Thereby, we will also analyse how the perception of Starbucks has changed
and whether Starbucks lives up to the brand’s narratives and hence if Starbucks is perceived as
being authentic. This is an essential point to the analysis, as it is assumable that co-branding
including contra-narratives take part in the creation of a lack of authenticity of the Starbucks
brand (Gilmore & Pine 2007; Thompson et al., 2006). Gilmore and Pine (2007) and Thompson et
al. (2006) point to the fact that inauthenticity arises when a brand pretends to be something
which it is not or when it is not able to live up to its narratives. This is interesting as Gilmore and
Pine (2007) argue for the necessity of a brand being perceived as authentic – thus, authenticity
is being crucial in order to compete in the market place of today. Therefore, authenticity may be
characterised as a critical success factor and to be what the consumers of today demand. Thus,
analysing whether or not Starbucks appears authentic in the minds of the consumers is a decisive
factor when concluding Starbucks’ current situation. The analysis of Starbucks’ authenticity will
be based on Gilmore and Pine’s (2007) principles and will serve as a supportive explanatory factor
to why Starbucks’ brand may have been watered down over time. Thereby, extending the earlier
analysis which focuses on the industry and competition, and applying it as a part of the explanation for Starbucks’ current trouble.
5.3.4 The Consumer Culture
The analysis of the consumer culture will be founded on the findings regarding the narratives and
their development. Investigating the consumer culture is carried out due to the theory implicating that a change in the culture will affect the brand if this does not adjust to the culture (Holt,
2004). However, we will focus on the consumer culture and more specifically on the consumers of
Starbucks coffee. Due to Thompson et al. (2006) and Holt (2004), we are aware that the cultural
reasons for Starbucks’ success have to be understood in a broader cultural perspective, hence
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that an analysis of the consumer culture alone may not explain adequately the cultural reasons
for a brand like Starbucks being selected or avoided. We find it necessary to delimit the analysis
to include the consumer culture, as a complete cultural analysis of the US is found too complex to
carry out within the scope of the thesis. This is furthermore due to the complexity of clarifying an
entire culture as it entails several different subcultures and different demand patterns. Especially,
considering a country like USA, it can be argued that the analysis will be further complicated as
perceptions and demands differ among the different states. Furthermore, this implies a difficulty
in revealing cultural anxieties or contradictions within the American context. Holt (2004) points
out the significance of understanding subcultures’ cultural contradictions as a means in the cultural branding. However, as it is problematic for us to gain knowledge of the American culture in a
broader perspective, it is similarly found to be too difficult to identify potential cultural contradictions. Thus, we are aware that the argumentation for clarifying whether Starbucks corresponds to
any cultural contradictions is weakened. Nevertheless, it is found to be satisfactory to focus the
cultural analysis on the American consumer culture as an indicator of the cultural tendencies that
may affect the perception of Starbucks’ brand. Moreover, the consumer culture will be delimited
to focus on the social network of the brand, hereunder the consumers’ identity projects, and hence
meaning transfer, all focused on the consumers of Starbucks and not coffee consumption in general (McCracken, 1986). The analysis will result in a suggestion of how the industry, the development of the narratives, along with the social network can serve as an explanation for Starbucks’
current brand difficulties.
When clarifying the consumer culture of Starbucks, some generalisations will be made on the
basis of the consumer culture theory (cf. Consumer Culture Theory, Section 5.1.7). Thereby, some
of the consumer characteristics will be founded on theory, which will then be strengthened with
comments from Starbucks’ consumers. To illustrate how the consumer culture may have changed,
arguments from the earlier analysis of the “bobo-consumer” will be compared with the consumer
of today.
5.3.4.1 Meaning Transfer and Identity Projects
As it is argued that consumers use brands and their meanings as a means in the creation of selfidentity (McCracken, 2005), it is found essential to touch upon how consumers may or may not
use Starbucks in their identity projects – thus, to which extend consumers perceive Starbuck as
a brand which creates the wished identity. Furthermore, it is found essential to clarify whether
the consumers’ identity projects have changed, thereby clarifying if Starbucks’ brand still appeals
to the same type of projects. To this, it seems imperative to account for meaning transfer (McCracken, 1986) and furthermore whether and how the consumers transfer the meanings of the
brand to their self-identity when interacting with the brand.
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Our findings regarding the consumer culture and its values today will be compared to the consumers’ identity project. Also the identity projects of the bobo-culture will be pointed out to conclude
what kind of identity project Starbucks appealed to. When analysing the consumers of Starbucks
we will also identify whether there has been a change in how the consumers apply the meanings
of the brand in their identity projects and hence how the meanings of the brand correspond with
the character of the post-modern consumer compared to the bobo-consumer. This will be done by
applying some of the findings from the analysis of the narratives, as the narratives will tell something about what meanings are currently attached to the brand, and whether these meanings correspond with the demands of the consumers. Thereby, we will strive to outline whether Starbucks
are meeting the current demand from the consumers or whether an explanation for difficulties
may also be found in the consumers’ demands and perception of Starbucks’ brand.
5.3.4.2 The Brand’s Social Network
The findings regarding the consumer culture will be applied to analyse Starbucks’ brands’ social
network (Holt, 2004). The social network of Starbucks’ brand is imperative to analyse as the insiders, followers, and feeders imply whether the brand can survive. This is especially relevant in the
case of the insiders as they are important for Starbucks as a means to legitimise the brand (Holt,
2004) and facilitate attraction of followers and feeders who are responsible for the sale and hence
the bottom-line at Starbucks. We argue that the state of the social network of Starbucks’ brand is
tightly associated with the meanings of the brand and hence the narratives. Therefore, the findings from the Brand Genealogy will be applied in this analysis.
In the Theory Section 5.1.5, we argue that during time the social network of the brand will be weakened if the brand is not correlating with the context and somewhat re-inventing itself. Therefore,
we will try to demonstrate if this is in fact the case with the Starbucks brand – if the insiders have
gradually left the brand due to the meanings in the brand not correlating to their identity projects
or that the narratives are not authentic anymore. Thereby, we will combine McCracken’s Flock and
Flow theory (2006) and Holt’s Social Network theory (2004) to serve as explanation for the Starbucks brand’s suffering.
Additionally, we will include Libovetsky’s (2005) findings regarding the hyper-modern consumer.
Thereby, indicating that the cultural consumption context may have changed and that Starbucks
must take this into account too. However, Libovetsky’s (2005) findings must only be seen as
putting the consumer culture into perspective and not as directly affecting the final conclusions.
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37
Figure 5 | Overview of the Thesis
Part II
Part I
Problem Area
& Methodology
Introduction
to Starbucks
Brand
Part III Genealogy
Industry &
Compitition
Analysis
Consumer
Culture
Are The
Meanings
of The Brand
The Reason
for Starbucks’
Trouble?
5.4 Empirical Evidence9
In general, the thesis conclusion will draw upon secondary data as it has not been possible to collect primary data. Therefore, the secondary data applied to answer the research statement has
not been conducted with the same purpose as we have in this thesis. This must be taken into account when evaluating the validity of the conclusions. However, articles and customer comments
about Starbucks have been found to be suitable data to interpret and analyse in order to be able to
answer the problem statement. In the following, we will establish reasoning for the data collection
and argue how the secondary data can be justified to serve as basis for our conclusions. Moreover,
it will be explained on what basis we have chosen this kind of empirical data to be applied in the
thesis.
A vast amount of articles have been written about Starbucks as various journalists and private
persons seem to have an opinion about Starbucks. The public media’s coverage of Starbucks’ business can be argued to be enormous. Therefore, to make the data collection manageable, we have
found it necessary to sort through the newspaper articles and only focus on specific newspapers.
We have chosen to pick out, and hence base our argumentations, on articles from the following
newspapers: Seattle Times, The New York Times, The Wall Street Journal, The Nation’s Restaurant News, and Tea and Coffee Trade Journal. These newspapers and trade journals have first and
foremost been selected as they are well reputed and reliable sources of information, while the
trade journals represent expert information upon the subject of specialty coffee.
5.4.1 The Industry and Competition
The analysis regarding the competition and the specialty coffee industry in general is based on
qualitative secondary data and mainly newspaper articles, market reports and books written
about the industry. As this is a more general analysis, which is not focussed only on the branding
of Starbucks, this secondary data is found suitable to deduce Starbucks’ role in the industry over
9
Data collection methods are explained on the basis of the methods outlined in Andersen (2005).
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
time and how the industry has developed in the last three decades. Of course validating questions answered by, for instance SCAA (Specialty Coffee Association of America), would have been
preferable, however instead statistics from their homepage have been applied as contact with the
organisation has not been possible.
5.4.2 Blogs and Fora
To account for and analyse Starbucks’ brand development over time, we have again applied secondary data of qualitative character. Empirical evidence to support our hypothesis regarding Starbucks’ narratives having undergone changes over time, is mainly based on newspaper articles
and material found on Starbucks’ own homepage; www.starbucks.com. Furthermore, findings are
supported by comments made by Starbucks’ consumers on www.mystarbucksidea.com10. This is
a forum where consumers of Starbucks coffee, as well as the average American, can comment on
Starbucks’ products, the Starbucks Experience, and the involvement of Starbucks comprising the
atmosphere, locations, service, social responsibility and the partners etc. The reason why people
make comments on mystarbucksidea.com has to be taken into consideration. The comments are
not made to say whether they like Starbucks or not, even though we argue that it is expressed
indirectly, the reason for commenting is to bring up new ideas and hence how to improve Starbucks. Several homepages about Starbucks can be found on the Internet in which consumers express their attitudes towards Starbucks. These pages both cover forums for absolute devotees
of Starbucks but also forums for absolute opponents whose only intention is to smear Starbucks’
brand. It is interesting how Starbucks gives platform to these forums to emerge and consumers
seem to be divided in their opinions about Starbucks. Although these homepages are a rallying
point for meanings about Starbucks, they are not all included as empirical data in our investigation
about Starbucks. Similar to the large coverage of Starbucks in the news papers where we found
ourselves compelled to make the material manageable by focusing on selected newspapers, we
also found it necessary to focus on the empirical data from the consumers. Thus, we have chosen
to concentrate the consumer comments to mystarbucksidea.com and www.starbucksgossip.com.
The comments on these pages are assessed to be more constructive than the case of for instance
hateful homepages such as www.ihatestarbucks.com in which the tone seems very frivolous and
harmful. On mystarbucksidea.com, concrete proposals and ideas are given to Starbucks regarding
innovations and changes, as well as opinions about Starbucks’ business and products initiatives,
and how these are perceived compared to the original Starbucks are also aired.
However, it is essential to keep in mind that not all Starbucks customers choose to post ideas and
comments on the Internet. It is only a section of the customers, and to a great extent these can
be argued to be more committed customers. The comments furthermore give the impression
10
Will from here on be referred to as mystarbucksidea.com
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that the majority of consumers posting ideas and comments are, or used to be, loyal customers
of Starbucks. At the same time, there may be a lot of less committed customers whose opinions
would only be unfolded when directly asked. This is essential in regards to the discussion about
how customers can be characterised as insiders, followers and feeders as a difference among these
can be argued to depend on their commitment to Starbucks and their concern about changes.
Hence, it cannot be disregarded that conclusions drawn upon empirical data collected from mystarbucksidea.com may be biased seeing that not all types of customers post comments. Therefore, the comments on mystarbucksidea.com do not illustrate accurately how the consumers currently perceive Starbucks and their narratives but we have, however, interpreted and analysed the
comments and applied them being aware of the limitation in the comments. As we have stressed
in the discussion of the aspect of Authenticity (cf. Authenticity, Section 5.1.7.5) meanings are a
construct and are being made within the consumers, thereby saying that meanings are perceived
differently from consumer to consumer. Therefore when indicating how for instance the meanings
of being Fair Trade is perceived, this will be done on the basis of awareness of the meanings being
perceived differently from consumer to consumer. Therefore the deductions will to some degree
be based on interpretations and thus the conclusions will not be an absolute illustration of the
meaning constructions.
5.4.2.1 Who are the Bloggers?
The consumers of Starbucks are accounted for by analysing the comments on mystarbucksidea.
com and blogs. Again, this is secondary non-stimuli data which we have had no influence on as,
for instance, in posing questions in the role of interviewer. We argue that the people writing on a
forum such as mystarbucksidea.com to some degree are engaged in the brand on a higher level
than the common specialty coffee drinker and therefore represent the perspectives of Starbucks’
brand from mainly followers. The reason for not characterising the bloggers as insiders is that the
insider most likely would not consume Starbucks due to the brand and hence be unaware of the
forum mystarbucksidea.com. They would rather, to a larger degree, consume Starbucks coffee
due to the authenticity it once possessed with all that it implied of Italianess etc. (cf. High Quality,
Section 12). The followers on the other hand may represent larger consumer groups who bought
into Starbucks following the lead of the insiders, and hence not only drinking the coffee due to the
product attributes, but also due to some sort of a Veblen Effect making the followers strive to
gain the status of the insiders, who we later will argue to have once been the bobos.
However, it is extremely difficult to verify the character of the participants on mystarbucksidea.
com. We will base our argumentation on the assumption that being involved on a forum like
mystarbucksidea.com requires involvement from the participant and, as many of the comments
expresses deeply felt disappointment from long-time loyal consumers; we cannot eliminate the
possibility that some of the bloggers may represent points of views from insiders. Moreover we
broaden this assumption by saying that the participants mainly represent followers as the insiders
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
legitimate the brand and, when these have disappeared due to changes in the brand, the followers
may start to express their disappointments before turning their back to the brand as well.
Also due to the character of the empirical data we will not be able to make the same exact description of the followers and the feeders as we do with the insiders; as in the case of the bobos where
we have had supplementary sources characterising this exact consumer group (Thompson et al,
2006; Brooks, 2000). For this to have been possible, we would have had to conduct interviews with
the consumers in Starbucks in order to have been able to deduce the consumers’ characteristics.
5.4.3 Consumer Culture and Identity Projects
The general consumer culture has been accounted for by applying various consumer culture theories. This is not specifically applied to the American consumer culture but is more of a general
character. Nevertheless, Brooks’s (2000) book regarding the first Starbucks customer is applied
together with the general characteristics of the consumer culture to thereby account for the Starbucks consumer when first introducing Starbucks to the US market. Thompson and Arsel (2004)
and Thompson et al. (2006) have conducted analyses of the brand image of Starbucks and in
this connection they have interviewed a number of consumers who dissociates themselves from
Starbucks. The way Thompson and Arsel (2004) and Thompson et al. (2006) characterise these
interviewees can be juxtaposed with the characteristics of the bobos and post-modern consumers
with high cultural capital. This is due to these interviewees valuing highly personal and “authentically distinctive social and aesthetic experiences” (Thompson et al., 2006:56), and furthermore that
they give the impression of emphasising artisanal products where they can express connoisseural
knowledge. Therefore, their comments can be used to deduce which meanings the bobos attach
to Starbucks today and furthermore for which reason they are repelled by the brand.
Furthermore, the general evolution of the consumer together with the comments on mystarbucksidea.com and newspaper articles serves as an illustration for the consumer of Starbucks
today. Therefore, generalisation about the American consumer of specialty coffee is based on
comments from Starbucks’ customers. This weakens the validity of concluding how the Starbucks
brand corresponds with the American consumer. Moreover, it has to be mentioned that some of
the newspaper articles from which we base our data generalise the consumers of Starbucks by
using the terms blue- and white collar. However, the term “bobo” is more complex and cannot only
be described as white collar (cf. description of bobo and the post-modern consumer of Starbucks
in Section 16.1). Moreover, we are aware of stating an identity according to a certain collar is in
outright contradiction with the earlier explained transformational approach to the post-modern
consumer (McCracken, 2008) and to the idea of the fragmented consumer (McCracken, 2005).
Having in mind that the articles are of generalising character and not taking the complex structure
of the post-modern consumer and hence the consumer of Starbucks into account, we will apply
the empirical data in our analysis knowing that the findings are not absolute.
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The analysis of the identity projects of the Starbucks consumer is mainly based on a conference
held by Professor in History at Temple University, Bryant Simon. He has studied Starbucks the last
three years and has spent more than 12 hours a week in studying the consumers at Starbucks and
talking with them. The result of this is a book which will be published next year called “Consuming
Starbucks”. Instead, the conference will serve as empirical data together with our own deductions
made from the comments on mystarbucksidea.com and starbucksgossip.com. We are however
aware of the fact that our argumentation and hence findings would have been stronger if primary
data had been collected. Especially in the case of in-depth interviews with Starbucks customers
would have proved to be ideal, where details regarding their perception of the brand could have
been clarified. Again the resources for visiting the US market have not been possible and nor has
the SCAA been cooperative with divulging details on the American coffee consumer either.
5.4.4 Critique of Data Collection
It would have been preferred to be able to draw conclusions upon primary data tailored to the
purpose of this thesis, thereby enhancing the validity of the conclusions. Had we collected primary
data in the form of interviews with customers in several Starbucks cafés, it would have been
possible to have captured comments from several different kinds of customers than we argue
exist through the Internet Starbucks forums. This is due to the argumentation of these forums
not representing the entire social network of Starbucks, but mostly the followers. Therefore, it
would have been preferable to have had interviews with a sample of the general American population and the Starbucks consumers to draw conclusion on how Starbucks is being perceived and
how they have changed according to the general American’s perspective. Furthermore, via direct
personal interviews it would have been possible to tailor the questions asked to fit the research
statement and furthermore pose more thorough questions to find out more about the customers’ attitudes and feelings towards Starbucks, which is not possible via the forums. However, once
again we have not had the chance to travel to the US and conclusions will therefore be made on
the basis of the secondary data source. Thus, one must have in mind that the conclusion may not
be absolute in their character and further research can be done on our findings.
Even though books (cf. “Pour your Heart into it”, Schultz, 1997) have been written about Starbucks and their intentions and Starbucks.com to some degree covers some narratives, qualitative
stimuli interviews with Starbucks’ marketing department would have been preferable to validate
our argumentation. However, to date, Starbucks have not been interested in a co-operating with
us. Through our investigation process, the Danish branch of Starbucks was also contacted but, as
this is situated in the airport, the store is operated under a franchise license agreement and does
not have any direct contact with the US head quarters. Hence data regarding marketing for our
purposes was not found to be collectable or suitable from the Danish Starbucks branch.
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5.5 Delimitation
Focus in the thesis will be on US market and how Starbucks’ brand is coping on this market; how
Starbucks brands themselves, how the narratives have developed, and how the surroundings interpret and perceive Starbucks’ branding attempts from the launch of Starbucks until present
time. This will all be delimited to focus on the US market. The rationale behind focussing on the
US market is that it was from this market that the narratives originated and that some of the
narratives only can be analysed with a US cultural perspective. This is for instance the case for the
narrative regarding the “American Dream” and Howard Schultz (cf. American Dream, Section 11.1)
a narrative which on overseas markets may not influence the meanings of the brand in the same
scale as in the US.
Also, we are aware of the fact that the narratives are interpreted differently across geographical
boarders due to differing national cultures (Lindstrom, 2005), may well result in the brand, and
hence narratives, also being interpreted differently within the US boarders (McCracken, 2006).
However, we are aware of the fact that the US consumers might have different opinions and that
consumers from Seattle may interpret Starbucks and the narratives differently than consumers
from the San Francisco Bay area. Having this in mind when analysing Starbucks, we will apply our
findings on a more general basis not distinguishing between local cultures.
Additionally, we will focus on the consumer culture and on how the consumption of coffee, and
especially Starbucks coffee, has been. Therefore, we will not map the whole US culture and the
related subcultures. This is due to the fact that Holt’s theory (2004), regarding cultural branding,
is difficult to apply not least as we have had limited access to empirical data about the culture.
Therefore, we have chosen to focus on the culture consisting of the consumers of Starbucks coffee and their perception of the brand.
Due to our problem statement revolving around Starbucks’ current situation, focus will be on how
the narratives are perceived today, and not on how they have been accepted during the whole period of Starbucks’ operation. Thereby, we argue that Starbucks’ brand and perception until recently
has been meeting Starbucks’ objective. We base this on Starbucks’ huge success and the critique
and disappointments manifested in the media today – illustrating or suggesting that something
in the brand has changed causing equivocal narratives to be developed.
Focus will at all times be on Starbucks and their narratives and the consumers of Starbucks coffee.
Hence, a comparative analysis of the competitors and market analysis will not be in focus though
we are aware of describing the chaos end in the Kauffman Continuum and prepare the ground for a
deeper analysis of the competitors. However as the purpose is not to make a comparative analysis
of Starbucks compared to the competitors, this will not be done however the competition in the
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specialty coffee industry will be outlined as well as how Starbucks differentiated themselves and
hence entered the Continuum in the first place. Therefore, it will not be analysed how consumers
prefer other coffee bars and the underlying reason for these choices, but rather focus will be on
how the meanings of the brand has affected the consumers to select or deselect Starbucks.
Part II
6. Introduction to Starbucks
In the early 1980s, the majority of Americans only knew of coffee made from an electric percolator
or drip coffee machine and coffee was considered a commodity that could only be bought in the
supermarkets. However, from the moment Howard Schultz stepped into the small specialty coffee retailer Starbucks Coffee, Tea and Spice in Seattle, this culture was soon about to change. The
founders and personnel of this store were experts in coffee and sold beans of high quality. They
did not sell coffee by the cup but instead roasted beans for people to brew at home, and through
their great engagement and knowledge of coffee, they distinguished themselves by educating
customers in the different beans’ flavours and aromas and how to make a good cup of coffee.
Howard Schultz was amazed by the specialty coffee and immediately realised the unfolded potential of the specialty coffee shop. Shortly after, he was hired in the small Seattle coffee retailer.
Together with the discovery of the specialty coffee and a business trip to Italy where he became
acquainted with the Italian espresso bar and coffee culture, this chanced combination later turned
out to be epoch-making to both Howard Schultz, the American and international coffee culture.
Howard Schultz was so enthusiastic about the way the Italian people met in the espresso bars and
how coffee was the rallying point to social life, that he brought back the idea of serving specialty
coffee in the US. Even though Howard Schultz was not able to convince his bosses at Starbucks
Coffee, Tea and Spice about the potential of expanding business to include serving of specialty
coffee like he had seen it in Italy, he did not forget this dream (Luttinger & Dicum, 2006; Koehn,
2001).
In the US in the 1980s, specialty coffee seemed to be reserved for coffee enthusiasts and devotees who had an interest in coffee and its origins (Koehn, 2001; Luttinger & Dicum, 2006). However, Howard Schultz was convinced that specialty coffee, and the Italian way of consuming it,
had the potential of attracting more than only coffee devotees and that a huge demand within
other customer segments was yet to be unfolded. Thus, he wished to broaden the knowledge of
specialty coffee and his intention was to re-create the Italian coffee culture in the US and to make
it accessible to a much bigger group of the population. This wish formed the basis of the Starbucks
Corporation as we know it today.
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In 1985, Howard Schultz succeeded in opening his own coffee shop, Il Giornale, appearing as a copy
of an Italian espresso bar. Customers were enthusiastic about the specialty coffee concept and
Howard Schultz’s business grew rapidly. In 1987, he had the opportunity for acquiring the Starbucks
Coffee, Tea and Spice and hence he was able to have the Starbucks name that was already an established name within high quality coffee. Since, the coffee shop has made enormous progress
and today covers most of the US with approximately 10.000 shops and 5.000 in the rest of world
(Starbucks, 2008a).
6.1 Description of Starbucks’ Business
Starbucks is specialised in purchasing, roasting and distributing coffee. In their retail stores, a wide
selection of coffee beverages is sold, both freshly brewed coffee, whole beans and cold coffee
beverages (Starbucks, 2008c). High quality seems to be a central theme in most actions carried
out by the company, hence they ensure that the beans and coffees sold in the stores are of highest quality and that the employees provide a similar level of high quality service in order to give
customers the best experience. Therefore, Starbucks’ strategy is to be in control in every step of
the coffee making, meaning that purchase of whole beans and roasting is integrated activities
of the company. Furthermore, Starbucks distribution predominately relies on company-owned
stores – more specifically, 85% of the 2007 revenues came from Starbucks’ company-owned retail stores (Starbucks, 2008c). Only in locations such as airports and university campuses where it
is not possible to operate with a company-owned store, Starbucks enters into licence agreements
(Schultz, 1997).
Starbucks retail stores are mostly placed in high-traffic and high-visibility locations close to workplaces and shopping facilities (Schultz, 1997). In the big and densely populated cities, the Starbucks
retail stores are placed very closely to each other, almost on every street corner, and remarks are
often passed on how Starbucks’ retail stores dominate the townscape. Even jokes are made about
Starbucks planning to open a new Starbucks in the rest rooms of an existing Starbucks store
(Thompson et al., 2006).
Besides selling coffee, Starbucks also sells coffee-making equipment, mugs, coffee grinders and
other coffee accessories which can be argued to supplement their core product (Schultz, 1997).
However, during Starbucks 20 years in business, more and more products that are not directly associated with coffee are added to the product portfolio. Thus, today Starbucks also sells juices, sodas, food such as pastries and sandwiches, ice-cream and music. In the expansion of the product
portfolio, Starbucks has entered into licence agreements with large corporations such as PepsiCo
and Kraft Food Inc (Luttinger & Dicum, 2006; Schultz, 1997).
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7. The Industry in which Starbucks Emerged
Until recently, it does not seem like Starbucks has met any appreciable troubles during its 20 years
in business, but only enormous success. Though it cannot explain the entire success of Starbucks,
it is essential to the story of Starbucks that the company was introduced at a time where the
specialty coffee industry was booming. During the 1970s and 1980s, the specialty coffee industry
experienced enormous growth rates, thus in annual revenues the industry grew from $45 million
in 1969 to $750 million in 1980 (Koehn, 2001). According to Koehn (2001) the rise of the specialty
coffee industry was connected to an increasing interest in natural foods and a growing tendency towards dissociating from mass-produced products, especially amongst urbanites – hence a
growing interest in specialty coffee that differed from the traditional filter drip coffee that most
Americans associated with coffee.
When Starbucks emerged, coffee was most usually bought in supermarkets like any other staple goods and was generally perceived as a standardised product and commodity (Koehn, 2001;
Luttinger & Dicum, 2006). This view on coffee can be argued to be due to the comprehensive
development that the sale and distribution of coffee went through during the 20th century. Due
to efficiency improvements, the structure of the American coffee industry has changed during
time resulting in the supply of coffee being concentrated on fewer, but larger suppliers. Attempting to maintain high profit margins, these coffee companies have compromised with the quality
of the coffee. Attention was only slightly given to the drinking and flavour of the beverage, thus
traditions of different roasting methods and bean origins giving rise to different flavours were
disregarded. Coffee was thereby turned into a homogeneous product not varying much in taste,
making price the most obvious difference between the different coffee brands in the supermarkets (Koehn, 2001; Luttinger & Dicum, 2006).
The poor quality coffee and the homogenisation of the coffee tastes made room for the specialty
coffee sector. This sector was highly focused on high quality coffee and the vast variations of
the flavours and aromas of the coffee. Thus, with its many variations in coffee beans, roasts and
grinds, specialty coffee became a strong alternative to the standardised mass-produced coffee
from the supermarkets giving rise to an unfolded potential within the specialty coffee sector.
However, in spite of the strong growth of the specialty coffee industry, the specialty coffee segment still only accounted for less than a tenth of the total coffee sales compared to the general
coffee industry in the early 1980s, and the awareness of specialty coffee was still rather limited
(Koehn, 2001). An explanation for this may be found in the fact that specialty coffee was only a
niche product that at this time was not given much public awareness. Furthermore, it is essential that the general perception of coffee differed a lot between drinkers of specialty coffee and
drinkers of ordinary coffee. Whereas the latter was more focused on the caffeine fix of the coffee
rather than the taste of it, the former put time and interest into the preparation and savouring of
the coffee, making the drinking of coffee an experience. Thus, the ordinary coffee drinker can be
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argued to see coffee as part of a daily routine that, in taste and habits, did not differ much from
time to time, whereas the drinker of specialty coffee in general searched for new tastes and variations of the coffee (Luttinger & Dicum, 2006).
It is worth mentioning that the concept of specialty coffee was not new and innovative as it took
off in the 1970s and 1980s. While coffee was generally commercialised through the 19th
and 20th century, some smaller roasters had held on to the traditions of the good coffee and the
art of coffee-making, thus coffee of high-quality beans was accessible in a few, smaller retail
stores in selected markets. One roaster is in particular called attention to when talking about the
initiating craze of the specialty coffee; this is Alfred Peet who managed to open his own specialty
coffee retail store in 1966. He introduced the US to dark-roasted coffee and was committed to the
flavour and high quality of the coffee (Schultz, 1997; Allison & Martinez, 2007). In many ways he
was leading the way within the specialty coffee in the US. As the distribution was rather limited at
this time, so too was the general public awareness. Hence, the sale of specialty coffee was based
on few but loyal customers that could be characterised as coffee connoisseurs and devotees, and
the niche segment did not do much to create awareness of the specialty coffee. Most awareness
of the specialty coffee was thereby created by word of mouth within the circles of people already
interested in coffee (Luttinger & Dicum, 2006).
7.1 Starbucks Revolutionising the Industry
Even though specialty coffee in itself was not an innovative concept as Starbucks emerged, this
kind of coffee was still new and innovative to the majority of the population. This was due to
specialty coffee’s character of a niche product which had, to a large extent, been for the few and
those in the know. Hence, the revolutionary aspect in the emergence of Starbucks was their pioneering approach to coffee and how they took part in the transformation of the perception of coffee (Thompson et al, 2006; Koehn, 2001). Thus, the general perception of coffee as a commodity
was challenged by a “decommodified” coffee experience, emphasising the freshness, quality and
taste of the coffee.
However, the appeal of specialty coffee did not do it alone. Thus, specialty coffee had always
been there if you knew where to look for it (Koehn, 2001). As Starbucks entered the market, the
conventional way of consuming coffee was challenged. Conventionally, coffee was bought to drink
at home, both when it was bought in the supermarket or in a specialty retail store. Hence, the
specialty coffee segment was specialised in selling a large selection of coffees either grinded or as
whole beans, and furthermore to educate the customers in making a good cup of coffee at home.
Predominantly, the specialty coffee retail stores did not serve by the cup, however (Koehn, 2001).
According to Luttinger and Dicum (2006) and Bundgaard (2004), what Howard Schultz did, which
did not only revolutionise the American coffee industry but also the culture, was to make the good
cup of coffee the rallying point to people. Thus, he served the specialty coffee by the cup – this
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
way differentiating from specialty coffee competitors that in general only sold coffee as whole
beans for people to brew and drink at home. He introduced the social element of coffee to the industry, making coffee a social rallying point and the café a space for people to come together and
socialise; a Third Place, i.e. a place between home and work for social interaction (Oldenburg, 1989;
Thompson & Arsel, 2004; Koehn, 2006). It can be argued that serving coffee by the cup was not a
revolutionising concept in the American market per se, as diners had served drip coffee for years.
However, Starbucks’ concept was capable of distancing itself from these diners as they appealed
to a different customer type and furthermore that they created a new trend.
Even though Starbucks was not profitable their first years in business, they were still capable of
raising capital and resources for the company to grow rapidly. Besides, Starbucks managed to create awareness, not only to their own advantage but also to the advantage of the specialty coffee
segment in general. From the time Starbucks entered the market, things really started to happen
within the industry. Thus, it is generally believed that the emergence of Starbucks revolutionised
the American coffee industry (Luttinger & Dicum, 2006; Koehn, 2001, Thompson et al., 2006).
Starbucks had an incentive and energy that had never been seen before within the industry and
Starbucks, with Howard Schultz leading the way, had an innovative approach to specialty coffee
and the way of delivering it to the customer which was also rather new to the industry. This new
thinking can in particular be seen as a new perception of coffee. Coffee was not just to be understood as coffee (Koehn, 2001) – thus Starbucks provided a breeding ground for dissociation from
the prevalent perception of the ordinary filter drip coffee. Furthermore, the intention of making
specialty coffee much more accessible to people was influential for the success of Starbucks, extending the knowledge of specialty coffee, and thus attention was created outside the circles of
coffee connoisseurs and devotees. Therefore, what made Starbucks revolutionary was the combination of serving a good cup of coffee and providing the customers with a Third Place (Thompson
& Arsel, 2004; Luttinger & Dicum, 2006).
Starbucks was also revolutionising to the extent that they changed the coffee culture. Due to the
new thinking of cafés serving good quality coffee to the common public, Starbucks served as a
model to a huge number of cafés emerging in the market during the years, both to similar coffee
chains and smaller independent cafés (Koehn, 2001). When Starbucks emerged it was not common to find specialty coffee in other places than the small specialty coffee retailers, but today it
is almost unthinkable that cafés and restaurants do not serve specialty coffee such as cappuccino and café latte as these coffee beverages have become an integrated part of the common
coffee culture (Luttinger & Dicum, 2006). Thereby, it can be argued that Starbucks innovated the
American coffee culture and at the same time set the industry standards. It is crucial also to point
out that Starbucks not only transformed the American perception of coffee but also influenced
the culture of social interaction as Starbucks provided people a place to meet and be social (Luttinger & Dicum, 2006; Thompson et al, 2006). In this way, Starbucks was ground-breaking and
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has achieved iconic status (Thompson et al., 2006). Therefore, it is not remarkable that ever since
competitors have tried not only to copy the idea of high quality coffee but also to copy the concept
of the Third Place.
What is further essential to underline is the awareness and status Starbucks and specialty coffee
in general achieved in the public when was introduced to the market. Starbucks started a trend
and made it fashionable to drink coffee. They put meanings and identity into the coffee beverage
emphasising that coffee was not just coffee. Buying specialty coffee therefore became a means
for the consumers to apply in the creation of their self-image. Furthermore, specialty coffee expressed a sense of style and class and was regarded an affordable luxury – it was a luxury and
self-indulgence which most people could afford. This contrasted other luxury goods which could
only be afforded by the few and affluent consumers (Koehn, 2001). Thus, consumers could have
the sense of luxury within an economically reasonable way.
8. Current Conditions of the Specialty Coffee Industry
Between the late 1980s and 2000, the general coffee consumption in the US more or less stagnated, with a growth of only 0.26%. However, in the same period of time the trend toward specialty
coffee rose resulting in sales of specialty coffee quadrupling between 1986 and 1997. Starting as a
niche product in the early 1980s accounting for less than 1% of the coffee market, specialty coffee
had developed into an acknowledged and widespread coffee product accounting for approximately
30% of market sales in 2000 (Encyclopedia of Global Industries, 2008).
8.1 The Specialty Coffee Market and the Competition
It can be argued that Starbucks’ coffee beverages compete against all other coffees on the market and indirectly against all other kinds of beverages. As argued for in earlier sections, there has
been a clear distinction between specialty coffee, i.e. espresso-based and flavoured coffee, and
the conventional filter or drip coffee and furthermore a distinction between how coffee has been
distributed. Regarding the competition, this distinction of coffee segments is no longer that clear,
as the players are moving across the coffee segments and the structure of the distribution has
changed. This has intensified the competition. Characteristic for the market is furthermore that
the market can be divided into coffee consumed away from home and coffee consumed at home.
Seeing that Starbucks predominantly sells their coffee to be consumed away from home and due
to the fact that the company focuses on the coffee experience in their retail stores, Starbucks is
also in the café and restaurant industry. Therefore, it is essential also to discuss the competition
based on the fact that Starbucks is also in the café- and restaurant industry.
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8.1.1 The Coffeehouses
With the strong demand for specialty coffee, many competitors entered the market during the late
1980s and the 1990s. All over the US, cafés and coffeehouses serving specialty coffee emerged.
Thus, the industry experienced a rapid growth in the number of retail stores, increasing from 50 in
1979 to 25.000 in 2007 (Lingle, 2007; Encyclopedia of Emerging Industries, 2008).
Starbucks is still the dominating player in the market of specialty coffee and the company has approximately 10.000 stores all over the US (Starbucks, 2008d), whereas in comparison, the second
largest coffee shop defined by operating units is Caribou Coffee with almost 500 retail stores in
the US (Caribou Coffee, 2008). To the list of the largest coffeehouses in the US, the following can
furthermore be added; Diedrich Coffee, Tim Horton’s, Peet’s Coffee and Tea11, Seattle’s best Coffee, Tully’s Coffee, and Coffee Beanery (Hirsh, 2006; Encyclopedia of Emerging Industries, 2008).
Characteristic to these coffeehouses is the specialisation in sourcing, roasting and selling highquality coffee, and in general how they show a dedication to the coffee experience as well as the
freshness and flavour of the coffee. In general, the coffeehouses offer gourmet coffee, espresso
based beverages, whole bean coffees, coffee merchandise and pastries in line with Starbucks
(Datamonitor, 2008a; 2008b; 2008c; 2008d). Nevertheless, Starbucks differs from the competitors when comparing the economic scale of the companies. Thus, Starbucks recorded revenues of
$9.4 billion in 2007, whereas Diedrich Coffee had revenues of $36.6 million, Caribou Coffee $256.8
million and Peet’s $249.4 million during the same period (Starbucks, 2008a; Datamonitor, 2008b;
2008c; 2008d). However, it must also be said that the strategy of Starbucks has been rather different from the majority of the competitors. Whereas Starbucks has focused on being a national
and international brand, the competitors can largely be characterised as regional brands, thus their
retail stores are concentrated in selected regions of the US. For instance Peet’s has a very strong
position in the San Francisco Bay Area and Tim Horton’s in the states of the Northeast of the US
(Hirsh, 2006; Taub, 2005). In general, the competing coffeehouses have not shown the same level
of busyness as Starbucks regarding expansion. However, during the next few years, an increasing
number of specialty coffeehouses plan to become much more nationally present (Hirsh, 2006;
Walkup, 2008).
8.1.2 Specialty Coffee Going Mainstream?
What is also interesting is that the industry has experienced a trend toward consolidation of
smaller specialty coffeehouses. Thus, in the 1990s, smaller specialty coffeehouses and chains
were acquired or consolidated in order to stay in the market, this was especially due to increased
competition from larger and more national firms (Schoenholt, 1998; Encyclopedia of Emerging
Industries, 2008). For instance, the coffee chain Diedrich Coffee now owns the formerly independ-
11
Peet’s Coffee and Tea will also be referred to as Peet’s
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
ent coffeehouses Gloria Jean’s and Coffee People (Datamonitor, 2008d). In 2003, Starbucks chose
to acquire Seattle Coffee, enhancing Starbucks’ portfolio with the brands Seattle’s Best Coffee
and Torrefazione Italia Coffee (Datamonitor, 2008a).
Even though Schoenholt12 (1998) only indirectly criticises the tendency towards the specialty coffee industry being characterised by larger chains, he calls attention to the fact that the tendency is
changing the industry. He argues that the specialty coffee industry is moving away from specialty
towards commercialisation. This argument is further strengthened by the fact that big corporations diversified into other product segments such as tobacco, dairy products and household
products, and have entered the specialty coffee segment due to the large unfolded potential of
the industry. These conglomerates, led by The Procter & Gamble Company, Nestlé, Kraft Foods
Inc., and Sara Lee, have dominated the market shares of supermarket coffee for years, i.e. the
conventional and mass produced coffee (Luttinger & Dicum, 2006).
In spite of the strong growth of the specialty coffee segment and the growth of consumers consuming coffee away from home, it is nevertheless still a fact that most coffee is still consumed
at home. Thus, in 2005, the Americans consumed more than 300 million cups of coffee per day of
which 75% were brewed at home (Encyclopedia of Emerging Industries, 2008). Therefore, it is not
surprisingly that The Procter & Gamble Company, Nestlé, Kraft Foods Inc., and Sara Lee have seen
the chance of getting a share in the growing specialty coffee segment. Furthermore, the fact that
the consumer has become aware of the high-quality coffee available in coffeehouses and retail
stores has in turn created a more “coffee educated” coffee consumer who demands higher quality coffee, not only when buying the coffee in the retail store but also when buying the coffee in
the grocery store to brew at home. Thus, during the 1990s producers of conventional coffee have
expanded their coffee assortment to include specialty coffee products to brew at home (Luttinger
& Dicum, 2006). This has increased the competition and, in addition, enlarged the specialty coffee
segment. Thus, the distribution of the specialty coffee segment is no longer only covered by the
coffeehouses and retail stores which originally characterised the industry segment.
It is furthermore seen how coffeehouses such as Peet’s Coffee and Tea and Diedrich Coffee benefit from not only being coffeehouses selling coffee by the cup but also from being roasters and
wholesalers. This means that coffeehouses profit from selling their products through other distribution channels such as the Internet and wholesale accounts including restaurants, office coffee
service and grocery stores (Encyclopedia of Emerging Industries, 2008). It can be argued that sale
of roasted coffee or whole beans through the grocery channel makes the coffee products more
accessible to consumers nationwide, which intensifies the competition. Christopher P. Mottern,
Donald Schoenholt is the founder of the Specialty Coffee Association of America and the president of coffee roaster, Gillies Coffee Co. in Brooklyn, New York (Schoenholt, 1999).
12
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
Peet’s president and chief executive, says that the strategy for Peet’s is to make their coffee
products more accessible to the consumers, not only through company owned retail stores but in
particular through the grocery stores. Mottern argues that the large focus on the grocery channel
is due to the tendency of consumers buying more and more specialty coffee through the supermarkets (Peters, 2001). Thus, in 2007 specialty coffee accounted for 27% of the grocery coffee
sales, which was an increase of 15% (Peet’s Tea & Coffee, 2008). It is within this grocery sector
that the growth of the specialty coffee is, and will be heading, due to the fact that most coffee
in the US is still brewed at home (Allison & Marinez, 2007). It is also the case that Peet’s generates 80% of their revenues through wholesale, though this only accounts for 20% of their sales
(Stepankowsky, 2008).
8.1.3 The Threat of the Fast Food Restaurants
During the recent years, the competition within specialty coffee has taken a new turn which is
due to the increased competition from the fast food chains, especially McDonald’s, Burger King
and Dunkin’ Donuts. The competition between Starbucks and the fast food chains revolves mainly
around the breakfast market. Since the early 1970s when McDonald’s introduced breakfast items
to their menu, the fast food chain has dominated the quick service breakfast market (Jennings,
2008). However, the fast food chains have upgraded their offerings of coffee, now selling specialty
coffee as well. Therefore, they cater to a lot of Starbucks’ customers. Earlier on Starbucks did not
consider the fast food chains as competitors as they are argued to have had a different approach
to coffee. Hence, Starbucks considered the coffee of, for instance, McDonald’s a “hot, brown liquid
masquerading as coffee” (Adamy, 2008). Furthermore, the different approaches to service, menu,
marketing, and quality and also the need for a comfortable meeting place draw a distinction line
in the comparison of the specialty coffee retail stores and the fast food chains (Kowalski, 2006).
However, not only the fast food chains’ increasing initiatives on specialty coffee pose a threat
to Starbucks and other specialty coffeehouses. Convenience is pointed out to be a dominating
factor in the competition of customers between Starbucks and the fast food chains, seeing that
the breakfast market is characterised by customers under time-pressure (Walkup, 2006; Adamy,
2008). Therefore, customers are attracted by places where they can have both their breakfast
and their beverage. Before McDonald’s introduced their specialty coffee, customers bought their
breakfast at McDonald’s and then went to other places to buy their beverages. Furthermore, it is
seen that 70% of Starbucks’ customers are having their coffee as a take-away option which implies that the need for a comfortable meeting place is less essential. This is the case at least in the
competition of the breakfast segment it can be argued (Thompson et al., 2006). Instead, speed
and convenience is central.
It is seen how the specialty coffee served at the fast food chains appeal to the customers and that
the number of customers buying coffee at fast food chains is growing rapidly. Thus, by the end of
2007 every eleventh customer buys a coffee drink during a fast food chain visit (Walkup & Martin,
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
2007). Hence, there is no doubt that the fast food segment poses a threat to Starbucks and the
other specialty coffeehouses. Furthermore in tests undertaken, McDonald’s coffee has beaten
Starbucks coffee in the category of taste, which indicates that the fast food chain is gaining on
to Starbucks’ differentiated coffee products (Seattle Times, 2007). The fact that coffee in the
fast food restaurants, on average, costs $1 less than the coffee at Starbucks, additionally poses
a threat to Starbucks seeing that the fast food chain is offering an equally or better than tasting
product at a lower price and thus are in a strong competitive position (Jennings, 2008). This furthermore implies the need for Starbucks to differentiate on their brand image.
In order to lure and maintain the customers, Starbucks has made a countermove to the fast food
chains’ specialty coffee initiatives. Hence, Starbucks introduced breakfast food items in their retail
stores and furthermore opened drive-through services in many outlets. The drive-through service
is a success to McDonald’s and accounts for two-thirds of their sale (Adamy, 2008). The initiative
of the drive-through has turned into a market trend seeing that more and more specialty coffeehouses include drive-through’s to their stores. Perhaps most importantly, this is a trend that is
embraced by customers (Encyclopedia of Emerging Industries, 2008). This further stresses speed
and convenience as competitive factors, but at the same time weakens Starbucks’ competitive
advantage of the Third Place.
8.1.4 The Evolution of the Specialty Coffee Industry
Despite the clear threat of the fast food chains, the way Starbucks has reacted to the competition
is questioned. It is argued that Starbucks may be facing the risk of their brand being damaged
seeing that the company has chosen to meet the competition at the expense of their core competences and the Starbucks Experience by focussing on increased efficiency and competing in the
breakfast market (Kowalski, 2006; Jennings, 2008). Thus, it seems as if the increasing competition
from the fast food segment has shocked Starbucks in a way, which has made them take some
decisions which may have seemed rational to correspond to the competition in the short term.
However, these decisions, we argue, seem to negatively effect on the Starbucks brand in the long
run, and seem to have been ignored in the decision-making (Appendix 1). Thus, the company has
been criticised for losing focus (Berta, 2007; Nocera, 2007).
It can be argued that the emergence of the fast food sector as a serious competitor to the specialty coffeehouses has resulted in an evolution of the market. The distinction of the specialty coffee
sector and the fast food sector is getting blurred as they are nearing each other with the danger
of commoditising13 the specialty coffee (Walkup, 2006; Schoenholt, 1998). Despite the threat of
the fast food chains, it can still be argued that some players within the specialty coffee segment
Commoditising the specialty coffee can be understood as the product being viewed as a mass-consumer-product instead of
referring to the experienced based café where specialty coffee typically was consumed before the fast food chains entered the
market.
13
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
suffer less from the new competition. These are the coffeehouses keeping focus on their core
competences of offering customers high-quality coffee in comfortable and coffee-focused environments. Kowalski (2006) argues that due to the competition from the fast food chains and the
fact that Starbucks and other specialty coffee chains such as Tully’s Coffee and Tim Horton’s may
have commoditised their businesses in order to correspond to this competition, a distinction line
is appearing between these coffeehouses and those which have retained their specialty coffeehouse focus treating coffee as a rare commodity. Kowalski (2006) further implies that Starbucks
is distancing themselves from the specialty coffee segment which the company initially evolved,
where focus was on the coffee experience and not just to be served quickly, and that the competition has created a new category of coffeehouses placed between the fast food chains and the
traditional coffeehouses. Thus, a category of larger coffee chains which have adopted the fast
food segment’s level of customer attention and efficiency.
It can be argued that to some extent the specialty coffee of the fast food segment does not target the same customer segment as the traditional coffeehouses, seeing that the fast food chains
may appeal to the average American and not to the higher class American (Bosman, 2006). As
Starbucks dilutes their brand values by taking on initiatives similar to the characteristics of fast
food chains, it can be argued that they are moving towards a more mainstream concept of the
specialty coffee and away from the segment in which they originally were placed. Furthermore,
it can be argued that customers who are not interested in the mainstream concept to a lesser
extend will perceive Starbucks as an alternative. Peet’s, on the other hand, is an example of a coffeehouse, which has not compromised with their core values and competences in order to increase
sales and correspond to the new competition. They still manually control their roasting process
emphasising the freshness, flavour and quality of the coffee (Stepankowsky, 2008; Hirsh, 2006).
Thus, Peet’s is still perceived to represent the values of the traditional coffeehouses, which Starbucks can be argued to be losing.
8.1.5 Starbucks in the Kauffman Continuum
It has been outlined that specialty coffee as a concept has gone through an evolution since it
emerged and since Starbucks introduced it to the masses. Looking at the specialty coffee industry
in the light of Kauffman’s Continuum it can therefore be argued that specialty coffee has moved
down the Kauffman Continuum towards rigidity due to similar concepts catering to the same
segments as Starbucks have entered the market. Specialty coffee is no longer a niche product in
the coffee industry. It has developed into a common concept to the Americans as the numbers of
Americans consuming specialty coffee on a daily basis is increasing. In general the specialty coffee industry is predicted to continue growing. As Starbucks can be argued to approach the fast
food segment, the competition is even more intensified. Starbucks will slide even faster down the
continuum – also a movement fortified by the fact that the restaurant industry in general moves
faster down the continuum than other industries on average (McCracken, 2006).
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
54
Figure 6 | Starbucks in the Kauffman Continuum
Chaos
Starbucks 1985
Rigidity
Starbucks 2008
Direction of progress
Source: McCracken (2006) and of own construction
As illustrated in the figure above, Starbucks entered the market when it was ripe for the concept
of Starbucks. It was a new way of perceiving and drinking coffee which contrasted with the conventional drip coffee consumed mainly at home, but also from the drip coffee served at the diners.
Thus, the specialty coffee concept led by Starbucks became a strong alternative to the otherwise
standardised coffee in the market. Furthermore, the fact that Starbucks provided the consumers with a social element to the coffee, a Third Place, cannot be ignored as the American culture
seemed to lack social rallying points before Starbucks emerged. Thus, providing a Third Place with
the specialty coffee as the centre of the experience has been a factor distinguishing Starbucks
from the alternatives in the market. Starbucks delivered something to the American consumers
which they did not have access to before and therefore Starbucks has been argued to have been
teaching the Americans to drink good coffee (Bundgaard, 2004). They pioneered the industry, but
during time the market has gradually developed. Thus, the concept of specialty coffee no longer
has the same distinct character as identified it in the early days. A lot of coffeehouses have entered the market and consumers at all levels of society and all ages have embraced the idea of
drinking good coffee. This and the fact that specialty coffee is available all places serving coffee
today, even in the supermarkets, can be argued to be a reason for the concept of specialty coffee
moving towards rigidity. It is losing its distinct character. However, as argued in the previous section, the structure of the industry has changed dividing the operator of the specialty coffee into
two underlying categories. Thus, a distance is created between the larger chains competing on the
conditions of the fast food segment and the smaller chains and the independent local shops. From
this perspective it can be argued the smaller operators, such as Peet’s, will slide slower down the
continuum than others seeing that they are able to hold on to the original feeling of the coffee
shop not following the mainstream tendency suit.
Additionally, as other chains operating in the fast food industry have made an entrance on the
gourmet coffee market by initiating sale of gourmet coffee, Starbucks has been pushed further
and faster down the Kauffman Continuum. This indicates that the brand is threatened to be associated with coffee from fast food chains. Consumers have also begun to see Starbucks’ coffee
as being substitutable with coffee from fast food outlets like McDonald’s. As Starbucks makes
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
initiatives similar to the fast food chains in order to comply with the intensified competition, it
can be argued that Starbucks is moving away from providing a distinct concept and thus becomes
more mainstream.
Part III
9. Brand Genealogy
9.1 Starbucks’ Branding Strategy
Buying coffee at Starbucks has been characterised by Starbucks themselves as being an Experience – the Starbucks Experience. The experience at Starbucks is argued to be the reason why
Starbucks has been able to differentiate from the competitors and to gain their, until now, extensive success (Michelli, 2006). In the following we will account for the Starbucks Experience as we
see it as a constitution of narratives creating and attaching the Starbucks brand with values and
meanings. In the following we will account for whether the narratives have changed during time,
and thereby whether the consumers apply these meanings in their identity projects. The findings
will later be applied in the consumer analysis with the purpose of clarifying whether the initial consumers of Starbucks coffee find it difficult to apply the current meanings of the Starbucks brand
in their identity projects.
The narratives have intentionally been communicated by Starbucks on their homepage and in
books such as Pour Your Heart into It (Schultz & Yang, 1997) and not through advertising, hence,
indicating that storytelling plays a decisive role in their marketing. In fact Starbucks has followed
a marketing strategy not built on traditional advertising and with a considerably lower marketing
budget than other restaurant chains of that size (Kang et al., 2007). Most marketing has been
done through word of mouth where consumers have been spreading the word of the coffee chain
and in this way creating an emotional relation to Starbucks (Luttinger & Dicum, 2006). This has
been a very unusual way of going about branding and given Schultz’s own statements we argue
that the strategy chosen is deliberately done to maintain a feeling of Starbucks being a small
neighbouring coffee shop and in general attach the brand with a feeling of being small and familiar
(Schultz & Yang, 1997).
9.1.2 Emotional Branding
Emotional branding is about creating a personal dialogue with consumers and to know them individually and intimately (Gobé, 2001:xxiii). The emotional branding strategy at Starbucks has
manifested itself via extensive focus on customer loyalty obtained through customer connection
between partner and consumer – creating a special connection between the two parties. Gobé
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
(2001) also emphasises that an emotional branding strategy’s core is about this connection to
the consumer which will result in a deep and lasting loyal connection. A connection could consist
of the shop assistant knowing the name of the consumer thereby interacting with the consumer
in a personal way (Gobé, 2001). Another way in which Starbucks has carried out their emotional
strategy is through the smells in the stores. Gobé (2001) suggests that smells are a very powerful
tool to create emotions towards a brand. The way Starbucks has emphasised the smell of freshly
ground coffee is a way to make the consumers connect with the brand. Moreover, Starbucks has
expressed that using word of mouth communication supports their emotional branding strategy and help sustain the emotional connection between brand and consumer (Kang et al., 2007).
The tool for spreading the word of mouth has been the event-like initiatives such as for instance
“Surprise and Delight”. These events are, as the name implies, about delighting and surprising
people. A “Surprise and Delight” event worth mentioning is when Starbucks rented whole cinemas
and surprised cinemagoers with free tickets from Starbucks (Lomax, 2005). These unexpected
delights are also identified as being a typical way of conducting an emotional branding strategy
(Gobé, 2001).
However, as Starbucks has grown and changed so has the way of branding and hence also the
marketing of the brand. Howard Schultz has stated that national advertising by its very nature fuels fear about ubiquity and he underlined in his book in 1997 that a strong brand is not built on advertising campaigns (Schultz & Yang, 1997). At that time Starbucks possessed fewer stores than
today where they in fact are ubiquitous. Therefore starting to advertise Starbucks on national television, billboards and in radio spots as they started to do last year, may not be contradicting with
what Starbucks in reality is (Kang et al., 2007). However the advertising strategy is a whole new
way of branding Starbucks which it could be argued contradicts the emotional branding strategy
evolving around the idea of the small neighbouring coffee shop (cf. The Third Place Section 13 and
Quality and Service, Section 12).
Connecting with the customers like they used to may be difficult on such a large scale and moreover the emotional feeling towards a brand which expresses their ubiquity through national advertising may be very difficult to sustain. Nevertheless, one should also keep in mind that having
an emotional branding strategy trying to connect with the customer on an emotional level may
become more and more difficult for Starbucks as they grow – it might even be argued that the
emotional branding strategy which Starbucks has used until now is by its very nature in contradiction to a corporation as Starbucks; this because knowing consumers on an individual basis will be
practically impossible taking into account the size and omnipresence of Starbucks. Therefore, the
emotional branding strategy which Starbucks is conducting, or tries to conduct, may not only be
insufficient as branding strategy for Starbucks’ sustained competitive advantage (cf. Literature
Review, Section 3) but it may also be very difficult to carry out with the current expansion pace –
at least the part of their strategy which is about the close connection with the customers.
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From the above it is evident that Starbucks has been focusing on an emotional branding strategy
in order to succeed. However, as indicated in the beginning of the thesis, the underlying reasons
for Starbucks’ success may be another. According to Holt’s (2004) theory it can be argued that
the initial success can be explained by Starbucks applying cultural branding. This is a result of
Starbucks’ ability to target a subculture in the American Society getting the bobos attracted to
the messages in the brand and thus initially legitimising the brand. It does not seem as though
Starbucks was aware of the fact that they targeted this subculture and that this was the reason
for success and the brand achieving iconic status. Thus it can be argued that Starbucks’ cultural
branding was not done deliberately. Thereby the cultural branding approach has not been followed
through during the years and hence the emotional branding strategy has been perceived by Starbucks as the key to their success.
10. The Narratives
As consumption plays a great part in constructing the self (McCracken, 1986) and the fact that
Starbucks’ coffee can be considered an identity product it can be argued that the meanings attached to the Starbucks brand are used in the consumers’ construction of their identity. The meanings are developed through the narratives told by Starbucks. However it has also been stated that
the consumers and the surroundings can co-brand a company – a co-branding incontrollable to the
company (Holt, 2002; McCracken, 2005). Therefore, the surroundings may also tell contra-narratives about Starbucks which can harm the brand’s credibility. Thompson et al. (2006) and Klein
(2000) indicate that there has been a tendency towards large corporations with strong brands
experiencing negative consequences when stepping out of line and not living up to what was
promised in their narratives – the external environment quickly responds and co-brands the brand
with meanings which are not always flattering for the corporation (cf. Holt, 2002, Klein, 2000).
In the following we will therefore account for the narratives firstly as Starbucks has intentionally
tried to tell them and secondly how these have changed during time due to co-branding from the
surroundings – this being consumers and media. Afterwards we will look at how Starbucks has
counteracted criticism thereby trying to maintain the positive meanings in the narratives.
Through word of mouth the company has succeeded in building a strong brand attached with
meaningful narratives. Moreover the influence of the narratives communicated by the surroundings can be seen as a proof of the consumers possessing power as to which meanings are associated with the Starbucks brand – a power also mentioned as being characteristic for the post-modern
consumer (cf. The Post-Modern Consumer, Section 5.1.7.4). In the following we will look into the
development of Starbucks’ narratives including how the surroundings have co-developed them.
The narratives analysed are the following: The narrative of Howard Schultz, the Third Place, the
Quality and Service, and the Social Responsibility.
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11. The Narrative of Howard Schultz
When saying Starbucks you also say Howard Schultz. The founder and CEO of Starbucks has
achieved to become deeply associated with the company and this, we argue, is not a coincidence
but a story carefully constructed by Starbucks over many years. The narrative about Howard
Schultz evolves around the idea of the American Dream and around being the embracing father
figure of Starbucks.
11.1 The American Dream
Howard Schultz is an example of how the American Dream can come true to anyone who pursues
it. This is the story about Howard Schultz whose parents were part of the working-poor in Brooklyn, New York City which they later left for a housing project (Marketing Magazine, 2004). The
father had different low society jobs such as taxi driver, diaper-service truck driver and factory
labourer while the mother Elaine was a non-working housewife (Koehn, 2001; Serwer & Bonomici,
2004). The story about the family which had to go through an awful lot is further emphasised
when the father breaks his ankle and cannot afford the hospital bill and on top of that looses his
job (Bundgaard, 2004; Serwer & Bonomici, 2004).
Schultz started working early in his life doing different odd jobs and gave some of the earnings to
his mother as he knew that they were short of money at home. If it was not for the football scholarship Howard Schultz probably would not have attended college but he got it and got into University of Northern Michigan. The narrative also includes how Howard had different jobs but because
of being curious about why a certain Starbucks Coffee, Tea, and Spice bought so many plastic cone
filters from his current job at Hammerplast he visited the place to see what it was. He immediately
fell in love with the shop and the coffee – he saw that it had potential: “I felt as though I had discovered a whole new continent […] By comparison, I realized the coffee I had been drinking was swill”
(Koehn, 2001:219). The rest of the story we know – Starbucks becomes a success in the US and
overseas and is the symbol of a real success story of how Schultz’ social circumstances does not
stop him from chasing his goals, and he becomes a strong example of the American Dream.
11.2 The Father Figure
From discovering the specialty coffee potential in an American market ripe for a quality product
Schultz’s story goes on with how his passion for specialty coffee and the coffee bar concept all
started with a trip to Milan in 1983 where he tasted his first latte. Schultz described the first
coffee experience as a revelation something he had to share with the rest of US (Daehne, 1994;
Bundgaard, 2004); almost as though Howard Schultz was a symbol of the father of the US who
wanted to share his positive experiences with the rest of his country. Also the way he regards his
employees as being partners who can have a say in daily operational decisions expresses the caring
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Schultz (Schultz & Yang, 1997; Michelli, 2006). The caring for the employees is emphasised again
and again. One example is how Schultz has introduced health insurance not only to the partners
but also to their cohabiting partner no matter the sex (Bundgaard, 2004; Lindstrøm, 2003, cf.
The Good Place to Work, Section 14.1). Schultz also acts as the omni controller of Starbucks by
not letting the concept be franchised, which can also be argued to facilitate the “small feeling” of
Starbucks – one can put a face on the owner and hence the company may not feel as corporate.
Being one man directed can be seen as a way to keep control in the hands of the company but it
is also sending a strong signal to the outside world supporting the narrative of the compassionate
CEO who will not let anyone in on his territories.
However Schultz steps down from his CEO position between 2000-2008 (Starbucks, 2008h). During that period Starbucks began to suffer and as the situation looked its worst Howard Schultz
came to Starbucks’ rescue. One can see this just as a way of getting the company back on track
but it can also be a carefully thought through marketing strategy supporting the narrative about
the caring father of Starbucks who will not passively be a witness to his company and personal
dream suffering. In addition a memo sent to the partners regarding how the company had to go
back to the roots and how the experience had become inauthentic got out (cf. Appendix 1). This
way all Americans were able to read Howard Schultz’s deepest concerns and how he was willing to
fight for his company in cooperation with his partners. Of course this memo was also made to create a sense of internal unity but we argue that it was just as much released to tell the story about
the caring CEO coming back to save the company and do what has to be done. A quote such as:
“I’m glad Howard is back at the helm. Starbucks is his heart. I have every confidence he will turn the
company around…” (Stone, 2008:3), illustrates how one stockbroker characterises Howard Schultz
as an owner whose company is close to his heart and where customers and employees even just
call him by first name.
The connection between Starbucks and Howard Schultz is constructed to be emotional and informal. Without accusing Schultz of not being genuine in his story telling one should also not be
naïve and think that the narratives have not been well thought through. There is no doubt that
the strong association between Howard Schultz and Starbucks is based on the narrative regarding
the way he got the idea for Starbucks and how he managed to build a strong coffee empire but
it takes up a lot of space when telling the story of Starbucks. This is also fortified by the books
written about Starbucks, such as Michelli’s (2006) “Five Principles for Turning Ordinary into Extraordinary” (cf. Literature Review, section 3) but not least due to Schultz’s staging himself in a book
such as “Pour Your Heart into It – how Howard Schultz Build a Company one Cup at a Time” from
1997. Here the development and struggles of the company is made public and again relates Schultz
to the American Dream. How he is passionate about sharing good coffee with the Americans, how
he built the company up from scratch and how he cares for Starbucks including his partners. Fur-
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thermore in Pour Your Heart into It emphasis is on how Howard Schultz was able to open the eyes
of the Americans to the need of specialty coffee – a need they did not know they had – and in this
way he acts the role of sender according to the classic actant model14. At the same time this story
of Howard Schultz is staged as a fairytale where Howard Schultz in the role of the hero has to go
through an awful lot before he achieves his dream – granting the Americans with Starbucks.
The stories told about Howard Schultz in the media and by himself all tell something about the
brand. The stories fill up the brand with meanings about Starbucks being a corporation where a
common hard working American man set the strategies. By “putting a face” on the corporation
it can be argued that Starbucks tries to avoid being seen as the big and ugly. Being a symbol of
the American Dream which the common American citizen believes in just like the Danish believe
in the welfare state (P1, 2008) has attached the brand with meanings which the Americans are
very likely proud to identify with and buy. It can be argued that buying the coffee at Starbucks is
like buying a little piece of success – success which can be transferred to the consumer’s identity.
The narratives also tell the story about Schultz as the caring CEO who wants the best for his fellow Americans not only by serving good coffee but also by supporting different social projects (cf.
Social Responsibility, Section 14). Together with the story of the American Dream which came true
for Schultz they support the development of a corporation which does not only want to achieve
profit – a message which is hard for the average American not to sympathise with. It can be argued that this narrative targets lower social strata as the American Dream appeals to the feelings
of success and opportunities to crawl up the social ladder.
11.3 Development of the Narrative of Howard Schultz
In general Howard Schultz tries to counter-attack the criticism the coffee chain experiences from
the media. This is mostly done through communication from Howard to the employees using emails and news letters. Howard Schultz’s communication is very personal and friendly which can
be argued to be intentional to distance him from being a hierarchic leader of a large corporation.
Thus he puts himself on level with the employees encouraging two-way communication. It seems
as if he tries to create an atmosphere and a feeling of community, strengthening the mutual feeling among the employees and motivating them to engage in the customers (cf. Appendix 4). The
purpose of the communication is to explain to the partners and the surroundings the underlying
reasons why the media has attacked Starbucks and what the solution is to re-create the emotional connection with the customers (cf. Appendix 3-5). Schultz underlines the values of unity – the
partners must all stick together to overcome critique. These very personal letters sent out to the
partners support the narrative of the caring founder of the corporation. But this communication
from Schultz can also be interpreted as a way to strengthen the narrative about Starbucks not
being a corporate titan but a company with a visible leader who cares.
14
This model is applied as marketing tool in Fog et al. (2004).
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When Howard Schultz decided to regain his position as CEO earlier this year a strong signal was
sent to the surroundings – a signal that the founder of the company still had faith in Starbucks
and that he still cared for the company and his employees. The following quote also shows the
influence on the stocks illustrating how Howard Schultz’s significance for the company did not
disappear over the years. Moreover it also illustrates the close connection between the brand and
Schultz and the way one stockholder again sees Howard Schultz as the hero coming to the rescue
of Starbucks:
“The day after the announcement, the price of Starbucks’ shares rose over 8 percent — “the
Howard rally,” Wall Street was calling it. At Starbucksgossip.com, Starbucks employees
weighed in ecstatically. “I have faith in Howard,” wrote one.” (Nocera, 2008)
By expressing in the memo that Starbucks has to go back to what it was before, that Schultz cares
about the Starbucks Experience of being a café where quality and service are still paramount factors it can be argued that the narrative of the caring founder is still being supported today (Appendix 1). However Joe Nocera an American journalist and author exposes a different picture of the
CEO which weakens the narrative of Howard Schultz. In his column in The New York Times Nocera
(2008) points out that not only is Howard Schultz a bad manager who never really gave up his
position as CEO in 2000 and that Mr. Donald the new CEO never made his own decisions without
consulting Schultz but he also argues that Howard Schultz is driven by growth and numbers much
more than he is driven by his heart. Thereby it is indicated that the book Pour Your Heart into It
is also a part of their marketing instead of just being a sincere Schultz leveraging his American
Dream story to his fellow Americans. Nocera (2008) thereby paints a much less romantic picture
of Howard Schultz. This picture of Howard Schultz is also supported by Pendergrast (2001) who
underlines Howard Schultz’s winner instinct; he is a businessman pursuing profit. Pendergrast
(2001) does not imply that Howard Schultz is not sincerely passionate about coffee and that this
is a cover for the real purpose of profit but one should not be fooled by Howard Schultz’s painting a rose-colored image of himself as the hero and his intentions. Nocera (2008) points out that
Schultz is pushing growth at all costs. Closing down shops in the US to get back to the authentic
Starbucks Experience does not work if the strategy is not carried out all the way which Nocera
(2008) indicates it is not – Schultz’s goal is still to expand on potential foreign markets a strategy
which collides with the narrative of the founder who wants to save his company and get back to
its roots.
Another downside to Howard Schultz being strongly identified with Starbucks is that when Starbucks takes a wrong step it can be argued that it rubs of on the narrative of Howard Schultz causing negative associations towards the CEO hence affecting the narratives’ credibility (cf. Development of Social Responsibility, Section 14.4). Summarising on the above it seems as though the
narrative of Howard Schultz has developed through the years as criticisms of Starbucks had made
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the narrative of Howard Schultz less glamorous and hence credible. He is however still presented
as the passionate founder of Starbucks and a symbol of the American Dream. However Starbucks’
recent struggles may have caused the American Dream narrative to fade slightly and the success
story is threatened by a less happy ending where Starbucks must close down several shops and
rethink their strategies. However, until recently the American Dream narrative has been intact
hence the meanings of being a symbol of success can to some degree still bee justified. You buy a
little of that dream when you buy coffee at Starbucks and the fact that the company has grown
surpassing all expectations is only supporting the American Dream narrative. But still it has to
be noticed that the tight association between Schultz and Starbucks may be moderated as the
company grows.
12. High Quality
The quality of Starbucks coffee and how Howard Schultz taught the Americans to drink good
coffee based on the Italian espresso bar idea is emphasised in almost any written paper about
the corporation (Serwer & Bonamici, 2004; Bundgaard, 2004; Daehne, 1994; Schultz & Yang, 1997;
Pendergrast, 2001; Luttinger & Dicum, 2006). The high quality narrative is comprised by three factors: the Italian coffee traditions, the service and how Starbucks controls the supply chain.
12.1 The Italian Coffee Traditions
In Italy coffee was not the same as the brown liquid which the Americans were used to consume
but a drink made with dedication and a special precision combined with a place where people could
chat or read the newspaper all wrapped up in an authentic European café milieu. Telling the story
about how Schultz got the idea to open up a coffee shop based on the Italian coffee culture can
be seen as a way for Starbucks to be associated with the Italian coffee culture. The Italians’ coffee
culture is filled with meanings of tradition, quality and authenticity and the Italians are famous
for their coffee roastings such as Lavazza, Illycaffé, Pascucci, and Segafredo Zanetti and also
known for their traditional hand made espresso machines such as La Marzocco and Pascucci used
at home and in cafés all over Europe (Euromonitor, 2005 Euromonitor, 2007). To communicate
the meanings of being a café based on the Italian coffee traditions, Starbucks uses Italian words
such as barista, which is the Italian word for bar man and they use Italian coffee expressions such
as tall, grande, and venti to indicate the size of the coffee. Also the names of the coffees such as
cappuccino, caffe latte, tazza, doppio etc. are taken from the Italian coffee vocabulary all to attach
Starbucks with Italian coffee culture implying legitimacy of being authentic Italian.
To be sure that the best cup of coffee is brewed selection of the coffee is important and carrying
out a distinct selection process of beans serves as a means to emphasise the quality narrative
of Starbucks. They carefully select and buy the beans from different places in the world as the
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location and seasons have an influence on the coffee flavour. On Starbucks.com one can also read
how to taste coffee, the history of coffee, the history of roasting, how to make the perfect cup of
coffee at home with a lot of specialist knowledge etc. – all sending a signal about Starbuck being
a coffee connoisseur who shares their knowledge with the customers (Starbucks, 2008f).
Therefore, by emphasising that Starbucks is founded on the basis of the Italian coffee culture, the
meanings from this culture are transferred to Starbucks and thereby Starbucks may be associated
with the Italians’ coffee culture with all of what that implies of intellectuality, traditions, quality
and authenticity. According to Simon (Appendix 2) the Italian café culture encourages intellectual
conversations, reflections and to linger. At the emergence of Starbucks the Italianess had a strong
association with something exotic and different due to the concept being unknown in the US at
that time. This implies that an Italian café milieu with the meanings of traditions, quality, intellectuality and connoisseurship attached were a part of what the customers bought. As a contrast
to the coffee culture at that time in the US, Starbucks as a re-creation of the Italian coffeehouse
came to illustrate a bohemian lifestyle (Appendix 2). The traditions of quality, connoisseurship and
authenticity were transferred to the customers enhancing their self-image as well as sending a
signal of possessing status and high cultural capital to their surroundings. Thereby, they signalled
that they knew of the coffee traditions, what quality was and how to consume coffee. Especially
in the early days of the specialty coffee craze it can be argued that these meanings of quality and
the Italian origin had a strong value as this differed a lot from what was already known in the US
market (cf. The Industry, Section 7). Furthermore, buying Starbucks coffee in the beginning may
also have sent a signal of being trendy adapting to this specialty coffee as the first Flock. Building
the Starbucks brand around the Italian authentic café culture can be argued to have appealed to
a certain customer group with higher cultural capital. This will be further elaborated on in the section, The Social Network of the Starbucks Brand, Section 16.4.
12.2 Service
The quality of the coffee is also assured by the extensive training of the baristas resulting in a
narrative regarding a high level of service. Working at Starbucks is not only about pouring coffee
but the barista must possess knowledge and show enthusiasm towards the job. Therefore, all
partners go through an at least 28-hour long coffee course including everything from company
philosophy to extensive coffee tastings assuring that the partners can guide their customers if
they should be in doubt of what to choose from the broad coffee menu (Locascio, 2007; Lindstrøm, 2003; Michelli, 2006). All this supports the narrative about the corporation’s knowledge
about coffee and high level of quality.
The education of the partners also includes that the partners gain insight in the company philosophy regarding the importance of interacting with the customers. The Green Apron Book is one of
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the appurtenances to teach the partners the importance of communication and interaction with
the customers, as interaction is to create loyalty towards the brand. In this book the principles
of Starbucks are listed together with success stories especially regarding how the partners have
made the customers’ Starbucks Experience special and how the customers have shown their gratitude by contacting Starbucks’ head office thanking Starbucks for being the way they are (Michelli,
2006). This can be seen as a way for Starbucks to assure that also the partners show loyalty and
dedication towards their job resulting in a “living the brand” or brand citizenship behaviour where
the partners show extraordinary commitment to the brand which will be leveraged to the customers’ experience (Karmark, 2005; Burman & Zeplin, 2005).
12.3 The Control of the Supply Chain
To ensure high quality of the coffee, Starbucks has additionally found it necessary to have high
quality in all the activities in the supply chain as well (Schultz & Yang, 1997). Therefore, the selection of coffee farmers, the sourcing of the beans and the roasting process are integrated activities
in Starbucks. Starbucks has built their own roasting plants and the coffee stores are companyowned (Appendix 2). Howard Schultz argues that quality control is essential when you are dealing
with a product like coffee as it is imperative to the final coffee product that the beans are fresh
and that they are roasted and brewed the right way, and that this quality control will be reduced if
the activities are outsourced (Schultz & Yang, 1997). Furthermore, he finds it difficult to keep the
company culture intact if the stores are franchised. Then it would be difficult to make sure that
the Starbucks service level is the same in every store and thereby that the customer has the quality experience they are to expect. Starbucks seems very determined on not to compromise with
the quality control.
Even though it may have the greatest significance for internal matters that Starbucks value the
control of their supply chain, it can still be argued to take part in creating an image of the company
which above all wish to express quality, and that the product is premium made with care. Thus,
this quality approach distinguishes Starbucks from the mass produced coffee products where a
low price can be argued to be one very decisive factor in the decision making. However, avoiding
influence from external suppliers signals financial superiority and independence resulting in an
image of Starbucks being a large and corporate company. Thus, Starbucks cannot get away from
the fact that they are a large corporation which distances them from the small feeling values they
try to express.
12.4 Development of the Narrative of Quality
“I have been drinking Starbucks grande lattes for about 16-17 years. I remember that initially,
the price was a shocker for a cup of coffee, but the consistently exceptional quality proved to
be worth the price. Things have changed over the years and the pattern I’ve experienced follows: from always a great latte, to every now and then an ok latte, then usually an ok latte, to
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presently every now and then a great latte. The shift has gone from quality to quantity and
you have lost the magic along the way. Bring back the consistent quality, please…” (Miclin,
2008)
As one can read from the quote above the trustworthiness of the quality narrative seems to have
suffered. Quality of the beans has in general been lowered due to the large batches of coffee
beans purchased – a demand which the suppliers find difficult to meet as the suppliers find it difficult to keep up with the pace of Starbucks’ expansion level (Batsell, 2004).
There seem to be a general consensus on mystarbucksidea.com that coffee brewing should rather
take the time it does instead of rushing the brewing process to keep queues and waiting time
down (Hb123, 2008; BII, 2008; Melody, 2008a; Jayded, 2008; Verum, 2008). Moreover, it is underlined that there is a lack of consistency in quality but also a lack of consistency from shop to shop.
This can be argued to be caused by the baristas being increasingly under time pressure as the chain
has grown but also that the chain has grown so big that it is difficult to control and maintain the
quality in every Starbucks (Hellow, 2008).
Most critique refers to the introduction of the Clover machine this year. The Clover brews one cup
of coffee from beans the barista selects on the automated machine (Schwaner-Albright, 2008).
But also the La Marcocco espresso machines were replaced with the automated Swiss-made Mastrena machine and should according to Howard Schultz replace La Marcocco in three-fourths of
the Starbucks in 2010 (Stone 2008) resulting in some customers preferring smaller coffee shops
such as Peet’s Coffee and Tea which handmakes the coffee and thereby also emphasises the
Italianess to a larger degree and therefore is perceived more authentic than Starbucks. As handcrafted coffee is associated with quality, it can be argued that customers feel that Starbucks has
reduced their quality by introducing automation:
“Ever since Starbucks went to the automatic machines (similar to McDonald’s) the quality
of the drinks have suffered. Top quality espresso can only be made from properly calibrated
automatic machines, or more often, from manual and semi-manual machines with properly
trained employees. Fans of espresso know this, as does Peet’s Coffee, which is why Peet’s
uses manual machines for “hand crafted” drinks. Peet’s is where the quality is because of
this. Some of the cappuccinos that I have purchased from certain Starbucks stores have been
close to undrinkable (great use of $3.50). The shots of espresso have been thin tasting, bitter,
and of poor quality. Starbucks will only thrive if it can get the quality back in its espresso. This
will be through the right equipment, maintenance, and training of employees. The training
aspect should include instruction on what makes good espresso and what it tastes like so
quality control can be maintained. If the barista is clueless about what good espresso is, they
will have no idea of when there is a quality problem.” (OC Mark, 2008)
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Another comment, which supports the lack of quality in relation to the automated coffee machines:
“…I have spent thousands of dollars at Starbucks. You are losing me and TONS of other customers simply because of these automatic machines. You used to teach baristas about the
timing of shots, humidity and air pressure. Now, they don’t know anything about pulling a
good shot, and have no idea what you’re talking about when you tell them the shot tastes like
water. They have no idea what can be done except give you a coupon.” (Trevor H, 2008)
It is not only that the new coffee machines brew coffee of poorer quality it is also the theatrical
experience of watching the barista making the coffee which is argued to be gone when the barista
only pushes a button. Coffee brewing on these machines does not call for extensive training sessions and therefore making the coffee will have less character of handcraft resulting in the baristas showing less passion and pride and hence interest in their jobs. One barista points out that he
left the company to another coffeehouse as he could not vouch for the quality of Starbucks’ coffee
anymore (BII, 2008). Also the meanings of Italianess attached to Starbucks are threatened when
replacing the Italian espresso machines with automated machines as this diminishes the Baristas’
otherwise central role of the Italian coffee shop. Moreover, the new machines and especially Clover
machines have been criticised for being too tall not allowing the barista to communicate with the
customer rendering the important interaction in the shops impossible and also hiding the barista’s
coffee-making (Stone, 2008).
The quality feeling of Starbucks has also been diluted when introducing sandwiches and breakfast
items. By doing that, the smell of coffee has been overruled by the smell of food – a problem many
have underlined on mystarbucksidea.com and by Howard Schultz himself, seeing that the smell
of coffee always has been a part of the coffee experience at Starbucks - an artefact which most
customers have valued highly (Appendix 1). The smells as well as the fact that the baristas have
become less educated are underlined in the following comment:
“…Starbucks has been dumped down to a McDonald’s level...5 or 6 years ago it was like: “yes,
finally a place where I can get great coffee, sit down and actually be a part of my community.”
Now, it’s just like every other American establishment: poor quality, bad smells and baristas
that have little to no idea of how to make a good espresso…Oh well, there’s always Italy.”
(Millim, 2008)
Like entering the food business, Starbucks has also entered other businesses such as the book and
music businesses. Hence, books and music are sold in the coffee shops. The fact that Starbucks is
no longer concentrated around the coffee experience but has diversified into other areas confuses
the perception of Starbucks as a coffee shop of the Italian traditions. Therefore, the authentic
meanings of the Italianess are weakened and make room for meanings of Starbucks as profit
pursuing to emerge.
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It also has to be mentioned that the participants of the discussion on mystarbucksidea.com regarding the quality of Starbucks’ coffee display very connoisseural knowledge about coffee and
go into details about how long the brewing process should be, how warm the milk should be and
how the baristas should pack the beans the proper way. Thereby, they validate their arguments
about the lower quality, a fact also validated by the media (Smale, 2008; Stone, 2008; Grynbaum,
2008).
One of the initiatives to try and maintain the narrative of quality and to counteract the recent
criticism of Starbucks lowering their quality, was firstly the memo sent out to all the partners
explaining how Starbucks had to go back to its roots (cf. Appendix 1) and secondly a nationwide
training session was organised to revive the intimate, friendly feel of a neighbourhood coffee
shop. All Starbucks coffee shops were closed down for three hours, this being 7,100 shops at precisely 5:30 p.m. and then the re-education camp was launched with instruction in espresso making
– how the espresso shot should be made in glasses so every shot’s colour could be checked and
how milk was supposed to be steamed in a way that the right sweetness was obtained. Moreover,
Schultz announced that the chain would get rid of odoriferous breakfast sandwiches so that the
customers could smell the coffee again. Starbucks was according to Schultz, going back to their
roots (Grynbaum, 2008). Thereby, Schultz implies the wish to re-establish the original meanings
of the brand.
12.5 Development of the Narrative of Service
The quality of the service level also seems to have changed over the years. As the chain has grown
the partners have been under severe stress to keep up with the demand for Starbucks coffee. This
has resulted in less of the important connection between the partners and the customers as the
environment is too busy for small talking and the customers are so manifold that it is not possible
to remember what the regulars usually drink (Yum2me, 2008; Superman, 2008; CustIdea, 2008).
As Starbucks has grown it may also have been more difficult to control that all stores have the
same level of service and the right people behind the counters than it used to. However, some customers still express that their local Starbucks provide good service and they praise the partners:
“The politeness and responsiveness of Starbucks employees is legendary and unequalled in business.
I have had ONE negative experience with a Starbucks employee in 23 years...” (Mza, 2008) and “My
local Starbucks is in Denville, NJ (Union Hill Mall) and anyone who wants good customer service
should come to this store. All of our Baristas ROCK! Most of them know my favourite Latte and some
even have it ready when I get up to the counter!” (Sadie, 2008). It is viewpoints like these which
demonstrate that some of the principles of connection between the customer and the partner,
which Michelli (2006) is referring to as one of Starbucks’ critical success factors, is still apparent
today. However, this connection has not been possible between all customers and partners. Thus,
it can be argued that the lowering of quality within service has resulted in customers showing less
loyalty towards the Starbucks brand.
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However, introducing automated coffee machines also witness about the stores being busier, and
the need for speed coming into focus. As written previously the machines reduce the importance
of the interaction with the customer and may give a feeling of rush and less service. It is also
pointed out that while expanding aggressively the demand for partners to fill vacancies in newly
opened stores is high. Therefore, managers cannot afford to select the so-called “people people” –
employees who like to interact and small talk with customers and who are knowledgeable about
coffee. This was the kind of employee Starbucks initially focused on employing (Schultz & Yang,
1997:245). One blogger at mystarbucksidea puts it like this: “The desire to be truly customer service
oriented is not generally something that can be trained into a person. It comes from within. It is a
personality trait…” (Cafegirl, 2008). It seems like the workforce is characterised by a large amount
of students who understandably do not engage 100% in being a part of the Starbucks mindset resulting in a lower service level – a problem which is also mentioned several times on mystarbucksidea.com (Dalahest, 2008; CustIdea, 2008). There seems to be disappointment in the majority of
the comments on mystarbucksidea.com regarding the quality and service level as the customers’
expectation to Starbucks still remains the same despite the development of Starbucks. The customers still expect to get the same good service and quality, not least due to the price premium
of the coffee. This signals that the meanings of quality and service are still closely attached to
Starbucks – at least some customers perceive it like this. However, the meanings have been damaged as Starbucks is not able to live up to these meanings. Thus, meanings of standardisation and
a less intimate service are created – meanings similar to those of the fast food chains.
Expansion is still a pivotal point for Starbucks and the company has turned its focus to expansion
in foreign markets instead of expanding in the US (Nocera, 2008) – decisions which do not correlate with the desire to go back to the roots and hence focus on the initial quality/service narrative. Further expansion will not facilitate the neighbouring feeling of Starbucks coffee shops.
Therefore, we argue that the initial narratives of quality and service have developed during the
years, and the strategy of Starbucks has not permitted Starbucks to be true to the initial narrative
of quality. The strategy has resulted in lower quality and service and loyal customers who show
disappointment causing some to deselect Starbucks in favor of competing coffee shops such as
Peet’s Coffee and Tea. Does the Quality and Service Narrative Hold?
Starbucks keeps telling the narrative of them being a service minded quality brand. Due to the
fact that the company has made some strategic expansion decisions, the surroundings perceive
Starbucks as slacking on the quality. This results in the surroundings telling another story causing
the original meanings to have lost their values. Thereby, the image of being a re-creation of the
Italian coffee shop has been damaged resulting in the meanings of the Italian traditions and all
which this implies disappearing as well. The distinct and exotic character of Starbucks has been
removed and buying the brand it can be argued no longer creates the bohemian identity of being
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intellectual, individual and focused on connoisseurship also characterising the post-modern consumer with a high level of cultural capital (cf. Post-Modern Consumer Theory, Section 5.1.7.3). As
Starbucks has standardised the quality and service in all the coffee shops making procedures for
how to address the customers, the identity constructing meanings of the brand have disappeared.
Instead the brand has been commoditised and has become just a common coffee shop, which
can be argued to repel the customers who bought into the Italian coffee culture and the identity
creating meanings:
“I feel like [...] I just need this. And I think that’s why I feel so upset because it’s just like my
necessities are so basic. I just need a coffee. I just need some caffeine. I just need a place to
rest and drink my coffee. I don’t like these ridiculous names of coffees. They’re just like these
crazy made-up names, and they can be really long...Is it truly a name or just something that
the branding guru made up because it sounds cool and Italian?” (Laura in Thompson & Arsel,
2004:637)
This interviewee is one example of customers perceiving Starbucks as commoditised and hence
a coffee shop which fulfils a basic need for caffeine and a not place to carry out identity projects.
Toning down the Italian elements of the coffee experience by for instance putting less emphasis
on the role of the barista both in the coffee making and the connection with customers makes
Starbucks seem less authentic Italian. Therefore, the fact that Starbucks still holds on to the
story of the Italian traditions by for instance calling their beverages Italian names questions the
brand’s credibility and the Italian elements left today in the Starbucks brand appear comic and
misplaced.
13. The Third Place
The profiling of Starbucks as a Third Place is estimated to be one reason for Starbucks’ success
and a concept which Starbucks has adopted (Luttinger & Dicum, 2006; Koehn, 2001). Howard
Schultz’s vision has been to enhance the purchase of coffee to be more than just a cup of Joe. He
has focused on everything surrounding the coffee; the elements creating the coffee experience.
What he discovered on his trip to Italy was how coffee was a social rallying point to people and
how cafés provided citizens a place to meet and hang out – a place between home and work. This
idea of a Third Place is widely recognised for instance as the German beer gardens, the English
pubs, and the French and Viennese cafés – all with the common denominator of providing the
neighbourhood citizens an informal public place to gather and converse (Oldenburg, 2001). When
reading comments from Howard Schultz, there is no doubt that he consciously tries to create an
image of Starbucks as a Third Place and that he plays on the emotional benefits customers gain
from buying coffee in a Starbucks coffee shop.
“In an increasingly fractured society, our stores offer a quiet moment to gather your thoughts
and centre yourself. Starbucks people smile at you, serve you quickly, don’t harass you. A visit
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to Starbucks can be a small escape during a day when so many other things are beating you
down. We’ve become a breath of fresh air.” (Schultz & Yang, 1997:119)
However, Howard Schultz is not alone in his postulation of Starbucks as a Third Place. In general,
there seems to be consensus about the fact that Starbucks can be associated with a Third Place
(Pendergrast, 2001; Thompson et al., 2006; Koehn, 2001; Locascio, 2004, Bundgaard, 2004; Luttinger & Dicum, 2006). When searching for information about Starbucks in literature and the media, the narrative of the Third Place is one of the strongest and most repeated narratives in the
public profiling of the company.
Howard Schultz realised that the American citizens were without these kinds of gathering places
in the early 1980s and that there therefore was a social need for them. He felt that customers
were searching for romance and community, fuelling the need for a Third Place in the US (Schultz
& Yang, 1997). He expressed it like this:
“Serving espresso drinks the Italian way could be the differentiating factor for Starbucks. If
we could re-create in America the authentic Italian coffee bar culture, it might resonate with
other Americans the way it did with me. Starbucks could be a great experience, and not just a
great retail store.” (Schultz & Yang, 1997:52).
And he continued:
”People didn’t know they needed a café, comfortable, neighborhood gathering place. They
didn’t know they would like Italian espresso drinks. But when we gave it to them, the fervor of
their response overwhelmed us.” (Schultz & Yang, 1997:122).
Recreating this feeling of a social stamping ground has become the pivotal point in the creation
and branding of Starbucks. Being a rallying point to people is attached with meanings. It is a place
where people feel that they belong – an extension of the front porch – and they have a personal
connection to the place. It gives the customers a feeling of community and intimacy which they
are not able to find in a fast food restaurant where the purpose partly is to receive your commodity and to fulfil needs for eating. The coffee menu is also seen as a means to create a sense
of belonging. It is carefully calibrated in a way that only the people being a part of the Starbucks
community know how to order the specialty coffee. When you know how to order your personalised specialty coffee and the order is easily understood by the barista, you belong to the Starbucks
community (Appendix 2).
The idea of the Third Place has been mainstay in the appearance of Starbucks’ coffeehouses and it
has provided the breeding ground for the narrative of Starbucks as a Third Place. This means that
the company has been very aware of creating the right atmosphere in the coffeehouse to make
people linger and hang out, and especially for them to perceive their local Starbucks coffeehouse as
a place they wish to spend time in and return to. In his book about Third Places, Oldenburg (2001)
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emphasises that what, amongst others, makes a Third Place is the fact that the customers to
some extent are regulars. Due to the regulars’ acquaintance with other regulars and the employees, an atmosphere of homely comfort and a feeling of belonging are created. Starbucks seems
to be very aware of creating connections to the customers and that loyalty is a key to create and
legitimise the myth of Starbucks as a Third Place. Therefore, Starbucks has deliberately created
the physical setting with the intention of recalling the right atmosphere and thus invite customers to return. Thereby, the interior and atmosphere in the design of the stores can be argued to
be artefacts which have the purpose of supporting the narrative of the Third Place. The stores are
furnished with comfortable seating places, large armchairs and soft sofas. Besides, lighting and
background music are used to create the right atmosphere, which makes the customers want to
linger (Schultz & Yang, 1997; Appendix 2) – at least this is how the shops appeared originally.
Thompson et al. (2006) point to the fact that the decor of Starbucks expressed creativity. From
this it can be argued that Starbucks set the scene for absorption, conversation and a source of
creativity for the consumers to find inspiration. Thus, it gave Starbucks a personality which appealed to a more creative audience which also appreciated the intellectual meanings of a place for
substantial conversations. Therefore, these consumers bought into the meanings of a creative
and intellectual community which gave them a sense of status and value to belong to.
Furthermore, Starbucks has been very conscious about the employees’ significance for the customer experience and feeling of belonging. Hence, Howard Schultz has felt that the employees’
involvement in the customers plays a decisive role for the atmosphere of the coffee shop and for
the customer to feel comfortable (cf., Quality Coffee and Service, Section 12). It all comes down to
the emotional connection created between the barista and the customer (Schultz & Yang, 1997).
Therefore, the employees are trained in and encouraged to be obliging, smiling, and small-talking
with the customers for them to feel at home (Michelli, 2006).
13.1 Is Starbucks Still a Third Place?
During the years, the idea of Starbucks as a Third Place has been impaired which in the following
will be argued to be due to the development of the company. The great majority feel that the atmosphere is no longer the same, and that Starbucks has lost their identity of a Third Place:
“I remember going into Starbucks when I was younger, and the entire store smelled of coffee,
there were lots of couches and comfortable chairs for people to gather on, the baristas were
friendly, knowledgeable and always seemed to have a good time. Now, even at my own store, I
walk in and I smell a mix of breakfast sandwiches and chemicals, the coffee menu and aroma
are no longer existing, we have tiny tables and hard chairs, and the baristas (not all, but most)
have horrible attitudes [...] and the interaction between barista and customer isn’t personal or
casual anymore...its mechanical and robotic. It makes me sad.” (Mom_of_3, 2008)
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“Does anyone have the long memories of what it once was? You could leisurely chat with a barista about coffee. The store smelled of coffee. Please don’t make me cry. You’ve GOT to pull
through this. Remember when there used to be a beautiful whole bean coffee menu? That’s
when things really deteriorated when that menu came down and a big picture of a breakfast
sandwich went in its place. Return to all things coffee. Give your employees the labour needed
to learn about coffee. Hire baristas who actually drink coffee and want to engage in coffee
tastings.” (Melody, 2008b)
Increasing customer traffic, noise, the lack of comfortable seating, the lack of obliging baristas,
and the fact that Starbucks has added food items to the menu are some of the common issues
customers have against Starbucks and in general what they feel diminishes the feeling of belonging and relaxation. The idea of a Third Place is to be an extension of the front porch, a place the
customer feels that he belongs to, and where the employees know the names of the regulars (Oldenburg, 2001). However, it can be argued that the strategy of Starbucks, which has been to locate
most Starbucks stores in busy areas such as close to shopping facilities and workplaces (Schultz
& Yang, 1997), goes against the idea of the Third Place as it may be difficult to maintain the local
spirit and atmosphere of neighbourhood in these areas. In the residential areas, it may be easier
to keep the neighbourhood citizens, but seeing that most Starbucks stores are located in areas
where a high number of different customers are passing through, it can be argued that the stores
lose the feeling of neighbourhood.
What cannot be ignored in the questioning of the Third Place narrative is furthermore the fact
that more and more customers take their coffee to go. In fact, “coffee to go”-customers account
for approximately 70% of the total number of customers (Thompson et al., 2006). Hence, it seems
that the customers come for the coffee but that the majority does not use Starbucks’ coffee
shops to hang out in. This raises the question whether the customers no longer perceive Starbucks
as a Third Place or if the need for a Third Place has diminished. Do customers seek elsewhere to
hang out and meet friends? Nevertheless, the large number of customers rushing in and out the
stores grabbing their coffee to go diminishes the atmosphere of relaxation for those customers
hanging out in the coffee shop. This tendency of customers having their coffee to go is also manifested in the fact that as well Starbucks as the entire industry are experiencing growing sales in
their drive-through services and that more coffee kiosks not providing seating are opened. This
could indicate that customers who buy Starbucks’ products today have other demands of the coffee shops, which can be argued to be more equal to the characteristics of the fast food segment.
Thus, it indicates that efficiency and speed of the service have taken over the agenda in Starbucks
and that the social element of the coffee shop as a stamping ground has receded into the background. However, on mystarbucksidea.com it is obvious that a large number of customers feel
repelled by the development of Starbucks and that they still wish for Starbucks to be their Third
Place (Deanphil, 2008; Sbx_eluk, 2008; OldDays, 2008).
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“Sadly, I believe Starbucks has lost its way. No longer is it a cool, engaging, and interesting
experience. If Starbucks is trying to deliver a fast food experience, then they have exceeded.
The staff seems unmotivated, disinterested, and delivers an experience too close to that of
fast food.” (Otcem, 2008)
Furthermore, it seems that customers choose not to use Starbucks as a Third Place exactly because Starbucks has moved towards a fast food chain and thus that the atmosphere does not
invite for a Third Place.
“...I have witnessed a drastic decline in the atmosphere at Starbucks. Once a warm, coffee
house style and relaxing place to hang – it has become loud [...] cold and not conducive to
hanging out for long periods of time. Please go back to fireplaces and that warm inviting
place to take a break or catch up with friends. I have taken to drinking my coffee in the car –
not what I am paying a premium for!” (Pinkie, 2008)
Thus, it can be argued that the strategic choices of Starbucks to focus more on speed than efficiency is undermining the narrative of Starbucks as a Third Place. Some customers feel that
Starbucks is no longer a place to linger and relax because they feel treated like line items as if
Starbucks was a fast food store. Moreover, the quotes above may illustrate the views from disappointed customers who appreciated the meanings of community and belonging. These meanings,
however, can be argued to have disappeared and the question regarding the customers no longer
wanting to be associated with the meanings of the brand – these being the standardised corporate concept – can be posed. Several interviewees in Thompson’s et al. (2006) analysis express
that they dissociate themselves from Starbucks due to the impersonal feeling which Starbucks
has come to represent. Furthermore, the interviewees state that they find it difficult to associate
a national chain with personality and intimacy as a standardised servicescape does not invite for
personal interaction. They prefer the local coffee shops indicating that these fulfil the role of a
Third Place providing the intimate atmosphere and personal connection between employees and
customers. This implies that the interviewees feel that the personal connection diminishes in line
with the growth of the coffee shop and that the informal feeling of belonging is more difficult to
maintain in a busy coffee shop environment (Thompson et al., 2006).
Many customers also complain about a too high noise level in the stores due to too loud music and
the increased customer traffic (Lindo, 2008; Jimbogpa, 2008). Besides, many customers feel that
the comfortable seating has been replaced with hard wooden chairs similar to interior of the fast
food chains, which does not provide comfortable seating to sit for longer periods (Joejunki, 2008;
Mom_of_3, 2008). The criticism of Starbucks’ development all point to the fact that Starbucks no
longer fulfil the same need of a Third Place.
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In line with the questioning of Starbucks as a Third Place, it seems obvious to include the originator of the term “Third Place”, Ray Oldenburg (2001). He argues that popular chains often claim
to be Third Places when they, according to him, are not. Hence, he implies that large chains have
wrecked havoc upon the term and the real Third Places. Oldenburg (2001) thinks that large chains’
overshadowing focus on profit and their impersonal atmosphere and fast pace destroy the essence of the Third Place. Instead, he describes the best Third Places as smaller, locally-owned and
independent places which can be characterised as “neighbourhood” restaurants. This is furthermore the same experience, which the interviewees of Thompson et al. (2006) have of a Third Place
– that this is apparent in the small local coffee shops where there is room for personal interaction
with the employees. This points to the fact that Starbucks due to their development and size has
moved away from the characteristics of a Third Place. Luttinger and Dicum (2006) also imply that
the narrative of Starbucks as a Third Place does not hold good anymore and they call Starbucks a
“Plastic Place” in stead, also indicating that Starbucks tries to characterise themselves as something they are not able to fulfil. Thus, it can be argued that is has been too difficult for Starbucks
to embrace the narrative of the Third Place at the same time as they wish to cater to the customer
segment which requires efficiency and speed of services. Seeing that these two missions require
two different approaches to the serving of coffee and the design of the coffeehouse, they are
argued to conflict. Therefore, it can be argued that Starbucks has exhausted the meanings as a
Third Place in order to comply with the grab to go segment (Appendix 1; Kowalski, 2006).
Therefore, everything points to the fact that Starbucks is no longer a Third Place. However, Starbucks tries to maintain that they are. Thus, the idea of the Third Place is strongly connected to the
brand as Starbucks in literature and articles is almost always referred to as a Third Place, even today. Furthermore, customers talk about Starbucks which used to have the status of a Third Place
and they wish for them to go back to being a Third Place where baristas spend time having a personal conversations across the counter, and where the barista cared about the coffee making and
hence did not treat orders like line items (Hopetobegreat, 2008; Mom_of_3, 2008). Furthermore,
it can be argued that Starbucks led by Howard Schultz still brands and communicates Starbucks
as a Third Place and holds on to this narrative (Appendix 1; Starbucks, 2008c). However, Starbucks
cannot live up to being a Third Place leaving the narrative of being a Third Place less trustworthy
today (Luttinger & Dicum, 2006; Appendix 1; Kowalski, 2006). Thereby, the feeling of belonging to
a local Third Place has disappeared to some extent.
14. The Narrative of Corporate Social Responsibility
Corporate Social Responsibility is a central theme in Starbucks’ business model and identity. The
way they have chosen to conduct their business reflects that being a responsible company takes
up a greater part of the agenda, not only for the company but also for society in general. This
responsibility manifests itself in a commitment to the environments and communities in which
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Starbucks operates, meaning that Starbucks through the way they conduct their business wants
to contribute to a positive social, environmental and economic development. Thus, Starbucks is
conscious about establishing sustainable and economically secure working conditions for the farmers, providing employees a great working place, and to minimise the company’s environmental impact (Starbucks, 2008e). It is a narrative, which is constantly emphasised and Starbucks is open to
making new and environmentally friendly initiatives in their product development (Michelli, 2006;
Schultz & Yang, 1997). Furthermore, Starbucks is engaged in several organisations such as Saving
the Children, CARE, and Eartwatch (Starbucks, 2008e).
Starbucks acknowledges the benefits of being a socially responsible company as it can be worth
it to care about social, economic and environmental manners. Starbucks states that consumers
demand more from a producer today than just to provide products. They want companies to care
about the environment and to take action in matters they can improve (Starbucks, 2001). Thus,
it can be argued to be a threshold of today to be socially responsible. Contributing to better conditions whether this being employee working conditions or environmental sustainability, it gives
the company something valuable in return. Not only does it provide more engaged and motivated
employees and more sustainable and secure supply conditions, the story told about the socially
responsible company also contributes to creating a beneficial image of Starbucks as a caring and
responsible company. Therefore, Starbucks sees their socially responsible actions as investments
(Starbucks, 2001).
14.1 The Good Place to Work
When reading about Starbucks and their concept one cannot ignore the constant story told about
how good a place Starbucks is to work at. In general, Howard Schultz is very conscious about the
conditions of the employees as he is aware of the fact that ensuring the well being of the employees and to make employees feel a sense of identity with Starbucks will be in the advantageous
for the company:
“Treating employees benevolently shouldn’t be viewed as an added cost that cut into profits,
but as a powerful energizer that can grow the enterprise into something far greater than
one leader could envision [...] If people relate to the company they work for, if they form an
emotional tie to it and buy into its dreams, they will pour their heart into making it better.”
(Schultz & Yang, 1997:6)
Therefore, Starbucks’ social responsibility towards the partners is closely related to Howard
Schultz’s caring character and is one of the predominant reasons for Starbucks being The Good
Place to Work.
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In Starbucks the employees are referred to as partners, making the employees feel as an important part of the company and the experience delivered to the customers (Schultz & Yang,
1997). Furthermore, it encourages the employees to not just perceive their job at Starbucks as just
another job, but to engage in their role. This is also why Schultz in October 1990 introduced the
Bean Stock to all employees, changing their title from employee to partner. Schultz wanted the
employees to feel the success of the corporation too and the Bean Stock enabled the employees
to set the value of the company themselves. Their hard work would have a direct influence on the
stock value and hence link shareholder value with long-term rewards for the employees encouraging them to devote themselves to Starbucks (Schultz & Yang, 1997).
Starbucks offers the partners a career, which provides opportunity to advance. Social security is
provided when working more than 20 hours a week also for the cohabitating partner no matter
sex. Being medically insured is not the norm in contemporary American corporate culture, where
usually only the full-time workers are eligible for this type of incentive (Marques, 2008). Also the
minimum wage is higher than the industry average (Schultz & Yang, 1997).
Additionally, Starbucks is certified as age friendly signifying that partners above the age of 50
can have special retirement positions where their age is taken into account. Also the extensive
training programme, where all partners must undergo a 28-hour course in coffee history, firm
philosophy and coffee making, and the opportunity to have a saying in decision making seems to
be a recurring motif in articles, books, and Starbucks’ own homepage (Starbucks, 2008g; Michelli,
2006; Bundgaard, 2004; Lindstrøm, 2003; Daehne 1994; Locascio, 2004). All the benefit initiatives
seem to have a positive spill over effect on employee turnover, which is far lower than the fast
food industry in general (Pendergrast, 2001) and that the health plan makes a huge difference
in attitude of the partners – as Schultz argues; “When a company shows generosity toward them
[the partners], employees show a more positive outlook in everything they do.” (Schultz & Yang,
1997:173).
Marques (2008) refers to Starbucks as a company which demonstrates spiritual behaviour, which
is broadly defined as a company which mixes capitalism with social responsibility (Serwer &
Bonamici, 2004) – meaning that they create win-win situations for both suppliers, partners and
customers. For instance, treating the partners with medical insurance make more dedicated employees who make better coffee resulting in happier customers as well as Starbucks benefit from
more loyal customers and lower employee turnover. The narrative about how Starbucks cares for
the employees is intimately connected with the narrative regarding Howard Schultz and that the
partners have benefited from Schultz’s difficult circumstances when he grew up. Howard Schultz
did not want the partners and their families to suffer like he did when he was young, especially after his father broke his ankle disabling him from working, and with no medical insurance his family
was in deep financial trouble (cf. Howard Schultz, Section 11): “I will never forget that episode”, says
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Schultz. “I never want that to happen to our employees.” That’s why thousands of part-time workers
have full medical benefits” (Serwer & Bonamici, 2004:4).
The way Howard Schultz perceives and treats his employees depicts him as a helper15 wanting to
give them better conditions than what was the threshold of the American labour market in the
early 1990s and furthermore that the partners should not be exposed to the same difficulties in
life as his family experienced. This caring approach to the employees depicts Starbucks as a company which does not care about profit at all costs, but that they are willing to spend a little extra
to secure a good working environment – this attaches meanings to the brand. It may be difficult
to deduce exactly how people apply the meanings of Starbucks genuinely caring about their employees but it can be assumed that the meanings contribute to create an overall positive image
of Starbucks which consumers want to buy into and support. The narrative of The Good Place to
Work also has the purpose of increasing commitment internally in the organisation, hence branding the company to attract new partners.
14.2 Starbucks Still Strives to be the Good Place to Work
Starbucks tries to maintain the narrative of being the Good Place to Work by keeping focus on
the conditions of the employees and thus distancing themselves from similar workplaces by introducing initiatives as mentioned above (cf. The Good Place to Work, Section 14.1). The fact that
Starbucks’ caring approach to the employees has resulted in the company achieving a rank as the
seventh best place to work by Fortune in 2008 (Fortune, 2008) can be argued to be very unusual
for the industry as Starbucks is the only one within the industry to be ranked. This shows that
employee commitment and care is still high on the agenda. Furthermore, it strongly supports and
strengthens the narrative about being The Good Place to Work.
However, Howard Schultz is not blind to the vulnerability of this narrative and how challenging it
is to make all employees feel respected and appreciated. Especially the expansion of the company
is posing a challenge as the increased size of the company creates a distance between the management and the employees. Howard Schultz acknowledges that it has not always been easy to
comply with the intention of treating employees with dignity and as individuals. He is furthermore
aware of how damaging it can be to lose the dedication of the employees:
“Sometimes we lose sight of that [the passionate devotion of our employees] at Starbucks [...]
But I know, in my heart, if we treat people as a line item under expenses, we’re not living up
to our goals and our values. Their [the employees’] passion and devotion is our number-one
competitive advantage. Lose it, and we’ve lost the game.” (Schultz & Yang, 1997:138)
15
Fog et al., 2004
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However, the fact that employees are not always treated with the respect and dignity, which
Starbucks intent to and tell in their narrative is not passed unnoticed. Thus, Starbucks has not
been able to avoid negative publicity in the media and criticism from their own employees – telling
a different story of being a Starbucks employee and staining the initial narratives developed by
Starbucks. For instance former employees who used to be devoted to Starbucks and the visions of
Howard Schultz indicate that the development has changed Starbucks’ attitudes towards the employees. Thus, to the former employees, Sherri Miller and Kevin Knox, Starbucks’ commitment to
the employees is perceived as a marketing gambit (Pendergrast, 2001). They feel deceived. Sherri
Miller puts it like this: “There’s a lot of talk about treating employees with ‘dignity’ at Starbucks,
but the reality often isn’t there.” (Pendergrast, 2001:304). Sherri Miller and Kevin Knox criticise
Starbucks for focusing on profit and the bottom line at the expense of the people employed. They
point out that there is no soul in Starbucks’ narrative about people being the most important in
the company (Pendergrast, 2001). This further fuels the narrative of Starbucks as a corporate giant using predatory business practises striving for profit.
Other criticism evolves in particular around Starbucks’ underpayment of the employees. One story
which has earned a lot of press coverage in 2008 weakening the narrative of being a Good Place
to Work has been the trial regarding Starbucks paying the supervisors with tips earned by the baristas. One barista sued Starbucks for giving the supervisors the tips which were predestined the
baristas. The superior court in San Diego estimated that Starbucks should pay back the baristas
$86 million plus interests and thus the court favoured the barista (BBC, 2008). Also in a trial in
2002, Starbucks was sentenced to pay back their partners who were entitled to $18 million for
overtime work (Ringkøbing, 2002). These stories and a consensus about the partners being paid
too low wages weaken the narrative of Starbucks being the Good Place to Work. The wage may be
above the quick service industry standards but it is still categorised as low and many employees
state that it is hard to make a living on this wage (Milan, 2008; Weca, 2008; UrbanVoy, 2008;
Fidm22, 2008). Despite the many benefits Starbucks ensure their employees, the fact that the
employees do not feel that they are paid what their job is worth may result in an increasing employee turnover which may be harmful for the overall Starbucks Experience. Starbucks has previously had a very low employee turnover compared to the industry, which can be argued to be due
to a high level of satisfaction among the employees. Howard Schultz has stated that Starbucks’
low employee turnover ensured the high quality and the Third Place – as regulars are more likely
to appreciate the ambience if the employees are not constantly replaced (Schultz & Yang, 1997).
However, as Starbucks are not able to satisfy their employees, the employee turnover is likely to
increase and hence Starbucks may attract less qualified candidates, which in the end affects the
Starbucks Experience. Thus, it seems that Starbucks’ intention of attracting employees who are
devoted to coffee and Starbucks has been more difficult to fulfil during the years seeing that the
wage attracts less qualified and less devoted employees. The less qualified employees furthermore distance Starbucks from the meanings of quality of the service. As many customers imply
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that the employees seem unknowledgeable, young and not committed, meanings associated with
a lower service level are created – lower quality and lesser emphasis on the experience surrounding
the purchase.
Despite the criticism it is possible to find examples of satisfied employees on mystarbucksidea.
com which underlines the fact that many employees like to work at Starbucks (Miss_Paris, 2008;
Runfar1, 2008). Examples of Starbucks doing something extra for the employees are also given.
For instance on mystarbucksidea.com a mom of a former barista expresses how grateful she is
for all what Starbucks did to her son, while he was sick. Not only did they treat him with respect
and as a valued employee even though he could not work, Starbucks also kept paying him while he
was hospitalised and took care of all medical costs. This attitude towards the employees emphasises Starbucks’ caring approach and hence illustrates that it can be worth it for Starbucks to do
something extra for the employees. Furthermore, Starbucks takes the time to reply to the mom’s
message:
“Like the others on this post I am sorry to hear of your loss. As a father of two myself, I can
only begin to imagine what that might have been like. I am proud indeed that as a company
we made at least one aspect of that tragedy a little bit easier. Though no organization is
perfect, I can tell you that genuine concern for our partners is emphasized in a more real and
tangible way than at any other company I’ve ever worked at. I do not see that philosophy
changing.” (Sbx_MATT, 2008)
The personal reply from the head office and that Starbucks in general replies comments posted
on mystarbucksidea.com send a signal of an attending and caring company. However, Starbucks
only replies to comments when they feel it is necessary to meet critique and establish what they
stand for.
Even though the narrative about being the Good Place to Work can be argued to have suffered
from the recent trial and the criticism of the low wage, some stories told on mystarbucksidea still
emphasise that Starbucks is a good place to work:
“There is a whole side to this company customers don’t see. It’s actually pretty simple. We do
it because we love it. We really don’t make that much [...] I work at Starbucks because I love
what I do.” (Mariel, 2008)
Thus, due to this statement and a lot of others on mystarbucksidea.com it is possible to argue
that many employees feel that Starbucks is a good place to work despite narratives telling another
story as well. Furthermore, the fact that Starbucks has been ranked on the top ten best places to
work by Fortune in 2008 does in particular fuel the narrative of Starbucks as a good place to work
(Fortune, 2008). Thereby, the breeding ground for the narrative to be trustworthy is still intact.
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Publicly, Starbucks has created the image that they are a company for which the conditions of the
employees are very important. Furthermore, Howard Schultz gives the impression that employees are listened to and involved in the actions of the company (Schultz & Yang, 1997). This all portray Starbucks as a good place to work, but the reality of discontent employees and the media’s
increasing attention towards issues where Starbucks does not live up to the image, prick a hole
in the narrative. However, it can be argued that the narrative still circulates but that bad publicity
and unsatisfied employees create contra-narratives as well.
14.3 Fair Trade
Another narrative which seems to be emphasised when reading about Starbucks’ social responsibility, is the story of Fair Trade and how Starbucks set the industry standards in that area of business conduction. Starbucks began purchasing Fair Trade certified coffee in 2000. This certificate
secures that farmers receive a guaranteed minimum price for their coffee, a price that is higher
than in the conventional coffee market (Allison, 2006). It has even been stated that Starbucks
pays even higher prices to the farmers than the Fair Trade certificate requires (Hansen, 2001).
It is recognised that the majority of the farmers who produce coffee in the Third World countries
live in poverty and that their living standards are low. As a company like Starbucks decides to buy
Fair Trade certificated coffee, they signal that they try to fight this poverty. Furthermore, Starbucks portrays themselves as a company, which does not pursue low coffee prices at the expense
of the farmers’ living standards. Thus, they care about the social and economic consequences of
buying coffee in these communities. The fact that Starbucks shows this responsibility towards
the farmers and communities can be argued to distance them from the mainstream and the image of Starbucks as a corporate titan. It brands Starbucks as a company, which will not let the
farmers live in poverty while they benefit from it.
It can be argued that the fact that Starbucks is a socially responsible company is not only about
caring for the conditions for the farmers. It is just as much about the fact that it sells products to
show this social responsibility towards the communities. Today, there is a tendency towards many
customers valuing the fact that they consume products which have been produced and traded
under orderly conditions and that companies show a business model which is not only about making profit (Benjc32, 2008; Twen_01, 2008). Thereby, as Starbucks engage in securing the farmers
a good and secure working environment, meanings of social responsibility are created. Thus, they
create meanings of not wanting to conduct business at the expense of the farmers in order to gain
the highest possible profit. The fact that Starbucks carefully selects the farmers and the beans
they use in their coffee furthermore distances them from an image of being a mainstream concept of mass produced coffee. This supports the meanings of the small feeling of the brand and
may apply a luxury feeling as well.
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Simon (Appendix 2) states that after 9/11, it was obvious that some people did not like the Americans that much – a fact that the Americans did not like – and some of the wanting to disassociate
from the American culture was related to the issue of globalisation. So by buying fairly traded
products, the American consumer could signal that he or she was a person who cared about what
was going on, and that he or she was involved in global issues. By putting the Fair Trade coffee
right at the entrance, Starbucks is sending a message about global involvement, which the consumers can apply in their projects of acting politically correct (Appendix 2). Additionally, acting
politically correctly by consuming Starbucks can also be done on a micro level. Starbucks seems to
have understood that the Americans feel bad about their racists past and had for instance formed
a joint venture with former Los Angeles Lakers star Magic Johnson to open stores in lower-income,
more diverse communities around the US (The Wall Street Journal, 2007). Moreover, Starbucks
have opened up shops in largely African American and Latino neighbourhoods such as Harlem.
Simon (Appendix 2) argues that these initiatives are done to allow whites to dissociate from racism: “If you buy a product from a company that pursuit diversity […] you are washed from the sins
of racism, you’re innocent by association.” (Appendix 2:3). This also signals that Starbucks is open to
diversity within social class and race.
In the early days of Starbucks being a socially responsible company differentiated them from the
coffee industry. Therefore, at that time when buying Starbucks’ coffee, the customers transferred
the meanings of being engaged in others than themselves and furthermore that they were broader minded and enlightened about what was going on in the world – thereby indicating that the
consumers applying the Fair Trade meanings in their identity projects brand may have belonged
to a higher level of society. This was especially apparent in the early days of Starbucks where Fair
Trade was a new concept and Starbucks was pioneering in this area. Moreover, being Fair Trade
expressed that the consumers had taken a stand on how Starbucks conducted business which
contrasted the mass produced products where the underlying business procedures were not a part
of the selling proposition and hence not based on individual stands. In comparison Starbucks came
to appear as a differentiated concept not only focused on the product but also the supply chain.
Therefore, buying Starbucks represented consumers making an individual choice breaking with
the conventional norms of conducting business and drinking coffee. It can be argued that these
meanings of individuality and taking a stand have appealed to a higher educated consumer equalling the post-modern consumer.
14.4 Development of the Fair Trade Narrative
The Fair Trade narrative has fallen victim to substantial critique. It is debatable whether the critique has been righteous or not. Nevertheless, especially co-branding from the media has harmed
the trustworthiness of Starbucks’ “Social Responsible” narrative.
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In 2001 the prices of raw coffee declined drastically threatening the livelihood of the farmers in
the Third World countries. During three years the price of raw coffee beans declined from DKK8 to
3,50 a pound and the farmers were producing with deficit. Concurrently, the consumers expected
lower coffee prices in the supermarkets and the coffee shops, but this did not happen. Instead
Starbucks, and other coffee shops, prospered from the low raw products and in 2001 Starbucks’
profits increased with 41% due to the low coffee bean prices (Hougaard, 2001; Hansen, 2001). Being a big company and at the same time expanding rapidly as well – a growth facilitated among
others by the low coffee prices – resulted in strong reactions from NGOs who condemned Starbucks for making profits at the expense of the poor farmers in the Third World. The critique of
Starbucks harmed the narrative of being a Fair Trade company. Even though Starbucks in fact paid
their suppliers more than the average and the fact that they did not have a chance to control the
coffee prices, Starbucks got exposed as being the big greedy corporation who gained success at
the expense of the impoverished (Schultz & Yang, 1997; Hansen, 2001, Ringkøbing, 2002). Another
narrative harming the Fair Trade image tells how Starbucks tried to block the Ethiopian coffee
producers to trademark three types of coffee, resulting in lower prices and exclusive trading with
Starbucks – this is at least what Oxfam claims. NCA [National Coffee Assosciation] has rejected
the claim. However, the consumer has been left in doubt about Starbucks’ good intentions (BBC,
2006).
What is furthermore contradicting with the narrative of Social Responsibility is that the coffee
chain has been criticised for not buying enough Fair Trade Coffee. Only 6% of Starbucks’ total
coffee purchase is based on Fair Trade coffee (Ringkøbing, 2001; Appendix 2). Hence, complaints
about Starbucks not buying enough Fair Trade coffee circulate and are expressed several times
on the mystarbucksidea.com where customers ask of Starbucks to be more socially responsible
within this area:
“I was shocked to find out that only about 6% of your coffee is actually fair trade. You have
made an entire corporate image around what a “good guy” you are in the world. It’s time you
walked the talk and improved that percentage. Otherwise, you’re starting to smell a lot less
like fresh brewed and more like the stagnated burnt corporate coffee guys.” (Dulanie, 2008)
In general, customers do not like Starbucks oppressing the farmers and they expect of a big company as Starbucks to act socially responsibly and thus provide the farmers orderly conditions (Cmrced, 2008; Benjc32, 2008; Twen_01, 2008). The danger which Starbucks is facing is to be perceived
as corporate titan who exaggerates the image of them trading fairly. Thus, many customers feel
deceived and that Starbucks uses their low percentage of Fair Traded coffee as a marketing gambit to make customers perceive them as socially responsible. This makes Starbucks’ narrative of
being conscious about the farmers’ conditions less trustworthy.
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Despite the criticism, the reality is that Starbucks is one of the largest buyers of Fair Trade coffee
in the US (Michelli, 2006; Watson, 2006). However, though it may be the case that social responsibility is highly placed on Starbucks agenda, the perception amongst customers of Starbucks not
doing enough to deserve the “socially responsible”-label may overshadow the reality and make the
narrative be less glamorous. Thus, the attacks on the Fair Trade narrative have damaged the initial
narrative of Starbucks being a socially responsible company. Therefore the meanings attached to
the brand may not be the same anymore, and the customers who bought into the values of the
Social Responsible firm, identified with it, and applied it in their identity project, may not find it
as useful and trustworthy as before. Seeing that being socially responsible during the years has
become industry standards, thus that most coffee shops trade fairly traded coffee, the meanings
of Fair Trade are not reserved for Starbucks making them distinct and more responsible than the
competitors. Additionally, before when the Fair Trade concept was not that widespread it can be
argued that it expressed that the consumer took an individual stand when consuming it. Choosing
Starbucks is not based on an individual choice as the meanings of being Fair Trade are embedded in
the competing concepts as well. The Fair Trade narrative can therefore be argued to move towards
rigidity. In line with this it is assumable that the people originally buying into the Fair Trade narrative, when this was strongly attached to Starbucks alone, to a lesser degree find the meanings of
Fair Trade applicable to their identity projects seeing that the concept has become a standard and
hence mainstream. This is further strengthened by the increasing untrustworthiness of the narrative due to the contra-narratives pointing to the Fair Trade narrative being blown up to something
it can not fulfil. Thus, the enlightened class does not want to put op with something it perceives
as fake.
15. What has Become of the Starbuck Experience?
What has become conspicuous to us through the investigation of the narratives, which Starbucks
has intentionally tried to communicate during their 20 years in business, is that these narratives
still seem to be told by Starbucks. From the beginning it seems like Starbucks’ storytelling is
formed around the Starbucks Experience. Thus, the narratives of the American Dream, Quality,
the Socially Responsible Company and the Third Place all together have been told to strengthen
the Starbucks Experience. Thereby, it can be argued that everything Starbucks does is intended to
ensure the customer having a nice and comfortable experience while buying a high quality coffee
beverage. This intention has not changed through the years and the Starbucks Experience still appears to be the central theme in Starbucks narratives. To keep the Starbucks Experience intact, it
seems as though Starbucks more or less has stood by their original narratives. However, the many
comments from customers, employees, and the media give the feeling that the Starbucks Experience is not that intact after all – a feeling which Starbucks is not shy to admit themselves. Howard
Schultz expresses it like this:
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“Over the past ten years, in order to achieve the growth, development, and scale necessary to
go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of
decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and,
what some might call the commoditization of our brand.” (Appendix 1)
In this statement, Howard Schultz opens up to what may be the root cause for the brand’s problems. Starbucks has made some strategic decisions during the years which may have seemed right
at the time they were made but which in the long run have been harmful to the value of the brand
and thereby the Starbucks Experience – at least when arguing that these decisions have been
made at the expense of the brand’s value and thereby without regards for the meanings of the
narratives. Thus, it can be argued that Starbucks has not developed the narratives in line with the
development of the company. Thereby, the narratives tell a story of Starbucks which the brand no
longer delivers and hence a gap between the narratives and what is delivered has emerged.
As we argue that Starbucks’ pursuit of growth and the wish of being the dominating coffee brand
within the industry conflicts with the narratives they tell, the following will illustrate how Starbucks’ strategic choices have influenced the narratives, the perception of the brand, and how they
have provided a breeding ground for contra narratives to be created.
15.1 Standardisation and Expansion Strategy
Starbucks’ strategy has been to grow rapidly in order to capture the market (Schultz & Yang, 1997;
Nocera, 2008). Whereas competitors like Peet’s in the late 1980s and early 1990s seemed content
to be a regional brand, Starbucks’ intention has been to become a national brand and to make specialty coffee accessible to all American customers (Luttinger & Dicum, 2006). Due to high revenues
and the Americans’ enormous interest in specialty coffee, Starbucks has been able to achieve this
goal, increasing the number of coffee shops rapidly across the US. This aggressive expansion has
changed the character of Starbucks during the years because running a business of less than 100
shops, which they did in the late 1980s, is rather different to running more than 11.000 which they
do today.
With the high number of shops and a much higher number of employees (170.000), it has been
necessary to introduce systems and processes to secure that the standards are kept the same in
all coffee shops across the country (Appendix 5; Schultz & Yang, 1997:204). This has resulted in a
high level of standardisation regarding uniformity in product range, shop design and service. And
the Starbucks concept has been standardised to ensure customers always to have the same experience in every Starbucks coffee shop. However, it can be questioned whether the initial customer
of Starbucks is appreciating this uniformity. Furthermore, it can be argued that the Starbucks
Experience has suffered from the aggressive expansion and the standardisation across the shops
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due to the fact that the narratives Starbucks tell are created to picture Starbucks as a company
built on small-business values which are difficult to comply with considering the size and behaviour of a large company. Some customers feel that the streamlining of the concept has taken the
soul out the Starbucks brand and many criticise Starbucks for moving towards becoming “just
another chain” (Krissibd, 2008; Chadbb26, 2008). This is indicated below:
“They [Starbucks] expanded rapidly, lost vision, created different drinks and foods, and became a chain that was not what they used to be. From the employees, to the cleanliness
and even the quality of the drinks/food, Starbucks has lost touch with their market and the
consumer has paid.” (Prosen, 2008)
Now when the situation looks grave Howard Schultz seem to have opened his eyes for what is
going on with his business. He is now aware of how the perception of Starbucks is changing and
how customers to a larger extent perceive Starbucks as a chain store concept in line with fast food
stores (Appendix 1; Nocera, 2008; Smale, 2008; Susie C, 2008; Mathguy, 2008). Thus, Schultz indicates that a risk of the decisions they have made during the years is that Starbucks has become
mainstream and commoditised in the minds of the customers (Appendix 1). Besides the high level
of standardisation, less committed employees and an increased focus on efficiency can be argued
to be reasons for Starbucks being perceived as a chain store concept. Furthermore, many feel that
the atmosphere in Starbucks’ coffee shops has turned into a fast food atmosphere, thus, that
they have lost their way (OldDays, 2008; Otcem, 2008; Mathguy, 2008).
The aggressive expansion and high level of standardisation can furthermore be argued to have
distanced Starbucks from the small-business atmosphere, around which they have intended to
build their brand and narratives. The fact that Starbucks originally has been able to live up to
the small-business atmosphere is not called into question. However the fact is that Starbucks
has tried to maintain this feeling while focusing on growth, and becoming the most recognised
coffee brand has resulted in the surroundings questioning the genuineness of the brand’s narratives. Hence, many have perceived Starbucks’ narratives as a marketing gambit intended to cover
up Starbucks real identity as a corporate titan (Thompson et al., 2006; Thompon & Arsel, 2004;
Potrerohillman, 2006; Ensenadajim, 2008). This has created a negative picture of Starbucks and
they are criticised for being an ”evil empire”. Thus, it can be argued that a contra narrative to Starbucks’ narratives has been created – a narrative, which questions the intentions of Starbucks of
maintaining the small-feeling atmosphere while growing so aggressively.
15.2 Efficiency Focus
As the competition has been intensified by fast food chains introducing specialty coffee, Starbucks has focused on making their business and operations effective. The consequence has been
that many customers feel that the level of service has declined, as it seems that Starbucks has
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shifted focus from the experience of the customer to an enhanced speed of the service, hence, to
have customers move faster through the line. However, customers find it difficult to see how this
focus on speed harmonises with Starbucks’ narrative of being a Third Place and that the brand is
build around quality and customer experience. To a larger extent, customers become line items
and it is not without reason that a narrative of Starbucks as a mainstream fast food chain is created (Otcem, 2008; Mathguy, 2008). The distance between Starbucks and the fast food restaurants diminishes, which is further strengthened by Starbucks’ introduction of automated coffee
machines. The purpose of these coffee machines is to make the coffee-making effective, but at
the same time the automation can be argued to puncture the original narrative of quality and the
authentic Italian feeling. Customers have always valued the handmade espresso, which Starbucks
introduced to the Americans and Starbucks has always made a virtue of making the perfect cup
of coffee. The decision of automating the coffee making has probably been made to meet the
competition from the fast food chains but in turn it has been harmful to genuineness of the brand.
Thus, it can be argued to have confused the perception of Starbucks and what they try to be.
A consequence of the introduction of the automated coffee machines is furthermore that the role
of the barista has decreased – the barista who usually has been a cornerstone in the Starbucks
Experience. Thus, the fact that the importance of the barista has diminished due to efficiency
has damaged Starbucks’ emotional connection with customers. Howard Schultz has always emphasised that the people employed in Starbucks was the competitive advantage of the company
(Schultz & Yang, 1997; Appendix 1). Thereby, he has pointed out that good service and obliging
employees who can professionally guide the customers in their coffee purchases has been the factor creating the emotional connection with the customers, which can be argued to be the power
of the Starbucks brand (Schultz & Yang, 1997:245). Therefore, Starbucks has focused on hiring
the right people who are passionate about coffee. However, as Starbucks has grown and become
widespread, it has been difficult to maintain the same level of control of the employees ensuring
that people who are hired are dedicated to providing customers with the Starbucks Experience.
Both media and customers have criticised Starbucks for hiring less committed employees as they
feel that it has diminished the Starbucks Experience that Starbucks has loosened the control of
the training and hiring of employees (Nocera, 2008; PJDubs, 2008; UKCoffe, 2008).
The criticism of Starbucks is focussed on the fact that the emotional connection between customer and barista more or less has disappeared both because the barista no longer has the time
to small-talk but also because the barista no longer possesses the engagement and commitment
to get involved with the customers. This takes away the meanings attached to being served by a
real barista who would be enthusiastic about coffee and his job. Thus, this can be argued to question the narratives of quality and authenticity as the Starbucks Experience is built on enthusiastic
baristas willing to engage in the customers.
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15.3 Change in the Meanings
Through the analysis of the narratives, it has become evident that a lot of customers feel aggravated by an uncertainty of what Starbucks stands for. Starbucks’ narratives and history imply
one thing whereas their actions imply another. From their emergence, Starbucks’ intention seems
to have been to create an alternative to the large, mainstream and mass produced coffee brands
and thus to provide customers an alternative approach to coffee (Luttinger & Dicum, 2006; Koehn,
2001; Schultz & Yang, 1997). Hence, with their narratives and ”word of mouth” approach to marketing, Starbucks has tried to create a feeling of authenticity as a neighbourhood coffee shop
through small-business values (Schultz & Yang, 1997). This feeling, they have tried to hold on to
despite their growth.
When investigating Starbucks one gets the impression that Starbucks used to be a brand which
the customers wanted to be associated with due to the meanings embodied in the brand. However, the development of the narratives and thereby the meanings point to the fact that the
Starbucks brand no longer has the same status in the minds of the consumers. The meanings of
the Starbucks brand have lost their distinct character. It is assumable that initially the narratives
included meanings of possessing connoisseurship, having passion for the coffee, Italian traditions,
Italian atmosphere, being something distinct, exclusive and revolutionising. In contrast the meanings today can be summarised to include more standardised meanings resulting in a commoditisation of the Starbucks brand. Furthermore, as Starbucks has tried to appear as a small neighbouring
coffee shop while actually acting opposingly, has resulted in the brand losing its credibility and
provided a breeding ground for contra-narratives to emerge. Therefore, as Starbucks hold on to
their old narratives, meanings of Starbucks being a corporate titan are created as the consumers
who valued the original meanings may perceive these as a cover for what Starbucks really is.
It was earlier mentioned that the specialty coffee industry has undergone changes since the concept was first introduced and it has thus become more rigid. This can be argued to have rubbed of
on Starbucks’ meanings. For instance the fact that a lot of players have entered the industry and
that specialty coffee and specialty coffeehouses are common concepts in the American culture
today are arguments for Starbucks losing the distinct meaning of being revolutionising and bringing the Americans something new. Starbucks entered the American culture as an identity brand
which meant that the brand represented more than just being the commodity coffee – they created a new concept and a new way of consuming coffee attaching coffee with meanings. Hence
Starbucks coffee was not solely bought because of the coffee as a mere necessity but as well due
to the identity the consumer was transferred in the purchase. It was mentioned earlier, that the
specialty coffee concept and Starbucks in particular was regarded a luxury good in the early 1990s
– thus, it can be argued to be a way of expressing class and cultural insight to drink Starbucks coffee. It was a distinct product differentiating strongly from the conventional coffee known at that
time.
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Additionally, the paradox of Howard Schultz’s wish to make specialty coffee accessible to all Americans, is that it has resulted in that the specialty coffee concept has become a common property
for the American consumer. This is also the case for Starbucks. It has damaged the identity of being something distinct – an identity the customers may have bought into originally. Thereby the
meanings are no longer the same as when Starbucks emerged and the chain is neither a part of
that buzz it used to be due to the brand becoming mainstream.
15.4 Can You Grow Big and Stay Small?
Considering the strategy which Starbucks conducts, it can be questioned whether this can really
be carried out; is it possible to grow big while trying to stay small? In his book, Pour Your Heart Into
It, Howard Schultz poses the question himself how to balance the values of the brand with the
wish of growing: “Can a company double and even triple in size but stay true to its values? How far
can you extend a brand before you dilute it?” (Schultz & Yang, 1997:197)
This quote indicates the vulnerability of the brand – the complex of staying small together with
the wish of increasing profit, hence, the danger of selling out to become big. However, Howard
Schultz argues that it is possible to combine the two just that it takes a lot of effort. He further
states that Starbucks is up against the perception which most people have of large companies
perceiving these as capitalists only focused on profit (Schultz & Yang, 1997). Analysing the image
of Starbucks today it seems as if Starbucks to a large extent has fallen into the trap of becoming
a large company at the expense of the values of the brand even though Howard Schultz was so
focused to avoid it. And another picture has also been drawn of Howard Schultz who is not only
driven by emotional care for his company but just as much to gain shareholder value. It seems like
Starbucks has not truly recognised the challenge of bringing the narratives into line with the business strategy. In other words, Starbucks’ narratives picture the brand as one thing whereas the
strategy pictures them as another. They say they are something, which they cannot deliver. When
customers sense this discrepancy and conflict between the narratives and what is delivered, the
brand loses authenticity.
15.5 Authenticity
The great majority of the customers expressing their opinions about Starbucks publicly ask for
Starbucks to go back to the original Starbucks. Thus, it can be argued that they ask for the Starbucks which was authentic and which was able to deliver what was promised through the narratives. Starbucks has undertaken a lot of new initiatives which have changed the concept. Even
though many customers have embraced these initiatives, such as Starbucks providing access to
Internet in the coffee shops, the comments on mystarbucksidea.com give an impression of customers wishing for Starbucks to keep to their core competences; the high quality coffee and the
Starbucks Experience.
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According to the theory, authenticity, amongst other things, exists when a brand is able to deliver
what it says it is and promises to deliver and in the case of Starbucks through the narratives (cf.
Authenticity, Section 5.1.7.5). The fact that Starbucks has made decisions which question their
ability to answer for what they tell through the narratives, can therefore impair their authenticity.
This makes the brand untrustworthy. On the contrary, customers and media seem very certain
that what Starbucks used to be equalled authenticity, hence the brand was able to deliver what
was promised. From this, authenticity seems to be very important; hence that Starbucks must be
able to live up to what they say they are to be perceived authentic. However, it can be questioned
whether Starbucks has ever been able to live up to what they say they are.
Starbucks is built on Howard Schultz’s experiences with the Italian coffee culture, thus, the idea of
Starbucks was to re-create the atmosphere and coffee of the Italian coffee culture. Even though
the foundation of Starbucks is to be found in Italy, it can be questioned whether Starbucks is
authentic Italian. In the early days of Starbucks, even before Howards Schultz’s coffee shops had
the name Starbucks, the intention was to re-create a coffee shop designed to replicate an Italian
coffee shop as closely as possible and to be true to the authentic Italian espresso bar experience.
Thus, the coffee shop had the Italian name, Il Giornale, and was very true to the appearance of
an Italian coffee shop (Koehn, 2001). However, as soon as the coffee shops changed the name to
Starbucks and Howard Schultz started compromising the spirit of the Italian coffee to comply
with the demands of the American consumers, it can be argued that Starbucks started moving
away from being authentic Italian. For instance, Starbucks started compromising with the Italian espresso beverages by introducing lowfat milk although Italian espresso beverages were only
made of whole milk but also that they started to extend the coffee menu to include a vast variety
of coffee drinks which was far from the Italian coffee concept – such as flavoured coffees and the
Frappuchino. Furthermore, Starbucks diversified into other business areas selling books and CDs
in the coffee shops which is not authentic Italian either (Koehn, 2001; Schultz & Yang, 1997). Still,
the Italian authenticity has constantly played a decisive role in the storytelling of Starbucks. It can
be reasoned that Starbucks never was an Italian coffee shop and hence Starbucks was not what
they said they were – being a re-creation located in the US, founded by an American. However, we
deduce that Starbucks has been able to make the Italian foundation of a coffee shop American
and hence their own. Starbucks introduced a new approach to coffee to the Americans and even
though it is not true to the Italian coffee culture, it can be argued that until recently Starbucks has
been true to the concept they have created – a concept which to a large extent has pioneered the
American coffee culture. In other words, Starbucks is not authentic in the Italian sense but they
became Starbucks Authentic – meaning that they became an authentic American coffee shop.
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Figure 7 | The Real/Fake Matrix
Is what it says it is
Is not what it says it is
Real-fake
Real-real
Starbucks 2008
Fake-fake
Starbucks 1985
Fake-real
Is not true to itself
Is true to itself
Source: Gilmore & Pine (2007:97) and of own construction
Applying Gilmore and Pine’s (2007) Real/Fake Matrix, the first years of Starbucks can be plotted
into the Real/fake Matrix being “Fake-real”. Thereby saying that Starbucks was not able to live
up to being Italian authentic although they tried to re-create the Italian coffee atmosphere but
that Starbucks was able to be true to their own Starbucks concept located in the US. Deduced
from the assessment of the narratives and their development caused by Starbucks being forced
to take strategic decisions based on optimising efficiency and creating standardisation, Starbucks can be argued to have moved away from being true to themselves. They do not carry out
the promises told in the narratives and hence they have moved to become inherently fake and
hence inauthentic. Thus, it can be argued that consumers find it hard to see Starbucks being true
to their concept and what they used to deliver. Thereby, it can be argued that Starbucks may
have lost some of their Starbucks authenticity as well. By plotting Starbucks into to the matrix
the otherwise fluffy and subjective concept of authenticity is getting more tangible and manageable. Thereby it is seen how Starbucks may have changed from being to some degree real
but during time they have moved away from their narratives while still trying to convince the
consumers of the meanings being the same – a fact that the consumers have not bought into
causing some to turn their backs on the Starbucks brand.
16. Consumer Culture
16.1 The Initial Subcultural Consumer of Starbucks’ Coffee
According to Thompson et al. (2006) Starbucks did, maybe not deliberately, target the higher
middle class characterised by Brooks (2000) as the bobos; a mix between the bourgeois and the
bohemian culture, hence achieved status as an iconic brand. Brooks (2000) describes how the old
categories of consumers did no longer make sense – throughout the modern period, it had been
easy to distinguish between who was bourgeoisie and hence was a part of the capitalist world
and the bohemian counterculture characterised by creativity. The bourgeoisies were the square
and practical ones who defended tradition and middle-class values. They lived in suburbs, which
was typical for that time, worked for corporations, and went to church. Meanwhile, the bohemi-
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ans were the free spirits who flouted the traditions. They were the artists, the intellectuals – the
hippies (Brooks, 2000:10; Featherstone, 1991:45) who stood for all the values of freedom and experimentalism of the 1960s (Holt, 2002). On the other hand, the bourgeois expressed the values
of the enterprising yuppies of the 1980s (Brooks, 2000:10). In the 1990s, these two groups of society somehow started to melt together and people seemed to have combined the countercultural
1960s with the achieving 1980s into one social ethos making it impossible to tell an espresso-sipping artist from a latte-drinking banker. Brooks (2000) explains this as a cultural consequence of
the information age in which the intangible world of information merges with the material world
of money creating new phenomenon such as “intellectual capital” and “the Culture Industry”. One
subculture of this era was the bobos; a new kind of hybrid personage who had one foot in the
bohemian world of creativity and the other grounded in the bourgeoisie world of ambitions and
upper-class (Brooks, 2000:10-12) – a well educated upper-middle class whose, before seen, rational
pursuit of gaining had become a search for pleasure and pursuit for self-interest (Brooks, 2000:15;
Lash, 1979 in Rifkin, 2000).
Others have also described this new consumer. For instance, Bourdieu (in Feathersome, 1991)
names them the new petite bourgeoisies, who are fascinated by identity, presentation, appearance, lifestyle, and the endless request of new experiences. They were not only represented by the
intellectuals but the petite bourgeoisie transmitted the intellectual lifestyle to a larger audience
and did somehow open up the inner circle of the bourgeoisie and were determined to be cultural
intermediaries. Also Arnold Mitchell (1983) reflected upon the new values within the American
consumers and developed an extension of Maslow’s hierarchy of needs; VALS (Values and Lifestyles), to explain the relationship between personal values and how these created matching patterns of outer behaviour. The VALS categorisation system was based on the changing lifestyles in
the US during the 1970s where seven different value patterns were outlined. Here, also a new kind
of consumer was plotted in; the integrated, whose values are somewhat similar to those of the bobos. These values being a mixture of the so-called achievers, who are the highly educated money
centred stereotype of the wealthy American, and the socially conscious type who is concerned
about societal issues, trends, and events. Additionally, the integrated are well educated, heavily
Caucasian (Mitchell, 1983), and could be argued to possess a high level of cultural capital entailing
emphasis on authenticity and connoisseurship (cf. Consumer Culture Theory, Section 5.1.7), as Holt
(2000) states that higher education leads to a higher level of cultural capital.
Additionally, the general gourmet coffee drinker has been identified to be more affluent than
the general US consumer and that he or she lives or works in big cities. Moreover, it has been established that gourmet coffee consumption rises with the drinker’s educational level. Those who
have finished college buy in average 49% more gourmet coffee and those with some postgraduate education buy 71% more. The gourmet coffee consumer has, by the SCAA, been described as:
“an educated urban resident with the disposable income to spend on fine coffee.” (Encyclopedia of
Emerging Industries, 2008).
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The type initially drinking coffee at Starbucks, is in a blog described like this:
“I always feel like those people are the kind of people who go to all the openings in town, and
get on all the guest lists […] Those people look all the same too. They’re the IKEA types who’ve
graduated from the animal rights and environmental action groups. Now they’re “grown up”
and far more inward looking, sometimes they would call reflective” (Simon Jones, 2004)
This quote, reflecting one person’s image of a Starbucks customer, is of course very opinionated.
However, we deduce that the way trendy and animal right’s advocate is correlated may express
the bobo who possesses a dual personality of hippie and hip. We will in the following refer to the
bobo character as an upper-middle class, well-educated intellectual personage who appreciates
authenticity, experiences, individuality, and recognises the value of connoisseurship. Hence, to
some degree we juxtapose the bobo with the characteristics of the post-modern consumer possessing higher cultural capital. However, this is done being aware of Holt (1998) who rejects the
notion of social strata in the contemporary society. The bobos also reflect values from the bohemian culture, hence, posses a more creative side to its personality.
Thompson et al. (2006) have argued that the bobo type, until recently, has given the Starbucks
brand its legitimacy. As Starbucks has been identified as a luxury brand emphasising high quality,
connoisseurship and intellectuality, and possessing an authentic ambience of the Italian coffeehouse (Koehn, 2001), the bobo character has been attracted by the brand. Therefore, they have
applied the meanings attached to the Starbucks brand in their identity projects hence expressing
their identity through the consumption of Starbucks coffee. Thereby they identified with Starbucks in the 1980s where the narratives of being a gourmet coffee shop was still trustworthy,
where the coffee shop was still associated with the neighbouring café, being their Third Place, and
where the atmosphere had character of the European intellectual café traditions.
Furthermore, the bobos have been participating in changing the perception of coffee being more
than just a mass-market product. Without being aware of the significance of the bobos, Starbucks has been dependent on them and their attendance in the stores. The bobos’ identity has
had a spill over effect, transferring meanings from the bobo to the brand granting the brand with
legitimacy (Holt, 2004; McCracken, 1986). However, this transformation process can currently be
questioned and we argue that the bobos have left Starbucks due to the narratives and hence the
brand not being true to itself anymore causing the original meanings to be less prevalent. The
perception of Starbucks has changed and made the narratives untrustworthy, causing the bobos
to seek towards other more authentic coffee grounds. This will be the pivotal point for analysis in
the following section.
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16.2 Identity Projects
Due to the time in which Starbucks emerged the approach to the Starbucks consumer is that he
or she fundamentally possesses the basic characteristics of the post-modern consumer thereby
defining this consumer of Starbucks as involved, individualistic, well-informed, critical towards
marketing, appreciating personal freedom and authenticity (cf. Consumer Culture Theory, Section
5.1.7). Additionally, that the consumers’ identities are fragmented and identity creation is done
through choices of consumption. The brand must, to survive appeal to these characteristics of
the post-modern consumer, hence include meanings in the brand which the consumers can use in
their identity projects (McCracken, 2005; Buhl, 2005). Moreover, brands are important but the consumer can see through marketing affectation hence demands more from the marketers’ branding
initiatives.
16.2.1 The Original Identity Projects of Starbucks’ Customers
It can be argued that Starbucks has been what Klein (2000) calls meaning brokers instead of plain
product producers, signifying that customers buying Starbucks’ products not only buy them due
to the product features but also due to meanings and identity attached to the brand. Simon (Appendix 2) supports that Starbucks’ brand consists of meanings and that one of the reasons why
people go to Starbucks is because of the meanings from the brand getting transferred to the
consumer of the product. The products tell something about the consumer, the consumer’s values
and by consuming the product the consumer send a signal to the surroundings about who he is. Simon (Appendix 2) calls it to stage a performance, one can act rich by consuming Starbucks coffee.
Simon (Appendix 2) underlines that Americans are obsessed with trading their identity by buying
into luxury goods showing that they can afford them. This is further stressed by the prevalent
perception of Starbucks as a luxury good (Koehn, 2001). Thus, consuming Starbucks, in the early
days, was attached with meanings of something classy and hip – especially due to the bobos attaching meanings to the brand. Thereby, their characteristics of being distinctive, intellectual and
their pursuit of unique authentic experiences were transferred to Starbucks, branding the coffee
shop as a way to achieve a bohemian lifestyle and furthermore made Starbucks juxtaposed with
a brand of high class and luxury. Consumers bought into this when consuming Starbucks coffee,
Simon (Appendix 2) argues. The artefacts in the shops as well as the quality narratives support
the luxury of the brand. Artefacts such as interior, the background music, the art on the walls and
newspapers lying on the café tables are supposed to strengthen the bohemian image of Starbucks.
16.2.2 The Identity Projects of Today
Simon (Appendix 2) indicates that customers still use Starbucks in their pursuit of creating an
identity of being intellectual, leaving one to suggest that the identity of Starbucks as a place for
the intellectuals, which was legitimised by the bobos, is still existing. He argues that Starbucks is
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trying to buy in and lend themselves in to the traditional European café, the intellectual café by for
instance having little quotes on their cups and thematize the milieu of the cafés as the European
with big comfortable chairs, and corners where readings and conversation can take place. Also the
design of the cafés is underlining the bohemian feeling to them. Like for instance the ceiling in
glass and wood which is supposed to give an urban hip feeling. In this way, by visiting Starbucks,
consumers can get some of that intellectual life and can present themselves as someone who
cares about ideas but also as taking part of the bohemian culture (Appendix 2). However, following Rifkin’s (2000) argument that culture changes continuously, it can be stated that since Bryant Simon carried out his investigation or observations of Starbucks and its customers in 2006,
there have been some changes in the perception of Starbucks. The narratives have changed due
to strategies based on heavy expansion and hence the brand’s narratives may not correlate with
the external perception or image. Other stories are being told in the environment surrounding
Starbucks harming the trustworthiness of Starbucks’ brand. Therefore, the identity projects of
the average Starbucks consumer may have changed.
16.3 The Disappearance of the Bobos
Previously it has been established that Starbucks has watered down their brand by heavy expansion and standardisation, which has had an effect on the narratives and how they are perceived.
By not being true to the brand and deviating from their brand promise, there is a risk of appearing
untrustworthy to the consumers and not least to the bobos, who will react by turning their backs
on the brand as they no longer are able to apply the meanings of Starbucks’ brand in their identity
projects. Moreover, the bobos can be argued to have been the insiders of the brand’s network –
the ones who adapted and identified with the brand when it first was introduced, and thus they
were the first Flock. The bobos could be seen as a part of the before described “petit bourgeois”
with high cultural capital and hence focused on, among other things, connoisseurship and the values of both the intellectuals and the bohemian culture. By the narratives which Starbucks initially
told, they were able to create meanings which the bobos could use in their identity projects. Thus,
the meanings of Starbucks as a luxury brand for the intellectuals, hip and creative were applicable
for the bobos at that time, creating an identity of them as connoisseurs. However, the fact that
Starbucks has expanded and grown into a large corporation conflicts with the meanings of the
narratives. This has resulted in the bobos having difficulties in applying the current meanings in
their identity projects as the meanings are no longer the same which Thompson et al. (2006) also
indicate. The dissociation the bobos show for Starbucks is very equal to the post-modern consumer with high cultural capital. The bobos do not want to identify with mass culture which Starbucks
can be argued to have come to represent during the years. Additionally, they pursue an authenticity which they cannot find in the mass-produced products and commercialised experiences. They
want what is real and individual, expressing subjectivity.
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16.3.1 New Meanings Attached to the Starbucks Brand
In general, it seems like various consumers are visiting Starbucks from all social strata of society
to socialise, grab a coffee to go, or just to be able to be “alone” among people. Various articles
determine that students find Starbucks’ premises useful for carrying out their studies when not
having anywhere else to do this (Smale, 2008; Harden, 2005). One student even suggests that
she would appreciate if she could book a table to study at in her local Starbucks (Mylanta, 2008).
It also seems like Starbucks has chosen to meet the demands of the students by setting up study
rooms in at least one location; Lawrence and El Camino, maybe realising that investing in the students now may result in loyalty in the long run. However, it can be questioned whether targeting
the students is an optimal strategy. It is difficult to say whether the students use Starbucks as
a part of their identity projects as it more seems like the premises offer them a good environment to carry out their studies without being at home alone or at the library – Starbucks offers
them a pleasing environment where also other students are working (Jason; Kevin; Florian, 2008).
However, as students account for a large part of Starbucks’ customers, the meanings attached to
being a student may be transferred to the brand – for instance that students have low economic
resources with contrast the luxury feeling which Starbucks tries to express but also that they
represent a younger segment which may posses other values than the intellectual bobos – two
aspects contradicting with what Starbucks has tried to express through their narratives. On the
other hand, business meetings held at Starbucks also seem to be popular (Sarah, 2008; Captain,
2008). In contrast to the students, these are more affluent customers who create a more serious
atmosphere raising the image of being an upper-middle class brand.
16.3.2 Why the Bobos Left the Brand
“I am generally not a complainer, I have been drinking Starbucks forever and I remember
drinking Starbucks in your first stores in Vancouver. In the last few years in New York, your
service and experience has become awful and it correlates with your stock price. Rather than
being an Italian coffee house experience, it raises my level of anxiety in the morning! Today by
Grand Central, one employee was screaming at the other to come out of the back room and
start making the bar drinks! […] I am confused. I read the book ‘pour your heart into it’ and
how the coffee experience was supposed to be authentic and best in class. It makes me sad
because I actually bought stock in the company a few years ago after I read the book because
I believed in the company. Now, I see fruit flies, screaming employees, empty cups being given
out and bad milk.” (ZEE123, 2008)
This statement shows how the assumable insider perceives Starbucks as having lost the authenticity and that the whole experience of going to Starbucks have been damaged by yelling and not
well educated teenage baristas (Simms, 2007), fruit flies etc. The perception of Starbucks being
dirty and baristas being inattentive teenagers is shared by many Starbucks customers (Kitkat11,
2008; Olan, 2007) and the narrative of high Quality and Service has been stained, hence not living
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up to the post-modern consumer’s demand for the company to posses connoisseural knowledge
about the coffee (cf. High Quality and Service, Section 12). Another factor exposed to critique from
the bloggers is the loss of Italienness and central European ambience. They find Starbucks being
more and more sterile in its décor resulting in too identical shops compared to for instance Peet’s
and Caribou Coffee which do not have the same industrial feeling to the concept. Also the clover
automatic espresso machines are being centre of critique in many of the bloggers’ opinion (Bbella,
2008).
“I used to love Starbucks because of the quality of the coffee and my drink, until the Italia
was brought in. The automatic espresso machines just don’t taste the same as a hand brewed
shot of espresso. I feel strongly that Starbucks should return to the La Marzocco or another
hand brewed espresso machine – it made the Baristas unique and the experience unforgettable.” (Lilmis84, 2008)
Also the diminishing of the coffee smell in the cafés seems to have scared the insiders off. Some
express with disgust how the cafés smell of burnt toast, cheese and even vinegar from the making of sandwiches. And that these smells dominate the smell of freshly grounded coffee that they
appreciated so much from Starbucks before – it was a part of the whole experience (Mike Clemmer, 2008; Etties, 2008; Prexec, 2008, and cf. Third Place and High Quality, Sections 13 and 12).
In a general perspective, the defection of the insiders, the bobos, can be argued to be due to the
standardisation and streamlining of Starbucks and their corporate image of wanting to target a
mass audience. As insiders and representatives for the populist world on which Starbucks build
their narratives, the bobos represent an authority to assess the authenticity of the brand and to
see whether Starbucks is sponging on the values of the populist world to make a profit. Therefore,
they dissociate themselves from Starbucks seeing that they are commercialising these values of
the populist world. Thus, they take away the legitimacy of the brand.
In the early days of Starbucks, the coffee shop appeared as a Third Place where consumers could
meet, be social or just to be alone amongst people. Thompson et al. (2006) argue that the bobos
were drawn by Starbucks as the coffee shop in its appearance encouraged to creativity in an environment which stimulated the consumers in a way to unfold both their professional and bohemian lifestyles. Thus, as a new concept and innovation to the American culture, Starbucks invited
for and expressed accept for alternative lifestyles which may have attracted individuals whose
positions and lifestyles were marginal and who did not feel like belonging to the mainstream
society (Thompson & Arsel, 2004). However, the way Starbucks appear today the bobos perceive
Starbucks as a conservative, standardised and uniform place which no longer invites for creativity
and time for reflection. Thus, they feel that the coffee shop appeal to a corporate clientele. This is
largely due to the development of Starbucks; that they have standardised the concept across the
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coffee shops making the experience of visiting Starbucks less personal and individually marked,
and furthermore that Starbucks has become mainstream (Thompson & Arsel, 2004; Thompson
et al., 2006).
In general, the bobos seem repelled by standardisation. They appreciate the feeling of small, individuality, personality and authenticity which they feel can be achieved only through unique customer experiences. Thus, they try to show their distinctiveness and sophistication by purchases
and consumption of authentic brands as a means to create their self-image. This identity cannot
be achieved through mainstream and standardised experiences. The gaining after authenticity
can neither be achieved through commercialised experiences like the experience which Starbucks
provides it is argued (Thompson & Arsel, 2004). Due to the standardisation of Starbucks, the
fact that they have diversified and entered into business agreements with large corporations,
and their movement towards mainstream, the bobos perceive Starbucks as a large corporation
pursuing profit. Thus they feel that what ever Starbucks does is to please the customers and to
make profit and is not done from a genuine dedication for the coffee and the authentic feeling.
For instance, the interviewees dissociates themselves from the decor of Starbucks’ coffee shops,
as they see the streamligning of the furnishing as a sign of Starbucks’ lack of authentic feeling.
One interviewee perceives Starbucks as calculating and analytic: “Some major metropolitan area
design team has come in [at Starbucks] and “okay, here’s how we’re going to design the cafe of the,
then, ‘90s, right? I’m sorry, that just doesn’t work for me.” (Patrick in Thompson & Arsel, 2004:636).
This feeling is supported by Kate: “I walk in [at Starbucks] and get this feeling that this is how they
think people want a coffee shop to be. They’re doing marketing research. They probably interviewed
a thousand people.” (Kate in Thompson & Arsel, 2004:637). These comments imply that these
customers perceive Starbucks as a corporation which consciously shapes and designs their coffee
shops the way they think the majority of customers want it to look like. Therefore, meanings of
Starbucks as a calculating corporate giant are created – meanings which the bobos as well as the
post-modern consumer with a high level of cultural capital find difficult to apply in their identity
projects as they do not want to be associated with a mainstream concept created deliberately
to target the average American. They want the authentic feeling, and the feeling of dedication
behind the coffee shop. Additionally, they feel that the authentic feeling is diluted as Starbucks
looks the same no matter which Starbucks coffee shop you enter, hence it is the same experience
to expect always. The bobos furthermore express that Starbucks has lost their bohemian character, which used to encourage all kinds of people to mingle and interact. Instead they feel that
Starbucks’ sterile and uniform decor dominantly attract the bourgeoisies (Sandra in Thompson et
al, 2006:58; Scott in Thompson et al., 2006:56).
What is clear from the statements of the bobos is that they are not indifferent towards Starbucks: They no longer feel attracted by Starbucks and do not feel that they can apply meanings
from the Starbucks brand in their identity projects but they still have an opinion about the coffee
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shop. They perceive Starbucks as a wrong place, diluting their own self-image if they are seen
consuming Starbucks because the brand for the bobos is attached with meanings which do not
correspond with the image the bobos want to create of themselves. Thus in the circles of the bobos, consuming Starbucks does not seem to be socially acceptable. Sandra even calls it tabooed to
frequent Starbucks, although she actually likes their coffee:
“For a long time I wouldn’t go to Starbucks because in my circle of friends it’s not socially acceptable to go to Starbucks because it is just a big corporate and that it destroys all the local
coffee shops [...] if I want to go to Starbucks and carry something out, I will bring my own cup
so I can walk around without having a Starbucks cup in my hand in public. [...] So I go there
anyway and hope that nobody sees me walking out of there who will think less of me for being there.” (Sandra in Thompson et al., 2006:636)
This signals that the bobos in general attach negative meanings to the Starbucks brand. They are
corporate, expressing materialistic objects and as a widespread chain concept they have become
standardised and uniform, expressing conformism – values which the bobos do not want to identify with. They want what is small, authentic and genuine, what is expressing anti-conformism
and anti-materialism but Starbucks has come to represent the antithesis to this. They are very
conscious about brand image and the fact that Starbucks has become mainstream and that the
brand is accessible to all Americans does not seem to attract the bobos. This has created meanings of Starbucks as a brand for the masses. This is negative in the eyes of the bobos as being
accessible to everybody takes out the unique and the distinct of the brand. Furthermore, this implies that Starbucks is sponging on the values of the populist world represented by the bobos. As
Starbucks cannot live up to what the post-modern consumer with high cultural capital and thus
the bobos want, they have left the brand.
16.4 The Social Network of the Brand
Even though losing customers on an overall sense, Howard Schultz has recognised the problem
of losing what he calls the right customers these being the ones who were drawn in by the whole
theatrical experience of coffee making (Schultz in Simms, 2007). This can be interpreted as if
Howard Schultz has realised that the insiders who have legitimated the brand have disappeared
effecting other customers’ perception of the brand. Furthermore, the way Starbucks is perceived
by the consumers seems to have affected who consumes Starbucks and how the brand fulfils the
customers’ identity projects. As Starbucks has turned into a common coffee shop not as distinct
in its character as when it emerged, the bobos find it difficult to attach meanings to Starbucks as
being distinct, authentic and creating unique experiences, thus, they do not feel at home anymore
in Starbucks’ mass concept shops (Smale, 2008). One explanation can be that while the meanings
of the narratives have developed, Starbucks has tried to cling on to the original meanings and narratives while trying to cater to the mass-market at the same time. Therefore, the surroundings
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have perceived Starbucks’ contradicting actions as a marketing affectation from which the postmodern customers dissociate themselves. This results in the surroundings co-branding Starbucks
with contra-narratives – diluting the brand and making it less trustworthy.
The bobos have very likely attracted a larger group of consumers with less cultural capital and
thus a less intellectual crowd to the Starbucks brand. This is due to Holt’s theory (2004) about the
insiders’ significance for attracting other customers to the brand. Customers with lower cultural
capital, and hence a lower ability to be trendsetting, have adopted the values of the bobos by buying coffee the same place as them. It is that little luxury, which Starbucks represents, which the
less affluent part of society can afford, and this luxury feeling attached to the brand can according to McCracken (1986) be transferred to the less affluent customer’s identity when consuming
the product and hanging out in the café. Schultz also mentions this fact; the blue-collar man may
not afford the Mercedes the surgeon just drove up in but he can order the same $2 latte (Schultz,
1997:119). Thereby, indicating that buying a latte can express the same sense of luxury as the Mercedes just in an affordable way. Simon (Appendix 2) extends this meaning transfer by explaining
that people among other things go to Starbucks, paying a price premium to give themselves a
treat – to somehow self-gift themselves.
Starbucks has gradually gained a greater reliance on less-affluent consumers and the customer
base is now predominantly the middle and lower wealth classes (Palmer, 2008). Smale (2008)
moreover, supports this by stating that it previously was white collars, who went to Starbucks.
These are now visiting smaller chains such as Peet’s Coffee & Tea and local coffee and independent coffee shops which posses the meanings which Starbucks used to have. The blue collars go
to Dunkin Donuts and McDonald’s – thereby indicating that fewer consumers are really left for
Starbucks. Most likely, this is due to the less affluent consumers choosing cheaper alternatives –
a tendency which might be intensified by the fact that the meanings attached to the brand has
been blurred and that it is harder to justify to buy a more expensive product which seems to have
the same taste and quality as coffee at McDonald’s (Schwaner-Albright, 2008). As the bobos have
been argued to posses high cultural capital, it can be deduced that a Veblen effect may have been
another reason for the lower class being more willing to pay the price premium to obtain some of
the status of the bobos. Since the bobos have left the brand, the customers striving to gain status
may to a lesser degree have the incentive to buy the more expensive Starbucks alternative and
cannot justify the purchase.
It is difficult to draw a complete picture of Starbucks’ social network regarding followers and feeders on the basis of the empirical data available in this thesis. As we argued in section 5.4 regarding
our empirical evidence, we deduce that the customers participating in the blog on mystarbucksidea.com are followers as we see that they illustrate the behaviour of followers due to Holt (2004).
Therefore the following conclusions will be based on the overall impression of the bloggers after
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having visited mystarbucksidea.com. These bloggers express their dedication to Starbucks and
many comments picture the customers as devotees of the brand because they are so eager to
make proposals for improvements of Starbucks. These customers show a sympathy and support to Starbucks but at the same time they show a contempt and fear of the development of
Starbucks currently. Many customers point out how significant Starbucks is to their everyday life
and how they feel that Starbucks is losing the soul and dedication of providing the customers the
right experience. Furthermore, they show a strong loyalty towards Starbucks indicating that the
brand has to step out of line really badly before they leave the brand for real, which can be seen as
characteristic for the follower in a brand’s social network (Holt, 2004). This is further underlined
by some bloggers who discuss with each other, who know each other and even the employees
from the head office of Starbucks engage in these discussions and know the regulars by their
usernames (e.g. Melody, 2008c; Sbx_nric, 2008; Brodave, 2008).
It is also expressed in the customer comments, that Starbucks create a feeling of belonging (e.g.
Tsthomson, 2008; Quad3spl, 2008). The customers like to be a part of the Starbucks universe and
to be initiated in for instance the Starbucks language when ordering their custom-made beverages – a language which may be difficult for an outsider to take part in (Appendix 2). Furthermore
is seems like the brand is elevated and hence the follower seem to look up to the Starbucks brand
as a kind of a lifestyle leader (e.g. Melody, 2008d; Missyjkl, 2008).
The many customer comments can be seen as disappointments and an expression for the customers buying into the original Starbucks’ meanings and that they wish to point out to Starbucks
that they want for them to seek back to their roots (e.g. Tlb4222, 2008; Scraig29, 2008; Sue1660).
The customer comments can also be interpreted as a fear for Starbucks developing into a concept
which will damage the values put into the brand. Whereas the brand’s untrustworthiness and
lack of ability to fulfil the meanings attached to the brand has resulted in the bobos turning their
backs on the brand, seeking other coffee grounds, it seems more difficult for the followers to
give up on Starbucks. Compared to the bobos, they seem to stick to the brand for a longer time
and to fight for maintaining the identity which up to now has attached to the brand. They identify strongly with Starbucks and the meanings attached to the brand are vital for fulfilling their
identity projects. In other words it can be deduced that they rely strongly on the meanings of the
brand. Whereas the insiders are more risk-seeking, the bloggers on mystarbucksidea.com, hence
followers, express a more risk-averse approach. As Starbucks was not able to live up to the meanings which the bobos originally attached to the brand, the bobos have lost credibility in the brand
as they feel that the brand has sold out. Thereby, Starbucks have lost their legitimising spokesmen for the brand and as the brand no longer have opinion leaders to influence the rest of the
social network, this is likely to disintegrate.
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In Thompson et al. (2006), other characteristics are given of the customers frequenting Starbucks
– these customers may be characterised as followers – and furthermore reasons for them to stick
to the brand despite the disappearance of the bobos are given. Thus, it is stated that they do not
seek the same authenticity as the insiders. Instead they are stuck to Starbucks due to a feeling
of safety. Due to the fact that Starbucks has turned mainstream and standardised, the Starbucks
Experience has also become standardised which creates safety for some customers. They know
Starbucks and what to expect and as they are not keen on new and unknown experiences they
value the standardised experience where they can feel at home and as a part of the community
(Ellen in Thompson et al., 2006:57). This furthermore stresses the risk-averse characteristic of the
followers not wanting to take the risk of stepping out of line trying something new and untried.
This also pictures the followers as the second and third Flock in the Kauffman Continuum, who
do not buy the brand until it has been legitimised by the early adapters of the first Flock. It is furthermore essential to point out that it is due to this legitimacy of the insiders that the followers
are attracted to the brand. The narratives and the meanings which the insiders legitimise are very
important to the followers. They are carrier of the meanings. Seeing that the insiders leave the
brand giving the impression that Starbucks sponges on the bohemian/bourgeois identity to make
a profit, the followers may also gradually leave the brand. If the followers do not feel that the
Starbucks identity is untenable they may also turn their backs on the brand, but because they are
brand magnets and risk-averse they stick to the brand for a longer time compared to the insiders.
That the followers are sticking longer to the Starbucks brand is also apparent through the comments on mystarbucksidea.com where the bloggers express their disappointment towards the
brand but still stick to the brand, believe in it, and come up with suggestions on how to improve it
(e.g. Hb123, 2008; Miclin; 2008; Sbx_eluk, 2008).
Due to the large popularity of Starbucks and the status which has been attached to drinking Starbucks coffee, the brand has naturally attracted a lot of customers who attracted by the status
symbol Starbucks has represented and furthermore the social cohesiveness of using the brand.
Compared to the followers and the insiders, these customers, the feeders are not attracted by the
myth of Starbucks. In other words, they do not buy into Starbucks’ meanings to create an identity
in the same way as the insiders and the followers use Starbucks to create their own self-image.
This is due to the feeders not being alert to the identity which Starbucks contains. They create
their identity on the basis of what is in and by this they have created an identity of being a part of
the group. Thereby, it is argued that a lot of Starbucks’ customers have not bought into the brands
narratives for instance as rallying point to people who had a need of a social gathering point for
those who represent lifestyles on the edge of society. They have fed on others’ identity creation.
Due to the specialty coffee concept becoming more and more common to the American citizens
it has been argued that Starbucks is moving down the Kauffman Continuum towards rigidity all
causing bobos to leave the brand which in the end will cause the brand’s network to gradually
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disintegrate (Kafmann Continuum, Section 8.1.5). Additionally, Starbucks is argued to move faster
down the funnel than the smaller specialty coffee shops which have been able to preserve their
core competences of coffee and hold on to the authentic values of a coffee shop. Due to Starbucks compromising with their foundation in order to correspond with the intensified competition
from the fast food restaurants, it was earlier established that Starbucks has undertaken some
meanings which normally are connected with the fast food restaurants which all things considered has taken part in eroding the initial meanings of Starbucks as the meanings of the fast food
restaurants do not meet the demand for individuality, and not least the demand for authenticity
described in the Theory Section 5.1.7.5. Thereby, the coffee experience at Starbucks no longer appears as the same unique experience as it used to be:
“Customers [at Starbucks] felt like connoisseurs because the coffee quality was at the heart
of the brand – they were proud to be associated with SB. But now with so many concepts like
SB there is no different meanings put into the brand than in any other of the competitors’
shops.” (Smale, 2008:3)
This quotation shows what may have happened to the brand due to changes in the industry. Thus,
Starbucks has moved down the Continuum losing their legitimising customers, the bobos, because they no longer attach meanings which are applicable in their identity projects to Starbucks.
The bobos were the most risk-taking and the ones to set the trend, thus representing the first
Flock. This first Flock provided the Starbucks brand with legitimacy causing followers and feeders
to identify with the meanings of the brand as well, and made them follow the lead of the first
Flock after a short while. The result may have been seen in the huge growth potential Starbucks
had during the 1990s where many Americans adapted the concept maybe resulting in the second
and third Flock buying into the specialty coffee culture.
The bobos have gradually left the brand and there is no personified evidence of the brand such
as the intellectual bobo sitting in a corner drinking the coffee or walking on the street with the
branded cup in his hand – thereby leaving Starbucks without legitimacy of the brand. In line with
Starbucks losing their distinct identity, lacking their competitive advantage as they have become
more equal to the competitors, it can be deduced that the feeders will defect gradually seeing that
they seek towards the brands which are popular giving status. They do not have any thorough
commitment to Starbucks and do not live of the meanings attached to the brand. As the most
heart-feeling customers it can be argued that the followers are the customer group which will
stick to Starbucks the longest. They will not give up on the meanings of the brand.
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103
Figure 8 | The Starbucks’ Brand Social Network
Starbucks 1985
Chaos
< Flock 1
< Flock 2
Bobos
Bobos
Followers
Feeders
Starbucks 2008
< Flock 3 < Flock 4
< Flock 5
Followers Followers Followers
Feeders
Rigidity
Direction of progress
Source: Holt (2004), McCracken (2006) and of own construction
The consequence of the social network dissolving is that the social network is closely connected
with customer loyalty of Starbucks – meaning that the different customer types are interlocked.
Therefore, as the bobos leave the rest of the network will follow suit eventually and the customer
loyalty will be diluted. This dissolution of the social network is what is happening in Starbucks. It
is difficult to point out exactly where Starbucks is situated currently in the figure above but the
bobos have left and Starbuck is approaching rigidity leaving us to believe that Starbucks is somewhere between Flock 4 and 5.
16.5 The Starbucks Consumer and Hyper Modernism
The theory of Gilles Libovetsky (2005) concerning the coming of the hypermodern consumer may
to some extend help to explain Starbucks’ recent difficulties. According to Holt (2002; 2004) it is
necessary for Starbucks to take the consumer culture into account when branding. They may not
have done that in the first place, by following an emotional branding strategy but still they seem
to have targeted some of the post-modern consumers’ demands. However, according to theory
consumer culture is undergoing continuously change (Rifkin, 2000) and hence also post-modern
consumerism is gradually changing – changing into what Libovetsky (2005) identifies as the hypermodern consumption. Therefore, Starbucks may not only face difficulties being inauthentic, they
also face a whole new consumer group with different demands patterns than seen before. This
culture is less focussed on status. Not being focussed on social status may be a problem as Starbucks coffee earlier described has been attached to the sense of luxury and a way to express that
you can afford to buy your coffee at Starbucks. On the other hand Starbucks seems to, with their
initial narratives to live up to the hypermodern consumers demand for ethical business execution,
as a lot of focus has been on social responsibility. However, this narrative has been stained by stirs
in society telling another more negative side of Starbucks, which likely does not appeal to a hypermodern consumer. The Starbucks Experience being less trustworthy can be a hindrance for Starbucks considering the new consumer type, as the hypermodern consumer values experiences to a
larger degree than before seen. This is due to experiences being able to satisfy their needs for self-
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
fulfilment and enjoyment (Libovetsky, 2005). However, as earlier mentioned the consumer culture
only changes gradually and is affected by the current culture. Therefore, it is difficult to conclude
how large the concentration of the hypermodern consumer is in the US, if the post-modern consumer may already contain some of the hypermodern values, or whether this discussion about the
new consumer type is still only apparent in France where the discussion currently is being carried
out. Consequently, we are not able to come with a final conclusion on whether he American society is influenced by hypermodernity but Starbucks must take this new tendency and its impact on
coffee demands into consideration when telling their stories and branding Starbucks.
17. Conclusion
The purpose of this thesis has been to investigate whether Starbucks’ current decline can be explained by the meanings attached to the brand, and hence, to what extent Starbucks lives up to
their brand promises.
During the investigation of the narratives and the meanings attached to Starbucks, it was unfolded that Starbucks deliberately has made use of storytelling in their branding focussing on creating
emotional connections with the customers. Thus, meanings have intentionally been put into the
brand making the purchase of coffee more than just coffee. Starbucks has created the Starbucks
Experience containing the meanings of Italian coffee traditions, intellectuality, Starbucks as a
Third Place encouraging to creativity and conversations, social responsibility, the American Dream
and high quality coffee. Seeing that Starbucks is an identity brand, these meanings have been
identified to be a means in the customers’ identity projects; thus, the meanings attached to Starbucks have been transferred to the customer when consuming Starbucks to create the customer’s
self-image. The meanings can be concluded to be legitimised by the bobos; a subculture melting
bohemian and bourgeois values and furthermore a representative of the post-modern consumers
with high cultural capital. Thus as an authentic neighbouring coffee shop encouraging to lingering
and conversations, Starbucks managed to cater to this high cultural subculture when they entered
the market. This has provided a breeding ground for later Flocks to embrace the brand as well
ensuring the success of Starbucks. Starbucks lead by the visions of Howard Schultz revolutionised
the coffee industry and the perception of coffee when introducing their specialty coffee concept
and since then Starbucks has set industry standards. However, it can be concluded that the fact
that specialty coffee in general has become widely accessible and common to the American consumers has pushed specialty coffee towards rigidity. Furthermore, it can be concluded that strategic decisions made by Starbucks have made the brand more rigid compared to smaller, local and
independent competitors. This rigidity and the strategic decisions such as aggressive expansions
and attempts to comply with the intensified competition from the fast food segment have created contra-narratives about the brand and attached less flattering meanings to Starbucks. Thus,
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it is deduced that Starbucks by some is perceived as a mainstream and standardised brand, which
no longer possesses a distinct character of a neighbouring coffee shop.
In an overall perspective it can be concluded that Starbucks has lost their authenticity; customers
and media perceive that Starbucks is not living up to their brand promises seeing that they communicate narratives of themselves which they are not able to deliver. Thus, the fact that Starbucks
tries to portray the brand as an authentic coffee shop is to some degree perceived as a marketing
affectation to cover the real identity of Starbucks as a corporate titan who has commoditised the
concept to target the mass-audience. From this it can be concluded that Starbucks has become
inherently fake and no longer is true to themselves. Therefore it can be concluded that consumers
has lost trust in Starbucks as the brand has not been able to live up to its brand promises. The
Starbucks Experience and the brand have been diluted. The consequences of no longer being perceived as real are vital as Starbucks has lost their legitimacy due to the bobos who are deduced to
be the insiders of Starbucks have turned their backs on the brand. This will eventually disintegrate
the social network of Starbucks. Starbucks appearing commoditised and mainstream opposes the
values of the bobos who appreciate authentic brands, unique experiences and personality. The
meanings attached to Starbucks portray the brand as an antithesis to this. The inauthenticity and
less flattering meanings furthermore result in customers not wanting to apply the meanings in
their identity projects and it can be concluded that consumers deselect the brand due to this.
Therefore, it can finally be concluded that Starbucks’ decline can be explained by Starbuck sticking
to their original narratives while the context fills the brand with conflicting meanings resulting in
the consumers not finding the meanings applicable in their identity projects.
17.1 Implications of the Conclusion
Starbucks lead by Howard Schultz has realised that the brand has lost its credibility and now faces
difficulties in maintaining the customer traffic, which have resulted in the coffee chain closing
down a lot of coffee shops across the US. Furthermore, Howard Schultz has recognised that the
brand must go back to its roots. However, Starbucks does not seem to be aware of the root cause
for their current decline as the future strategy of the brand is to expand further on the international markets and initiations such as introducing the automated coffee machines are still carried
through (Nocera, 2008; Starbucks, 2008c). Therefore, the strategy of Starbucks conflicts with
the intention of going back to the roots. The question is moreover if going back to what Starbucks originally was is the optimal solution for overcoming the current difficulties of the Starbucks
brand. This is due to the meanings of the original Starbucks being legitimised by the subculture,
the bobos, providing a breeding ground for Starbucks’ social network to develop. However, whether this subculture is still apparent in the US and whether Starbucks would still attract it again is
questionable. Therefore, it can be seen as a failure to pursue the old success, as the conditions for
this may not be apparent no more. Furthermore, the development of the company has to be taken
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into account, as this can be a hindrance for going back to their roots. This is due to the fact that
going back to the roots implies to go back to narratives evolved around the neighbouring coffee
shop, the Third Place where the visitors are acquainted with each other, and where there is time
to interact with every single customer. This conflicts with the expansion level and hence the size
of the company.
Therefore we instead suggest that Starbucks should go about their branding in another way if
wanting to be re-vitalised. They must target a new sub-culture in the US society. This is easier
said than done and we do not have the exact suggestion to who this subculture could consist of.
However, it could be a culture with some characteristics of the hyper-modern consumer. As this
hypermodernity is argued to be a successor to the post-modernity which gradually will gain a
footing in the consumer culture, it could be a suggestion that Starbucks re-invent themselves to
be able to target the anxieties of the hyper-modern consumers. They are anxious about what the
future brings, they do not consume to obtain personal status but to feel inner pleasure about their
choices, and they are concerned about the environment. Moreover it can be imagined that the
anxieties are further accelerated by the fact that US has been a target for terrorism and political
critique under the Bush government. However, it is not suggested that Starbucks ignore all their
initial values and meanings to pursue new grounds to address a new segment. Due to the brand’s
status as an iconic brand it can, according to Holt (2004), be deduced that Starbucks can take advantage of their historic ability to target a subculture’s identity desires. Thus, through the nation’s
memory of Starbucks’ previous myth and what this myth provided for people using it, Starbucks
has earned the authority to tell the same type of myths and to target a similar and current subculture’s identity projects.
Starbucks was able to create a Starbucks Authentic concept and maybe that is what Starbucks
should re-emphasise, thus be true to what they really are and acknowledge what they have become. Therefore the myth to be told should be based on what they have become and not focus
on being the small neighbouring coffee shop and instead find their authenticity in being their own
concept – an American coffee concept inspired by the Italian coffee traditions where the customer
can have their beverage in a comfortable and relaxing setting. Moreover, Starbucks must be realistic, and consider whether it is possible to go back to their roots at all and therefore consider
whether it is possible to target a culture that value the small neighbouring coffee shop as Starbucks has grown apart from his concept. However to meet the demand of being more individual
and express distinctiveness instead of being the omnipresent titan it is suggested that Starbucks
on individual coffee shop basis adapt to the local environment. This could be done by letting the
local coffee shop managers get more authority to take independent decisions. Moreover, local
managers should be encouraged to set their own mark on their shop. Thereby leaving their own local mark and facilitate diversity in the Starbucks concept – the ambiences would be different from
Starbucks but still keep the overall focus on quality. Also a suggestion to meet the raising problem
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of busyness caused by the to-go customers is to somehow separate the coffee to-go segment
with the sitting café guests. One suggestion is to have separate shops where it is not possible to
order coffee to go in the Starbucks Cafés and vice versa.
18. Implication for Further Research
The research of Starbucks’ brand has indicated that the meanings attached to the brand are playing a decisive role for the sustained success on the US market. Starbucks have during the last 13
(Starbucks, 2008i) years expanded heavily in overseas markets too and have also, until recently,
achieved success on these markets. Howard Schultz comments the cross-boarder success with “…
that our passion transcends language and culture” (Starbucks, 2008i). However, considering that
the same branding strategy is followed in all markets, we find the underlying reasons for success
very interesting, as according to theory (Holt, 2002; McCracken, 2005) brands should face difficulties if not corresponding to national culture. Also Lindstrom (2005) underlines that a brand cannot
expect to be accepted and gain success if not adapting to local cultures, hence a global and standardised brand strategy cannot be applied to local markets. Nonetheless this is what Starbucks
has done since 1995. Therefore, we suggest that further research can be carried out regarding
the underlying reasons for the Starbucks brand appearing to have success with a global branding
strategy regardless of national culture.
The research could be demarcated to focus on analysing the Japanese market – the first overseas
market of Starbucks, where they experienced huge success (Starbucks, 2008i). How come the
brand has success in Tokyo with a standardised concept hence telling the same narratives and in
a market, where the culture could not be more unlike the American? Especially an analysis of the
narratives and the perception of these could be interesting. Such as whether it really are the same
narratives that Starbucks tells in the Japanese market, if focus is laid upon some specific narratives, and whether the narratives are perceived in the same way. For instance it could be proposed
that a narrative evolving around the American Dream is ineffective in a Japanese context due to
the narrative’s tight connection to the US culture. Hence different cultural principles can be argued
to be apparent in the Japanese market, which make the research of the narratives and meanings
even more interesting, as according to the theory different rationale for applying the narratives’
meanings must be apparent on overseas markets. Additionally, an analysis of the identity projects
and hence how the Starbucks brand is being “used” in a Japanese context could bear witness to the
reason for Starbucks success. Thus the Japanese consumer may apply the brand in their identity
projects in a different way than the American consumer and the projects may as well give an idea
of the underlying reason for the Japanese consumer taking the Starbucks brand to heart. Thereby
the study cannot avoid possessing some character of a comparative study between the US consumer and the Japanese consumer comparing what the difference in brand perception is between
the two cultures. Hence what the success criteria have been in the Japan and the US respectively.
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Appendix 1
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 1
Starbucks Continues to Implement Transformation Plan, Announces Organizational Changes
to Support Long-term Growth
As part of its ongoing transformation, Starbucks communicated organizational changes today
including a realignment of its executive leadership team. Additionally, on the Q3 earnings call on
Wednesday, July 30, Howard Schultz, president, CEO and chairman, will provide an update on the
progress the company has made, both in elevating the customer experience and in the significant
actions the company has taken to structure the business for long-term, profitable growth. Schultz
sent the following email to all Starbucks partners earlier today:
July 29, 2008
To: Starbucks Partners
From: Howard Schultz
Re: A message from Howard---Building a stronger company for the future
Dear Partners,
I want to acknowledge from the outset some of the difficulty that many of you
may be experiencing given the tough operating environment we are facing. But
let me assure you that there has been a relentless focus on making the decisions
necessary to put us all in a position to win. Unfortunately, some of the decisions
will result in not only store closures, which we announced earlier this month, but
a restructuring of our organization that will eliminate some positions. Although I,
along with the leadership team, made the hard choices to close stores and
reduce the number of positions, which will result in loss of jobs, ultimately, I feel
that they rest with me. I fully understand the seriousness of these actions and
the concerns you may have, but please be assured that we will treat all departing
and remaining partners with respect and dignity.
We have been a public company for more than 16 years and, together, we have
created one of the most recognized and respected brands in the world, while also
providing our shareholders with significant long-term value. In the early days of
building our company, the naysayers didn’t believe in us or that our company
would even survive. And now, we can hear those drumbeats once again from
people who think that our best days are behind us. But I strongly believe that,
together, we will create an even stronger company for the future.
In January 2008, I, along with the senior leadership team, created our
1
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 1
transformation agenda and simultaneously, we initiated an ongoing, thoughtful
and thorough examination of all parts of our business. We framed our
transformation around three key strategies: strengthening our core business—
our coffee and our partners; elevating the customer experience; and making
decisions and investments to benefit the long-term growth of the business. I
believe, without a doubt, that these are the right strategies for us to execute in
order to make the necessary changes that will enhance the experience for our
customers and partners.
We are well into the implementation phase of transforming Starbucks, which has
included many new initiatives and corrections to our business. This month, we
announced and/or have begun implementing the following business strategies:
the closure of approximately 600 underperforming company-operated stores in
the U.S. market, with approximately 70 percent of partners in the first 50 closed
stores successfully transferred to positions in other stores (July 1); posted the
complete list of the 600 U.S. store closures on starbucks.com (July 17); the
closure of 61 stores in the Australia market, with 23 remaining open (July 29); a
reduction in our workforce of both the number of positions and partners across
the company by almost 1000 (July 29); and the realignment of the executive
leadership team (July 29).
As I have stated in previous communications, the U.S. store closure decision was
one of the most angst-ridden choices that we have made in my more than 25
years with Starbucks. Our decision to close underperforming stores in the
Australia market was just as difficult, and it in no way reflects the state of
Starbucks business in countries outside of the United States, which is quite
strong. Our challenges in Australia are unique, and there are no other
international markets that need to be addressed in this manner. Although it is not
easy, hopefully, we realize that part of transforming Starbucks is our ability to
look forward, while pursuing innovation. We strongly believe that our decisions
to close underperforming stores and reduce our partner workforce will help
support Starbucks continued growth.
As we have continued to execute our strategy, it became increasingly more
evident that a razor-sharp, unrelenting focus on our business is vital to our
success. As ceo, I understand this is a non-negotiable requirement and
concluded that I need a direct line of sight into our businesses and functions, with
a concentration on the U.S. Business, Starbucks Coffee International and
Consumer Products Group.
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With this in mind, I have asked Martin Coles, chief operating officer (coo), to once
again, assume the role of president, Starbucks Coffee International, a business
that achieved great success under his previous leadership. We are excited
about Martin’s return to our International business at a time of tremendous
opportunity. Concurrent with this, we have eliminated the coo position.
In order to effectively integrate our marketing, innovation, and customer
experience, Michelle Gass, senior vice president, Global Strategy – Office of the
CEO, has assumed the leadership of the newly redefined marketing and
category team as senior vice president, Marketing and Category, which includes
Food and Beverage. Michelle’s unique experience in both strategy and
marketing will provide the organization with a clear focus in this area.
Dorothy Kim, executive vice president, Global Supply Chain Operations, has
demonstrated an expert understanding of our supply chain operations, process
and strategic implementation, which will be utilized extensively in her new role as
executive vice president, Global Strategy -- Office of the CEO; and Peter
Gibbons, senior vice president of Global Manufacturing Operations, who led
manufacturing operations, has been promoted to executive vice president, Global
Supply Chain Operations.
Vivek Varma, general manager of Communications and Public Relations for
Microsoft Platforms Services Division, has been named senior vice president for
Starbucks Public Affairs. He will assume his new position on September 8.
Please join me in congratulating Martin, Michelle, Dorothy, Peter and Vivek on
their new roles.
I would also like to take this opportunity to thank Jim Alling, who is leaving the
company. I am personally grateful to Jim for his numerous contributions to
Starbucks during his 11-year tenure and we wish him continued success as he
enters the next chapter of his life.
We have experienced a lot of change since we embarked on our journey to
transform the company. And I know that the difficult and emotional nature of our
decisions has weighed heavily on every partner in the company, which is the
most distressing part of our current business state. With sincere gratitude and
thanks for your commitment to Starbucks, I ask that we all resolve to stay the
course and remain strong as we move forward.
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And please do not forget that we have had many successes that we can be
proud of such as: our nationwide Art of Espresso training in the U.S.; introduction
of innovative brewing equipment with MastrenaTM espresso machine and
Clover® brewing system; engagement with our customers through
mystarbucksidea.com; the Starbucks Card Rewards Program; and introduction of
our health and wellness platform with VivannoTM Nourishing Blends and Sorbetto
beverages. We are also receiving recognition for listening to our customers
during these tough economic times. Based on the responses received from over
1 million newly registered Starbucks card holders since we launched the program
in April, we will enhance and take our Starbucks Card Rewards program to the
next level of increased value in the fall. This will continue to demonstrate our
sensitivity to current economic conditions, as well as further our attachment with
our customers.
We have not had a Leadership Conference in two years, and I am very excited
about our upcoming Leadership Conference in New Orleans in October, when
our leaders come together---over 10,000 strong---to share our plans to build our
company for the future. We will also participate in community service projects
that will give us an opportunity to give back and help improve the lives of the
citizens of New Orleans. We are also looking forward to unveiling our fall,
holiday and FY ’09 product and promotion calendar, which I believe is the best
work we have done in years. As in the past, I know we will leave the conference
energized and aligned around the goals and objectives for fall, holiday and FY
’09, which we will share with all partners upon our return to our respective work
locations.
As I have said many times and sincerely believe, the best days for Starbucks are
ahead. This is another defining moment for our company and we will succeed!
Respectfully,
Howard
Source: www.starbucks.com/aboutus/transform/Howard%20communications%20July%2029.
pdf [assessed 27/09/08]
4
Appendix 2
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 2
Bryant Simon at Taste3 Conference – Wine, Food, and Art, 15/06/06
“Thanks, it’s great to be here. As Chris said I’m a historian but I’m not really anymore, luckily I have
ten years. But over the last few years I have been involved in a kind of ethnography – observing,
observing Starbucks mostly. And my son the other day asked another kid what that kids dad did
and the kid said his a banker and my son said that I work at Starbucks. And I really have spend
around 12 hours a week there and looking and watching what people are doing and talking to people about Starbucks and it’s sometime a painful experience, I listen to more Alanis Morisette than
any person should have to in their life and in acoustic no less. But, so in all seriousness I started
this book project with a kind of single proposition and that was: “That what we drink has meaning”. It says something about who we are. And that we in many ways that consumption a kind of
a democratic form, and I don’t want to push this too far. We make choices with the money that we
have, and those choices again tell us something about who we are. And so what I study in many
ways is a mass phenomenon.
Starbucks started out, and you’ll see, in 1971, this isn’t the store it’s a kind of whole earth kind of
entity, with some counterculture to it. And quickly that was bled out. And now there is 13.000
Starbucks around the world in about 30 countries, you know and this is just a kind of Starbucks
is everywhere – [showing photos on slides] this is Paris. But part of what is going on here, I mean
just a sort of look at the phenomenon itself I mean again, there is 13.000 this is in China in the
Forbidden City [showing photos on slides]. But again 13.000 stores they employ 100.000 people
they open a store every six hours. But most importantly to me is, I love this one, I can’t wait one
terminal to get to a Starbucks. But most importantly to me, you know not a bold prediction here,
but most importantly to me 44 million people a week go to Starbucks, that’s a lot of hits. And
that’s what I’m interested in. What these 44 million people are doing a week. A lot of them are
repeat customer obviously, and people do different things at Starbucks and I want to talk a little
bit about the meaning here. First thing here as you know the coffee is not cheap it’s not wildly
expensive but it’s not cheap and so one of the thing I want to propose and want us to think about
is something I think about is why people pay the premium? Not long ago I was at a Starbucks
at 18th and Broadway and I don’t know if any of you have ever been to the store but it’s a really
long store and the line was literally out the door. But I was facing out of the 18th street and there
was a little cart selling “gourmet coffee” for 15 cents – there was nobody there. So again I want
us to think about why people are willing to pay the premium and here’s the story about, apropos
of yesterday right and what was going on – there’s a guy in line complaining about the price of
gasoline and then I pays 24 dollar for a gallon tall latte. So why are people paying the premium?
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And again, you know, what could we learn from the purchases we make? I would suggest that
there is a kind of three ways to think about this about this consumption. One would be functional,
one would be emotional and the third would be expressive. And I just wanna kind of run through
these categories. And you can tell than I’m a teacher, you’ll have to have a list of three so that
people can take notes. Sorry I don’t mean to be talking down to you. But part of it is functional:
this is the molecule for caffeine, and you know, you can say whatever you want about caffeine but
people are addicted to caffeine, and Starbucks, I don’t want to push this too far, but, all right well,
Starbucks is I think not by accident the most caffeinated coffee on the market: a cup of Starbucks
has twice the amount of caffeine as a cup of Folgers. Now, you could be conspiratorial here and
think like cigarette companies that they try to hook people early but that will be for you to think
about. But I would suggest in other words there is a functional sort of aspect to this, I think, that
people need to serve their addictions. And that Starbucks wouldn’t work, I think, if it weren’t an
addictive product. And not only do they sell highly caffeinated coffee they sell it in mass amounts.
Not just to everyone, I mean, 20 ounces of highly caffeinated coffee is enough to addle anyone’s
brain. So in the functional terms they’re a caffeine delivery service, legalised right. So that’s the
functional part.
There is also an emotional part to it. By emotions it means that you feel better about yourself
simple as that. And, ehm, I talk to people all the time and I ask them why they go to Starbucks,
why would you buy that drink – I think that’s a caramel mocc..whatever. It’s a caramel something
that cost a lot of money, and what people will say is, you know I had a test so I bought myself
a treat, I had a hard week so I go on Fridays to treat myself for the week. The emotional part of
Starbucks and a part of why it’s working is that’s a form of self-gifting and it gets repeated again
and again and again and this is something you know, it’s a cheap form of self-gifting but it’s a
form of self-gifting and then again I talk to people all the time we talked about Starbucks and
self-gifting. Another kind of emotional sort of aspect of Starbucks ehm, many of you might live
in suburbs, we live in a world, where we are desperate for belonging if you saw the movie Crash
the opening line of Crash actually talks about how we are so desperate for a touch that we bang
into each other. Starbucks offers that language is carefully calibrated in it’s carefully calibrated you
have to master it and one you’ve mastered it you belong. They are trying to form a community of
belonging corporately sponsored and they coach their baristas and it’s in the manuals and it says in
that, it basically tells people to remember names all of this to form a connection in a world where
we are desperate for connection. That part is the emotional part of it. I don’t have a slide for this
and I know it’s a kind of criminal in such situation. But I would say that a third form of emotional
connection that people have developed to Starbucks is a desire for predictability. No these are not
all things that have to work for everybody and I think this is important some work for some people sometimes. And so many people are desperate for predictability. We talked about you know
the consistency of for instance fast wine yesterday [referring to a Taste3 seminar carried out the
day before]. They want that predictability people tell me all the time when you’re in an airport
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you want something predictable, when you go to a new town you don’t want to invest in what
economists call discovery costs, checking out every coffee shop you go to the one which is predictably ok. Now, there is a reassuring sense that people you know, Americans travelling abroad go
to Starbucks for the predictability. For some of you that may see it as some form of a thin way of
travel, but then again it works on an emotional level for many people.
I think the strongest and what I’m most interested in right now is what I would call the expressive branding. And that’s the form of branding that you buy something because you want to tell
something about yourself to the people that are looking at you. In other words it a performance.
A consumption is a form of performance, and Starbucks is staging these performances. I would
not think about Starbucks in terms of, I would think about it like a multimedia corporation in the
way it’s staging performances and make you the customer the centre of that performance. And
so if you like look at the basic Starbucks you know first thing you supposed to notice is, it’s not
McDonalds. It’s deliberately calibrated with stuff that looks expensive to a kind of mass audience.
I mean it’s reassuring too in its naturalness and all that, but it’s supposed to look there is ???
there is no sharp ??? right, those chairs you can buy online it’s supposed to sort of look like luxury
and the reason is that luxury is a part of performance it says “I can afford this”, and you present
yourself to the people looking at you as someone who can afford luxury. We are a nation currently
obsessed with trading up. It used to be that you proved your middle-class values through ???
and thrift your ability to safe. Now you prove it by acting rich. Starbucks offers a way to present
yourself as somebody who can afford to a sort of trade up. So let us talk a little about the art for
instance. You know why do they put that there? In a sense I think what they are saying is they’re
artistic, and let’s just think about the interiors now for a minute, they’re artistic and you get to be
artistic by going there. A little of it bleeds of and shades into you. And they, this is the art speaks
to one other thing about Starbucks there’s an attempt to engage with hip but it can’t be too hip.
Cause if you take too big a risk you’ll alienate people. Remember this is a mass-audience. But the
art again is carefully calibrated to a sort of fifties a kind of pop-art stuff. Boy that’s a crappy slide.
This was actually Starbucks really first kind of musical collaboration and it was Miles Davis. You
know Miles might have been the hippest person ever to live but they’re picking a very distinct
form of Miles Davis and that was the early fifties blue-note stuff. As I said to Chris before this is
not bitches brew. They are not pushing you to that point. But what does jazz say? As a vocabulary
it says a certain urban sophistication the play it because you can imagine yourself and you can
present yourself to someone else as sophisticated and urbane. Ehm, Dave Matthews, is now an
attempt to tap into 20 something market, I don’t think, and I’ll come back to this in just a second
??? it’s an attempt to a kind of reinvest the brand with hip, which is something I’ll come back to
as well. These, eehm, Starbucks puts quote on its cups. And it’s a kind of a crazy thing and they a
kind of hide them as well, I don’t want to put them on the couch, you know there is something go-
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ing on here. And, but, they’re very clear about this. They are trying to buy in and lend themselves
into the traditional European café. To the intellectual life in the café. And you then get some of
that intellectual life. You present yourself as someone who cares about ideas. This cup interestingly enough, the cups are actually, according to Starbucks, meant to stimulate the conversation
that we have in cafes. This is a cup that says wildly political proposition of a man who wishes he
haven’t been living in a closet all his life. And when students at Bay…ehm, the administration of
Bailors University complained they pulled the cups, because you can’t have too much conversation.
But again the idea is to link you, the consumer with the intellectual culture and present yourself
as a member of it.
Ehm, Starbucks in it’s architecture if you think about it is a design nightmare. If you take the natural wood, the natural floors the kind of, like, pottery barn thing of the furniture and the ceilings are
always like urban loft hip. It’s pastiche in some ways and I mean maybe pastiche is in, but it’s not
consistent. But that pastiche of the ceiling is the boho part of it. And you then represent yourself
as a kind of part of a bohemian culture. You present a version of yourself through it.
Another, you know expressive branding the comfortable chair. I want to talk now a little bit about
politics, ehm. Something we haven’t actually talked about at all. Starbucks as you know sell fairtrade coffee, well you might not know, but they do sell fair-trade coffee. But what I think they
really are selling here, is what I would call innocence by association, and let me just talk about this
for a second. In the wake of 9/11 we learned that people around the world didn’t like us that much
– some people. We’ve learned that globalisation is a really dicy proposition filled with exploitation,
filled with inadequacies and frankly we don’t feel very good about it. And what fair trade coffee in
a sense does is it allows you to say look, I’m involved in the global world and I’m innocent of any
crime or any wrongdoing, but that’s what it is. And Starbucks places it one step further they’re
the largest consumers of fair trade coffee in the world yet it represent only about 3% of their
total buy. But go into a Starbucks and they almost always, and particularly in university towns,
and they put the fair trade coffee right by the door. I don’t know if you know anything about the
science of selling, but that’s not a selling place that’s a message place. They’re planting the idea
because it makes people feel good about themselves. It’s not, I mean, I’m not sure that fair trade
coffee can solve for instance the problems of Rwanda where they now are buying fair trade coffee. We probably feel, I mean erhm, white America probably feel worse about racial issues than
anything else. Ehm, there’s a new book by S. Steel professor at Stanford called “White Guilt”. And
we work very hard in this country, we I don’t mean to exclude anyone, I talk specifically about the
white middle class, to dissociate from our nations racial past – it’s an ugly and difficult past. And
I think Starbucks understands that and they form deals with Magic Johnson to open up Starbucks
stores in underserved neighbourhoods around America. But I would suggest here, and I went to
the Starbucks in Harlem and it was the crappiest store I have ever been to, that that store was
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 2
more about Westchester than it was about Harlem. It was more about allowing whites to dissociate from racism. If you buy a product from a company that pursuit diversity, that have stores in
largely African American and latino neighbourhoods you are washed from the sins of racism you’re
innocent by association, you express something about yourself. And I think none of these works
for everyone they work for some people.
Let me end just quick, by talking about one kinda last thing, and it’s just if you load your brand
with all these meanings you run the risk of people really not liking you. Let alone taking over a lot
of street corners, errr, you run the risk of people not liking you. And one of the interesting things is
the way in which Starbucks has not only become a way that people express their values by identifying with the firm but the also express their values by not going. People tell me all the time I don’t
go to Starbucks, I’m not that kind of person. I go, I wont speak their language. It’s become such
an important kinda marker that even by not going you’re marking who you think you are – a form
of expressive branding. And just a couple of anti-starbucks propositions. So this is erh, breeds like
rats. There’s lot of like jamming, re-working the erhh logo. This is a woman from San Francisco
that Starbucks sued. This is, speaking about globalisation and Starbucks, this is the battle of Seattle from the late 1990’ies and Starbucks actually changed its policies in the wake of it. The woman
who threw the cash register through the window was only there by accident. Here’s the boycott
you know by not consuming you’re staying who you are. And last and sort of iconic but disturbing
image is, well this is not it, this is Delocator it’s a webpage where you can plot in the address of
the Starbucks and you can get all the independent coffee shops nearby and it’s one of the hottest
websites in America. And this is a kind of disturbing image of America, in a kind of meaning, but
represent playing around with it. Thanks for listening and having me here.
Source: http://www.youtube.com/watch?v=Fxpfx8W8C20 [assessed 18.06.08]
5
Appendix 3
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 3
Howard Schultz Transformation Agenda Communication #1
SEATTLE; January 7, 2008
Letter To: All Partners
From: Howard Schultz
Twenty-five years ago, I walked into Starbucks first store in Seattle’s Pike Place Market, and from
that day forward we have taken the road less traveled. Working with an exceptional group of
people and summoning all the courage we could muster, we created a new kind of place – one that
served the kind of coffee that most people had never tasted, an environment that didn’t look like
any other store, and hiring people who were fanatically passionate about coffee and celebrated
their interaction with customers. To do this, we focused every ounce of our beings on creativity
and innovation.
Over the years, together we have built one of the most recognized and respected brands in the
world. When we went public in June 1992, we had 119 stores. We now have more than 15,000
stores and a significant and growing presence in 43 countries, serving 50 million customers a
week. These customers have placed their trust in us, and for them and for each other we need to
ensure that our future is as exciting as our past.
If we take an honest look at Starbucks today, then we know that we are emerging from a period
in which we invested in infrastructure ahead of the growth curve. Although necessary, it led to
bureaucracy. We will now shift our emphasis back onto customer-facing initiatives, better aligning
our back-end costs with our business model. We are fortunate, though, that the challenge we face
is one of our own making. Because of this, we know what needs to be done to ensure our longterm future success around the world.
Transforming the Starbucks Experience
The Board decided that I should lead this transformation. Given this, effective immediately, in addition to my existing role as chairman, I have returned as chief executive officer for the long-term.
Jim Donald is leaving the Company. I want to pay tribute to Jim’s leadership. He was a passionate
and tireless advocate for Starbucks, and his contribution to our company cannot be overstated.
Looking ahead, the reality we face is both challenging and exciting. It’s challenging because there
are no overnight fixes. Rather, our success will come in the rigorous execution of several new strategic initiatives – that capitalize on our heritage to drive our successful future. And our reality is
exciting because there is so much opportunity ahead for Starbucks.
Our new transformation agenda includes:
- Improving the current state of the U.S. business: by giving our store partners better training and
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Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks
tools, launching new products – some of which will have an impact as significant as Frappuccino®
products and the Starbucks Card – and introducing new concepts in store design, among other
enhancements to the Starbucks Experience. At the same time, we will slow the pace of our U.S.
store openings and close a number of underperforming locations, so we can renew our attention
on store-level unit economics and be laser-focused on flawless execution.
- Re-igniting our emotional attachment with our customers by restoring the connection our customers have with you, our coffee, our brand, and our stores. Unlike many other places that sell
coffee, Starbucks built the equity of our brand through the Starbucks Experience. It comes to life
every day in the relationship our people have with our customers. By focusing again on the Starbucks Experience, we will create a renewed level of meaningful differentiation and separation in
the market between us and others who are attempting to sell coffee.
- Building for the long term, which has two distinct pieces: re-aligning Starbucks organization and
streamlining the management of the organization to better support customer-focused initiatives
by ensuring our support and planning functions -- from back-end IT systems to store operations
-- are most effectively dedicated to the customer experience. This will help us to make smarter
decisions about new products and initiatives and bring them to market more quickly than ever in
our past.
- Expanding our presence around the world, by building a profitable business outside the U.S., and
capitalizing on the enormous, untapped potential for our brand. We will redeploy a portion of the
capital originally earmarked for U.S. store growth to the international business. Though we have
5,000 international stores today, we are just at the beginning.
Taken together, these initiatives will help drive our enduring success. And they will come with
changes in our organization…some big and some small. I will be decisive in making them. Right
now, I can tell you they will include a realignment of our leadership structure, as well as a series of
actions to reduce costs and reallocate resources to customer-focused initiatives.
But even as we execute this transformation, there are certain integral aspects of our company
that will not change at all. These include our commitment to treating each other with respect and
dignity, providing health care and Bean Stock for all of our eligible full- and part-time partners, and
our commitment to our community efforts, our ethical sourcing practices and encouraging our
coffee suppliers to participate in our CAFE practices program in our origin countries.
Stay Tuned
I know that you may have a number of questions. Attached is a brief Question and Answer document that answers some of them. And you have my commitment that there will be more information to come over the next few weeks and I will keep you informed. Specifically, I will be meeting with the leadership of the Company in the near future to discuss our transformation agenda,
and in the coming weeks we will communicate these details with you, including your role in it.
In the meantime, I want to thank you for your dedication to Starbucks and for your commitment
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to earning the trust of our customers every day. Our success is up to us. We know what we need
to do to win, and we will do it.
Onward,
Howard
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Voicemail To: All Partners
From: Howard Schultz
Hello partners, this is Howard Schultz. Today, Starbucks is announcing a series of strategic initiatives to increase shareholder value and capitalize on our significant U.S. and international opportunities.
Going forward, we will be refocusing our entire organization on the Starbucks Experience, by going
back to our heritage and what made us so successful in the first place; putting the customer back
at the center of everything we do.
The execute this transformation, the Starbucks Board of Directors has asked me to return as your
chief executive officer, in addition to serving as chairman, effective today. This is not an interim
role for me. I’m in it for the long-term and I promise to be decisive and do all I can to lead Starbucks
to new heights.
Jim Donald will be leaving the Company and let me just pay special tribute to Jim who has been a
passionate and tireless advocate of the company. I’m grateful and I thank him for his significant
contributions and I wish him nothing but the best in the future. He’s been a business partner and
a dear friend and I’m sorry to see him leave and I think it’s clear to say that his contribution to our
Company cannot be overstated.
The success of Starbucks rests on the emotional connection we have with each other and with
our customers. It also rests on how we implement our strategy and innovate to stay ahead in a
competitive marketplace and tough economic environment.
I think recently we have become victims of our own tremendous success. We are emerging from
a period in which we have invested heavily in infrastructure ahead of the growth of the company
and, although necessary, it has lead to bureaucracy that has both slowed us down and cost us
money. We now shift our emphasis back to consumer facing initiatives, betting aligning our back
end costs with our business model.
In refocusing our Company, we are going to play to our strengths – to what has made Starbucks
and the Starbucks experience so unique; ethically sourcing and roasting the highest quality coffee in the world, the relentless focus on our customers, the trust we have built with our people,
and the smart, entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our
company.
To this end, in the coming months you will be seeing internal changes and exciting new developments at Starbucks.
We’ll share the specifics as soon as we can. But in general, I can tell you that our transformational
agenda will have three objectives:
- To improve the current state of the U.S. business
- To re-ignite the Starbucks experience through driving improvement and change in all areas that
4
“touch the customer”; and
- To build for the long term; this has two distinct pieces;
- Realign our organization and streamline the management of the organization to support customer focused intitiaves and
- Accelerate our International success story and growth even further
In closing, let me say that we are truly in this together. Every partner plays a critical role. I am asking that each of us focus on carrying out our responsibilities in the best way possible, and help to
create welcoming and distinctive places that are truly a “third place” for customers and the communities that we serve.
Let me just say to everyone who is listening, I am sincerely excited and energized by the challenges
and the opportunities we have. I am here for the long term. I’m here to help every one of you succeed and to restore the company to the greatness it has been.
But our success is up to you, not only me, but all of you and all of us. We know what we need to
do to win and we will do so.
Thanks for all you do and all you have done and for contributing so much to Starbucks and to all
those people who work so hard and tirelessly behind the scenes who contribute to so much.
Thank you very much. All the best.
Howard
Appendix 4
Source: http://www.starbucks.com/aboutus/pressdesc.asp?id=814 [accessed 10/10, 2008]
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 4
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Howard Schultz Transformation Agenda Communication #4 Howard Schultz Partner Update:
What I Know to be True
February 4, 2008
What I Know to be True
Dear partners,
As I sit down to write this note (6:30 a.m. Sunday morning) I am enjoying a spectacular cup of
Sumatra, brewed my favorite way – in a French press.
It has been three weeks since I returned to my role as ceo of the company I love. We have made
much progress as we begin to transform and innovate and there is much more to come. But this
is not a sprint – it is a marathon – it always has been. I assure you that when all is said and done,
we will, as we always have, succeed at our highest potential. We will not be deterred from our
course – we are and will be a great, enduring company, known for inspiring and nurturing the human spirit.
During this time, I have heard from so many of you; in fact, I have received more than 2,000
emails. I can feel your passion and commitment to the company, to our customers and to one another. I also thank you for all your ideas and suggestions ... keep them coming. No one knows our
business and our customers better than you. I have visited with you in many of your stores, as well
as stopping by to see what our competitors are doing as well.
It’s been just a few days since my last communications to you, but I wanted to share with you
what I know to be true:
• Since 1971, we have been ethically sourcing and roasting the highest quality Arabica coffee in the
world, and today there is not a coffee company on earth providing higher quality coffee to their
customers than we are. Period!
• We are in the people business and always have been. What does that mean? It means you make
the difference. You are the Starbucks brand. We succeed in the marketplace and distinguish ourselves by each and every partner embracing the values, guiding principles and culture of our company and bringing it to life one customer at a time.
Our stores have become the Third Place in our communities - a destination where human connec-
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tions happen tens of thousands of times a day. We are not in the coffee business serving people.
We are in the people business serving coffee. You are the best people serving the best coffee and
I am proud to be your partner. There is no other place I would rather be than with you right here,
right now!
• We have a renewed clarity of purpose and we are laser-focused on the customer experience. We
have returned to our core to reaffirm our coffee authority and we will have some fun doing it. We
are not going to embrace the status quo. Instead, we will be curious, bold and innovative in our
actions and, in doing so, we will exceed the expectation of our customers.
• There will be cynics and critics along the way, all of whom will have an opinion and a point of
view. This is not about them or our competitors, although we must humbly respect the changing
landscape and the many choices facing every consumer. We will be steadfast in our approach and
in our commitment to the Starbucks Experience - what we know to be true. However, this is about
us and our customers. We are in control of our destiny. Trust the coffee and trust one another.
• I will lead us back to the place where we belong, but I need your help and support every step of
the way. My expectations of you are high, but higher of myself.
• I want to hear from you. I want to hear about your ideas, your wins, your concerns, and how we
can collectively continue to improve. Please feel free to reach out to me. I have been flooded with
emails, but believe me, I am reading and responding to all of them.
As I said, I am proud to be your partner. I know this to be true.
Appendix 5
Onward ...
Howard
P.S. Everything that we do, from this point on (from the most simple and basic), matters.
Master the fundamentals. Experience Starbucks
Source:
http://www.starbucks.com/aboutus/pressdesc.asp?id=825
[accessed 10/10, 2008]
Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The Story of Starbucks | Appendix 5
Howard Schultz Transformation Agenda Communication #8
Seattle, February 25, 2008
To: All Partners
From: Howard Schultz
Re: As we embark on Espresso Excellence Training
Aged Sumatra … that’s what I’m drinking as I write you this note. Hands down, it’s my favorite
coffee. Aged for three to five years in a warehouse in Singapore, then shipped as green coffee to
our plant in Kent, Washington, and roasted to perfection. The result is a stunning cup of coffee.
The velvety mouthful, the full-body of one of our classic Indonesian coffees, and the subtle but
ever-present earthiness and spiciness brought to life by our proprietary aging process. It’s rare, it’s
exotic, and it’s ours. What a gift … and we get to share it with one another and with our customers.
Tomorrow evening, we will come together in an unprecedented event in our company’s storied history. We will close all of our U.S. company-operated stores to teach, educate and share our love of
coffee, and the art of espresso. And in doing so, we will begin to elevate the Starbucks Experience
for our customers. We are passionate about our coffee. And we will revisit our standards of quality
that are the foundation for the trust that our customers have in our coffee and in all of us.
But, as I think about it, there is another perhaps equally important reason why we have scheduled
this training. It’s to celebrate who we are.
We are Starbucks. We should be incredibly proud of what we have built. We are the worldwide
leader of specialty coffee. And, believe me when I tell you, we are just getting started. We will
overcome the difficult and humbling challenges we face, and will be stronger for it. You have my
word on that.
We are Bean Stock, we are Healthcare, and we are also the Cup Fund.
We are at our best when we are entrepreneurial and courageous, push for innovation and reject
the status quo. We are leaders not followers--we leave that for others.
We are the third place in the lives of millions of our customers. We are the coffee that brings people together every day around the world to foster conversation and community.
As Starbucks partners, we are bound together by the passion we have for our coffee and the
customer experience. More than 170,000 of us stand for quality and an uncompromising ethical
standard. We uphold our guiding principles by demonstrating respect and dignity for one another,
and for our customers.
Thank you in advance for embracing tomorrow night in the spirit in which it is intended. Have fun,
but also make it matter. Learn, teach, and share with your fellow partners.
Celebrate our coffee, one another, and the respect we have for our customers.
Onward,
Howard
Source: http://www.starbucks.com/aboutus/pressdesc.asp?id=833 [accessed 10/10, 2008]
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