MASTERING THE 4 A’S
Starbucks coffee shop was a new concept for US consumers, and filled the gap between family and work.
Starbucks coffee shop was a new concept for US consumers, and filled the gap between family and work. The Starbucks Experience was defined as “be yourself”, whether doing individual activities, or socializing with friends.
The high quality of the products and services together with a broad range of products (coffee, teas, other products related to their use) increased the level of acceptance from the consumers.
A key factor in developing acceptability was to educate the consumers to the quality of the products.
Starbucks’ genius was to redefine the meaning of affordability regarding coffee. Target consumers were identified with regards to their living environment, level of income and education. They were convinced to pay premium prices for the experience, service and quality they were getting.
The company was able to capture the changing consumer behavior since the 1980’s: more out-of-home entertainment, more self gratification from consumers toward a good movie, a good glass of wine and a good cup of coffee.
By increasing the perceived value of the product in the eye of the consumer, Starbucks was able to raise its prices while keeping the product affordable. Creating brand loyalty through quality and innovation was also an important factor in decreasing the price elasticity of this commodity product.
The company’s availability strategy relies on two approaches driven at the same time:
Horizontal expansion and vertical growth. The horizontal expansion of Starbucks was planned since its very beginning, and consists of increasing the number of stores (either by ownership, by licensing or by specialty sales).
Stores are clustered in the prime locations to maximize their market share in areas identified as having the highest volume potential. This in turn allows building a regional reputation (low profile regions and rural areas see Starbucks as a status symbol that upgrades the area’s image).
The vertical growth strategy consists in creating a whole range of coffee drinking occasions such as in-store, on-the-go, at home, at work and travel, and by penetrating consumption places like offices, hotels, restaurants, catering services, campus cafés and home (by mail and online distribution).
While small coffee shops would benefit from local awareness, Starbucks leveraged its size and location strategy to reach high brand awareness, mainly by word-of-mouth. Another way that Starbucks increases awareness is through agreements with leading retailers, wholesalers, restaurants, airlines, bookstores to carry Starbucks coffee, associating the Starbucks brand with the high quality and premium image of its partners.
Finally, awareness was completed by selling coffee related and unrelated high quality items like coffee makers, mugs, stationery and souvenirs bearing the Starbucks logo.
By building your corporate strategy on the framework of the 4 A’s you are creating a high demand business from a customer value perspective. You are able to look at the world through your customer’s eyes and focus on the areas that will build a relationship that they can’t live without. When you combine this framework with our other models you develop the ultimate branding tool.