Reason for success of Starbucks

On September 4, 2007, we witnessed once more a cultural invasion of Starbucks. The International Herald Tribune’s article describes that “With the hiss of an espresso machine and a note in Russian explaining the meaning of tall, grande and vente, Starbucks opened its first coffee shop in Russia on Thursday in a mall outside Moscow” (Kramer, 2007, para.1). Nowadays most people know Starbucks and have tasted their coffee. A cup of Starbucks coffee is not only a drink, but also a part of modern culture. “A cup of coffee is just a drink. But a frappuccino is an experience” (Lawless, 2006, para.1). In addition success of Starbucks became a good model for many economists. What is a reason for success of Starbucks? We can find the key point in their special marketing such as emotional branding, experience marketing, and relationship marketing, also their management of employee training.

Starbucks is a coffeehouse chain based in the United States. Named after the first mate in the novel Moby-Dick, Starbucks is the largest coffeehouse company in the world, with 7,521 self-operated and 5,647 licensed stores in 40 countries, making a total of 13,168 stores worldwide (Starbucks, 2007). Starbucks is founded in Seattle, Washington, in 1971 by three young people: Jerry Baldwin, Kristina Taplin, and Gordon Bowker. When Howard Schultz first joined the company in the early 1980s, Starbucks has grown quickly and enormously. However their anti-competitive tactics and predatory pricing to expand and keep their principal position are issue of controversy. Although it is certainly unfair policy, we have to recognize that the world of business is the survival of the fittest. In fact, we can learn from Starbucks how we can survive in the cruel world.

First reason for success of Starbucks is their emotional branding. They approach the customer sensitively. Starbucks recognized earlier the emotional value. They research to know what the customers’ preference is. “Starbucks has created a retail store experience that is attractive, comfortable, and even entertaining, designed to attract customers and keep them coming back to the stores” (Isidro, 2004, para 5). In a Starbucks store, we can find their stone counters, soft wooden floors, comfortable chairs, modern track lights and white cups also give them image of the great place to drink real coffee. It is a Starbucks’ idea to make customer’s satisfaction greater and better through a process. In addition we can feel psychology of luxury by drinking Starbucks coffee. People tend to be the higher classes, but it is restrictive. Starbucks’ high quality policy allows us to feel substitute behavior. All can not purchase a luxury car, however most people can drink a luxury coffee. In conclusion, their emotional branding is a development and maintenance of a company’s identity and Starbucks could succeed by their efforts for the company’s identity.

The second reason is their experience marketing. This idea of experience came from Howard Schultz, Starbuck’s leader. When he visited Europe, in Milano, he saw that many people sat at an espresso café on the street and talked each other, and then he decided to introduce this idea to US (Starbucks, 2007). For example, Starbucks began to present wireless high-speed Internet access in its stores in 2001 to improve the experience for students, business travelers, and web surfers who take advantage of this service while tasting their beloved coffee (Isidro, 2004). What can we imagine with this situation? It is a “third place”. According to the Howard Schultz’s interview with the New York Times, he wants Starbucks to become “The third place” in people’s lives (Nocera, 2007). It is a kind of link between home and work where we can read the paper, download and enjoy music, study or buy a book, and either prepare for the day or wind down from it. To sum up, their experience marketing has enabled customers to satisfy their physical desire, provides us a comfortable place to a quiet rest.

Moreover Starbucks’ relationship marketing is a motive power of success. A key reason for Starbucks’ success is its strategic partnership initiatives (Isidro, 2004). In 1993, Starbucks made relationship Barnes and Noble bookstore in the United States to make its coffee available to bookstore customers and Starbucks partnered with Pepsi-Cola Company in 1996 to start the business and they sold a bottled version of Starbucks Frappuccino in supermarkets. Also in same year, the company also made partnership with Dreyer's Grand Ice Cream, Inc. and launched Starbucks Ice cream and Starbucks Ice cream bars, which rapidly turn into the best selling coffee ice cream in the United States. To obtain success in business, we have to find various possibilities to use the product’s value. In this process, making efficient network with partners who can share a risky attempt is a very important for success.

Finally, Starbucks’ employee management is very special. It is kind of human and familial. Howard Schultz, Chairman, said that he created Starbucks brand first with employees, not with customers, because he believe that the best way to meet exceed the expectations of customers was to hire and train great people, they invested in employees (Moore, 2006). All employees of Starbucks are treated like a member of family and have pride of their company. For example Starbucks offers stock options to even part-timers and spending more on employee training and health insurance than advertising. Consequently, the Starbucks employee turnover rate is 250% lower than the industry average (Michelli, 2006). Therefore their human employee management enables Starbucks to keep success.

Opponents say one reason that has been put forth for the success of Starbucks is their alleged practice of predatory pricing. Recently, their anti-competitive tactics and predatory pricing to expand and keep their principal position are issue of controversy. For example the company would open a branch close to a rival’s business, using competitive pricing to interest customers away from their rivals. As soon as the rival had left the zone Starbucks would then be able to set its own price. However it is true that all kind business uses strategy and need inevitable situation in competition world. According to the theory “Creative destruction”, “Process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one” (Schumpeter, 1975, pp. 82). In addition customers still prefer Starbucks coffee rather than the other one. If customers find some quality problem in Starbucks, even their prices are cheap, they should stop to drink Frappuccino. We still drink Starbucks coffee which is always same quality.

In conclusion, Starbucks’s reason for success is their special mind. Starbucks’s success is made with its strong development of identity by the company’s actual movement, mark and communication. Furthermore, Starbucks created a new coffee culture by relationship between product and experience. This is a main point of their success. Now it influences other business as well as people’s life. Starbucks opened up a new market for new drinking culture. Their pioneer spirit is an exemplary conduct.


References

Isidro, I. (2004, October 5). Learning from Starbucks: 10 Lessons for small businesses. Retrieved September 20, 2007, from http://www.powerhomebiz.com/vol144/starbucks2.htm

Kramer, A. (2007, September 6), Starbucks opens its first store in Russia, International Herald Tribune, Retrieved September 26, 2007 from http://www.iht.com/articles/2007/09/06/business/starbucks.php

Lawless, J. (2006, April 16). Academic studies Starbucks cultural impact. Retrieved
September 20, 2007, from Lexis Nexis database.

Moore, J. (2006). Tribal knowledge: Business wisdom brewed from the grounds of Starbucks corporate culture. New York, Kaplan Business

Michelli, J. (2006). The Starbucks experience. Hightstown, McGraw-Hill

Nocera, J. (2007, March 3). Give me a double shot of Starbucks nostalgia,
NewYork Times, Retrieved September 28, 2007, from
http://select.nytimes.com/2007/03/03/business/03nocera.html?_r=1&oref=slogin

Schumpeter, J. (1975). Capitalism, socialism and democracy. New York, Harper.

Starbucks (2007). Starbucks company profile. Retrieved September 27, 2007 from http://www.starbucks.com/aboutus/Company_Profile.pdf

Fighting Corruption Is a Global Concern

Zussman’s(2005) article ” Fighting Corruption Is a Global Concern” states that corruption must be eliminated. He explains that the framework of the anti-corruption conference in Beijing where Transparency International gives details making corruption problems noticeable to public. Next, nations and worldwide association are working together to eliminate in society. And enormous amounts of global bribes are more spend than government’s financial. Consequently he claims that many counties concentrate with anti-corruption efforts, because corruption interferes with economic structure and reduces inhabitant’s quality of life. Furthermore he explains four essentials to the flourishing accomplishment of an anti-corruption. First, we need to acceptable laws. Second, all society have to know the regulations. Third, there have to be forceful achievement of the policies. Finally, we need to place truthful people in leadership roles. He also claims that corruption should be eliminated in society.

It is apparent that author speaks convincingly. Corruption is a bad habit in our society. Moreover it occur many social problems, therefore people try to stop it. However it seems to be impossible. Corruption can not be stopped.

First, some people who are leading corruption above the law. Although the government makes more strict laws, this regulation does not apply to special people. The application of a law always has been controlled by power and money. We know that the big business man never be held in the prison, even he is a criminal. The rich is not guilty, only the poor is guilty. In addition most people love money. Many problems can solve with power of money. When we have to receive speed ticket, frequently people try to give some cash with a license to officer and they can success their purpose. Therefore anti-corruption movement is the waste of time and money and also it would hurt a person’s feeling.

Moreover, anti-corruption movement has risks to law enforcers. The corruption always concern with the dark quarters. This picture is very familiar for us because of gangster films. However, it is true story. Many corporations have a corrupt relationship between political and business circles. We know that some companies provide a brief to government for their profit. However people’s opposition can not change their behavior, because they have power. Nowadays, we are in the world where the weak are victims of the strong. If you are not a strong, you may not try to eliminate the corruption. There will be too many threats.

Finally, corruption is an old vice like a chain that never breaks. We can say that history of human society is a record of corruptions. There was this routine in the Roman Empire as well as the Middle Ages. For example, Catholic Church had a dishonest relationship with royal authority for ling time, and they even sold an indulgence. All the time corruption has existed also people who are opposite from corruptions have survived. Why does corruption still remain? It is not a simple issue. Corruption clearly will succeed to next generation and they also will organize anti groups. Nevertheless do we have to going against corruption?

In conclusion, there is every reason to believe that corruption will be not stopped. Corruption is related to too many barriers: political and financial powers, historical abuse and force of the under-world. Therefore we need to recognize that corruption is an inevitable phenomenon in human society.

Reference

Zussaman, D. (October 11, 2005). Fighting corruption is a global concern. Ottawa Citizen. pp. A15

Is Wal-mart beneficial for America?

Nowadays Wal-mart is occupying the America. The cost-cutting ethos of Sam Walton, a founder, seems to be triumph. Many people sympathize with his idea and love Wal-mart. Those who do not support it might say Wal-mart is not beneficial for America. However, we can find several advantages. There are three major reasons: low prices, wide selection of goods and good return and exchange policy.

The main attraction of Wal-mart is low prices. It is very important factor for consumers, especially students and small income earners. Low price policy provokes reductions of personal expenditure. Actually, however, it makes economic activity because we are excited psycho-logically to purchase more products with same price. Then low prices policy enables family economics to economize. Family economy is a basic element of social economy. Therefore Wal-mart’s low price policy influences a local society in a good way.

Moreover, Wal-mart provides wide selection of goods in same place. Formerly, to get various products, we had to buy at other stores such as the bakery, greengrocery and meat shop. However, we can do our shopping all at once in Wal-mart and save time. In addition, this advantage allows us to reduce traffic expenses and pollutants in our neighborhood. As society is getting more complex and industrialization, the environmental problem is an important issue in these days. Certainly, Wal-Mart’s wide selection of goods helps not only consumers but also our society.

Third, Wal-mart’s good return and exchange policy is very useful and helpful. Sometimes we can make mistake when purchasing products, or regret our decision. It makes us to obtain stress of mental health. For example, I purchased a curtain in Wal-mart. When I had tried to put it on window, I recognized that it was too short. Instant, I went to Wal-mart and exchanged the product simply. If I could not exchange, I should be disappointed with my wrong choice. Moreover by returning products, we can also purchase them with lower price. There is a small section named ‘lower price’ in Wal-mart. The products in this section which are returned by consumer are sold with lower prices. Therefore, Wal-Mart’s good return and exchange policy provides opportunity of choice with using products as well as gives mental stability by purchasing with lower prices.

Opponents of Wal-mart business say that almost products are low quality. However, this argument is irrelevant because we do not expect excellent quality there. If we want luxury goods with low price, is a contradiction. No one thinks we could buy a mink coat with 20 dollars in Wal-Mart. In addition, Wal-mart products are not such grave low quality. If they have serious defects, we never go to Wal-Mart. However, people are still going there. Besides if we do not want them after usage, we can return or exchange without difficulty. Although Wal-Mart’s products are not excellent quality, we do not have problems to use them.

Although there are several political problems, from a consumer’s standpoint, Wal-mart is very beneficial. Their policies provide personal and social activity as well as mental health of consumers. All companies have advantages and disadvantages. The core of success for business is how we can develop a good point. Therefore Wal-mart has enormous potential for America business system. The choice is ours.

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