10 elements of Starbucks'30-year development path from US $3.8 million to a market capitalization of more than 84 billion

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Source: new technology, new model, new future-- the Silicon Valley thinking Tour of Tencent Qingteng University was launched in August 2017. Starbucks customers saw Mr. Cambridge, Chief Marketing Officer, to share the theme. Notebook Man, as an exclusive course partner, has been reviewed and authorized by the organizers.

When you think of Starbucks, you may think of its coffee, sitting in its cafe, talking about things, thinking of the double-tailed mermaid in its trademark, and cultural marketing. Xiao Xia wants to ask, in front of the screen, do you feel like you have smelled the aroma of coffee?

A cafe, in 30 years, has grown from 3.8 million to an international brand with a market capitalization of more than $84 billion. Let's take a look at ten elements of Starbucks' success.

In 1983, Mr. Howard bought the original Starbucks for $3.8 million. Thirty years later, Starbucks has a market capitalization of more than $84 billion. Its brand has become as well-known as Coca-Cola, McDonald's, Apple and other international well-known brands, and it is also the retail brand with the largest number of customers and customers in the world.

Today, let's focus on 10 reasons behind Starbucks' success.

Reason 1: people's demand for the "third place"

Starbucks believes that in people's needs, in addition to home and work, there is a third place, where everyone needs to spend a lot of time, whether you are from China, the United States, South Africa or Mexico. When people have a need for a "third place", they will always find a third place in addition to the office where they work and home.

We know that people have all kinds of ways to kill time in Starbucks stores, such as chatting with friends, reading alone, using computers, and so on. Starbucks is a company that meets people's demand for the third place, and on this basis, the business is getting bigger and bigger.

Reason 2: environmental design based on users' feelings

In order to create an atmosphere that consumers like more, Starbucks has invested a lot of time in the design of the store environment. In addition to coffee, Starbucks also sells some fast food, but the feeling is completely different from fast food restaurants such as McDonald's and KFC. In order to create a good environment, Starbucks pays great attention to three major points in its design: the selection of building materials; the color tone of the whole store interior; and elegant furniture.

Every Starbucks store takes into account the large and small groups of diners. For example, a long table can seat one or two people. Sometimes there will be a large group of 8-10 people to the store, the store will leave a space, set a large table, reserved for the large group. Starbucks' design efforts, every time you go to a store, what you see, and even the smell you smell are carefully designed and calculated to give you a different experience.

For a while in 2008, many Starbucks in North America sold sandwiches for breakfast in the morning. At that time, the president visited several stores and found that the aroma of the coffee in the morning was gone and was replaced by a strong taste of food. It was later found that the cheese in the sandwich, once heated, would have a unique flavor, completely covering the aroma of coffee. They thought, we are Starbucks, we must let consumers into the store to smell the smell of coffee, so they decided not to sell sandwiches for breakfast.

It would cost tens of millions of dollars in revenue, but it did so. They later developed a new sandwich that does not mask the aroma of coffee. This design also highlights Starbucks' considerations in terms of user experience.

Reason three: "Coffee Dance"

Starbucks' attentiveness in coffee is never inferior to that in its design.

Starbucks calls the whole process from coffee bean farmland to a cup of coffee on the table "coffee dance". Unlike other coffee shops that don't pay much attention to raw materials, Starbucks pays attention to coffee farmland, trees that bear beans, and seeds of coffee fruits-the coffee we drink.

After farmers have collected and processed the coffee fruit, Starbucks buys coffee beans, which may come from Africa, East Asia, or the south-central United States, and then ship all the coffee beans to the United States, where they are roasted, mixed and packaged. And then sent to the major stores.

In order to keep it fresh, the coffee is in the form of coffee beans when it is in a bag. Only when consumers ask for it to be ground into powder will they grind the coffee into powder in order to maximize the freshness of the coffee.

It is because of the strict control of all processes that Starbucks is very confident that the coffee they make is the best.

Speaker Starbucks customer Insight Cambridge (left) and Hu Hao, Senior Director of Tencent Open platform and head of Qingteng University (right)

Reason 4: fancy the connection between people.

People always have a need to connect with other people. Starbucks values interpersonal communication and connections between people, and feels that the third place it provides is also a place to provide interpersonal connections. In other words, at Starbucks, coffee clerks have connections with customers, customers have connections with friends, and customers and customers themselves have self-connections, such as reading books and computers alone.

Why is Starbucks so successful in East Asia? One answer is that Starbucks doesn't just sell coffee, it also provides a place where people can communicate and interact with each other to the maximum extent possible.

Let me cite two small examples. First of all, the height of the front coffee counter and cashier counter of Starbucks is in fact reasonably designed and should not be too high, otherwise customers will not be able to see the cashier behind, nor can it be too short.

At the same time, the coffee machine for making espresso was originally designed in Switzerland, when the coffee machine was tall and large. After looking at the design, the president of Starbucks asked them to reduce the card machine by 6 inches, so that consumers can buy without being blocked by the coffee machine and interact more with the clerk.

With the subprime financial crisis in the United States in 2008, many retail stores closed and Starbucks was not immune, when it decided to close more than 100 stores.

After this decision was announced, many consumers wrote to Starbucks, using the expression "Please don't turn off my Starbucks". They called Starbucks "my Starbucks". It can be seen that these consumers spend a lot of time in the store with friends and have regarded Starbucks as their own place.

In addition, many city mayors and governments have written to Starbucks in the hope that the shops in these communities will not be closed, because it is a very good place for people to get together and socialize.

For market competition, Starbucks will always have competitors no matter which country or market it makes coffee. Competitors can probably be divided into two categories. The first category is coffee chain stores. For example, the second category of COSTA; in China is those independent coffee shops. These coffee shops are not many, maybe only one or three, mainly concentrated in a certain community.

And because Starbucks is a global company, it will have different competitors in many countries, and there is no way to analyze and compare each competitor, so the strategy adopted by Starbucks is to focus on itself. Always do what you think is right for customers and employees. Starbucks firmly believes that building itself will become a way to compete with others. At present, in this mindset, California's sales performance has not been bad or worrying.

Reason 5: Starbucks Mobile APP

When Starbucks was introduced in North America in 2009, consumers could download the Starbucks app to pay in the store and have membership points, which was successful at the time. In 2015, Starbucks APP introduced a number of other features that can place orders remotely and then pick up coffee at the store. The new approach not only provides a lot of convenience for consumers, but also increases the efficiency of store operations-store staff do not need to spend too much time face-to-face with consumers to order, saving time and cost.

Reason 6: customer reward mechanism

Starbucks' reward system in North America is a black card. Customers can accumulate two stars for every dollar they spend, and when you accumulate 25 stars, you can exchange them for drinks or consumption. There are now more than 13 million very active members in North America that bring profits to Starbucks. Customers who enjoy this incentive mechanism are actually regulars of Starbucks and spend more. So it's a win-win for customers and Starbucks stores.

Reason 7: employee = partner

On this element, no other successful American company has done as much as Starbucks. Starbucks refers to employees as partners, and Starbucks partners enjoy shares in the company in every store. In fact, the reason is very simple: if you are kind to your employees and make them happy, they will work hard; if you make your consumers happy, they will be willing to spend here and bring more benefits.

This is important because Starbucks has a large number of stores around the world, and they need to think about how to ensure that every store can satisfy its customers. In 2000, Starbucks did something different from other retail companies in the United States: buying health insurance for every part-time partner and every part-time employee. Health insurance in the United States is very expensive, and buying health insurance means that most of the expenses incurred by the person when seeing a doctor are borne by the company, which few companies were able to do at that time.

Today, Starbucks offers benefits to employees around the world, including full tuition fees at Arizona State University, which Starbucks will pay for in full if a partner attends the university. Recently, Starbucks China released official information to increase the benefits enjoyed by employees in every store, including rent subsidies and health insurance to cover employees' families.

Reason 8: just-in-time production supply chain

JIT system is a concept introduced by Toyota more than 20 years ago, that is, Just In Time, just-in-time production, also known as inventory-free production. It means that when you are doing distribution, whether it is delivered to factories or stores, there is a time limit and time, too early or too late will lead to a higher cost.

Take an example based on market data from the United States and Canada in 2008: behind the stores you can see, Starbucks actually has a very large distribution system.

At that time, Starbucks had 50 distribution centers, which distributed large amounts of drinks and food to various stores every day. For example, distribute 608 million breads and cakes; 103 million gallons of milk; 240 million pounds of coffee. This is a huge scale, a huge operating system. It is also a very challenging task. Why do you say that?

Because Starbucks' strategy requires that supply and distribution must be delivered when the store needs it, it may be spoiled if it arrives too early, and if it arrives too late, it may affect the purchase of many consumers.

So how to deliver these items to those stores when they are most needed in time is a very big problem. So Starbucks headquarters in Seattle has a dedicated distribution and supply department to study how the global supply chain should deliver goods to all stores efficiently. Of course, in each individual market, there will be a dedicated supply team to do very complex work.

Starbucks' supply chain distribution system can not only operate on a very large scale, but also greatly reduce costs. The way Starbucks supply chain teams work is based on three principles:

The first principle is that the supply team will think of all the stores as their own customers and wholeheartedly hope to provide the best service for every customer.

The second principle is that the supply team can find the most competitive and cheapest local suppliers for each store, thus greatly reducing costs.

The third principle, Starbucks corporate culture, the supply team respects every store.

Reason 9: back-feeding

Starbucks knows how to balance profitability with social influence. The success of many big companies is not only because of how much money they earn, behind the business, they can do something on behalf of society. Starbucks firmly believes that it must contribute to society in the process of making money. These beliefs and values have been imprinted in Starbucks DNA.

Case 1: technical support. Starbucks is very supportive of coffee growers. Starbucks will ask experts to treat coffee trees if they know that their coffee trees are sick, whether in South America or Africa. At the same time, Starbucks has its own coffee field, and they do a lot of experiments, and when they find a way to increase the yield of coffee beans, they share the technology with other coffee farmers.

Case 2: fair trade. When buying coffee, Starbucks will give coffee growers a reasonable price and will not deliberately use very low prices to buy farmers' coffee.

Case 3: play an active role in international protection organizations. Starbucks supports environmental protection and replaced all the plastic cups in its stores with paper cups about a decade ago.

Case 4: working for the welfare of employees. Starbucks should be the company that treats its employees best in American retail.

Reason 10: direct operation mode & joint venture company model

Different from McDonald's, KFC and other chain stores, Starbucks adopts the direct operation model in countries with more stores, such as the United States, Canada, Japan, China and so on. Through direct marketing, Starbucks has direct control over its stores and better control over the service experience and the quality of coffee, which is an important factor for Starbucks to maintain the same quality all the time.

In countries with fewer stores, such as India, which has fewer than 100 stores, and Vietnam, which has fewer than 20 stores, the cost of setting up a company directly is relatively high. Starbucks' strategy is to find a local partner to set up a joint venture in these countries, or authorize these companies to operate coffee shops in these countries. Starbucks' selection criteria for joint ventures in these countries are very high, and the most basic values should be consistent.

At the same time, every time Starbucks enters a stable market, it will immediately look for local suppliers of raw materials, such as vegetable farms that provide fresh ingredients, which can better expand their product selection.

Starbucks is also expanding its business and product methods, making tea and food in addition to coffee. At the same time, Starbucks counters are set up in many vegetable markets or grocery stores, selling coffee separately, and imperceptibly expanding the market.

As a retail company, it is actually different from McDonald's and KFC. Starbucks seldom advertises, and less advertising is the reason why its profit can be kept at around 20%.

Summary:

First, the success of a successful company cannot be supported by strong business fundamentals. The basic elements of Starbucks are good coffee, good customer experience, fast and efficient supply chain.

Second, a successful company will certainly take care of its employees.

Third, a successful company must have strong values and will help people, things and industries in its field.