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  • Writer's pictureOzzie Paez

Application notes: Starbucks

Starbucks’ (SB) success relies on a socially centered customer value proposition. According to founder Howard Schultz, the idea came to him after tasting his first espresso during a 1983 trip to Italy: “I was captivated by the beverage, the barista who prepared it and the romance of the café atmosphere.” Twenty-eight years and thousands of coffee shops later, he explained in his book Onward that “Starbucks’ coffee is exceptional, yes, but emotional connection is our true value proposition. Starbucks is not a coffee company that serves people. It is a people company that serves coffee.”

Most, if not all of us have experienced and paid a premium for SB’s value proposition. I used our framework to reconsider it in a post-lockdown economy context. Three important questions emerged: What new sources of uncertainty will the company face? Will its value proposition survive and remain compelling? Have COVID and the lockdowns rendered the company's business model and competitive strategy structurally unprofitable?

How would you answer these questions? Can you think of others? I'm using this case to help business leaders understand and clarify their own challenges and uncertainties. I'll share a few answers and observations in the next post.

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