Starbucks innovation strategy and competitive positioning

Starbucks Innovation Strategy

Over the past three decades, Starbucks has become a staple of mainstream culture throughout the world with tens of thousands of coffeehouse chains operating in the United States, Latin America, Australia, the United Kingdom and Asia. In addition to the many locations of Starbucks coffeehouses, the company maintains its influence in the global market through licensing and corporate partnerships which serve to increase visibility. While the corporation has come under fire since its inception over fair trade practices and market saturation strategies, Starbucks still remains popular and ever expanding. The innovation tactics taken by Starbucks executives, namely CEO Howard Schultz, have enabled Starbucks to monopolize the market on coffee products and equipment as well as social hot spots.

A main crutch in the innovation of the Starbucks brand and product came with its early product expansion. Upon acquiring the Starbucks chain in 1987, Schultz altered the company's focus to further cater to the coffee-drinking consumer by offering such drinks for purchase in an atmosphere that encouraged patrons to linger and socialize. Rather than focusing simply on the sale of beans or equipment for coffee preparation at home, Schultz's vision included making the enjoyment of coffee and other beverages easier. This change in product focus has proven beneficial to Starbucks development since Schultz's takeover. As Rudolf P. Gaudio explains, Starbucks was able to garner the power of conversation and turn it into an integral part of its services offered -- a product niche that had yet to be tapped in the 1980s and 1990s (Gaudio, 2003). By encouraging consumers to drink coffee in settings other than just at home, Starbucks reformed social meet-ups and catch-ups.

In addition to delivering a product, Starbucks innovation has been boosted by its visibility in the market through both physical and corporate presence. Starbucks locations are plentiful throughout the world, concentrated in areas at times. For areas where there is not a stand-alone Starbucks location there are often Starbucks licensed products sold, or Starbucks licensed cafes existing inside larger retailers such as Barnes & Noble or Target. For all of its corporate proliferation, Starbucks also takes pride in social responsibility through charitable participation. The corporation gives back to the community through partnering with local organizations such as Make Your Mark, Product Red and UNICEF. While the fulfillment of such public generosity shows the corporation's social consciousness, taking part in such acts of charity garner Starbucks favorable publicity along with visibility thus making Starbucks a trendsetter of civil service as well. Starbucks began as a chain of stand-alone coffeehouses but has since transformed to become a staple amenity with locations in airports, hotels and even on cruise ships. The risk of expansion came with a price, but the innovative step taken to expand its product has helped to keep Starbucks ahead of its competitors. As explained by Peter Skarzynski and Jorge Rufat-Latre in their article, "Lessons to Jumpstart Disruptive Innovation," while Starbucks has taken financial hits with the rollout of multiple locations, the buyout of competitors like Seattle's Best Coffee company and the woes of the recent recession, its work has established its sustainability. The need for high-quality coffee drinks on the go will always resonate with a portion of the population, thus allowing Starbucks to carve a niche in the market.