The Secret of Starbucks's Success

 

The word “Starbucks” flashes across anyone’s mind, even for a moment when we think of coffee. Though there are many coffee chains, Starbucks is the only one that has transformed the way we experience coffee. It is an American company that started in 1971. But in 1987, it was acquired by Howard Schultz, and it was under his tutelage that it was raised to become a colossal coffee chain. Starting with a single coffee shop, the company has a fleet of 32,000 stores today. It has become a premium coffee brand giving the enriching experience of coffee. But how was Starbucks able to achieve this feat? There are many successful coffee chains, but what keeps Starbucks outperforming all of them. It employed some tactics that we will see one by one.

First and foremost, the baristas (the person serving in the coffee bar) were provided with extensive training in hospitality. The baristas developed such a level of connection with the customers that they used to remember the customers’ names and their coffee preferences. And in some instances, this connection became so wonderful that Starbucks Baristas used to get invited to their customer’s weddings. This was the deep-rooted connection that Starbucks was built upon. And this was the reason why people love to visit the store, not with the intent to visit a coffee shop, but to a place next to home.

Secondly, they focused on mass customization wherein they provided personalized food experiences to their customers. The barista takes special instructions given by the customer to ensure the order is specially made according to the customer’s liking. In case the customer is dissatisfied with the order, Starbucks remakes it to give customers a pleasurable experience.

Third, they focused intensely on Sensory Marketing to attract customers to its stores. For instance- they make sure that the aroma of the coffee is strong enough to elicit a sensory reaction from its customers. For that purpose, they even stopped serving breakfast with eggs because it would interfere with the fresh smell of coffee. Also, the music they play in the store is very carefully selected to create the “Starbucks experience.” The songs played in the store are sent directly to each location from the company central location. And the layout of the café is structured in such a way that the customer can see the entire process of brewing the coffee, giving an aesthetically appealing experience.

Also, they are following a little weird marketing tactic in which they deliberately write the wrong spelling of your name on the coffee mug. The customer, upon seeing this, will post it on social media and will indirectly expose the brand among its followers. There is a hashtag trending #StarbucksNameFail having more than 30,000 posts on Instagram. Even if we assume that each of these people has around 100 followers, we can say that about 3 million people were exposed to the brand for free.

Though these are some of the measures they followed to attract customers to their stores, the most important of them is “HUMAN TOUCH.” It is their core philosophy. They have created their brand image not as a coffee-company serving people but as a people company serving coffee. And herein lies the significant difference, because in coffee-company serving people, your priority is coffee but in people-company serving coffee, your priority is people, and coffee becomes a mere instrument of your service. They have also taken many community initiatives like hiring military veterans and widows. Using reusable cups made of recyclable materials. During the recession, when companies were saving every penny, Starbucks spent around 30 $ to help the people of New Orleans who were devasted by the flood. About 10,000 Starbucks employees spend 50,000 hours to revive the flood-ravaged city. While most corporations find loopholes to escape government regulation, Starbucks was spending millions of dollars to go beyond government regulation both for the environment and the people it serves.

It is easy to be a huge brand but very difficult to be a memorable brand. In this world of digital communication, where the power of human touch and compassion are often undervalued, Starbucks has practiced and embraced it in the right way and has become a memorable experience for its customers.

About the Author

Praveen Kumar

Pursuing PGDM (Finance) at IMT Hyderabad

Interests in Automobiles, Politics

MENSA BRANDS: HOUSE OF BRANDS

 

Any seller would like to promote his products to increase his sales. However, the seller/manufacturer will have to establish and contact his network of people to sell the product to increase sales. What if you can sell his products to your friends, family or social groups and charge a certain mark-up over and above the selling price stated by the seller? Meesho is one such platform where the sellers display their products, and individuals can post these products on social media platforms to sell them to their known people. Once the order is confirmed, the logistics are managed by Meesho. This way, the seller earns his share of money and saves money on logistics, the reseller or the middleman earns his mark-up on the product, and Meesho earns a commission from the seller, creating a win-win situation for everyone.

Every business strategy starts with an idea. Similarly, Meesho was started with the idea that revolutionized the buying and selling on social media platforms, paving its way for social commerce in India. The founders of Meesho- Vidit Aatrey and Sanjeev Barnwal came across a local shopkeeper in Koramangala, Karnataka, who frequently uploaded pictures of his products on WhatsApp and Facebook and customers placed orders through these platforms that contributed to the revenue for that local shopkeeper. Vidit and Sanjeev were intrigued with this unique and simple idea that is now ruling the online reselling business with its robust business model. Meesho is gaining more popularity in Tier 2,3&4 cities, with more women using this app to generate revenue. Meesho also successfully took steps to empower women to build their own identity and use Meesho as a source of income. It is apparent that data and the internet are a constraint in rural areas and people in these areas use older versions of android mobile phones. After understanding the problems local shopkeepers and shoppers face, the Meesho app is built at a mere 14.5MB, making it the lightest e-commerce app in India on Google Play Store. This helped optimize the e-commerce experience in Tier 2 and 3 cities by giving unparalleled user experience to its app users and is available in 7 different languages.

You must have understood from the Meesho story that every business is only an idea away. Moreover, in my opinion, it is easy to grow a business if it is for the benefit of society as no business can exist in silos. So, let us all get started with building our empire of dreams which is only an idea away.

In the era of startups where most startups are at a loss and are a billion-dollar company, Mensa brands are one startup that is not only a billion-dollar company in less than six months but also profitable in the market. So, you all will be thinking about what such Mensa brands have done such that they have become the fastest-growing startup in Indian history. So, .it all started when the founder of Mensa brands, Ananth Narayanan, saw an opportunity in the small and medium scale business where they had good products but did not have enough capital, good technology, and supply chain management.

Mensa brands strategy:

So basically, Mensa brands follow the Thrasio model. This name became famous because of the meteoric rise of an American startup called Thrasio. Thrasio is a company founded in 2018, and within just two years, it hit a billion dollars valuation to become one of the fastest-growing unicorns in the world. So, you all will be thinking about how the Thrasio business model works? Thrasio looks for a small-scale entrepreneur who manages everything from marketing, listing, manufacturing, packaging, and even shipping. This is both highly tedious and costly, and especially when they are selling online on a platform like Amazon where there is cutthroat competition, it becomes challenging for small-scale brands to bring new products and scale their brands, therefore despite having a great product, these small-scale entrepreneurs reach a saturation point. And if they want to grow any further, they either must take hefty loans or, worst-case, they must take personal debt. This saturation of growth is where Thrasio comes in, where they bring both credibility and insight on how to grow these small skill brands, and using their credibility, they raised a million dollars in funding and started offering an exit strategy to these great entrepreneurs.

Once this business is acquired by Thrasio, the company uses its scale capital and expertise to grow the operations further. The same approach has been applied by Mensa brands where they offer a good brand story to the existing product, better copywriting to the product, taking good pictures of the product by hiring high skilled photographers and videographers, better digital marketing strategy to a product where they would not only be selling on a particular platform like amazon and Flipkart but also increasing its reach by promoting on Facebook, Instagram and other social media applications. Because of having good funding from the investors, the Mensa brands can do celebrity endorsement also, which again leads to more brand value and increase its visibility in the market. Lastly, the Mensa brands built an extensive supply chain to get the product into retail shelves like Dmart, jiomart, and other super Mart. We can see the result of Mensa brands expertise where they have acquired twelve consumer brands like VILLAIN and Karigari, and in October 2021, these brands seem to have hit a growth of 250 percent and 140 percent, respectively. But there's a slight difference between how Thrasio and Mensa work while Thrasio gives a founder 100 percent exit; Mensa brands keep the founders in the business but with just a significant stake in the company and intend to acquire these brands gradually in the next five years fully. After that, just like Thrasio, Mensa brands use their digital marketing specialisation, sales channel, and supply chain management expertise to scale these brands both domestically and internationally. This is how in the past six months, through technology and digital marketing, Mensa has been able to grow their brands at a staggering rate of 100 percent. In my opinion Considering the rise of Mensa brands has increased the opportunity for small-scale business entrepreneurs, and they are not making brands just for India but for the whole world.

ABOUT THE WRITER

Vinit Prasad

Pursuing PGDM at IMT Hyderabad

A keen observer, love to read geopolitics and investment strategies.

MEESHO- A MESSIAH FOR THE UNTAPPED RURAL MARKET

E-commerce has been rising significantly in India with the increasing reliability of India's population on the internet. Social media platforms are one of the most common uses of the internet, and not surprisingly, 70% of India's population are active social media users. It will be interesting to infer that where there are people, there is business. With a significant number of people spending their time on Facebook, WhatsApp, Instagram, and other social media platforms, the buying and selling also started via these platforms leading to the rise in "social commerce." Social commerce can be considered a subset of e-commerce and growing social media interaction is helping social commerce grow by leaps and bounds. Indian startups have also recognized the business opportunity behind social media platforms and used them to generate revenue. Companies like Meesho and DealShare are a few of India's promising names for social commerce.

Since the pandemic outbreak, individuals have started relying on social media platforms to earn money, and online reselling is one of the trending ways to make money with zero investment. Even before the pandemic, Meesho, an online reselling social commerce platform, identified the potential of reselling business. The idea of an online reselling business is straightforward- any individual can resell their products by posting them on social media websites and selling them to their friends and family or their known community. Most importantly, a reseller business includes a third party between the buyer and seller who sell the products at a mark-up price. Now you may be wondering how Meesho facilitates this reselling and what exactly is its business model?

Meesho’s Business Model:

Any seller would like to promote his products to increase his sales. However, the seller/manufacturer will have to establish and contact his network of people to sell the product to increase sales. What if you can sell his products to your friends, family or social groups and charge a certain mark-up over and above the selling price stated by the seller? Meesho is one such platform where the sellers display their products, and individuals can post these products on social media platforms to sell them to their known people. Once the order is confirmed, the logistics are managed by Meesho. This way, the seller earns his share of money and saves money on logistics, the reseller or the middleman earns his mark-up on the product, and Meesho earns a commission from the seller, creating a win-win situation for everyone.

Every business strategy starts with an idea. Similarly, Meesho was started with the idea that revolutionized the buying and selling on social media platforms, paving its way for social commerce in India. The founders of Meesho- Vidit Aatrey and Sanjeev Barnwal came across a local shopkeeper in Koramangala, Karnataka, who frequently uploaded pictures of his products on WhatsApp and Facebook and customers placed orders through these platforms that contributed to the revenue for that local shopkeeper. Vidit and Sanjeev were intrigued with this unique and simple idea that is now ruling the online reselling business with its robust business model. Meesho is gaining more popularity in Tier 2,3&4 cities, with more women using this app to generate revenue. Meesho also successfully took steps to empower women to build their own identity and use Meesho as a source of income. It is apparent that data and the internet are a constraint in rural areas and people in these areas use older versions of android mobile phones. After understanding the problems local shopkeepers and shoppers face, the Meesho app is built at a mere 14.5MB, making it the lightest e-commerce app in India on Google Play Store. This helped optimize the e-commerce experience in Tier 2 and 3 cities by giving unparalleled user experience to its app users and is available in 7 different languages.

You must have understood from the Meesho story that every business is only an idea away. Moreover, in my opinion, it is easy to grow a business if it is for the benefit of society as no business can exist in silos. So, let us all get started with building our empire of dreams which is only an idea away.

ABOUT THE WRITER

Sanjana Nahata

Pursuing PGDM at IMT Hyderabad

An ambitious and result-oriented person, keen on self-learning finance and financial management.