Coffee beans, one of the simplest and cheapest commodities. Yet Starbucks had transformed it into a luxury-like global experience, which seems to be worth far more than the drink itself. Across the whole planet, thousands of stores sell the comfort of the experience and the identity of the brand. The use of powerful branding, strategy premiumization and a carefully crafted customer experience, Starbucks had turned something as basic as an everyday cup of coffee into a cultural symbol. This article explores how Starbucks created value beyond the product, redefining what consumers are really paying for.

Branding
Coffee is considered something low-cost and undifferentiated. In our case, Starbucks uses branding to add an intangible, abstract meaning to the product. This kind of psychological aspect for the experience increases the perceived value by the customer, due to the meaning added to the product. The use of fitting and memorable logos, colour schemes, cup designs, etc., creates consistency & recognisability. This kind of customer service creates a ‘third place’ idea (home, work and… Starbucks). Thus making it feel like you’re buying identity and convenience, not just coffee.

Customer experience
To elaborate on the experience, instead of a regular coffee shop. Starbucks started to focus on comfort: music, lighting, sense of smell inside the cafe. The customisation you have in your drinks, instead of a bland choice of a set type of coffees, Starbucks gives you the sense of control, “your drink, your way” style. Moreover, the staff training is paid more attention to than in any other small no no-name coffee shops. Heavily popularising and influencing ‘Barista culture’. The friendly and personalised service emphasises connection. To elaborate on the point of personalised service, Starbucks were one of the ones who heavily popularised the idea of writing customers’ names globally. This campaign improved the previously mentioned personalised connection with the customer. Starbucks stores are designed in a way which makes people stay, meet or work again, contributing to the experience and atmosphere.

Premiumisation
The pricing strategies of Starbucks contribute towards the feeling of luxury when buying coffee. Even though coffee is considered a basic, cheap commodity, Starbucks is still able to charge 4 to sometimes even 8x more for it. Starbucks uses branding and overall experience to justify the premium pricing. Customers pay for the atmosphere, convenience and social status. Furthermore, seasonal drinks, such as the Pumpkin Spice Latte, create a social hype around them, which creates the willingness to pay more. Higher-end items, such as cold brews, are used for product premiumization, which are used for adding versions such as ‘Vanilla Sweet Cream cold brew’. According to reports, cold brew drinks grew 13% in sales year-on-year, indicating that Starbucks is successfully pushing its more premium cold brew drinks.

Global Cultural Symbol
Starbucks had a huge influence on the coffee and public catering industry through globalisation. It could be considered a major symbol for Western urban culture and especially the modern US. The franchising style of business caters for the consistency across countries, which creates a sense of familiarity & trust among customers.

Starbucks sells something more than coffee. It’s a mix of identity, comfort and experience. From the perspective of economic logic, it is a great example that if you combine brand power and premiumisation, you would create high profits from something as simple as coffee. Starbucks transformed a cheap commodity into a global lifestyle symbol. Popularised a lot of marketing techniques and highly influence on the restaurant industry.