Starbucks' Psychology

Behind That Gourmet Cup of Coffee Is a Careful Marketing Strategy to Get Customers Addicted

SEATTLE, May 10, 2007 —

If you think there's already a Starbucks coffee shop on every corner, just wait: The company hopes to eventually run 40,000 of these latte-serving storefronts.

But how can the company sustain so many shops, with one just a few blocks away from its rival?

It has everything to do with the marketing strategy behind this designer coffee chain, which devised a clever way of creating its own community. It also pinpointed one key aspect of caffeine shoppers: They want their coffee immediately.

"Because it's a cup of coffee, you can get it in a lot of places, and so we won't go very far … and they know that," said author Karen Blumenthal, who chronicled Starbucks for a year in "Grande Expectations."

In Seattle, the birthplace of coffee culture, there are 60 of the shops downtown. And within 20 miles of the downtown area, the suburbs house 300 additional Starbucks.

Across the United States, there are 9,814 stores with a total of 13,728 worldwide. The Starbucks management has watched coffee drinks, and figured out exactly what people will and won't do for coffee.

"We actually study traffic patterns," said Starbucks CEO Jim Donald. "If it's in a downtown area, we study foot-traffic patterns."

Company officials also managed to get customers comfortable, paying up to six times as much for Starbucks coffee as they could pay elsewhere.

"Not everyone can shop at Tiffany's, but everyone can afford a cup of coffee -- even if it's $2, $3 or $4," Blumenthal said. "You can do something nice for yourself by buying yourself a good cup of coffee every day."

Home Away From Home

People are ordering so many of these beverages. The average Starbucks sells $1 million of coffee a year, and more than half of the coffee is sold before noon.

While 80 percent of the sales are takeout, they're still delighted to have customers stay and sit with their computers for hours to make the place feel lived in.

The tables are also rounded to give it a comfortable atmosphere. As Blumenthal explained, round tables are more welcoming than those with square edges, and people look "less alone" while seated at a round table.

Blumenthal also noted the Starbucks menu vocabulary, with its "frappucino" and "half-caf" orders, was a clever way to add to the store's appeal.

"It did seem to be nuts, but it worked," she said. "It felt [like] sort of a special language -- like you were part of a special community when you could walk into a Starbucks."

It's all part of their strategy to make Starbucks a third primary "place" in the day of Americans.

"We say the first place is home, second place is office, and then Starbucks is a third place," Donald said. "They use our stores for gathering spots, and we think that that that's what makes that whole experience what it is today."