The Story of Starbucks

Copenhagen Business School 2008

Cand.Merc.International Marketing and ManagementCentre for Business History

Master Thesis

The STory of STarbuckS

Ea Elisabeth Finn Nielsen Tina Holm Mortensen

201180 2470 291282 1644

Date of Hand-in: 28.11.2008

Name of Supervisor: Per H. Hansen

Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The STory of STarbuckS

Table of contentsPart I

1. Preface 1

2. Problem Area 2

2.1 Branding as the Root Cause 3

3. Literature Review 4

3.1 A Holistic Approach 5

3.2 Brand Attachment 7

3.3 A Historical Approach towards Starbucks and their Role in the Market 8

3.4 A Critical Perspective on Starbucks’ Branding 11

3.5 Locus as Promoter 12

3.6 Communication Strategy 13

3.7 Summary 14

3.8 Reflections upon the Literature Review 14

4. Thesis Approach 16

5. Methodology 17

5.1 Theoretical Foundation 17

5.1.1 Cultural Branding 17

5.1.2 Meaning Transfer 18

5.1.3 Flock and Flow 19

5.1.3.1 The Flows 20

5.1.3.2 The Flocks 21

5.1.4 Cultural Categories 21

5.1.5 Flocks and the Social Network of the Brand 22

5.1.6 Cultural Meaning and Identity Projects 24

5.1.7 The Consumer Culture 24

5.1.7.1 The Evolution of the Consumer 25

5.1.7.2 From Modernity to Hypermodernity 26

5.1.7.3 The Post-modern Consumer 26

5.1.7.4 The Character of the Post-modern Consumer 28

5.1.7.5 Authenticity and Consumption 28

5.1.7.6 Hypermodernity 30

5.1.7.6.1 Fear of the Future 31

5.1.7.6.2 Ethical Responsibility 31

5.2 Method 32

5.3 Research Design 32

5.3.1 Introduction to Starbucks 32


5.3.2 Starbucks within the Industry and the Competition 33

5.3.3 Brand Genealogy 33

5.3.4 The Consumer Culture 34

5.3.4.1 Meaning Transfer and Identity Projects 35

5.3.4.2 The Brand’s Social Network 36

5.4 Empirical Evidence 37

5.4.1 The Industry and Competition 37

5.4.2 Blogs and Fora 38

5.4.2.1 Who are the Bloggers? 39

5.4.3 Consumer Culture and Identity Projects 40

5.4.4 Critique of Data Collection 41

5.5 Delimitation 42

Part II

6. Introduction to Starbucks 43

6.1 Description of Starbucks’ Business 44

7. The Industry in which Starbucks Emerged 45

7.1 Starbucks Revolutionising the Industry 46

8. Current Conditions of the Specialty Coffee Industry 48

8.1 The Specialty Coffee Market and the Competition 48

8.1.1 The Coffeehouses 49

8.1.2 Specialty Coffee Going Mainstream? 49

8.1.3 The Threat of the Fast Food Restaurants 51

8.1.4 The Evolution of the Specialty Coffee Industry 52

8.1.5 Starbucks in the Kauffman Continuum 53

Part III

9. Brand Genealogy 55

9.1 Starbucks’ Branding Strategy 55

9.1.2 Emotional Branding 55

10. The Narratives 57

11. The Narrative of Howard Schultz 58

11.1 The American Dream 58

11.2 The Father Figure 58

11.3 Development of the Narrative of Howard Schultz 60

12. High Quality 62

12.1 The Italian Coffee Traditions 62

12.2 Service 63

12.3 The Control of the Supply Chain 64

12.4 Development of the Narrative of Quality 64

12.5 Development of the Narrative of Service 67


13. The Third Place 69

13.1 Is Starbucks Still a Third Place? 71

14. The Narrative of Corporate Social Responsibility 74

14.1 The Good Place to Work 75

14.2 Starbucks Still Strives to be the Good Place to Work 77

14.3 Fair Trade 80

14.4 Development of the Fair Trade Narrative 81

15. What has Become of the Starbuck Experience? 83

15.1 Standardisation and Expansion Strategy 84

15.2 Efficiency Focus 85

15.3 Change in the Meanings 87

15.4 Can You Grow Big and Stay Small? 88

15.5 Authenticity 88

16. Consumer Culture 90

16.1 The Initial Subcultural Consumer of Starbucks’ Coffee 90

16.2 Identity Projects 93

16.2.1 The Original Identity Projects of Starbucks’ Customers 93

16.2.2 The Identity Projects of Today 93

16.3 The Disappearance of the Bobos 94

16.3.1 New Meanings Attached to the Starbucks Brand 95

16.3.2 Why the Bobos Left the Brand 95

16.4 The Social Network of the Brand 98

16.5 The Starbucks Consumer and Hyper Modernism 103

17. Conclusion 104

17.1 Implications of the Conclusion 105

18. Implication for Further Research 107

19. References 108

20. Appendixes 116

Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The STory of STarbuckS 1

Part I

1. PrefaceAs the neo-classic theory, the information model (McCracken, 2005) within advertising is based

on the idea of homo economicus – the rational human being or the rational consumer. According to

this theory the consumers evaluate products on a rational basis and buy the goods which are as-

sessed to optimise their self-interest. Thus the cultural context surrounding the good is not taken

into account when planning a branding strategy. This indicates that the consumer at any given

time will select a product on the basis of an objective evaluation upon the good’s utility regardless

of any other factors. However, how does the information model explain that that the consumer’s

actions deviate from what is dictated in the theory and hence that the consumer does not always

act rational? Consumers buying patterns and decision making seem to be controlled by other fac-

tors than rational evaluations and hence the information model appears to face limitations when

trying to give explanation to why expensive branded goods are chosen rather than similar goods

without brand value – choices, which are inherently irrational. So what triggers the consumer to

make these choices? And if the consumers based their consumption on rationality would some

luxury goods not battle to survive in the market place? Therefore, when looking into the specialty

coffee1 market it could be argued that the similar cheaper coffee product now supplied by fast

food chains such as McDonald’s or Dunkin Donuts, would easily substitute a product such as coffee

from Starbucks Corporation2?

However, it seems like the consumers act less rationally than predicted by the neo-classic eco-

nomic theory and thus base their consumption choices on other factors than for instance price – it

is not rational to buy a tall latté in Starbucks when a product with similar product-property can be

bought in McDonald’s for less than half the price, but nevertheless numerous consumers do buy

their latte at Starbucks. Then it is arguable that the quality and taste were what differentiated

the Starbucks latte from the McDonald’s latte, which would justify the more expensive purchase.

But according to specialists the price premium of coffee at Starbucks cannot be justified anymore

(Schwaner-Albright, 2008) again indicating that something other than pure information is con-

trolling consumers buying decisions. McCracken (2005) explains these irrational choices with the

so-called transformation model, the counterpart of the information model, which operates within

another paradigm not explaining consumer choices on the basis of information but on the basis

of consumers being surrounded by culture – culture which affects the consumption patterns and

that products possess intangible benefits or meanings which can be transferred from the prod-

ucts to the consumer, meanings which the consumers need to construct their identity. For this

1Speciality coffee: “Sometimes called “gourmet” or “premium” coffee, Specialty Coffees are made from exceptional beans grown only in ideal coffee-producing climates. They tend to feature distinctive flavours, which are shaped by the unique characteristics of the soil that produces them” (SCAA, 2008)2Starbucks Corporation will be referred to as Starbucks in the rest of the thesis.


reason rational choices are not always made – brands possess intangible meanings which results

in consumers making irrational choices based on emotions and feelings and which to some degree

may explain the success of the Starbucks until now.

2. Problem AreaInvestigating the state and direction of Starbucks leaves one with the impression of a very suc-

cessful company – it is an almost unbelievable success story about the coffee chain and a brand

which changed the Americans’ coffee and café culture. Since 1987, when this success story took

its departure, Starbucks has attained immense growth results. The coffee shop chain has been

growing with more that 20% a year (Bonamici & Fortune, 2004) and in five years the chain almost

tripled the number of stores worldwide, from 5,886 in 2002 to 15,011 in 2007 (Harrer, 2008) result-

ing in an almost global omnipresence (Starbucks, 2008a). Thus, Starbucks is developing rapidly

which is reflected in the fact that the chain until last year opens approximately five new stores a

day worldwide. According to the corporation, the intention is to let this development continue and

the plan is to add approximately 6,500 stores to the total store count by the end of 2011 (Star-

bucks, 2008b)

However, in the media, Starbucks is criticised for this rapid growth and analysts do not seem to

doubt that the expansion objective of a total number of 40,000 stores is to stretch the expansion

too far, as it is estimated that it might be difficult to maintain a profitable turnover in the long

run (Nocera, 2008). Furthermore, if continuing this fast, some analysts expect that the corpora-

tion eventually will destroy what they have built up and what have become to be known as their

unique characteristics. Hence, analysts believe that Starbucks have lost focus and track of the

Starbucks Experience3 which has always been the cornerstone of the corporation (Nocera, 2008).

These statements are particularly interesting as Starbucks’ growth rate seems to have been slow-

ing down the past year (Starbucks, 2008d). To this, it is seen how Starbucks is not able to meet

the expectations of the market, which is reflected in dropping stock prices in particular, and in the

fact that Starbucks struggles to retain the same costumer traffic as before. Starbucks believes

that increasing competition from quick-service restaurants, which have started offering coffee

and the decrease in the American economy, are the main explanations for Starbucks’ inferior re-

sults (Starbucks, 2008c). Naturally, it cannot be rejected that some of Starbucks’ decline is con-

nected to the US economic slowdown as the tendency is seen across the industry, but comparing

Starbucks’ stock prices to the overall index, Starbucks has experienced a steeper fall the past year

(Factiva, 2008). Therefore, the decline may have other explanations. Although Starbucks is far

from economic crisis at this moment, it can be argued that potential crisis are lurking.

3Starbucks strives to provide customers with a special and theatrical experience in a comfortable and inviting environment when buying their coffee beverage. This is referred to as “The Starbucks Experience” which will be elaborated on later as the experience comprises of many different factors.


Extending the knowledge of the Starbucks Corporation, there is no doubt that the future is chal-

lenging to Starbucks, especially since it has been presumed that the golden days of Starbucks is

over (Gilbert in Nocera, 2008). In this context, it is essential to be aware of the growing tendency

of customers deselecting Starbucks deliberately and especially the growing number of customers

actually avoiding Starbucks (Thompson et al., 2006; Thompson and Arsel, 2004). The growing

number of customers dissociating themselves from Starbucks, expressing their negative atti-

tudes towards the corporation, cannot be ignored as they can be seen as an expression of Star-

bucks struggling with the trustworthiness of their brand.

2.1 Branding as the Root CauseDue to the growing dissociation from Starbucks and the questioning of their narratives, we argue

that branding can be at the root of the problems Starbucks is facing currently. Thus, Starbucks’

approach to their branding is questioned. The dissociation from Starbucks can furthermore be

understood as an expression of Starbucks not delivering what the consumer of today demands

– thereby arguing that the Starbucks brand struggles in corresponding with the cultural desires

in society. The purpose of the thesis is therefore to investigate how Starbucks has handled their

branding and hence narratives. In relation to branding we have come across Holt (2004) and Mc-

Cracken (1986; 2005) who both take a cultural approach to branding and thus focus on the impor-

tance of brands relating to the cultural context. Holt (2004) and McCracken’s (1986; 2005) theories

analyse brands attached with meanings which consumers adopt when they buy the brand, thereby

the brand’s meanings and values are transferred to the consumer’s identity. Thus, these brands

can be characterised as identity brands. Starbucks is identified to be such an identity brand, seeing

that customers apply the meanings of Starbucks’ brand in creating themselves (Thompson et al.,

2006). Therefore, branding is about creating narratives which correspond with the desired image

of the consumers. This requires an understanding of the historical and cultural context. The point

is that if the narratives are not continuously related to the changing cultural context, hence the

desires of the consumers, the brand will be in trouble as the narratives lose their trustworthiness

(Holt, 2004).

Based on Holt’s (2004) theory about iconic brands, it can additionally be argued that Starbucks has

reached iconic status as they achieved to become a symbol representing the desires of consumer

culture when they entered the market. They were able to comply with the subcultural desires of

that time, exemplified by the “bobo-culture”, which will be elaborated on later (Thompson et al.,

2006). This may leave one with the impression that Starbucks has pioneered in applying a cultural

branding strategy. However, this does not seem to be the case since it is suggested that they do

not change in line with the context yet, time after time, they intimate that they pursue an emo-

tional branding strategy (Schultz & Yang, 1997; Michelli, 2006). Consumers’ doubt in Starbucks’

trustworthiness indicates conflicts in the image of Starbucks, and furthermore that the narra-

tives do not correspond with the identity that consumers desire.


McCracken (2006) points out that all trends and concepts emerging as cultural innovations over

time will be perceived as an ordinary standard; hence they lose what made them distinctive and

interesting in the beginning, as well as their initial novelty value This is furthermore an interesting

approach to Starbucks’ decline as it may be the case that Starbucks has difficulty in retaining the

same position in the mind of the consumers seeing that the concept of specialty coffee might now

be perceived as a mainstream concept.

The cultural branding approach complies with and overcomes the shortcomings of emotional

branding (Holt, 2004) which will be outlined as the branding strategy of Starbucks in the Litera-

ture Review. Therefore, the following Literature Review will serve as a justifying foundation for

applying a cultural branding approach to the understanding of the Starbucks brand.

3. Literature ReviewThe Starbucks corporation has been discussed in various articles, books, and TV shows and it

seems that a large amount of writers have an opinion about the company which they wish to

express in one way or another. However, only few articles and books have taken the discussion

and analysis about the famous company to an academic level, and quite a few of these apply Star-

bucks as a case example and hence are not focussed on Starbucks alone. In the following review,

we will outline the tendencies towards Starbucks’ branding. We have chosen to include academic

research, consultancy work, and more descriptive analyses. We are aware of the fact that in the

case of the consultancy literature, it appears to be weaker in its argumentation due to the fact

that it is not based on thorough research. However, since only a little literature analyses Starbucks

on an academic level, consultancy literature is included to give a more comprehensive image of

the branding of Starbucks as it is found to provide a useful insight into how Starbucks have gone

about their branding – knowledge which can be applied later in the thesis.

Academic research includes, among others, Thompson and Arsel (2004), Thompson et al. (2006),

Lyons (2005), Rindova in Lerpold et al. (2007). We define consultancy books as literature written

with the purpose of giving the business-world’s suggestions on how to go about branding by ap-

plying Starbucks as a prime example. In the Literature Review, they are represented by Michelli

(2007) and Scott Bedbury (2002). Lastly, there has been identified descriptive literature upon

Starbucks’ branding. This is mainly written by Koehn (2001), Pendergrast (2001) and Luttinger

and Dicum (2006), who include Starbucks in the historical context of the specialty coffee sector’s

development.

In general, it can be argued that the literature found shows an agreement in that Starbucks’

branding strategy is emotional, though some only imply this implicitly. We attempt to identify


gaps in the existing literature on which to base our argumentation of choosing a cultural branding

approach. Moreover, most of the literature is written with the purpose of explaining Starbucks’

current troubles – therefore the gaps identified should not be seen as a criticism towards the ex-

isting literature as it has not been its purpose to analyse Starbucks from a cultural and contextual

approach. Moreover, all texts have been composed before the crisis of Starbucks and therefore it

seems logical that Starbucks’ poorer performance has not been investigated. Nevertheless, the

fact is that only few authors have taken Starbucks’ lack of cultural branding up for evaluation and

we will apply knowledge from these authors as foundation for the further research.

3.1 A Holistic ApproachMichelli (2007) describes through an internal analysis of the corporation how Starbucks revo-

lutionised the coffee industry, gained high growth rates, and success worldwide. Michelli

(2007) points out that the company has followed five principles, and that these have lead di-

rectly to their success. The principles are all focused on how the company can differentiate

from other coffee shops and, through the principles, create a special coffee experience for the

customer. The key to this special experience is to create a connection between the partner4

and the customer and through this connection create a relation that emotionally attaches the

customer to the brand.

Michelli (2007) does not intend to describe the branding strategy of the company, and the purpose

of his book is not to demonstrate the branding of Starbucks, but to develop a generic framework

for success by indicating that any company can gain success applying the five principles. However,

we argue that Michelli (2007) through the book, although maybe not consciously describes the

branding of Starbucks, and that the five principles described in sum, constitute the branding strat-

egy, or at least part of it. Implicitly, it can be argued that the strategy Michelli (2007) is describing

is an emotional branding strategy as it is evident that emotions are the pivotal point of the strat-

egy, and thus that the goal is to create an emotional relationship with the customers through the

five principles. Thereby, focus seems so be shifted from a product benefit-driven approach to an

emotional appeal (Roberts, 2004 in Thompson et al., 2006). What also seems clear is that the five

principles shall not be deviated from. This indicates a consistency that is in line with the thoughts

of emotional branding. Hence, the principles should be kept consistent in all the brand activities of

the company over time.

Michelli’s (2007) focus is predominantly internal. It is the CEO, managers, and partners who, from

a top-down perspective, deliver the five principles and hence the brand to the customer. As men-

tioned before, the key is to connect with the customer and create a relationship, which according

4Partner is a Starbucks term used for employee


to Michelli (2007) seems to be done very easily – not taking into consideration the rapid servings

and the many different partners. This leaves us wondering if it is really possible to connect to

every single customer and whether this is the explanation to the success of Starbucks. Also the

internal view of the brand can be argued to be a problematic way to describe the brand and explain

its success criteria. Michelli (2007) may have what by some authors (Schultz et al., 2005, Davis

& Dunn, 2002) is described as a holistic approach to the branding of the corporation taking the

whole company into consideration when delivering the brand to the consumer. Thus, in order to

connect emotionally with the customers it is imperative that all parts of the organisation under-

stand how to express the intended narratives and emotions. This is especially true in the case of

the employees delivering the brand to the customers, which is no doubt of high priority. However,

this approach is not found to be sufficient due to the fact that leaving out the demand side, the

consumers, can in fact be very problematic. Holt (2004) and McCracken (2005) point out that the

context in which the corporation exits cannot be left out of the branding process as it plays an

active role in the branding.

The methodology of Michelli (2007) should be questioned as it results in the brand being described

only from a positive and at times unrealistic angle, thereby lacking a critical position towards

Starbucks. The analysis is purely internal and done through various interviews of CEO’s, leaders,

partners and most important Chris Gorley, head of Global Brand Communication at Starbucks.

Therefore, it can be argued that the analysis is one-sided and positive towards Starbucks’ brand

due to Starbucks huge involvement in the book. Only a few times are the five principles ques-

tioned which leaves the reader with an extremely positive perception of the brand. Again, it can

be concluded that the analysis of the brand lacks a more objective perspective, and Michelli (2007)

does not take into consideration that external factors such as the consumers as well as media

functioning as co-branding. Furthermore, the holistic approach to the brand is not sufficient to

explain the contents of the Starbucks’ brand.

Due to the book being published in 2007, where the company was on their highest opening an av-

erage of five shops a day (Rubin, 2008) it obviously does not consider the current crisis Starbucks

is facing or reflect on the danger the brand could likely be facing with the huge expansion level.

The former head of marketing in Starbucks, Scott Bedbury’s book “A New Brand World” was pub-

lished in 2002. The book does not only focus on the branding of Starbucks but does in general de-

scribe how branding should be carried out. Due to Scott Bedbury playing a large role in Starbuck’s

marketing, it can be assumed that the points of view on branding are highly relevant in regards to

the Starbucks branding strategy.

Like Michelli (2007), Bedbury (2002) has developed, in this case, eight principles as to how a brand

can become successful. Most importantly is that the brand must be relevant to the customer


and hence the customer’s needs must be understood. In general, the customer’s influence on the

brand is less ignored than, for instance by Michelli (2007), who leaves out this external factor of

the branding process completely. Bedbury (2002) mentions that the customer more than ever has

control over the brand, and that the customer in many ways is in the driver’s seat. This is mainly

due to the Internet where word of mouth spreads positive as well as negative narratives which

in many ways are incontrollable for the company at stake. However, this fact is only mentioned

shortly and is not further discussed in relation to Starbucks. Later in the review we will get more

into how literature has analysed on how the consumer can and have affected the Starbucks brand,

however mostly in the negative way.

Also the emotional connection with the brand is underlined and, just like Michelli (2007), the con-

nection is achieved by communication through firstly the employees and also the artefacts in the

coffee shop, such as design, music, the quality of the coffee and even down to the number of

toilet paper plies, as everything matters when expressing the wanted brand image. In regard to

this, Bedbury (2002) mentions that one of the main reasons for Starbucks’ brand success is the

way they extend their brand – all extensions are focussed on the main mantra quality; whether

this is in music, extension of coffee menu, products sold etc. This everything matters approach

and hence focus on all possible aspects of the company to express the image, reflects Bedbury’s

(2002) holistic view upon the branding process that he shares with Michelli (2007). Again focus

is on the employees and how they connect and create a special experience. Even though custom-

ers are stated to have some influence on the brand image, this is not the main factor leading the

brand to what it is perceived to be.

Moreover, the brand DNA or brand karma, which is the term Bedbury (2002) uses, is emphasised.

The brand core is to be identified and is not supposed to be changed over time. However, this

statement contradicts Bedbury’s (2002) emphasis on being of relevance to the customer by al-

ways living up to their needs – don’t the customers’ needs express the current context in which

they interact? Therefore, this statement should in our further research be questioned, as cultural

brand management theory in particular explains failing brands with brands which do not take

changes in culture, and hence consumer demands, into their consideration and thus fails to keep

up with the movements in the contemporary society (McCracken 2005; 2006; Holt, 2004).

3.2 Brand Attachment Park et al. (2006) take the brand connection to another level and describes how attachment to a

brand can be achieved. They compare the attachment process to how a parent develops the rela-

tionship to its child through gratification of basic needs, enabling actions, and through giving the

child a sense of security and trust. In this same way, the consumers attach to brands when the

brand gratifies the consumer by offering aesthetic pleasure, enriching the consumer by expressing


their actual or desired self – similar to what McCracken (2005) describes as the consumers identity

projects. Park et al. (2006) do not analyse the Starbucks brand but apply the coffee chain as an

example of a brand which creates attachment through mainly aesthetic/hedonic experiences5.

Park et al. (2005) underline that Starbucks is a good example of a brand, which is build upon a set

of visually and aurally pleasing atmosphere factors, which allow relaxation and self-indulgence.

This aesthetic/hedonic experience is according to Park et al. (2006) supposed to gratify the self

and thus to evoke an emotional connection. Again we are introduced to the emotional branding

though Park et al. (2006) who have chosen a different term but the concept of aesthetic/hedonic

experiences cover the same aspects as the notion of emotional branding introduced by the aut-

hors in this literature review (cf. Thompson et al., 2006; Michelli, 2007; Bedbury, 2002) – here the

emotional connection to the brand is evoked by a pleasing retail atmosphere.

Again we are introduced to a text, which even though not focussing on Starbucks, has a positive

approach to the firm and apply Starbucks as a prime example of conducting business. Moreover,

the text does not go into detail about how Starbucks creates this attachment to the consumers

and the argumentation about possessing a pleasing atmosphere seems rather weak. Park et al

(2006) do not go further into any detail about how Starbucks has gone about their branding strat-

egy and moreover, how Starbucks has ran into difficulties lately. Therefore, it is important to be

aware of the text’s insufficiency in explaining the rise as well as the fall of Starbucks.

3.3 A Historical Approach towards Starbucks and their Role in the MarketBoth Koehn (2001), Pendergrast (2001), and Luttinger and Dicum (2006) have written about the

history and development in coffee focusing on the American market. A characteristic shared by

them all is that attention is attached to how Starbucks has influenced the history and develop-

ment of the US coffee market.

Koehn (2001) does however, in the chapter on Starbucks, differentiate her approach to why Star-

bucks has become the brand they are today from Michelli (2007) and Bedbury (2002). She argues

that Starbucks gained considerable success and set industry standards by introducing a whole

new concept at the right time in the American context. Furthermore, she links Starbucks’ success

to socio-economic reasons, both changes in income and lifestyles; hence changes in consumerism.

The 1980s spurred economic growth resulting in higher disposable incomes which made consum-

ers demand luxury goods and since Starbucks was perceived as an affordable luxury; Starbucks

became more or less an overnight success.

Koehn (2001) follows Starbucks and their success but lacks to explain, having set the industry

standard, why and how the brand in the end of the day differentiates itself from their competitors.

5Starbucks is a good example of a company applying aesthetic/hedonic elements as it “...evokes pleasure from multiple sensory modalities (e.g. hot, strong tasting coffee with a pleasant aroma) set in a visually and aurally pleasing retail atmosphere that allows for relaxation and self-indulgence...” (Park et al., 2005:204)


The brand as explained by Koehn (2001) does not consist of something that the rising amount of

other competitors does not also posses. These include qualities such as a clean relaxing place for

conversation and/or business where premium coffee is served, and hence demarcates the brand

to be about social interaction, belonging and identity etc. and hence also how the brand leads to a

sustained competitive advantage (Barney, 1991).

Moreover, Koehn (2001) describes Starbucks from a predominantly positive angle – Starbucks had

yet not, according to Koehn (2001), experienced any serious threats and was peaking growth by

opening two stores a day in the domestic market. However, Starbucks must have already in the

late 1990s encountered some opponents who have anti-branded the coffee chain especially due

to the fact that the corporation expanded heavily. This one-sidedness leaves one with a very posi-

tive perception of Starbucks, which even though being followed in their most successful years also

must have encountered some antagonists. Therefore, Koehn (2001) lacks to describe how the

consumers perceived the brand, and not only what Starbucks intended to express with their brand.

Also a reflection on how the context is not only a factor which contributes to a brand’s success but

also that a changing context can affect the Starbucks brand negatively if the brand is not capable

of adapting to changes in the society (Holt, 2004). However, this is probably due to the text being

written ex ante the crisis of Starbucks.

Koehn (2001) is able to outline how Starbucks is incorporated in the industry and context as they

emerge. Luttinger and Dicum (2006) is much like Koehn (2001) in their way of delineating facts

and relate Starbucks to their cultural fit into the context. Similar to Koehn (2001), Luttinger and

Dicum (2006) describe the success of Starbucks and hence the specialty coffee industry from a

historical perspective, thus the role of Starbucks is related to the development of the coffee in-

dustry and the American culture. Even though the story of Starbucks is only a small part of their

description of the history of coffee, Luttinger and Dicum (2006) still point out reasons for Star-

bucks being successful. They do not, however, go as far as Koehn (2001) to connect the success

with economic reasons. On the other hand, they also point to the fact that Starbucks emerged at

the right time just as Koehn (2001), drawing attention to the essential criteria of meeting cultural

needs in society to becoming a successful brand.

Apart from the fact that Starbucks was leading the way in introducing the high quality of spe-

cialty coffee to the masses, it is also stressed how Starbucks was able to meet a cultural need in

society, identified as the need for the so called Third Place. A Third Place is an informal public place

between home and work where people can meet and gather – a place which encourages custom-

ers to relax and linger (Oldenburg, 2001). However, Luttinger and Dicum (2006), and Koehn (2001)

are not alone in this viewpoint of labelling Starbucks as a Third Place, as it seems to be generally

believed that providing the customers with a Third Place is one explanation for the success of

Starbucks, and thus is supported by Pendergrast (2001), Thompson and Arsel (2004), and Thomp-


son et al. (2006), which will be discussed later. Still, Koehn (2001) does not seem to follow up on

how these factors, giving rise to the initiating success of Starbucks developed in line with the de-

velopment of the company. Starbucks is still referred to as a Third Place as if it is a fact, but it can

be argued that Starbucks has changed during the years and no longer fulfils the criterion of being

a Third Place (Oldenburg, 2001). Hence, there seems to be a tendency to disregard the fact that

Starbucks may no longer be the same company as it was when it emerged. Therefore, the text of

Koehn (2001) can be criticised for not critically evaluate the factors leading to the initial success. It

appears that Koehn (2001) focuses on conditions which were current at the time of the emergence

of Starbucks and leaves out a critical discussion regarding the current presence of these factors. In

comparison, Luttinger and Dicum (2006) point out how the development of Starbucks may have

led to a loss of the initiated Third Place. Indirectly, Luttinger and Dicum (2006) criticise Starbucks

for having stirred away from their origin and that they have sold out their core essence in order to

gain profit. Furthermore, they are able to draw attention to some negative consequences of the

development Starbucks has gone through. Thus, they are alert to the fact that the way Starbucks

has conducted business is not without side effects, and that their exploding expansion strategy

and product standardisation have challenged Starbucks to preserve the initial soul of the company

and the brand.

Like Koehn (2001) and Luttinger and Dicum (2006), Pendergrast (2001) acknowledges how revo-

lutionising Starbucks has been to the specialty coffee industry. However, like Luttinger and Dicum

(2001) he pricks a hole in Starbucks’ story of success and tries to point out what is happening

beneath the surface of Starbucks. His criticism is mainly pointed at the father figure of Starbucks,

Howard Schultz, and how the genuineness of the image he is trying to create of himself may be

questioned. Pendergrast (2001) gives Howard Schultz credit for his route to success but at the

same time he implies that appearances are deceptive. Thus, he indicates that Howard Schultz is

trying to brand the company by creating a positive and engaging image of himself, portraying him

as a fine example of the American Dream come true. Pendergrast (2001) is critical of how Howard

Schultz tries to depict himself as a hero whose main goal is to bring something to the society

through fair trade, engagement in caring organisations and especially by providing community to

the American people through his establishment of the Third Place. Hence, Pendergrast (2001) ar-

gues that one must not be fooled by the branding of Howard Schultz and Starbucks as it is evident

that Howard Schultz is not in the business to provide community. “He is in it to win.” (Pendergrast,

2001:306). Pendergrast (2001) exemplifies this winning instinct in how Starbucks has used their

position of being larger and financially stronger compared to the competitors to force them out

of the market. Starbucks has shown a strategy of wiping out competitors by buying them out,

or otherwise to employ predatory retail tactics as Pendergrast (2001) calls it to outperform com-

petitors. Pendergrast (2001) seems critical of the image of the Starbucks brand and indirectly he

alludes to the reality of Starbucks living up to the brand image of Starbucks as a corporate titan

circulating about the brand.


3.4 A Critical Perspective on Starbucks’ BrandingLuttinger and Dicum (2006) call attention to the fact that Starbucks is loosing their touch of

the market, but they do not directly link Starbucks’ risk of loosing their soul with their emotional

branding strategy. Thompson et al. (2006) and Thompson and Arsel (2001), on the other hand,

draw this parallel, pricking another hole in the success story of Starbucks. This literature, being

discussed below, shows criticism towards the way Starbucks is conducting business and hence

identifies drawbacks of Starbucks’ branding strategies that initially have led to success. Thus, the

way to success may not be questioned but instead the future plans and goals of the company.

Whereas the earlier mentioned authors only implicitly allude to Starbucks conducting an emo-

tional branding strategy, Thompson et al. (2006) take the fact that Starbucks has conducted an

emotional branding strategy as their point of departure. Even though Thompson et al. (2006),

with reference to other authors, acknowledge the fact that Starbucks is one of the most evident

examples of a successful emotional branding strategy, it is not their intention to investigate how

emotional branding has led to Starbucks’ success and how the company has succeeded in creating

emotional relations to the customers. However, they do point out how Starbucks was able to fit

into a subculture at the time they emerged, and how this was vital in leading towards success. In-

stead Thomson et al. (2006) focus on the drawbacks of emotional branding. Thus, the purpose of

their article is to illustrate how emotional branding can become a drag to the brand if the brand is

not able to live up to its brand promises – using Starbucks as a case example. They do so by intro-

ducing the term doppelgänger brand image which can be defined as a cultural backlash, i.e. nega-

tive narratives told about the brand by the conditions which emerges when a brand is not able to

live up to its brand promises. The essence of the article is thereby that Starbucks is not living up to

their brand promises and Thompson et al. (2006) point to a mismatch between the identity, which

Starbucks wishes to express and how they are actually perceived. This gap is expressed mainly

through the Internet, where communities against corporations like Starbucks are formed with the

purpose of sharing negative opinions and experiences with each other.

What is interesting to notice about Thompson et al. (2006) is the attitude towards branding and

how this must be related to the cultural context to gain success. Myths are a central point to the

branding and thus the ability to use storytelling to cater to customers. Thompson et al. (2006)

point out that Starbucks’ initial success is based upon their ability to deliver the right myth to a

specific customer segment at the right time. This segment is identified as the Bobos, bohemians

bourgeois who “attempted to meld the bourgeois values of hard work, career success, and material

affluence with the bohemian values of creativity, expressiveness, anticonformism, and antimaterial-

ism”. (Thompson et al., 2006:60). Starbucks’ myth was able to allay the cultural conflicts of ap-

preciating both bohemian and bourgeois values, which characterised the corporate bohemians,

and Starbucks then catered to this segment. However, Thompson et al. (2006) argue that the cir-

culating doppelgänger brand image is an expression of the myth no longer being authentic to this


customer segment, as Starbucks is no longer able to fulfil the promises of the branding narrative.

In general, authenticity seems to be a central theme in the article of Thompson et al. (2006), as a

brand’s authenticity is understood as a key to success. Contempt is revealed towards the branding

of Starbucks, as the imaging of them providing the customers an authentic, coffee experience, in

a comfortable and homelike environment can be understood as a marketing gambit on the plea of

Starbucks’ real identity as a corporate titan. Thus, if the customers feel put upon, the authenticity

of the branding stories is taken away.

Thompson et al. (2006) opens up the other side of the glamorous success story of Starbucks but

on the other hand they leave out that this, by the company incontrollable co-branding, does not

necessarily have to be negative. Co-narratives could also be positive and serve as brand strength-

ening narratives. Thus, it can be argued that positive narratives about Starbucks circulate in the

popular culture which improves the image of the brand. However, the article of Thompson et al.

(2006) can be seen as a call for Starbucks to take immediate action on their branding while the

doppelgänger brand image still has not destroyed the branding of the company. Thus, Starbucks

is encouraged to create new narratives, emotional branding stories, and to create agreement be-

tween brand promises and what is provided.

Thompson and Arsel (2004) do, in a predecessor to the above article, underline that brands and

also Starbucks will be imposed to different meanings when introduced to other cultures – what

is a hip brand in the US may reflect the opposite in another country, as global brands take on

a variety of localised meanings. But also within the national boarders a brand can be perceived

differently due to cultural differences in, for instance, different states. Moreover, the anti-Star-

bucks discourse is analysed and two distinct groups of anti-Starbucks café guests are recognised.

Thompson and Arsel (2004) dig a bit deeper into the reasoning of the two groups and why they

are avoiding Starbucks. However, the analysis lacks to explain the anti-Starbucks discourse with a

more cultural approach and so does the former analysis (cf. Thompson et al., 2006). Though both

analyses seem to consider culture to affect the brand in general, neither links the anti-Starbucks

discourse with a potential change in the American culture. Of course the objective of the analysis

has to be considered as well, and as Thompson and Arsel (2004) are not trying to map the brand-

ing strategy of Starbucks but seek to analyse the different meanings and actions which emerge in

a given context, one cannot expect to find all aspects of the Starbucks branding in their article.

3.5 Locus as PromoterLyons (2005) underlines that Seattle is the core identity of Starbucks marketing and that the

city Seattle defines where Starbucks stems from – an origin that imbues the identity of the cof-

fee chain. Additionally, Lyons (2005) focuses on how Starbucks has applied product placement in

its marketing efforts not only to generate increased brand awareness but also to accommodate

harming critique from the media.


Lyons’ (2005) main focus is on how Starbucks has branded themselves through the use of location

especially of the first coffee shop at Pike Place, and how Seattle has become a part of Starbucks

identity. However, other factors must be included when analysing how Starbucks has branded

themselves. Moreover, it may be questioned whether the consumer is aware of Seattle being a

part of the corporate identity and a main factor to their branding strategy as Lyons (2005) argues.

Therefore, it can be questioned whether Seattle takes this central role in Starbucks’ current brand-

ing not least due to the large distributions of coffee shops all over the world, where the consumers

most likely would not associate Seattle with the same degree as an American would associate

with the city with. Therefore, it can be concluded that Lyons (2005) is missing out on other factors

regarding Starbucks’ branding. But still, Lyons (2005) addresses a branding factor, which has not

been in focus of other Starbucks brand analyses

3.6 Communication StrategyRindova (in Lerpold et al. 2007) analyses the communication strategies in the specialty coffee in-

dustry in the US. These strategies are extremely important for the coffee chains as they present

the company, their values, and hence how the consumers perceive them. Rindova (in Lerpold et al.,

2007) explains how the communication strategy has a decisive role for leadership in the specialty

coffee business and exemplifies how Barnies’s Coffee Shop did not keep the leading position in

the market, even though they were the first to introduce several new concepts before Starbucks

did, (such as for instance a flavoured coffee). Barnies’s Coffee was not able to create sustainable

competitive advantage when only focussing their communication on the rational communication

strategy and product development. The key to success is, according to Rindova (in Lerpold et

al., 2007), to combine four communication strategy modes and develop, what she describes as a

multiplex communication strategy, which facilitates engagement of stakeholders on many levels

– creating a more elaborate perception of the firm which does not only communicate their rational

benefits but also plays on a cognitive and thus on a feeling based level.

It is explained how firms do not only compete on their resources but also how competition is on

the perception from the stakeholders. Here we would like to add an argument that the percep-

tion, and hence the way the business communicates, is a part of the brand which is a resource – an

intangible one though, which according to Barney (1991) quite so will lead not only to competitive

advantage in the short run but to long-run sustained competitive advantage due to its intangible

character and thus its resistance to be imitated by competitors (Barney, 1991). However, Rindova

(in Lerpod et al., 2007) does not link communication strategy and branding strategy together. This

would have made good sense as the communication of the firm, as to how Rindova (in Lerpold et

al., 2007) describes it, is directly linked to what is perceived as being branding of a firm. Therefore,

it may be concluded from Rindova’s text (in Lerpold et al., 2007) that the root cause to Starbuck’s

success is their application of a multiplex communication strategy, which is highly linked to their

branding strategy as well – a strategy which does not only speak to the rational level of the con-


sumer and hence their rationale behind preferring Starbucks, but a communication strategy that

appeals to the values and beliefs of the consumer as well. In this way Starbucks has differentiated

themselves from their competitors who have not applied a multiplex strategy and hence have left

the leading role in the speciality coffee business, to Starbucks.

3.7 SummaryTo sum up, there seems to be a clear consensus in the literature that Starbucks have conducted

an emotional branding strategy (Michelli, 2007; Bedbury, 2002; Thompson et al., 2006; Park et al.

2006; Rindova in Lerpold et al., 2007) though some only imply this implicitly. Thus, there seems

to be agreement about Starbucks capabilities to create an emotional connection to the custom-

ers, which is found to be the key to their success. Moreover, the emotional branding strategy is

argued to be supported by a holistic approach to the brand – meaning that the whole corporation

is responsible of delivering the brand through what Karmark (2005) would describe as a “living the

brand” strategy. However, it is apparent that some literature takes the context into consideration

as well (Koehn, 2001; Lyons, 2005, Luttinger & Dicum, 2006) and also external impact on the brand

is described by Thompson et al. (2006) and Thompson and Arsel (2004) – this being influence

from anti-corporate groups. Additionally, Thompson et al. (2006) argue that the Starbucks brand

has evolved around one single narrative being the authenticity narrative which we will argue is

not broad enough to explain the contents of the Starbucks brand and the reason to why the brand

presently is in trouble.

Both socioeconomic factors (cf. Koehn, 2001) making it possible for Starbucks to fit into the con-

text at the time they did are touched upon, as well as the product in itself and the innovative

thoughts and management behind the company, are pointed out to be central to the success.

Nevertheless, the arguments for especially the external reasons (i.e. the contextual part of the ex-

planation for the success) are not thorough enough and could require a more careful investigation.

Furthermore, as mentioned above, the existing academic material on Starbucks seems to lack

reflections on how the company gradually has related to its success factors. Hence how custom-

ers’ increasing knowledge of Starbucks, the company’s expansion level, and the changing context

as more and more similar concepts have emerged, collectively have changed the conditions for

Starbucks throughout the years.

3.8 Reflections upon the Literature ReviewWhat has caught our attention in the investigation of the material about Starbucks is in particular

the attitude shown by Thompson et al. (2006) towards Starbucks and their branding. Thompson

et al. (2006) point out that the way Starbucks carries out their branding is not optimal for the

brand. In other words, they criticise Starbucks for being stuck in their emotional branding story.

At the same time, they indicate that the decline in consumer traffic may be due to Starbucks not

being capable of corresponding with the needs of society. Thus, they imply that Starbucks cur-


rently lacks a cultural insight. The way Thompson et al. (2006) imply that Starbucks should handle

their branding is very much like the viewpoints of Holt (2004) and McCracken (1986; 2005; 2006).

The essence of Thompson et al. (2006) is that there is a gap between Starbucks’ brand image and

the culture currently, due to Starbucks not corresponding with the culture. We find this gap very

interesting and believe that it may be a valid explanation for Starbucks experiencing decline cur-

rently. The findings of Thompson’s et al. (2006) cannot be ignored in this thesis as they seem very

applicable for further investigation of Starbucks’ cultural branding – especially since Thompson

et al. (2006) do not dig further into the underlying cultural reasons for this mismatch, thus, only

demonstrating its appearance. Thereby, the reasons for Starbucks’ emotional branding stories not

being in line with the brand promises delivered are not investigated. This fact sets the scene for

our further investigation.

Thompson et al. (2006) point out the cultural conflicts experienced by “the bobos” in the mid

1980s to be the element which secured Starbucks a foothold within the context. Their analysis

does not go any further, however. In general, it can be argued that the analysis of the existing

literature about Starbucks lacks explanations for the further developments of Starbucks’ suc-

cess. Seeing that Holt (2004) explains a brand’s sustained success with the brand’s ability to cor-

respond to the cultural context, it could have been interesting to carry out a similar analysis of

how Starbucks has related to the cultural context since their initial success. Thereby, investigating

how they have been able to correspond to subcultures’ cultural conflicts to preserve their success

throughout their time. In this light, it would have been obvious to make this approach the pivotal

point of the thesis, especially with regard to clarify the causes for Starbucks no longer experienc-

ing the same success as before - hence, emphasising the cultural and contextual factors. Even

though this approach appears very appealing, it may have been outside the scope of our thesis

due to the necessary requirements which would have had to be undertaken to fulfil the research

required. Therefore, we leave out this contextual analysis of the American market. Nevertheless,

as the literature review has opened up to the possibility that Starbucks’ current situation may be

related to the lack of cultural branding this approach will still be the pivotal point of this thesis and

it will therefore be based upon the following problem statement:

To what extent can Starbucks’ current decline be explained

by the meanings attached to the brand?

Hence, the purpose of the investigation of the brand revolves around the current decline which

Starbucks is facing. This will be based on a research within the scope of cultural branding. Firstly,

the investigation will be concentrated about Starbucks’ narratives and how Starbucks is able to

live up to their brand promises and hence whether they are perceived to be authentic. Due to lit-

erature (Thompson et al., 2006; Gilmore & Pine, 2007) arguing that gaps between brand promise


and brand delivery lead to a lack of authenticity, and due to authenticity being argued to be essen-

tial for competitive advantage in the current context, investigation of authenticity or lack thereof

is found to be essential to out research. Additionally, the investigation will focus on whether the

narratives have developed during time, and in which direction. Secondly, how Starbucks has been

perceived by the consumers over time – has there been a development in the perception?

4. Thesis ApproachSeveral factors may be able to explain Starbucks’ decline, for instance the decrease in the Ameri-

can economy, shifts in the market conditions, such as increased competition and changes in the

industry structure. However, branding is found to be one evident explanation for the growing

dissociation from Starbucks, which furthermore is supported by the previous investigation and

analyses of the company (cf. Literature Review, Section 3). Thus, the focus of the thesis will be

delimited to branding. The approach is cultural branding due to literature in the Literature Review

pointing to the emotional branding strategy which Starbucks has conducted being too consist-

ent and hence not being tenable to a brand like Starbucks. Furthermore, the status of Starbucks’

brand indicated to be iconic (Holt, 2004; Thompson et al., 2006) implies a cultural approach to the

investigation of the brand, as Holt (2004) points out a continuous assessment of the context as

well as a cultural understanding as central for an iconic brand to stay successful. The approach

in the thesis can also be identified as the pre-understanding on the subject (Gadamer in Gilje

& Grimen, 2002). Thus, it is with knowledge about the insufficiency of emotional branding and

the potential appropriateness of culture branding for Starbucks that we initiate our investigation.

Therefore, we will have a prejudiced approach to Starbucks and how they should go about their

branding in the future and, when construing literature regarding the subject, this will be done with

the underlying pre-understanding of branding. Also our general experiences and knowledge will

affect our approach to the thesis and how we interpret literature and hence to outcome and our

findings (Gilje & Grimen, 2002:173-176).


5. Methodology5.1 Theoretical FoundationFirstly, the theory chosen is based on the cultural approach. Hence, we are applying theory within

this paradigm. Moreover, the research and hence the conclusion of the thesis will take its start-

ing point in the following theory. Thus, the theory will function as an explanatory foundation for

Starbucks’ current situation.

5.1.1 Cultural BrandingHolt (2004) has developed a counterpart to the traditional mindshare-, viral-, and emotional brand-

ing models. These cannot, according to Holt (2004), secure sustained branding success contrary

to his cultural branding approach. This approach is based on the idea that the cultural context in

which the identity brand is positioned plays a decisive role in the consumers’ demand for the brand.

Therefore, it is essential that firms behind brands have a cultural understanding but also have

historical awareness and hence possess an ability to look backwards in the history of the culture

in which the brands are interacting – the identity brand is according to cultural branding theory a

historical entity. The adaptation to historical change is therefore essential for the identity brand

to be successful and it must therefore never become consistent in its narratives. Hence meanings

but must always be dynamic in its existence and relate to the current context (Holt, 2006).

The identity brands are different than other brands as they compete on the so-called myth mar-

kets. A myth is a narrative which targets a contradiction in society’s subculture or what Holt

(2004) characterises as the populist world. The populist world is defined to be a subculture of com-

munity, which is constructed and articulated through myths and expressed through icons. What

is interesting about these brands is the fact that they are “identity creating” to their customers.

Thus, they are appealing to the customers due to the content of the brand’s myth which enables

customers to maintain their wished identity in spite of the conflicts posed by society. There can

be many different populist worlds within the general society and when a brand’s narrative are

targeted towards a populist worlds’ anxiety, the brand will achieve what Holt (2004) identifies as

iconic status. The populist world is in contrast with the national ideology, which represents the

moral view of the world which glues a country together and creates a sense of community in a

society. A society will undergo different breaks through time, and decades will be different from

others due to innovation and the general evolution of society. Changes in society leave certain

population groups outside this society evolution creating a subgroup, or populist world, with anxi-

ety regarding their future. Therefore, when the context changes so must the myths concurrently

otherwise there will be a risk of the brand being stuck in their myth. Not being up-to-date with the

current stir in society will consequently lead the brand to failure (Holt, 2004).


Holt’s theory (2004) can be problematic to apply considering our problem statement as we do not

focus on the whole American culture as such, hence, a national ideology as well as subcultures will

not be pointed out. Therefore, all aspects of the theory will not be applied but the theory will used

as an analysis tool to explain the speciality coffee chain’s current myths and whether these have

changed over time, to whom they have appealed in the past, and to whom the myths currently ap-

peal. Thereby, it will be analysed whether Starbucks may or may not have changed their narratives

to be concurrent with their cultural context, and whether this has been done deliberately or not.

5.1.2 Meaning Transfer

Consumption of products and goods says something about who you are – one’s identity is devel-

oped through consumption, as meanings from the products we consume, are transferred from

the product to the consumer (McCracken 1986). Not all products are what can be identified as

identity products – meaning products attached with meanings which facilitate identity creation

for the consumer. Starbucks’ coffee is an identity brand, which is filled with meanings which are

expressed through extensive storytelling. McCracken’s (1986) theory upon meaning transfer of

consumer goods will be applied to explain why Starbucks has achieved success but also why they

currently are facing difficulties. This is important as the cultural categories such as gender, sexual-

ity, and age etc. to a greater extend are blurred in today’s society and hence the consumers’ iden-

tity are sought through consumption, consumption of goods which expresses meanings which

the consumer applies to express their identity (McCracken, 1986). The meanings attached to the

Starbucks brand are essential to clarify due to the argument that the product Starbucks is selling

does not differentiate much from the other competing speciality coffee chains in product fea-

tures. Hence a clarification of the meanings of the brand might explain how and why Starbucks

has obtained more success than the rest of the market for speciality coffee. Therefore, there must

be some other underlying reasons for Starbucks’ being able to reach superior expansion levels

they have experienced for the last two decades. McCracken’s (1986) theory will also be applied in

regards to how the brand’s narratives and hence meanings have changed during time from being

praised a well-reputed brand to being a brand in decline.

However, the theory on meaning transfer must be critically evaluated for the purpose of analysing

Starbucks’ brand and the meanings associated with the brand. Some of the categories that Mc-

Cracken (1986) lists to be important when transferring meaning may not be sufficient and com-

prehensive enough to explain the meaning transfer of a consumer good as Starbucks. Considering

that the consumer goods sold in Starbucks are perishable food products there may not be the

same rituals linked to the product as there would be with non-perishable consumer good. Non-

perishable consumer goods may have a stronger exchange ritual for instance where the product

are given as presents that both express how the giver want to be perceived through the present

and how the giver perceive the receiver match the identity of the present. Starbucks products


can of course be used in the same way but the period of identity expression of the products has

a limited period of time before the products are consumed. McCracken (1986) does not mention

this gap in his theory, which may lead to a less sufficient explanation of meanings attached to

perishable products. However, the theory is still found suitable to explain how and which mean-

ings the Starbucks narratives and brand are attached and how the meanings may have changed

during time.

McCracken (1986) has developed a model which seeks to explain how meanings are transferred

from the cultural constituted world to consumer goods, and again from the products to the con-

sumers, who apply the meanings to carry out their identity projects.

Advertising is one way of transferring meanings from the culturally constituted world to the prod-

uct. This transfer could for instance be done through for instance storytelling, applying a story

to the product that cohere with the cultural constituted world or by using celebrity endorsement

or opinion leaders, which results in the product being associated with the qualities the celebrity

stands for. Especially the last factor of meaning transfer, celebrity endorsement, is a part of what

McCracken (1986) identifies as being a part of the so-called fashion system. Other factors are also

linked to the fashion system as being a carrier of meaning such as for instance product placement

– displaying products in a certain environment on the cultural constituted world and in this way

the product will be associated with the values of these surroundings. (McCracken, 1986).

When the meanings have been transferred from the cultural constituted world to the good the

question is; how then are the meanings being transferred from the good to the consumer? Mc-

Cracken (1986) identifies symbolic actions or rituals to be powerful tools to get cultural meanings

transferred from the good to the consumers’ identity. A ritual is defined to be a social action done

for the purpose of collective or individual communication and cultural categorisation (McCracken,

1986). These rituals are not important for answering the problem statement and cannot be ap-

plied as explaining Starbucks’ brand troubles. Therefore, the rituals will not be further explained,

as the important point in McCracken’s theory is that meanings are transferred from the culture to

the good and then again to the consumer.

5.1.3 Flock and Flow

In McCracken’s newest book he presents a new perspective on the changes in the market result-

ing in change in consumer demands (McCracken, 2006). This theory on Flocks and Flows will be

applied to Starbucks and, in this way, used to explain the reasons why the speciality coffee chain

struggles in the US market. The theory will be combined with Holt’s (2004) brand network theory

to more precisely be able to explain why the consumers currently deselect the otherwise so ac-

claimed and successful brand.


5.1.3.1 The Flows

Grant McCracken (2006) explains the changes in the market by applying the Kauffman Continuum

depicted beneath in figure 1. The change, being a new trend, a product range or another innova-

tion, pours into the culture at the chaos end of the continuum and will compete against a myriad

of other similar innovations. Only one or few of the innovations will be accepted by the consumers

and thereby leave the chaos. Eventually, the innovations end up being rigid and leave the culture

in the other end of the continuum. Schumpeter (in McCracken, 2006) also explains this evolution

of an innovation as creative destruction – if a concept does not re-innovate itself it will at some

point be outperformed or destructed by a more innovative or creative concept. Hence, no product

or concept can survive being static and without changing to the demands of the market. A product

or a concept must therefore at some point reinvent itself over time so it does not end up in the

rigid part if the continuum that sooner or later will be outmatched by more creative competitors.

However, when considering Holt’s (2004) approach to branding, in which it is implied that branding

is as necessary to reinvent as product features, one can question the adequacy of McCracken’s

(2006) theory. Thus, products or concepts do not necessarily have to change, but the meanings

attached to the product must be adapted to the context.

Additionally, a corporation must consider not only when to enter the continuum or market – when

is the market ripe for a concept or a new product line? – But also when to exit – when is the market

saturated, or has the environment/culture changed?

Figure 1 | Kauffman Continuum

The trick is to enter the flow at the moment the change begins to create value and get out when

value opportunities is being extinguished (McCracken, 2006). However, in some industries the

movement down the continuum is faster than in others. For instance, the restaurant business

which includes the speciality coffee sector moves with high velocity down the continuum, hence

a restaurant only has a certain time of living before flock 5, to be described below, adapt the

concept and this becomes rigid. The reasons for this is that the trends within the restaurant in-

dustry change, and follow new trends, rapidly demanding high adaptability and innovative skills

of established restaurants to be able sustain a profitable position in the continuum. Therefore, it

Chaos Rigidity

Direction of progress

Source: McCracken (2006)


Chaos < Flock 1 < Flock 2 < Flock 3 < Flock 4 < Flock 5 Rigidity


Source: McCracken (2006)

is extremely important to be aware of the business in which the company is operating in and how

fast trends and thus the surroundings are changing. Still, firms should not chase the trends and

thereby change their brand all the time. This will confuse the consumers and this kind of so-called

“cool hunt” will only cause the brand to loose its authenticity and in the end their loyal consumers

(McCracken, 2006).

5.1.3.2 The Flocks

One may criticise McCracken’s Kauffman Continuum argument to be very similar to a simple PLC

curve (cf. Baker & Hart, 1999), where products have a certain lifetime before the products become

obsolete and new innovations take over. However, it differentiates on at least one very important

factor, which is the dynamics of flocks. Flocks represent clusters of consumers who follow a cer-

tain flow of innovation. McCracken (2006) divides flocks into five groups of consumers. Flock 1 is

the early adopters who quickly embrace a new trend or innovation. Flock 1 is the most risk-taken

and devoted to an innovation. They want what is pure new. Flock 2 is the consumers who will

only try something which has been in the market for some time. Hence, they are willing to take

on some risk but not the same deal as flock 1. As we move down the continuum the flocks of con-

sumers are more and more risk averse in their behaviour ending up at Flock 5 who is not willing to

take any risks at all. Flock 5 will according to McCracken (2006) buy the product without having

any idea of Flock 1 buying the product earlier that year. This fact may, however, be questioned as

we will later argue, applying Holt (2004) that consumers are interacting through a social network.

Moreover, McCracken implies in his earlier work that the fashion system communicates meanings

of products and hence across all consumer ranges, and thus it can therefore not be completely

rejected that Flock 5 is aware of Flock 1 buying a similar product (McCracken, 1990). Thereby, Mc-

Cracken (2006) argues that flocks will always follow each other as illustrated in figure 2, Flock 2

follow Flock 1, Flock 3 follow the lead of Flock 2, etc.

Figure 2 | Flocks and Flows within the Continuum

5.1.4 Cultural Categories

McCracken (2006) underlines that brands of today must be diverse in their meanings due to the

fact that flocks, and hence the consumers, are not bound to a certain class as they used to be.

Consumers are not locked into one class such as being a worker but declare themselves middle-


class, while the old declare themselves young (McCracken, 1986). Only rarely do segments solely

belong to one category – but more often they belong to different categories according to the

context in which they interact. Therefore, a worker cannot necessarily be recognised on the blue

Kansas and the husband might, as well as the wife, be doing the house chores at home – the cat-

egories are blurred in the present society (McCracken 2006; 2005), which results in the segments’

need to create their identities through consumption.

5.1.5 Flocks and the Social Network of the Brand

In the following, the Kauffman Continuum and the flocks apparent in this will be linked to Holt’s

(2004) analysis of the brand’s social network. In this way the two theories will be combined as we

argue that the two theories can complement each other in a constructive way.

According to Holt (2004), the customers of an iconic brand are loyal not because they have a

one-to-one relationship with the brand as the emotional branding paradigm claims (Gobé, 2001;

Michelli, 2007) but because the consumer is locked into a social mechanism, the so-called social

network of the brand. This mechanism, which determines the overall loyalty of a brand, divides

consumers of a brand into three distinct constituencies: insiders, followers, and feeders who com-

prise the brand’s social network.

Insiders represent the legitimacy makers of a brand that by consuming a brand leverage some of

their personal values and identity to the brand. They are not risk-averse and are ready to be the

first to try a new product or a brand. The insiders are not necessarily the largest group of consum-

ers of, for instance, Starbucks’ coffee, but they are those consumers who assign legitimacy to

the brand. They will drink the coffee, not because of the brand, but because of the product itself

– they believe that the coffee chain has the best coffee that live up to their connoisseural expecta-

tion. Moreover, the insiders are influencing the followers segment to consume the brand too due

to the followers wanting to identify themselves with the insiders. Furthermore, the followers can

be characterised as the segment which finds the greatest value in the brand’s myths which pro-

vides them their identity needs and through the brand they obtain a feeling of community with

the other followers. The followers are also seen as the bearer of the identity myth.

The feeders, on the other hand, are not genuinely loyal to the brand. They, as the name implicates,

feed on the brand’s narratives but are, on the other hand, a large segment that the firm needs

capture in order to be able to survive economically – these are the real cash cows for a company

and hence loosing this segment will be a substantial loss for a firm’s earnings. However, the feed-

ers only have a superficial connection to the values of the brand, and often merely use the brand

temporarily – this can be as a status symbol or to achieve credit from their surroundings such as

friends and colleagues. The feeders are not truly loyal and often lose interest in the brand quickly

and latch on to something more trendy and hip in the market (Holt, 2004).



Insiders Insiders Followers Followers Followers

Followers Feeders

Feeders

In short the flock and flow theory seeks to explain how the context and the evolution of this play

a decisive role for the success of a brand or a product, and how a brand must adapt to the chang-

ing context. McCracken (2006), however, does not make new groundbreaking discoveries with

his flock and flow theory, which seems to be an extension on Schumpeter’s ([1946], 2005) idea

of creative destruction. Moreover, the theory seems to be relatively one-sided and simplifies the

society and the consumers by not taking general consumer behaviour into account. Therefore, the

flock and flow theory has been modified and thus extended with factors from Holt’s (2004) social

network of the brand. Additionally, it must be mentioned that McCracken (2006) does not mainly

focus on the brand and its movement down the Kauffman Continuum. Added, the theory has a

more general viewpoint on the market place and consumer trends within this. However, in this

thesis the theory will be applied with focus on the brand, how the consumers perceive the brand,

and how the industry has developed during time.

McCracken’s (2006) view upon the consumers or flocks is very simplistic and does not explain how

loyalty plays a role in the brand’s survival. This generic model assumes that all brands go through

the Kauffman Continuum though with different speed regarding the brand’s characteristics. It

does not take the underlying reasons of the flocks’ behaviour into consideration, which on the con-

trary is in focus of Holt’s (2004) brand network theory. Therefore, we argue that the two theories

can complement and support each other when combined. In this way, the continuum can be seen

as including the social network of the brand. However, it may be argued that the social network

only can exist in the first flock which actually use the brand. McCracken argues that after a while

the brand will be adapted by other companies copying the brand to meet demands from less risk-

taking consumers. However, if the idea of the continuum is modified slightly, and the same brand,

without being changed and copied by competing companies moves down the continuum, this

would signify that the brand lost its values and slowly turned rigid due to the brand not adapting

to its surroundings. The network of the brand would, as the brand turned more and more rigid,

leave the brand and especially the followers unable to identify with the identity myth. Nor would

the feeders be able to find a rigid brand sufficient to assert them. The figure below illustrates the

combination of the two theories:

Figure 3 | Flock and Flows and the Social Network of the Brand


Source: Holt (2004), McCracken (2006) and of own construction


As illustrated in the figure above, the two concepts of Holt (2004) and McCracken (2007) respec-

tively have been combined, thereby providing a more comprehensive tool for analysing Starbuck’s

situation. The idea is to illustrate how flock 1 only consists of the insiders, who are the most risk

seeking and the first who discover a new brand. Shortly after, the followers follow the insiders’

lead. Hereafter, the feeders who feed on the narratives and meanings do so in order to attempt to

gain status. As the brand gradually becomes rigid and thus the narratives are not appealing to the

insiders’ identity projects the insiders will leave the brand and so will the feeders who were feed-

ing on the legitimacy which the insiders attached to the brand. Now only followers are left, and it

is only a question of time before these turn their backs on the brand too.

5.1.6 Cultural Meaning and Identity Projects

According to McCracken (1986) cultural meaning is carried by products, which express these mean-

ings through for instance storytelling. The consumers, in their identity projects, apply meanings

to construct their identity thereby implying that the human being does not possess an essential

identity but this is created and recreated according to the person’s current identity project – iden-

tity is hence socially constructed. These projects are getting more important due to, as before

mentioned, the cultural classes being less sharp and divided and hence identity projects preoc-

cupy us on a continual basis and change during different periods of our lives. Currently, it is not

sufficient to have an identity as being only a blue collar, white collar, or house wife. The identity

of consumers can be manifold and their identity is increasingly sought in products that they buy.

The consumers are looking for meanings in the products they can use in their construction of

themselves (McCracken, 2005). Thereby, the products are the locus of meaning, which they ex-

press and through the products the cultural meanings are made concrete and tangible. However,

the meanings are not innate qualities of the products, but meanings that have been ascribed to

the products through different marketing tools (McCracken, 1986). Moreover, it is important to be

aware of the fact that when the context is changing, so will the identity projects of the consum-

ers. Therefore, firms must acknowledge the changes in the context so that meanings of products

can be regulated according to the consumers’ identity projects and the context.

5.1.7 The Consumer Culture

This section has the purpose of accounting for the change in consumer culture in a broader per-

spective thereby not only focussing on the American consumer culture but the shift in consumer

culture in general. The consumer culture is decisive when branding, and the branding approach

must be adapted to the current consumer culture stirs to be effective (Holt, 2002). Thereby, the

argumentation of taking the shifts on consumer culture into consideration is based on the dialec-

tic interaction between consumer cultures and branding as represented by Holt (2002) where he

argues that consumer culture and branding can be seen as an elastic band. By this it is meant that

when the two factors near eachother, and the consumer become knowledgeable about the con-


ventional branding techniques developed within the culture, they gradually loses their efficiency

and a new branding paradigm will be developed corresponding to the apparent consumer culture

(Holt, 2002:80). This mechanism can serve as an explanation for the change from modernism to

post-modernism in the consumer culture.

Recently a new school of thoughts has been pioneered by the French philosopher Gilles Libovet-

sky (2005). This regards the new hyper-consumer who can be seen as an extension of the post-

modern consumer and demonstrates that the consumer culture might have changed since the

post-modern consumer culture. Additionally Rifkin (2000) supports the notion of a continuously

changing consumer culture and therefore it also has to be underlined that no sharp lines can be

drawn when discussing consumer cultures. The image made of the modern-, post-modern-, and

the hyper-consumer are all archetypes, and therefore it cannot be rejected that a society consists

of more than one consumer culture as the changes do not happen overnight, but are in constant

evolution (Rifkin, 2000), especially when considering the size and diversity of, for instance, the US

market.

Firstly, a short overview of the consumers’ evolution will be accounted for, resulting in a definition

of the consumer culture, and afterwards the different consumer culture periods will be elaborated

on more in-depth.

5.1.7.1 Evolution of the Consumer

Holt (2002) describes how the consumer has become more critical and how the marketing ap-

proach to the consumer has changed drastically over the last decades. Horckheimer and Adorno (in

Holt, 2002) possessed this locus classicus marketing approach evolving around a classic stimuli-re-

sponse idea, where the consumer was perceived to be uncritical in reacting on cultural authorities

such as marketing. The firm was perceived to be able to, through classic marketing tools such as

“The 4 P’s” (Kotler, 2003), meet and to some degree shape the consumers’ needs (Holt, 2002:70).

The marketers were portrayed as cultural engineers shaping the tastes of the consumers on their

demand (Holt, 2002:71). However, this approach to the consumer was, 40 years later, modified and

the consumer was re-defined to be able to decode and reflect on the marketing messages and as

a result reject a firm or brand, which did not live up to their expectations or needs (Murray and

Ozanne, 1991 in Holt, 2002). Also the thought of labelling the consumer as being segmented within

a certain group was broken up with. This acknowledgement of the critical consumer was not least

due to the fact that consumer resistance against brands became more and more apparent as a

problem (Klein, 2000; Holt, 2002; Thompson et al., 2006; Brown, 2006), which form the basis of

Holt’s (2002) dialectic thought and hence foundation for his branding approach. In this way, the

market power shifted from being marketer hegemony to being a market in which consumers took

over the control via consciously taking consumption choices, making it apparent that the consum-


er of today possesses the market power and not the firms (Firat and Dholakia, 1998). The firms

cannot uncritically expose the consumer of today with classic marketing tools based on the idea

of for instance the simple AIDA model6, expecting behavioural response through consumption,

as the consumer will not tolerate the lecturing tone of the post war modernity (Holt, 2002; Buhl,

2005). Therefore, the consumer culture can today be defined as: “…the ideological infrastructure

that undergirds what and how people consume and sets the ground rules for marketers’ branding

activities. “(Holt, 2002:80).

5.1.7.2 From Modernity to Hypermodernity

The economy has changed from being agricultural to industrial and it is argued that we have now

entered the service economy (Lund et al., 2005). This evolution has had an effect on society and

hence on the consumer culture and consumer values. The evolution can be juxtaposed to the mo-

dernity, post-modernity and the hypermodernity which will be presented below.

The modernity is not very relevant for the situation of Starbucks as this period took place before

Starbucks entered the market. However, this period, just after the Second World War, was the

era in which the mass culture industries such as TV, film, music and advertising blossomed and it

was here the marketers started to use these industries as channels for reaching the consumers.

As before mentioned, in this era the marketers used traditional marketing tools and dictated how

the consumer should live their lives in a paternal voice as Holt (2002) describes it. Holt (2002) also

describes how the American citizen was struck by the urbanisation which resulted in the citizens

not knowing their new neighbourhood, their neighbours and hence a level of anxiety was present

at this time. The national brands therefore provided a security as they instructed on how to live

the good life and acted as social glue which helped bringing these neighbourhoods of strangers

together. The modern consumer was also described as a more static consumer who was char-

acterised by remaining within a certain category such as being the housewife or worker (Rifkin,

2000: 202). The era of modernity and the branding paradigm, which was outplayed within this

period, came to an end as the consumers wanted to be able to experience their consumption as a

volitional site of personal development – they did not want to be controlled by the marketers and

their selling propositions and thereby a transition to the post-modern era in which the consumer

did not obey the markets dictations began (Holt, 2002).

5.1.7.3 The Post-modern Consumer

The early post-modern consumer was considered as more critical towards marketing than the mod-

ern consumer as, especially in the 1960s, personal freedom to choose ranked highly. This was the

era of the cultural revolution of sex, drugs and rock and roll. The revolution was personal and there

6Pavlovian marketing model developed according to: Attention, Interest, Desire, and Action. (Kotler, 2003)


was a great deal of personal experiments. After the 1960s, the consumers viewed consumption

more and more like a way to express their identities – they did not lose their interest in the brands

they just did not want to be dictated by the marketers and hence wanted to apply the brands in

their own identity projects in their own way (Holt, 2002). The post-modern consumers were and are

characterised by consumers defining their identities through consumption and those experiences

attached to the consumption (McCracken, 2005; Firat and Venkatesh, 1993:235). Rifkin (2000)

names the post-modern consumer the protean, thereby underlining the ever-changing character

of the post-modern consumer, who has many dramas going on in his life. In this way, the most

important goal for the post-modern consumers is to reproduce and represent themselves with an

image – the buying decision of the consumers is hence driven by a deeply psychological desire to

develop and enhance their sense of self as Lewis and Bridger describe it (2000). The consumer’s

identity is fragmented, meaning that many different identity projects are carried out during dif-

ferent periods of life, and also on a daily basis – this means that many different subcultures in

the post-modern consumer culture are apparent. The choice of identity is not as easy as it was 50

years ago where one for instance could be either hippie, disc’er listening to rock music. Additionally,

a consumer can consume price premium products one day and consume according to a lower live

standard the next. Today even gender can be questioned in post-modernity, which especially was

manifested when David Bowie was playing with the androgynous in the 1970s – the consumers

became fragmented and discontinuous in their identities and their identity projects follow that

lead leaving the consumer with various identity options and projects (McCracken, 2005; Popcorn;

1994; Buhl, 2005) precluding the classic use of segmentation in the post-modern society (Buhl,

2005). This fragmentation of the self-approach has been further developed by McCracken’s latest

book release in which the transformation process of the individual is analysed. Here, McCracken

(2008) emphasises that not only can the consumer have different identities referred to as the new

individualism where many different roles are outplayed, an opinion shared with Buhl (2005), but

the consumer does as well transform himself during time. In short, McCracken thereby argues that

the consumers transform their identity through their whole life and just because one is born into a

gender, a social class etc. one will not necessarily have to stay in this category – the consumer is a

self-inventor, who is responsible for his own personal transformation(s) (McCracken, 2008:280).

This, as Rifkin (2000) describes the post-modern era as an “age of access”, intensifies the frag-

mented consumer’s identity by facilitating networking through the Internet where multiple iden-

tities can be outplayed (Rifkin, 2000:12). The branding paradigm corresponding to this form of

consumer was to approach the consumer without being too commercial and to express authentic-

ity (Holt, 2002). Added to this, the experience and authenticity term gained a footing, which es-

pecially Gilmore and Pine (1999) see as being essential when communicating with the post-modern

consumer. The brand must be an experience in which the consumer is engaged in a personal and

memorable way (Gilmore and Pine, 1999:3). This is how Starbucks has tried to brand their product


and service since the beginning, even referring to their concept The Starbucks Experience, thereby

indicating that the café was more than just the average coffee shop. Also Rifkin (2000) underlines

that the post-modern era is marked by, what he calls cultural and lived experiences, where the

world is a human construct that we create through stories which we concoct to explain it through,

and also by the way we choose to live in it. Thereby, Rifkin (2000) shares a social constructivist

approach to the post-modern period with the cultural branding approach (McCracken, 2005; Holt,

2002).

5.1.7.4 The Character of the Post-Modern Consumer

Moreover, the post-modern consumers have been characterised as being individualistic and

independent. They want to create and express their own style and take their own choices be-

tween brands (Buhl, 2005; Lewis and Bridger, 2000). Holt (1998) emphasises that consump-

tion in the US society today is not about structuring social class and status, thus, it is not

only about buying the right brands. Thereby, not saying that the US consumers do not create

their identity through consumption, or do not need to express individuality – cultural capital7

still becomes objectified in consumption objects (Bourdieau in Holt, 1998). The post-modern era

is characterised by a breakdown of the hierarchy distinguishing what is high culture and what is

considered low culture, which is coursed by accessibility in the sense Rifkin (2000) refers to but

also due to the diffusion between what is mass culture and what is haute – all is to some degree

accessible for all social strata. Consumer objects are therefore not accurate representations of

status but they allow a variety of consumption styles. Holt (1998) still distinguishes between

high and low cultural capital, this being consumers transforming or attaching cultural capital to

objects. Due to this dilution of status, the high class of cultural capital instead seeks authenticity

in the products as authenticity expresses a subjectivity, which cannot be found in mass-produced

products (Holt, 2008). Therefore, artisanal and hand crafted goods are preferred by this often

upper-well-educated-class to avoid contact with mass culture. Also the idea of connoisseurship is

emphasised as a factor that can produce individual subjectivity in goods for the consumers pos-

sessing higher cultural capital. Thereby, the consumers demonstrate that they possess extensive

knowledge regarding the object, which is ignored by other consumers. Hence, the level of connois-

seurship can be argued to heighten status and create superior identity which differentiates the

consumers with higher social capital from the consumers with a lower level of social capital (Holt,

1998).

5.1.7.5 Authenticity and Consumption

In the thesis, the concept of authenticity will be further analysed in relation to Starbucks and it

will be applied as a principle-explaining factor for Starbucks’ current struggles in the US market.

7Cultural capital (le capital culturel) is a sociological concept that was first articulated by Pierre Bourdieu in Cultural Reproduction and Social Reproduction, 1973. It can be explained as the knowledge, experience and/or connections one has had through the course of their life that enables them to succeed more so than someone from a less experienced background.


Therefore, we have found it necessary to explain the concept in further detail here.

Like McCracken (1986; 2005) Gilmore and Pine (2007) have a social constructivist view of the con-

sumer – thereby perceiving the consumer as an individual not born into a predetermined identity

but an individual who creates and develops their identity over time through the interaction with

other individuals and by consumption of goods which can express the wanted identity.

Due to the rise of the experience economy the concept of authenticity has increasingly been used

in marketing of consumer goods. Being real and authentic is apparently paramount for success

in the market place of today. Being perceived as being authentic is therefore one of the primary

sources of competitive advantage according to Gilmore and Pine (2007). According to Gilmore and

Pine (2000) it is no longer sufficient to compete on the basis of goods and services. In today’s

experience economy, companies must go beyond goods and services and compete on feelings and

experiences8. What the consumer of today wants has to be a real and genuine product from trans-

parent sources and hence everything consumers buy at present is evaluated to make sure that all

which is phoney and fake is avoided.

The role of authenticity is also emphasised by Lewis and Bridger (2000) and Holt (1998) who all

emphasise the role of the authenticity element when the post-modern consumer selects brands.

However, Bridger and Lewis (2000) generalise when explaining that the consumers reject mass-

produced and mass-marketed commodities, in favour of products and services which claim to be,

in some way, authentic (Bridger and Lewis, 2000:4). This statement is furthermore supported by

the notion that the consumers’ basic needs in the post-modern society are satisfied and therefore

the consumers are more concerned about original, innovative and distinctive products and serv-

ices. We have found this assertion problematic, as it is extremely generalising in its character. The

society is changing over time and it can only be concluded that the tendencies in the consumer

culture suggest that authenticity in general is more in focus than during modern consumer culture

(Gilmore and Pine, 2007). Also the generalisation of the concept authenticity must be questioned

as Gilmore and Pine (2007) also mention that authenticity is perceived differently from consumer

to consumer – what may be perceived as inherently authentic for one person might be perceived

as fake for another and the concept of authenticity is hence socially constructed. Brought to a

head, one may perceive Starbucks as authentic if sipping on a Frappuchino in Pike Place, Seattle

where the whole Starbucks adventure started, but it may be perceived inherently inauthentic if

located in Milan, Italy; the coffee Mecca. Therefore, the authenticity concept is constructed within

the culture and the consumer and it is very difficult to define what is authentic and what is not as

this is based on the consumer’s own reflections and life stages. On the other hand, consumers de-

8Experiences are defined as: ”…memorable events that engage customers in inherently personal ways like going to a theme park, visiting a museum, or engaging in a sporting event.” (Gilmore & Pine; 2000:19).


mand real offerings, meaning that brands will appear real to consumers if they are able to deliver

what they say they are. As Gilmore and Pine (2007) argue that authenticity is a social construct,

they have developed a model with the purpose of making the concept of authenticity tangible.

The model is based on a brand’s ability to live up to the two principles: “Is it what it says it is?” and

“Is it true to itself?”. This creates a matrix drawing up and ranking different levels of realness. This

is illustrated below.

Figure 4 | The Real/Fake Matrix

Is what it says it is Real-fake Real-real

Is not what it says it is Fake-fake Fake-real

Is not true to itself Is true to itself

Source: Gilmore & Pine (2007:97)

The X-axis describes the self-directed relationship between the company and its own output, and

the Y-axis describes the relationship between the company and its customers – is there a correla-

tion between the narratives told and what the brand really is? Thereby, the two principles can be

seen as the thought and actions of the company, firstly the importance of being earnest and con-

sistent in the foundation of the company and secondly the importance of being trustworthy and

honest in the company’s actions. (Gilmore & Pine, 2007:95-97). Thereby, the matrix has a more

operational approach to the notion of authenticity.

5.1.7.6 Hypermodernity

As of late there has been debate about the successor of the post-modernity where it is discussed

whether post-modernity is about to develop into a hypermodern society. This discussion is es-

pecially interesting in regards to Holt (2004) as he argues that a brand must correspond to the

culture in which it interacts. Therefore, if the society in general is changing so will the consumer,

which will have an effect on how brands are perceived (cf. Holt, 2002). However, as indicated

earlier, changes in society and consumer culture do not happen overnight and post-modernity

will still be apparent and it is argued that the post-modern consumer and the hypermodern con-

sumer currently live side by side. According to the French philosopher and professor at University

of Grenoble, Gilles Libovetsky (2005), the post-modern form of society and consumption gradually

transform into a hypermodern society characterised by hyper-consumption, hypermodernity and

hyper-narcissism.

Libovesky (2005) perceives modernity and post-modernity as representatives of different con-

sumption phases in the history of the consumer society. And the third phase of consumption is

described as a hyper-consumption, where everyone consumes first and foremost for his or her


own pleasure rather than out of rivalry of status with others (Libovetsky, 2005:11) – thereby in-

dicating the difference between the post-modern consumers and the hypermodern consumption

patterns. Whereas, the post-modern consumer to a high degree consumed to express status and

to stage himself, the hypermodern consumer consumes for more personal reasons – the post-

modern consumer can be said to be more extrovert in his consumption patterns while the hyper-

modern consumer is more introvert in his consumption hence goods are not purchased to achieve

social distinction but more towards personal satisfaction and amusement. For instance consump-

tion of luxury goods was previously argued to be bought to achieve social status and prestige

– a phenomenon known as conspicuous consumption (Veblen, 1994 [1899]). In the hypermodern

society, consumption of luxury goods are argued to be motivated by the satisfaction, which is at-

tained by possessing and using the good and the motivation for buying is hence less motivated for

formatting ones identity (Libovetsky, 2005:11). Consumption is in this society more about creating

introvert meaningful individual experiences – the hyper-narcissism.

Moreover, the resistance towards marketing and advertising and hence also to some extend

brands which Klein (2000) indicates seem to have developed to an even more distinctive level.

The hyper-modern consumer seems to be neutral towards the messages of advertising and the

consumer has developed a resistance towards marketing in general. Thus, companies must em-

phasise entertaining values as well as experiences, which seem to be even more important for the

hyper-modern consumer, as experiences are seen as facilitation to elevate the consumer on an

individual basis (Libovetsky, 2005).

5.1.7.6.1 Fear of the Future

The hypermodern consumer is moreover characterised by something defined as paradoxical in-

dividualism. This is for instance apparent by being condemning towards materialism but still ex-

pressing joy towards consumption. The hypermodern consumer is also characterised by showing

anxiety of what the future holds. In the hypermodernity, one is focused on the present moment in

fear of what will happen in the future. These anxieties have developed due to for instance globali-

sation, terrorism, pollution and the technological evolution – factors which force the hypermodern

consumer to think and act in the present moment and act selfishly (Libovetsky, 2005:39). The

anxiety for the future is also argued to influence the consumption of experiences, which will be

of higher importance for the hypermodern consumer – good experiences evoking a sensation of

living in the present moment.

5.1.7.6.2 Ethical Responsibility

Being socially responsible has been stirring in society for a while, however, Libovetsky (2005)

seems to acknowledge that acting ethically correctly is something more emphasised by the hy-

permodern consumer than for instance the post-modern consumer. Nevertheless, corporate so-

cial responsibility and corporate governance have been on the agenda for a while and also before


Libovetsky (2005) introduced his concept of hypermodernity. Libovetsky (2005) argues that the

hypermodern consumer to an even larger degree than before witnessed, demands that people act

ethically and morally responsibly.

5.2 MethodThe underlying reason for initiating this cultural branding approach to the investigation of Star-

bucks are the gaps found in literature which cannot appropriately explain Starbucks’ troubles (cf.

Literature Review, Section 3). The thesis will hence take its point of departure in the cultural

branding theory and empirical evidence will be analysed to support the theory’s suitability to ex-

plain Starbucks’ recent difficulties. Therefore, the approach in the project is deductive reasoning

that the argumentation takes its point of departure in cultural branding theory and that conclu-

sions are drawn on the basis of this theory (Andersen, 2005).

Additionally, we have a hermeneutical perspective in the thesis. As the area of research is not of

natural scientifically character but about interpreting social actors and their attitudes and percep-

tion of the Starbucks brand through time, it is not possible to analyse the problem statement with

a positivistic perspective (Saunders et al., 2007). Thereby, we endeavour to interpret assertions

from social actors such as the consumers and the media, applying cultural theory, and thereby to

deduce why Starbucks brand currently is facing trouble. Thereby, we will attempt to elucidate and

understand Starbucks’ difficulties by interpreting data with the principle that social actors can-

not be analysed on the basis of definite “laws” as in natural science but must be interpreted. The

perspective taken in the thesis also affects the data collection, this being qualitative, which will be

construed and analysed (cf. Empirical Evidence, Section 5.4).

5.3 Research Design As mentioned in the Research Statement, the pivotal points of this thesis are Starbucks’ ability

to deliver their brand promises, and further to investigate how Starbucks’ narratives and attached

meanings have changed during time as well as how changes in the consumer culture have made

customers relate differently to Starbucks. The following Methodology has the purpose of outlin-

ing how the Research Statement will be investigated. When explaining the methodology of the

thesis, delimitations of the research will be carried out during the presentation. Moreover, the fol-

lowing will be organised according to the structure of the Thesis.

5.3.1 Introduction to Starbucks

In order to understand the rise and decline of Starbucks from a cultural branding approach it is

found essential to clarify the context and how well Starbucks has fitted into this. However, before

any comparison can be made, it is essential to gain knowledge of the brand and the whole concept

of Starbucks. The analysis will therefore begin with an introduction of Starbucks, the Starbucks

concept, and the emergence of the brand. The essence is to gain a historical understanding of the


concept of Starbucks, the brand, and what context they initially introduced the concept in. Moreo-

ver, the decline and success of Starbucks will be illustrated. Therefore, the primary focus will be

on Starbucks’ initial success in the early 1990s compared to their current situation thereby, giving

the reader a sense of the current situation of Starbucks and in which context Starbucks gained

their initial success. The reasoning behind taking this historical approach to Starbuck’s rise and fall

is due to our application of Holt (2004) who underlines that one must understand the breeding

grounds and historical development to explain the success or struggles of any identity brand.

5.3.2 Starbucks within the Industry and the Competition

Even though the focus of this thesis is on branding, it is, nevertheless, found relevant to include

some current market conditions in the analysis. This is due to how significant radical changes in

the competitive conditions, the industry structure and coffee trends may be to the perception

of the Starbucks brand. In the light of this, McCracken’s (2006) Kauffman Continuum will be in-

cluded, illustrating how the specialty coffee concept has changed its character from being revolu-

tionising and innovative into a much more common concept, thus how it has passed through the

continuum. The essence of this is that Starbucks’ position within the industry must have changed

during its 20 years in business. We will also deduce how consumers take a different position on the

concept today than the position when Starbucks first emerged. Changes in the view on the spe-

cialty coffee concept as well as changed competition are factors which Starbucks maybe should

have taken into account when branding. Thus, how Starbucks strategically is positioned within

the industry is found relevant to be included in the analysis, clarifying the environment in which

Starbucks operates.

However, in order to illustrate the strategic position of a company, Porter (2005) suggests a full

industry analysis to be carried out to be able to lay down a competitive strategy. Porter’s full

analysis would include several industry factors but the purpose of our analysis is not to make a

competitive strategy for Starbucks. Therefore, we are aware of the necessity of a whole industry

analysis if wanting to give strategic recommendations regarding a competitive strategy, but due

to the scope of the thesis the competitive environment will be included only to illustrate Star-

bucks’ position and their evolution in the market as an explanatory factor for their decline. There-

fore, the analysis of the competitive environment will focus on the competitors.

5.3.3 Brand Genealogy

Empirically, it is argued that Starbucks in the early 1990s was able to correspond with cultural

contradictions in the American context (Thompson et al., 2006). Furthermore, Thompson et al.

(2006) point to the probability that Starbucks is trapped in their old narratives as an explanation

for the company’s struggles in maintaining the same level of success as before. Therefore, we

approach the analysis from the assumption that Starbucks’ branding revolves around old narra-

tives. The narratives filling the brand with meanings will therefore be clarified, thereby applying


the principles of Holt (2004) and McCracken (2005) who underline that storytelling, or the brand’s

myths, constitute the brand. Additionally it has to be mentioned that Starbucks do not them-

selves categorise their narratives, and the narratives analysed in the thesis are those we have

interpreted to revolve around the Starbucks brand.

Brand genealogy refers to how the brand has changed or developed during time (Holt, 2004). The

narratives intended to be told by Starbucks will found the basis for further research of these and

how they have developed during the last two decades. The analysis of the narratives has been

found necessary to be able to clarify whether the meanings which Starbucks intends to attach

to the brand correlate with how they are perceived. Furthermore, it is found necessary to analyse

whether the reason for Starbucks’ difficulties can be deduced to be the narratives and the changes

in these (Holt, 2004). In order to analyse whether the narratives have developed during time, the

stories told by the external surroundings will be looked into – what stories are told which Star-

bucks cannot control? Thereby we will seek to conclude whether the narratives have been consist-

ent or not, and whether the narratives have been harmed or strengthened by narratives told by

media and consumers. Thereby, we will also analyse how the perception of Starbucks has changed

and whether Starbucks lives up to the brand’s narratives and hence if Starbucks is perceived as

being authentic. This is an essential point to the analysis, as it is assumable that co-branding

including contra-narratives take part in the creation of a lack of authenticity of the Starbucks

brand (Gilmore & Pine 2007; Thompson et al., 2006). Gilmore and Pine (2007) and Thompson et

al. (2006) point to the fact that inauthenticity arises when a brand pretends to be something

which it is not or when it is not able to live up to its narratives. This is interesting as Gilmore and

Pine (2007) argue for the necessity of a brand being perceived as authentic – thus, authenticity

is being crucial in order to compete in the market place of today. Therefore, authenticity may be

characterised as a critical success factor and to be what the consumers of today demand. Thus,

analysing whether or not Starbucks appears authentic in the minds of the consumers is a decisive

factor when concluding Starbucks’ current situation. The analysis of Starbucks’ authenticity will

be based on Gilmore and Pine’s (2007) principles and will serve as a supportive explanatory factor

to why Starbucks’ brand may have been watered down over time. Thereby, extending the earlier

analysis which focuses on the industry and competition, and applying it as a part of the explana-

tion for Starbucks’ current trouble.

5.3.4 The Consumer Culture

The analysis of the consumer culture will be founded on the findings regarding the narratives and

their development. Investigating the consumer culture is carried out due to the theory implicat-

ing that a change in the culture will affect the brand if this does not adjust to the culture (Holt,

2004). However, we will focus on the consumer culture and more specifically on the consumers of

Starbucks coffee. Due to Thompson et al. (2006) and Holt (2004), we are aware that the cultural

reasons for Starbucks’ success have to be understood in a broader cultural perspective, hence


that an analysis of the consumer culture alone may not explain adequately the cultural reasons

for a brand like Starbucks being selected or avoided. We find it necessary to delimit the analysis

to include the consumer culture, as a complete cultural analysis of the US is found too complex to

carry out within the scope of the thesis. This is furthermore due to the complexity of clarifying an

entire culture as it entails several different subcultures and different demand patterns. Especially,

considering a country like USA, it can be argued that the analysis will be further complicated as

perceptions and demands differ among the different states. Furthermore, this implies a difficulty

in revealing cultural anxieties or contradictions within the American context. Holt (2004) points

out the significance of understanding subcultures’ cultural contradictions as a means in the cul-

tural branding. However, as it is problematic for us to gain knowledge of the American culture in a

broader perspective, it is similarly found to be too difficult to identify potential cultural contradic-

tions. Thus, we are aware that the argumentation for clarifying whether Starbucks corresponds to

any cultural contradictions is weakened. Nevertheless, it is found to be satisfactory to focus the

cultural analysis on the American consumer culture as an indicator of the cultural tendencies that

may affect the perception of Starbucks’ brand. Moreover, the consumer culture will be delimited

to focus on the social network of the brand, hereunder the consumers’ identity projects, and hence

meaning transfer, all focused on the consumers of Starbucks and not coffee consumption in gen-

eral (McCracken, 1986). The analysis will result in a suggestion of how the industry, the develop-

ment of the narratives, along with the social network can serve as an explanation for Starbucks’

current brand difficulties.

When clarifying the consumer culture of Starbucks, some generalisations will be made on the

basis of the consumer culture theory (cf. Consumer Culture Theory, Section 5.1.7). Thereby, some

of the consumer characteristics will be founded on theory, which will then be strengthened with

comments from Starbucks’ consumers. To illustrate how the consumer culture may have changed,

arguments from the earlier analysis of the “bobo-consumer” will be compared with the consumer

of today.

5.3.4.1 Meaning Transfer and Identity Projects

As it is argued that consumers use brands and their meanings as a means in the creation of self-

identity (McCracken, 2005), it is found essential to touch upon how consumers may or may not

use Starbucks in their identity projects – thus, to which extend consumers perceive Starbuck as

a brand which creates the wished identity. Furthermore, it is found essential to clarify whether

the consumers’ identity projects have changed, thereby clarifying if Starbucks’ brand still appeals

to the same type of projects. To this, it seems imperative to account for meaning transfer (Mc-

Cracken, 1986) and furthermore whether and how the consumers transfer the meanings of the

brand to their self-identity when interacting with the brand.


Our findings regarding the consumer culture and its values today will be compared to the consum-

ers’ identity project. Also the identity projects of the bobo-culture will be pointed out to conclude

what kind of identity project Starbucks appealed to. When analysing the consumers of Starbucks

we will also identify whether there has been a change in how the consumers apply the meanings

of the brand in their identity projects and hence how the meanings of the brand correspond with

the character of the post-modern consumer compared to the bobo-consumer. This will be done by

applying some of the findings from the analysis of the narratives, as the narratives will tell some-

thing about what meanings are currently attached to the brand, and whether these meanings cor-

respond with the demands of the consumers. Thereby, we will strive to outline whether Starbucks

are meeting the current demand from the consumers or whether an explanation for difficulties

may also be found in the consumers’ demands and perception of Starbucks’ brand.

5.3.4.2 The Brand’s Social Network

The findings regarding the consumer culture will be applied to analyse Starbucks’ brands’ social

network (Holt, 2004). The social network of Starbucks’ brand is imperative to analyse as the insid-

ers, followers, and feeders imply whether the brand can survive. This is especially relevant in the

case of the insiders as they are important for Starbucks as a means to legitimise the brand (Holt,

2004) and facilitate attraction of followers and feeders who are responsible for the sale and hence

the bottom-line at Starbucks. We argue that the state of the social network of Starbucks’ brand is

tightly associated with the meanings of the brand and hence the narratives. Therefore, the find-

ings from the Brand Genealogy will be applied in this analysis.

In the Theory Section 5.1.5, we argue that during time the social network of the brand will be weak-

ened if the brand is not correlating with the context and somewhat re-inventing itself. Therefore,

we will try to demonstrate if this is in fact the case with the Starbucks brand – if the insiders have

gradually left the brand due to the meanings in the brand not correlating to their identity projects

or that the narratives are not authentic anymore. Thereby, we will combine McCracken’s Flock and

Flow theory (2006) and Holt’s Social Network theory (2004) to serve as explanation for the Star-

bucks brand’s suffering.

Additionally, we will include Libovetsky’s (2005) findings regarding the hyper-modern consumer.

Thereby, indicating that the cultural consumption context may have changed and that Starbucks

must take this into account too. However, Libovetsky’s (2005) findings must only be seen as

putting the consumer culture into perspective and not as directly affecting the final conclusions.


Part I

Part II

Part III

Problem Area & Methodology

Are The Meanings of The Brand The Reason for Starbucks’ Trouble?

Introduction to Starbucks

Industry & Compitition Analysis

Brand Genealogy

Consumer

Culture

Figure 5 | Overview of the Thesis

5.4 Empirical Evidence9

In general, the thesis conclusion will draw upon secondary data as it has not been possible to col-

lect primary data. Therefore, the secondary data applied to answer the research statement has

not been conducted with the same purpose as we have in this thesis. This must be taken into ac-

count when evaluating the validity of the conclusions. However, articles and customer comments

about Starbucks have been found to be suitable data to interpret and analyse in order to be able to

answer the problem statement. In the following, we will establish reasoning for the data collection

and argue how the secondary data can be justified to serve as basis for our conclusions. Moreover,

it will be explained on what basis we have chosen this kind of empirical data to be applied in the

thesis.

A vast amount of articles have been written about Starbucks as various journalists and private

persons seem to have an opinion about Starbucks. The public media’s coverage of Starbucks’ busi-

ness can be argued to be enormous. Therefore, to make the data collection manageable, we have

found it necessary to sort through the newspaper articles and only focus on specific newspapers.

We have chosen to pick out, and hence base our argumentations, on articles from the following

newspapers: Seattle Times, The New York Times, The Wall Street Journal, The Nation’s Restau-

rant News, and Tea and Coffee Trade Journal. These newspapers and trade journals have first and

foremost been selected as they are well reputed and reliable sources of information, while the

trade journals represent expert information upon the subject of specialty coffee.

5.4.1 The Industry and Competition

The analysis regarding the competition and the specialty coffee industry in general is based on

qualitative secondary data and mainly newspaper articles, market reports and books written

about the industry. As this is a more general analysis, which is not focussed only on the branding

of Starbucks, this secondary data is found suitable to deduce Starbucks’ role in the industry over

9Data collection methods are explained on the basis of the methods outlined in Andersen (2005).


time and how the industry has developed in the last three decades. Of course validating ques-

tions answered by, for instance SCAA (Specialty Coffee Association of America), would have been

preferable, however instead statistics from their homepage have been applied as contact with the

organisation has not been possible.

5.4.2 Blogs and Fora

To account for and analyse Starbucks’ brand development over time, we have again applied sec-

ondary data of qualitative character. Empirical evidence to support our hypothesis regarding Star-

bucks’ narratives having undergone changes over time, is mainly based on newspaper articles

and material found on Starbucks’ own homepage; www.starbucks.com. Furthermore, findings are

supported by comments made by Starbucks’ consumers on www.mystarbucksidea.com10. This is

a forum where consumers of Starbucks coffee, as well as the average American, can comment on

Starbucks’ products, the Starbucks Experience, and the involvement of Starbucks comprising the

atmosphere, locations, service, social responsibility and the partners etc. The reason why people

make comments on mystarbucksidea.com has to be taken into consideration. The comments are

not made to say whether they like Starbucks or not, even though we argue that it is expressed

indirectly, the reason for commenting is to bring up new ideas and hence how to improve Star-

bucks. Several homepages about Starbucks can be found on the Internet in which consumers ex-

press their attitudes towards Starbucks. These pages both cover forums for absolute devotees

of Starbucks but also forums for absolute opponents whose only intention is to smear Starbucks’

brand. It is interesting how Starbucks gives platform to these forums to emerge and consumers

seem to be divided in their opinions about Starbucks. Although these homepages are a rallying

point for meanings about Starbucks, they are not all included as empirical data in our investigation

about Starbucks. Similar to the large coverage of Starbucks in the news papers where we found

ourselves compelled to make the material manageable by focusing on selected newspapers, we

also found it necessary to focus on the empirical data from the consumers. Thus, we have chosen

to concentrate the consumer comments to mystarbucksidea.com and www.starbucksgossip.com.

The comments on these pages are assessed to be more constructive than the case of for instance

hateful homepages such as www.ihatestarbucks.com in which the tone seems very frivolous and

harmful. On mystarbucksidea.com, concrete proposals and ideas are given to Starbucks regarding

innovations and changes, as well as opinions about Starbucks’ business and products initiatives,

and how these are perceived compared to the original Starbucks are also aired.

However, it is essential to keep in mind that not all Starbucks customers choose to post ideas and

comments on the Internet. It is only a section of the customers, and to a great extent these can

be argued to be more committed customers. The comments furthermore give the impression

10Will from here on be referred to as mystarbucksidea.com


that the majority of consumers posting ideas and comments are, or used to be, loyal customers

of Starbucks. At the same time, there may be a lot of less committed customers whose opinions

would only be unfolded when directly asked. This is essential in regards to the discussion about

how customers can be characterised as insiders, followers and feeders as a difference among these

can be argued to depend on their commitment to Starbucks and their concern about changes.

Hence, it cannot be disregarded that conclusions drawn upon empirical data collected from mys-

tarbucksidea.com may be biased seeing that not all types of customers post comments. There-

fore, the comments on mystarbucksidea.com do not illustrate accurately how the consumers cur-

rently perceive Starbucks and their narratives but we have, however, interpreted and analysed the

comments and applied them being aware of the limitation in the comments. As we have stressed

in the discussion of the aspect of Authenticity (cf. Authenticity, Section 5.1.7.5) meanings are a

construct and are being made within the consumers, thereby saying that meanings are perceived

differently from consumer to consumer. Therefore when indicating how for instance the meanings

of being Fair Trade is perceived, this will be done on the basis of awareness of the meanings being

perceived differently from consumer to consumer. Therefore the deductions will to some degree

be based on interpretations and thus the conclusions will not be an absolute illustration of the

meaning constructions.

5.4.2.1 Who are the Bloggers?

The consumers of Starbucks are accounted for by analysing the comments on mystarbucksidea.

com and blogs. Again, this is secondary non-stimuli data which we have had no influence on as,

for instance, in posing questions in the role of interviewer. We argue that the people writing on a

forum such as mystarbucksidea.com to some degree are engaged in the brand on a higher level

than the common specialty coffee drinker and therefore represent the perspectives of Starbucks’

brand from mainly followers. The reason for not characterising the bloggers as insiders is that the

insider most likely would not consume Starbucks due to the brand and hence be unaware of the

forum mystarbucksidea.com. They would rather, to a larger degree, consume Starbucks coffee

due to the authenticity it once possessed with all that it implied of Italianess etc. (cf. High Quality,

Section 12). The followers on the other hand may represent larger consumer groups who bought

into Starbucks following the lead of the insiders, and hence not only drinking the coffee due to the

product attributes, but also due to some sort of a Veblen Effect making the followers strive to

gain the status of the insiders, who we later will argue to have once been the bobos.

However, it is extremely difficult to verify the character of the participants on mystarbucksidea.

com. We will base our argumentation on the assumption that being involved on a forum like

mystarbucksidea.com requires involvement from the participant and, as many of the comments

expresses deeply felt disappointment from long-time loyal consumers; we cannot eliminate the

possibility that some of the bloggers may represent points of views from insiders. Moreover we

broaden this assumption by saying that the participants mainly represent followers as the insiders


legitimate the brand and, when these have disappeared due to changes in the brand, the followers

may start to express their disappointments before turning their back to the brand as well.

Also due to the character of the empirical data we will not be able to make the same exact descrip-

tion of the followers and the feeders as we do with the insiders; as in the case of the bobos where

we have had supplementary sources characterising this exact consumer group (Thompson et al,

2006; Brooks, 2000). For this to have been possible, we would have had to conduct interviews with

the consumers in Starbucks in order to have been able to deduce the consumers’ characteristics.

5.4.3 Consumer Culture and Identity Projects

The general consumer culture has been accounted for by applying various consumer culture theo-

ries. This is not specifically applied to the American consumer culture but is more of a general

character. Nevertheless, Brooks’s (2000) book regarding the first Starbucks customer is applied

together with the general characteristics of the consumer culture to thereby account for the Star-

bucks consumer when first introducing Starbucks to the US market. Thompson and Arsel (2004)

and Thompson et al. (2006) have conducted analyses of the brand image of Starbucks and in

this connection they have interviewed a number of consumers who dissociates themselves from

Starbucks. The way Thompson and Arsel (2004) and Thompson et al. (2006) characterise these

interviewees can be juxtaposed with the characteristics of the bobos and post-modern consumers

with high cultural capital. This is due to these interviewees valuing highly personal and “authenti-

cally distinctive social and aesthetic experiences” (Thompson et al., 2006:56), and furthermore that

they give the impression of emphasising artisanal products where they can express connoisseural

knowledge. Therefore, their comments can be used to deduce which meanings the bobos attach

to Starbucks today and furthermore for which reason they are repelled by the brand.

Furthermore, the general evolution of the consumer together with the comments on mystar-

bucksidea.com and newspaper articles serves as an illustration for the consumer of Starbucks

today. Therefore, generalisation about the American consumer of specialty coffee is based on

comments from Starbucks’ customers. This weakens the validity of concluding how the Starbucks

brand corresponds with the American consumer. Moreover, it has to be mentioned that some of

the newspaper articles from which we base our data generalise the consumers of Starbucks by

using the terms blue- and white collar. However, the term “bobo” is more complex and cannot only

be described as white collar (cf. description of bobo and the post-modern consumer of Starbucks

in Section 16.1). Moreover, we are aware of stating an identity according to a certain collar is in

outright contradiction with the earlier explained transformational approach to the post-modern

consumer (McCracken, 2008) and to the idea of the fragmented consumer (McCracken, 2005).

Having in mind that the articles are of generalising character and not taking the complex structure

of the post-modern consumer and hence the consumer of Starbucks into account, we will apply

the empirical data in our analysis knowing that the findings are not absolute.


The analysis of the identity projects of the Starbucks consumer is mainly based on a conference

held by Professor in History at Temple University, Bryant Simon. He has studied Starbucks the last

three years and has spent more than 12 hours a week in studying the consumers at Starbucks and

talking with them. The result of this is a book which will be published next year called “Consuming

Starbucks”. Instead, the conference will serve as empirical data together with our own deductions

made from the comments on mystarbucksidea.com and starbucksgossip.com. We are however

aware of the fact that our argumentation and hence findings would have been stronger if primary

data had been collected. Especially in the case of in-depth interviews with Starbucks customers

would have proved to be ideal, where details regarding their perception of the brand could have

been clarified. Again the resources for visiting the US market have not been possible and nor has

the SCAA been cooperative with divulging details on the American coffee consumer either.

5.4.4 Critique of Data Collection

It would have been preferred to be able to draw conclusions upon primary data tailored to the

purpose of this thesis, thereby enhancing the validity of the conclusions. Had we collected primary

data in the form of interviews with customers in several Starbucks cafés, it would have been

possible to have captured comments from several different kinds of customers than we argue

exist through the Internet Starbucks forums. This is due to the argumentation of these forums

not representing the entire social network of Starbucks, but mostly the followers. Therefore, it

would have been preferable to have had interviews with a sample of the general American popu-

lation and the Starbucks consumers to draw conclusion on how Starbucks is being perceived and

how they have changed according to the general American’s perspective. Furthermore, via direct

personal interviews it would have been possible to tailor the questions asked to fit the research

statement and furthermore pose more thorough questions to find out more about the custom-

ers’ attitudes and feelings towards Starbucks, which is not possible via the forums. However, once

again we have not had the chance to travel to the US and conclusions will therefore be made on

the basis of the secondary data source. Thus, one must have in mind that the conclusion may not

be absolute in their character and further research can be done on our findings.

Even though books (cf. “Pour your Heart into it”, Schultz, 1997) have been written about Star-

bucks and their intentions and Starbucks.com to some degree covers some narratives, qualitative

stimuli interviews with Starbucks’ marketing department would have been preferable to validate

our argumentation. However, to date, Starbucks have not been interested in a co-operating with

us. Through our investigation process, the Danish branch of Starbucks was also contacted but, as

this is situated in the airport, the store is operated under a franchise license agreement and does

not have any direct contact with the US head quarters. Hence data regarding marketing for our

purposes was not found to be collectable or suitable from the Danish Starbucks branch.


5.5 DelimitationFocus in the thesis will be on US market and how Starbucks’ brand is coping on this market; how

Starbucks brands themselves, how the narratives have developed, and how the surroundings in-

terpret and perceive Starbucks’ branding attempts from the launch of Starbucks until present

time. This will all be delimited to focus on the US market. The rationale behind focussing on the

US market is that it was from this market that the narratives originated and that some of the

narratives only can be analysed with a US cultural perspective. This is for instance the case for the

narrative regarding the “American Dream” and Howard Schultz (cf. American Dream, Section 11.1)

a narrative which on overseas markets may not influence the meanings of the brand in the same

scale as in the US.

Also, we are aware of the fact that the narratives are interpreted differently across geographical

boarders due to differing national cultures (Lindstrom, 2005), may well result in the brand, and

hence narratives, also being interpreted differently within the US boarders (McCracken, 2006).

However, we are aware of the fact that the US consumers might have different opinions and that

consumers from Seattle may interpret Starbucks and the narratives differently than consumers

from the San Francisco Bay area. Having this in mind when analysing Starbucks, we will apply our

findings on a more general basis not distinguishing between local cultures.

Additionally, we will focus on the consumer culture and on how the consumption of coffee, and

especially Starbucks coffee, has been. Therefore, we will not map the whole US culture and the

related subcultures. This is due to the fact that Holt’s theory (2004), regarding cultural branding,

is difficult to apply not least as we have had limited access to empirical data about the culture.

Therefore, we have chosen to focus on the culture consisting of the consumers of Starbucks cof-

fee and their perception of the brand.

Due to our problem statement revolving around Starbucks’ current situation, focus will be on how

the narratives are perceived today, and not on how they have been accepted during the whole peri-

od of Starbucks’ operation. Thereby, we argue that Starbucks’ brand and perception until recently

has been meeting Starbucks’ objective. We base this on Starbucks’ huge success and the critique

and disappointments manifested in the media today – illustrating or suggesting that something

in the brand has changed causing equivocal narratives to be developed.

Focus will at all times be on Starbucks and their narratives and the consumers of Starbucks coffee.

Hence, a comparative analysis of the competitors and market analysis will not be in focus though

we are aware of describing the chaos end in the Kauffman Continuum and prepare the ground for a

deeper analysis of the competitors. However as the purpose is not to make a comparative analysis

of Starbucks compared to the competitors, this will not be done however the competition in the


specialty coffee industry will be outlined as well as how Starbucks differentiated themselves and

hence entered the Continuum in the first place. Therefore, it will not be analysed how consumers

prefer other coffee bars and the underlying reason for these choices, but rather focus will be on

how the meanings of the brand has affected the consumers to select or deselect Starbucks.

Part II

6. Introduction to StarbucksIn the early 1980s, the majority of Americans only knew of coffee made from an electric percolator

or drip coffee machine and coffee was considered a commodity that could only be bought in the

supermarkets. However, from the moment Howard Schultz stepped into the small specialty cof-

fee retailer Starbucks Coffee, Tea and Spice in Seattle, this culture was soon about to change. The

founders and personnel of this store were experts in coffee and sold beans of high quality. They

did not sell coffee by the cup but instead roasted beans for people to brew at home, and through

their great engagement and knowledge of coffee, they distinguished themselves by educating

customers in the different beans’ flavours and aromas and how to make a good cup of coffee.

Howard Schultz was amazed by the specialty coffee and immediately realised the unfolded po-

tential of the specialty coffee shop. Shortly after, he was hired in the small Seattle coffee retailer.

Together with the discovery of the specialty coffee and a business trip to Italy where he became

acquainted with the Italian espresso bar and coffee culture, this chanced combination later turned

out to be epoch-making to both Howard Schultz, the American and international coffee culture.

Howard Schultz was so enthusiastic about the way the Italian people met in the espresso bars and

how coffee was the rallying point to social life, that he brought back the idea of serving specialty

coffee in the US. Even though Howard Schultz was not able to convince his bosses at Starbucks

Coffee, Tea and Spice about the potential of expanding business to include serving of specialty

coffee like he had seen it in Italy, he did not forget this dream (Luttinger & Dicum, 2006; Koehn,

2001).

In the US in the 1980s, specialty coffee seemed to be reserved for coffee enthusiasts and devo-

tees who had an interest in coffee and its origins (Koehn, 2001; Luttinger & Dicum, 2006). How-

ever, Howard Schultz was convinced that specialty coffee, and the Italian way of consuming it,

had the potential of attracting more than only coffee devotees and that a huge demand within

other customer segments was yet to be unfolded. Thus, he wished to broaden the knowledge of

specialty coffee and his intention was to re-create the Italian coffee culture in the US and to make

it accessible to a much bigger group of the population. This wish formed the basis of the Starbucks

Corporation as we know it today.


In 1985, Howard Schultz succeeded in opening his own coffee shop, Il Giornale, appearing as a copy

of an Italian espresso bar. Customers were enthusiastic about the specialty coffee concept and

Howard Schultz’s business grew rapidly. In 1987, he had the opportunity for acquiring the Starbucks

Coffee, Tea and Spice and hence he was able to have the Starbucks name that was already an es-

tablished name within high quality coffee. Since, the coffee shop has made enormous progress

and today covers most of the US with approximately 10.000 shops and 5.000 in the rest of world

(Starbucks, 2008a).

6.1 Description of Starbucks’ BusinessStarbucks is specialised in purchasing, roasting and distributing coffee. In their retail stores, a wide

selection of coffee beverages is sold, both freshly brewed coffee, whole beans and cold coffee

beverages (Starbucks, 2008c). High quality seems to be a central theme in most actions carried

out by the company, hence they ensure that the beans and coffees sold in the stores are of high-

est quality and that the employees provide a similar level of high quality service in order to give

customers the best experience. Therefore, Starbucks’ strategy is to be in control in every step of

the coffee making, meaning that purchase of whole beans and roasting is integrated activities

of the company. Furthermore, Starbucks distribution predominately relies on company-owned

stores – more specifically, 85% of the 2007 revenues came from Starbucks’ company-owned re-

tail stores (Starbucks, 2008c). Only in locations such as airports and university campuses where it

is not possible to operate with a company-owned store, Starbucks enters into licence agreements

(Schultz, 1997).

Starbucks retail stores are mostly placed in high-traffic and high-visibility locations close to work-

places and shopping facilities (Schultz, 1997). In the big and densely populated cities, the Starbucks

retail stores are placed very closely to each other, almost on every street corner, and remarks are

often passed on how Starbucks’ retail stores dominate the townscape. Even jokes are made about

Starbucks planning to open a new Starbucks in the rest rooms of an existing Starbucks store

(Thompson et al., 2006).

Besides selling coffee, Starbucks also sells coffee-making equipment, mugs, coffee grinders and

other coffee accessories which can be argued to supplement their core product (Schultz, 1997).

However, during Starbucks 20 years in business, more and more products that are not directly as-

sociated with coffee are added to the product portfolio. Thus, today Starbucks also sells juices, so-

das, food such as pastries and sandwiches, ice-cream and music. In the expansion of the product

portfolio, Starbucks has entered into licence agreements with large corporations such as PepsiCo

and Kraft Food Inc (Luttinger & Dicum, 2006; Schultz, 1997).


7. The Industry in which Starbucks EmergedUntil recently, it does not seem like Starbucks has met any appreciable troubles during its 20 years

in business, but only enormous success. Though it cannot explain the entire success of Starbucks,

it is essential to the story of Starbucks that the company was introduced at a time where the

specialty coffee industry was booming. During the 1970s and 1980s, the specialty coffee industry

experienced enormous growth rates, thus in annual revenues the industry grew from $45 million

in 1969 to $750 million in 1980 (Koehn, 2001). According to Koehn (2001) the rise of the specialty

coffee industry was connected to an increasing interest in natural foods and a growing tenden-

cy towards dissociating from mass-produced products, especially amongst urbanites – hence a

growing interest in specialty coffee that differed from the traditional filter drip coffee that most

Americans associated with coffee.

When Starbucks emerged, coffee was most usually bought in supermarkets like any other sta-

ple goods and was generally perceived as a standardised product and commodity (Koehn, 2001;

Luttinger & Dicum, 2006). This view on coffee can be argued to be due to the comprehensive

development that the sale and distribution of coffee went through during the 20th century. Due

to efficiency improvements, the structure of the American coffee industry has changed during

time resulting in the supply of coffee being concentrated on fewer, but larger suppliers. Attempt-

ing to maintain high profit margins, these coffee companies have compromised with the quality

of the coffee. Attention was only slightly given to the drinking and flavour of the beverage, thus

traditions of different roasting methods and bean origins giving rise to different flavours were

disregarded. Coffee was thereby turned into a homogeneous product not varying much in taste,

making price the most obvious difference between the different coffee brands in the supermar-

kets (Koehn, 2001; Luttinger & Dicum, 2006).

The poor quality coffee and the homogenisation of the coffee tastes made room for the specialty

coffee sector. This sector was highly focused on high quality coffee and the vast variations of

the flavours and aromas of the coffee. Thus, with its many variations in coffee beans, roasts and

grinds, specialty coffee became a strong alternative to the standardised mass-produced coffee

from the supermarkets giving rise to an unfolded potential within the specialty coffee sector.

However, in spite of the strong growth of the specialty coffee industry, the specialty coffee seg-

ment still only accounted for less than a tenth of the total coffee sales compared to the general

coffee industry in the early 1980s, and the awareness of specialty coffee was still rather limited

(Koehn, 2001). An explanation for this may be found in the fact that specialty coffee was only a

niche product that at this time was not given much public awareness. Furthermore, it is essen-

tial that the general perception of coffee differed a lot between drinkers of specialty coffee and

drinkers of ordinary coffee. Whereas the latter was more focused on the caffeine fix of the coffee

rather than the taste of it, the former put time and interest into the preparation and savouring of

the coffee, making the drinking of coffee an experience. Thus, the ordinary coffee drinker can be


argued to see coffee as part of a daily routine that, in taste and habits, did not differ much from

time to time, whereas the drinker of specialty coffee in general searched for new tastes and vari-

ations of the coffee (Luttinger & Dicum, 2006).

It is worth mentioning that the concept of specialty coffee was not new and innovative as it took

off in the 1970s and 1980s. While coffee was generally commercialised through the 19th

and 20th century, some smaller roasters had held on to the traditions of the good coffee and the

art of coffee-making, thus coffee of high-quality beans was accessible in a few, smaller retail

stores in selected markets. One roaster is in particular called attention to when talking about the

initiating craze of the specialty coffee; this is Alfred Peet who managed to open his own specialty

coffee retail store in 1966. He introduced the US to dark-roasted coffee and was committed to the

flavour and high quality of the coffee (Schultz, 1997; Allison & Martinez, 2007). In many ways he

was leading the way within the specialty coffee in the US. As the distribution was rather limited at

this time, so too was the general public awareness. Hence, the sale of specialty coffee was based

on few but loyal customers that could be characterised as coffee connoisseurs and devotees, and

the niche segment did not do much to create awareness of the specialty coffee. Most awareness

of the specialty coffee was thereby created by word of mouth within the circles of people already

interested in coffee (Luttinger & Dicum, 2006).

7.1 Starbucks Revolutionising the IndustryEven though specialty coffee in itself was not an innovative concept as Starbucks emerged, this

kind of coffee was still new and innovative to the majority of the population. This was due to

specialty coffee’s character of a niche product which had, to a large extent, been for the few and

those in the know. Hence, the revolutionary aspect in the emergence of Starbucks was their pio-

neering approach to coffee and how they took part in the transformation of the perception of cof-

fee (Thompson et al, 2006; Koehn, 2001). Thus, the general perception of coffee as a commodity

was challenged by a “decommodified” coffee experience, emphasising the freshness, quality and

taste of the coffee.

However, the appeal of specialty coffee did not do it alone. Thus, specialty coffee had always

been there if you knew where to look for it (Koehn, 2001). As Starbucks entered the market, the

conventional way of consuming coffee was challenged. Conventionally, coffee was bought to drink

at home, both when it was bought in the supermarket or in a specialty retail store. Hence, the

specialty coffee segment was specialised in selling a large selection of coffees either grinded or as

whole beans, and furthermore to educate the customers in making a good cup of coffee at home.

Predominantly, the specialty coffee retail stores did not serve by the cup, however (Koehn, 2001).

According to Luttinger and Dicum (2006) and Bundgaard (2004), what Howard Schultz did, which

did not only revolutionise the American coffee industry but also the culture, was to make the good

cup of coffee the rallying point to people. Thus, he served the specialty coffee by the cup – this


way differentiating from specialty coffee competitors that in general only sold coffee as whole

beans for people to brew and drink at home. He introduced the social element of coffee to the in-

dustry, making coffee a social rallying point and the café a space for people to come together and

socialise; a Third Place, i.e. a place between home and work for social interaction (Oldenburg, 1989;

Thompson & Arsel, 2004; Koehn, 2006). It can be argued that serving coffee by the cup was not a

revolutionising concept in the American market per se, as diners had served drip coffee for years.

However, Starbucks’ concept was capable of distancing itself from these diners as they appealed

to a different customer type and furthermore that they created a new trend.

Even though Starbucks was not profitable their first years in business, they were still capable of

raising capital and resources for the company to grow rapidly. Besides, Starbucks managed to cre-

ate awareness, not only to their own advantage but also to the advantage of the specialty coffee

segment in general. From the time Starbucks entered the market, things really started to happen

within the industry. Thus, it is generally believed that the emergence of Starbucks revolutionised

the American coffee industry (Luttinger & Dicum, 2006; Koehn, 2001, Thompson et al., 2006).

Starbucks had an incentive and energy that had never been seen before within the industry and

Starbucks, with Howard Schultz leading the way, had an innovative approach to specialty coffee

and the way of delivering it to the customer which was also rather new to the industry. This new

thinking can in particular be seen as a new perception of coffee. Coffee was not just to be under-

stood as coffee (Koehn, 2001) – thus Starbucks provided a breeding ground for dissociation from

the prevalent perception of the ordinary filter drip coffee. Furthermore, the intention of making

specialty coffee much more accessible to people was influential for the success of Starbucks, ex-

tending the knowledge of specialty coffee, and thus attention was created outside the circles of

coffee connoisseurs and devotees. Therefore, what made Starbucks revolutionary was the combi-

nation of serving a good cup of coffee and providing the customers with a Third Place (Thompson

& Arsel, 2004; Luttinger & Dicum, 2006).

Starbucks was also revolutionising to the extent that they changed the coffee culture. Due to the

new thinking of cafés serving good quality coffee to the common public, Starbucks served as a

model to a huge number of cafés emerging in the market during the years, both to similar coffee

chains and smaller independent cafés (Koehn, 2001). When Starbucks emerged it was not com-

mon to find specialty coffee in other places than the small specialty coffee retailers, but today it

is almost unthinkable that cafés and restaurants do not serve specialty coffee such as cappuc-

cino and café latte as these coffee beverages have become an integrated part of the common

coffee culture (Luttinger & Dicum, 2006). Thereby, it can be argued that Starbucks innovated the

American coffee culture and at the same time set the industry standards. It is crucial also to point

out that Starbucks not only transformed the American perception of coffee but also influenced

the culture of social interaction as Starbucks provided people a place to meet and be social (Lut-

tinger & Dicum, 2006; Thompson et al, 2006). In this way, Starbucks was ground-breaking and


has achieved iconic status (Thompson et al., 2006). Therefore, it is not remarkable that ever since

competitors have tried not only to copy the idea of high quality coffee but also to copy the concept

of the Third Place.

What is further essential to underline is the awareness and status Starbucks and specialty coffee

in general achieved in the public when was introduced to the market. Starbucks started a trend

and made it fashionable to drink coffee. They put meanings and identity into the coffee beverage

emphasising that coffee was not just coffee. Buying specialty coffee therefore became a means

for the consumers to apply in the creation of their self-image. Furthermore, specialty coffee ex-

pressed a sense of style and class and was regarded an affordable luxury – it was a luxury and

self-indulgence which most people could afford. This contrasted other luxury goods which could

only be afforded by the few and affluent consumers (Koehn, 2001). Thus, consumers could have

the sense of luxury within an economically reasonable way.

8. Current Conditions of the Specialty Coffee IndustryBetween the late 1980s and 2000, the general coffee consumption in the US more or less stagnat-

ed, with a growth of only 0.26%. However, in the same period of time the trend toward specialty

coffee rose resulting in sales of specialty coffee quadrupling between 1986 and 1997. Starting as a

niche product in the early 1980s accounting for less than 1% of the coffee market, specialty coffee

had developed into an acknowledged and widespread coffee product accounting for approximately

30% of market sales in 2000 (Encyclopedia of Global Industries, 2008).

8.1 The Specialty Coffee Market and the CompetitionIt can be argued that Starbucks’ coffee beverages compete against all other coffees on the mar-

ket and indirectly against all other kinds of beverages. As argued for in earlier sections, there has

been a clear distinction between specialty coffee, i.e. espresso-based and flavoured coffee, and

the conventional filter or drip coffee and furthermore a distinction between how coffee has been

distributed. Regarding the competition, this distinction of coffee segments is no longer that clear,

as the players are moving across the coffee segments and the structure of the distribution has

changed. This has intensified the competition. Characteristic for the market is furthermore that

the market can be divided into coffee consumed away from home and coffee consumed at home.

Seeing that Starbucks predominantly sells their coffee to be consumed away from home and due

to the fact that the company focuses on the coffee experience in their retail stores, Starbucks is

also in the café and restaurant industry. Therefore, it is essential also to discuss the competition

based on the fact that Starbucks is also in the café- and restaurant industry.


8.1.1 The Coffeehouses

With the strong demand for specialty coffee, many competitors entered the market during the late

1980s and the 1990s. All over the US, cafés and coffeehouses serving specialty coffee emerged.

Thus, the industry experienced a rapid growth in the number of retail stores, increasing from 50 in

1979 to 25.000 in 2007 (Lingle, 2007; Encyclopedia of Emerging Industries, 2008).

Starbucks is still the dominating player in the market of specialty coffee and the company has ap-

proximately 10.000 stores all over the US (Starbucks, 2008d), whereas in comparison, the second

largest coffee shop defined by operating units is Caribou Coffee with almost 500 retail stores in

the US (Caribou Coffee, 2008). To the list of the largest coffeehouses in the US, the following can

furthermore be added; Diedrich Coffee, Tim Horton’s, Peet’s Coffee and Tea11, Seattle’s best Cof-

fee, Tully’s Coffee, and Coffee Beanery (Hirsh, 2006; Encyclopedia of Emerging Industries, 2008).

Characteristic to these coffeehouses is the specialisation in sourcing, roasting and selling high-

quality coffee, and in general how they show a dedication to the coffee experience as well as the

freshness and flavour of the coffee. In general, the coffeehouses offer gourmet coffee, espresso

based beverages, whole bean coffees, coffee merchandise and pastries in line with Starbucks

(Datamonitor, 2008a; 2008b; 2008c; 2008d). Nevertheless, Starbucks differs from the competi-

tors when comparing the economic scale of the companies. Thus, Starbucks recorded revenues of

$9.4 billion in 2007, whereas Diedrich Coffee had revenues of $36.6 million, Caribou Coffee $256.8

million and Peet’s $249.4 million during the same period (Starbucks, 2008a; Datamonitor, 2008b;

2008c; 2008d). However, it must also be said that the strategy of Starbucks has been rather dif-

ferent from the majority of the competitors. Whereas Starbucks has focused on being a national

and international brand, the competitors can largely be characterised as regional brands, thus their

retail stores are concentrated in selected regions of the US. For instance Peet’s has a very strong

position in the San Francisco Bay Area and Tim Horton’s in the states of the Northeast of the US

(Hirsh, 2006; Taub, 2005). In general, the competing coffeehouses have not shown the same level

of busyness as Starbucks regarding expansion. However, during the next few years, an increasing

number of specialty coffeehouses plan to become much more nationally present (Hirsh, 2006;

Walkup, 2008).

8.1.2 Specialty Coffee Going Mainstream?

What is also interesting is that the industry has experienced a trend toward consolidation of

smaller specialty coffeehouses. Thus, in the 1990s, smaller specialty coffeehouses and chains

were acquired or consolidated in order to stay in the market, this was especially due to increased

competition from larger and more national firms (Schoenholt, 1998; Encyclopedia of Emerging

Industries, 2008). For instance, the coffee chain Diedrich Coffee now owns the formerly independ-

11Peet’s Coffee and Tea will also be referred to as Peet’s


ent coffeehouses Gloria Jean’s and Coffee People (Datamonitor, 2008d). In 2003, Starbucks chose

to acquire Seattle Coffee, enhancing Starbucks’ portfolio with the brands Seattle’s Best Coffee

and Torrefazione Italia Coffee (Datamonitor, 2008a).

Even though Schoenholt12 (1998) only indirectly criticises the tendency towards the specialty cof-

fee industry being characterised by larger chains, he calls attention to the fact that the tendency is

changing the industry. He argues that the specialty coffee industry is moving away from specialty

towards commercialisation. This argument is further strengthened by the fact that big corpo-

rations diversified into other product segments such as tobacco, dairy products and household

products, and have entered the specialty coffee segment due to the large unfolded potential of

the industry. These conglomerates, led by The Procter & Gamble Company, Nestlé, Kraft Foods

Inc., and Sara Lee, have dominated the market shares of supermarket coffee for years, i.e. the

conventional and mass produced coffee (Luttinger & Dicum, 2006).

In spite of the strong growth of the specialty coffee segment and the growth of consumers con-

suming coffee away from home, it is nevertheless still a fact that most coffee is still consumed

at home. Thus, in 2005, the Americans consumed more than 300 million cups of coffee per day of

which 75% were brewed at home (Encyclopedia of Emerging Industries, 2008). Therefore, it is not

surprisingly that The Procter & Gamble Company, Nestlé, Kraft Foods Inc., and Sara Lee have seen

the chance of getting a share in the growing specialty coffee segment. Furthermore, the fact that

the consumer has become aware of the high-quality coffee available in coffeehouses and retail

stores has in turn created a more “coffee educated” coffee consumer who demands higher qual-

ity coffee, not only when buying the coffee in the retail store but also when buying the coffee in

the grocery store to brew at home. Thus, during the 1990s producers of conventional coffee have

expanded their coffee assortment to include specialty coffee products to brew at home (Luttinger

& Dicum, 2006). This has increased the competition and, in addition, enlarged the specialty coffee

segment. Thus, the distribution of the specialty coffee segment is no longer only covered by the

coffeehouses and retail stores which originally characterised the industry segment.

It is furthermore seen how coffeehouses such as Peet’s Coffee and Tea and Diedrich Coffee ben-

efit from not only being coffeehouses selling coffee by the cup but also from being roasters and

wholesalers. This means that coffeehouses profit from selling their products through other distri-

bution channels such as the Internet and wholesale accounts including restaurants, office coffee

service and grocery stores (Encyclopedia of Emerging Industries, 2008). It can be argued that sale

of roasted coffee or whole beans through the grocery channel makes the coffee products more

accessible to consumers nationwide, which intensifies the competition. Christopher P. Mottern,

12Donald Schoenholt is the founder of the Specialty Coffee Association of America and the president of coffee roaster, Gillies Cof-fee Co. in Brooklyn, New York (Schoenholt, 1999).


Peet’s president and chief executive, says that the strategy for Peet’s is to make their coffee

products more accessible to the consumers, not only through company owned retail stores but in

particular through the grocery stores. Mottern argues that the large focus on the grocery channel

is due to the tendency of consumers buying more and more specialty coffee through the super-

markets (Peters, 2001). Thus, in 2007 specialty coffee accounted for 27% of the grocery coffee

sales, which was an increase of 15% (Peet’s Tea & Coffee, 2008). It is within this grocery sector

that the growth of the specialty coffee is, and will be heading, due to the fact that most coffee

in the US is still brewed at home (Allison & Marinez, 2007). It is also the case that Peet’s gener-

ates 80% of their revenues through wholesale, though this only accounts for 20% of their sales

(Stepankowsky, 2008).

8.1.3 The Threat of the Fast Food Restaurants

During the recent years, the competition within specialty coffee has taken a new turn which is

due to the increased competition from the fast food chains, especially McDonald’s, Burger King

and Dunkin’ Donuts. The competition between Starbucks and the fast food chains revolves mainly

around the breakfast market. Since the early 1970s when McDonald’s introduced breakfast items

to their menu, the fast food chain has dominated the quick service breakfast market (Jennings,

2008). However, the fast food chains have upgraded their offerings of coffee, now selling specialty

coffee as well. Therefore, they cater to a lot of Starbucks’ customers. Earlier on Starbucks did not

consider the fast food chains as competitors as they are argued to have had a different approach

to coffee. Hence, Starbucks considered the coffee of, for instance, McDonald’s a “hot, brown liquid

masquerading as coffee” (Adamy, 2008). Furthermore, the different approaches to service, menu,

marketing, and quality and also the need for a comfortable meeting place draw a distinction line

in the comparison of the specialty coffee retail stores and the fast food chains (Kowalski, 2006).

However, not only the fast food chains’ increasing initiatives on specialty coffee pose a threat

to Starbucks and other specialty coffeehouses. Convenience is pointed out to be a dominating

factor in the competition of customers between Starbucks and the fast food chains, seeing that

the breakfast market is characterised by customers under time-pressure (Walkup, 2006; Adamy,

2008). Therefore, customers are attracted by places where they can have both their breakfast

and their beverage. Before McDonald’s introduced their specialty coffee, customers bought their

breakfast at McDonald’s and then went to other places to buy their beverages. Furthermore, it is

seen that 70% of Starbucks’ customers are having their coffee as a take-away option which im-

plies that the need for a comfortable meeting place is less essential. This is the case at least in the

competition of the breakfast segment it can be argued (Thompson et al., 2006). Instead, speed

and convenience is central.

It is seen how the specialty coffee served at the fast food chains appeal to the customers and that

the number of customers buying coffee at fast food chains is growing rapidly. Thus, by the end of

2007 every eleventh customer buys a coffee drink during a fast food chain visit (Walkup & Martin,


2007). Hence, there is no doubt that the fast food segment poses a threat to Starbucks and the

other specialty coffeehouses. Furthermore in tests undertaken, McDonald’s coffee has beaten

Starbucks coffee in the category of taste, which indicates that the fast food chain is gaining on

to Starbucks’ differentiated coffee products (Seattle Times, 2007). The fact that coffee in the

fast food restaurants, on average, costs $1 less than the coffee at Starbucks, additionally poses

a threat to Starbucks seeing that the fast food chain is offering an equally or better than tasting

product at a lower price and thus are in a strong competitive position (Jennings, 2008). This fur-

thermore implies the need for Starbucks to differentiate on their brand image.

In order to lure and maintain the customers, Starbucks has made a countermove to the fast food

chains’ specialty coffee initiatives. Hence, Starbucks introduced breakfast food items in their retail

stores and furthermore opened drive-through services in many outlets. The drive-through service

is a success to McDonald’s and accounts for two-thirds of their sale (Adamy, 2008). The initiative

of the drive-through has turned into a market trend seeing that more and more specialty coffee-

houses include drive-through’s to their stores. Perhaps most importantly, this is a trend that is

embraced by customers (Encyclopedia of Emerging Industries, 2008). This further stresses speed

and convenience as competitive factors, but at the same time weakens Starbucks’ competitive

advantage of the Third Place.

8.1.4 The Evolution of the Specialty Coffee Industry

Despite the clear threat of the fast food chains, the way Starbucks has reacted to the competition

is questioned. It is argued that Starbucks may be facing the risk of their brand being damaged

seeing that the company has chosen to meet the competition at the expense of their core com-

petences and the Starbucks Experience by focussing on increased efficiency and competing in the

breakfast market (Kowalski, 2006; Jennings, 2008). Thus, it seems as if the increasing competition

from the fast food segment has shocked Starbucks in a way, which has made them take some

decisions which may have seemed rational to correspond to the competition in the short term.

However, these decisions, we argue, seem to negatively effect on the Starbucks brand in the long

run, and seem to have been ignored in the decision-making (Appendix 1). Thus, the company has

been criticised for losing focus (Berta, 2007; Nocera, 2007).

It can be argued that the emergence of the fast food sector as a serious competitor to the special-

ty coffeehouses has resulted in an evolution of the market. The distinction of the specialty coffee

sector and the fast food sector is getting blurred as they are nearing each other with the danger

of commoditising13 the specialty coffee (Walkup, 2006; Schoenholt, 1998). Despite the threat of

the fast food chains, it can still be argued that some players within the specialty coffee segment

13Commoditising the specialty coffee can be understood as the product being viewed as a mass-consumer-product instead of referring to the experienced based café where specialty coffee typically was consumed before the fast food chains entered the market.


suffer less from the new competition. These are the coffeehouses keeping focus on their core

competences of offering customers high-quality coffee in comfortable and coffee-focused envi-

ronments. Kowalski (2006) argues that due to the competition from the fast food chains and the

fact that Starbucks and other specialty coffee chains such as Tully’s Coffee and Tim Horton’s may

have commoditised their businesses in order to correspond to this competition, a distinction line

is appearing between these coffeehouses and those which have retained their specialty coffee-

house focus treating coffee as a rare commodity. Kowalski (2006) further implies that Starbucks

is distancing themselves from the specialty coffee segment which the company initially evolved,

where focus was on the coffee experience and not just to be served quickly, and that the compe-

tition has created a new category of coffeehouses placed between the fast food chains and the

traditional coffeehouses. Thus, a category of larger coffee chains which have adopted the fast

food segment’s level of customer attention and efficiency.

It can be argued that to some extent the specialty coffee of the fast food segment does not tar-

get the same customer segment as the traditional coffeehouses, seeing that the fast food chains

may appeal to the average American and not to the higher class American (Bosman, 2006). As

Starbucks dilutes their brand values by taking on initiatives similar to the characteristics of fast

food chains, it can be argued that they are moving towards a more mainstream concept of the

specialty coffee and away from the segment in which they originally were placed. Furthermore,

it can be argued that customers who are not interested in the mainstream concept to a lesser

extend will perceive Starbucks as an alternative. Peet’s, on the other hand, is an example of a cof-

feehouse, which has not compromised with their core values and competences in order to increase

sales and correspond to the new competition. They still manually control their roasting process

emphasising the freshness, flavour and quality of the coffee (Stepankowsky, 2008; Hirsh, 2006).

Thus, Peet’s is still perceived to represent the values of the traditional coffeehouses, which Star-

bucks can be argued to be losing.

8.1.5 Starbucks in the Kauffman Continuum

It has been outlined that specialty coffee as a concept has gone through an evolution since it

emerged and since Starbucks introduced it to the masses. Looking at the specialty coffee industry

in the light of Kauffman’s Continuum it can therefore be argued that specialty coffee has moved

down the Kauffman Continuum towards rigidity due to similar concepts catering to the same

segments as Starbucks have entered the market. Specialty coffee is no longer a niche product in

the coffee industry. It has developed into a common concept to the Americans as the numbers of

Americans consuming specialty coffee on a daily basis is increasing. In general the specialty cof-

fee industry is predicted to continue growing. As Starbucks can be argued to approach the fast

food segment, the competition is even more intensified. Starbucks will slide even faster down the

continuum – also a movement fortified by the fact that the restaurant industry in general moves

faster down the continuum than other industries on average (McCracken, 2006).


Chaos Rigidity

Starbucks 1985 Starbucks 2008


Source: McCracken (2006) and of own construction

Figure 6 | Starbucks in the Kauffman Continuum

As illustrated in the figure above, Starbucks entered the market when it was ripe for the concept

of Starbucks. It was a new way of perceiving and drinking coffee which contrasted with the con-

ventional drip coffee consumed mainly at home, but also from the drip coffee served at the diners.

Thus, the specialty coffee concept led by Starbucks became a strong alternative to the otherwise

standardised coffee in the market. Furthermore, the fact that Starbucks provided the consum-

ers with a social element to the coffee, a Third Place, cannot be ignored as the American culture

seemed to lack social rallying points before Starbucks emerged. Thus, providing a Third Place with

the specialty coffee as the centre of the experience has been a factor distinguishing Starbucks

from the alternatives in the market. Starbucks delivered something to the American consumers

which they did not have access to before and therefore Starbucks has been argued to have been

teaching the Americans to drink good coffee (Bundgaard, 2004). They pioneered the industry, but

during time the market has gradually developed. Thus, the concept of specialty coffee no longer

has the same distinct character as identified it in the early days. A lot of coffeehouses have en-

tered the market and consumers at all levels of society and all ages have embraced the idea of

drinking good coffee. This and the fact that specialty coffee is available all places serving coffee

today, even in the supermarkets, can be argued to be a reason for the concept of specialty coffee

moving towards rigidity. It is losing its distinct character. However, as argued in the previous sec-

tion, the structure of the industry has changed dividing the operator of the specialty coffee into

two underlying categories. Thus, a distance is created between the larger chains competing on the

conditions of the fast food segment and the smaller chains and the independent local shops. From

this perspective it can be argued the smaller operators, such as Peet’s, will slide slower down the

continuum than others seeing that they are able to hold on to the original feeling of the coffee

shop not following the mainstream tendency suit.

Additionally, as other chains operating in the fast food industry have made an entrance on the

gourmet coffee market by initiating sale of gourmet coffee, Starbucks has been pushed further

and faster down the Kauffman Continuum. This indicates that the brand is threatened to be as-

sociated with coffee from fast food chains. Consumers have also begun to see Starbucks’ coffee

as being substitutable with coffee from fast food outlets like McDonald’s. As Starbucks makes


initiatives similar to the fast food chains in order to comply with the intensified competition, it

can be argued that Starbucks is moving away from providing a distinct concept and thus becomes

more mainstream.

Part III

9. Brand Genealogy9.1 Starbucks’ Branding Strategy Buying coffee at Starbucks has been characterised by Starbucks themselves as being an Experi-

ence – the Starbucks Experience. The experience at Starbucks is argued to be the reason why

Starbucks has been able to differentiate from the competitors and to gain their, until now, exten-

sive success (Michelli, 2006). In the following we will account for the Starbucks Experience as we

see it as a constitution of narratives creating and attaching the Starbucks brand with values and

meanings. In the following we will account for whether the narratives have changed during time,

and thereby whether the consumers apply these meanings in their identity projects. The findings

will later be applied in the consumer analysis with the purpose of clarifying whether the initial con-

sumers of Starbucks coffee find it difficult to apply the current meanings of the Starbucks brand

in their identity projects.

The narratives have intentionally been communicated by Starbucks on their homepage and in

books such as Pour Your Heart into It (Schultz & Yang, 1997) and not through advertising, hence,

indicating that storytelling plays a decisive role in their marketing. In fact Starbucks has followed

a marketing strategy not built on traditional advertising and with a considerably lower marketing

budget than other restaurant chains of that size (Kang et al., 2007). Most marketing has been

done through word of mouth where consumers have been spreading the word of the coffee chain

and in this way creating an emotional relation to Starbucks (Luttinger & Dicum, 2006). This has

been a very unusual way of going about branding and given Schultz’s own statements we argue

that the strategy chosen is deliberately done to maintain a feeling of Starbucks being a small

neighbouring coffee shop and in general attach the brand with a feeling of being small and familiar

(Schultz & Yang, 1997).

9.1.2 Emotional Branding

Emotional branding is about creating a personal dialogue with consumers and to know them in-

dividually and intimately (Gobé, 2001:xxiii). The emotional branding strategy at Starbucks has

manifested itself via extensive focus on customer loyalty obtained through customer connection

between partner and consumer – creating a special connection between the two parties. Gobé


(2001) also emphasises that an emotional branding strategy’s core is about this connection to

the consumer which will result in a deep and lasting loyal connection. A connection could consist

of the shop assistant knowing the name of the consumer thereby interacting with the consumer

in a personal way (Gobé, 2001). Another way in which Starbucks has carried out their emotional

strategy is through the smells in the stores. Gobé (2001) suggests that smells are a very powerful

tool to create emotions towards a brand. The way Starbucks has emphasised the smell of freshly

ground coffee is a way to make the consumers connect with the brand. Moreover, Starbucks has

expressed that using word of mouth communication supports their emotional branding strat-

egy and help sustain the emotional connection between brand and consumer (Kang et al., 2007).

The tool for spreading the word of mouth has been the event-like initiatives such as for instance

“Surprise and Delight”. These events are, as the name implies, about delighting and surprising

people. A “Surprise and Delight” event worth mentioning is when Starbucks rented whole cinemas

and surprised cinemagoers with free tickets from Starbucks (Lomax, 2005). These unexpected

delights are also identified as being a typical way of conducting an emotional branding strategy

(Gobé, 2001).

However, as Starbucks has grown and changed so has the way of branding and hence also the

marketing of the brand. Howard Schultz has stated that national advertising by its very nature fu-

els fear about ubiquity and he underlined in his book in 1997 that a strong brand is not built on ad-

vertising campaigns (Schultz & Yang, 1997). At that time Starbucks possessed fewer stores than

today where they in fact are ubiquitous. Therefore starting to advertise Starbucks on national tel-

evision, billboards and in radio spots as they started to do last year, may not be contradicting with

what Starbucks in reality is (Kang et al., 2007). However the advertising strategy is a whole new

way of branding Starbucks which it could be argued contradicts the emotional branding strategy

evolving around the idea of the small neighbouring coffee shop (cf. The Third Place Section 13 and

Quality and Service, Section 12).

Connecting with the customers like they used to may be difficult on such a large scale and moreo-

ver the emotional feeling towards a brand which expresses their ubiquity through national ad-

vertising may be very difficult to sustain. Nevertheless, one should also keep in mind that having

an emotional branding strategy trying to connect with the customer on an emotional level may

become more and more difficult for Starbucks as they grow – it might even be argued that the

emotional branding strategy which Starbucks has used until now is by its very nature in contradic-

tion to a corporation as Starbucks; this because knowing consumers on an individual basis will be

practically impossible taking into account the size and omnipresence of Starbucks. Therefore, the

emotional branding strategy which Starbucks is conducting, or tries to conduct, may not only be

insufficient as branding strategy for Starbucks’ sustained competitive advantage (cf. Literature

Review, Section 3) but it may also be very difficult to carry out with the current expansion pace –

at least the part of their strategy which is about the close connection with the customers.


From the above it is evident that Starbucks has been focusing on an emotional branding strategy

in order to succeed. However, as indicated in the beginning of the thesis, the underlying reasons

for Starbucks’ success may be another. According to Holt’s (2004) theory it can be argued that

the initial success can be explained by Starbucks applying cultural branding. This is a result of

Starbucks’ ability to target a subculture in the American Society getting the bobos attracted to

the messages in the brand and thus initially legitimising the brand. It does not seem as though

Starbucks was aware of the fact that they targeted this subculture and that this was the reason

for success and the brand achieving iconic status. Thus it can be argued that Starbucks’ cultural

branding was not done deliberately. Thereby the cultural branding approach has not been followed

through during the years and hence the emotional branding strategy has been perceived by Star-

bucks as the key to their success.

10. The NarrativesAs consumption plays a great part in constructing the self (McCracken, 1986) and the fact that

Starbucks’ coffee can be considered an identity product it can be argued that the meanings at-

tached to the Starbucks brand are used in the consumers’ construction of their identity. The mean-

ings are developed through the narratives told by Starbucks. However it has also been stated that

the consumers and the surroundings can co-brand a company – a co-branding incontrollable to the

company (Holt, 2002; McCracken, 2005). Therefore, the surroundings may also tell contra-narra-

tives about Starbucks which can harm the brand’s credibility. Thompson et al. (2006) and Klein

(2000) indicate that there has been a tendency towards large corporations with strong brands

experiencing negative consequences when stepping out of line and not living up to what was

promised in their narratives – the external environment quickly responds and co-brands the brand

with meanings which are not always flattering for the corporation (cf. Holt, 2002, Klein, 2000).

In the following we will therefore account for the narratives firstly as Starbucks has intentionally

tried to tell them and secondly how these have changed during time due to co-branding from the

surroundings – this being consumers and media. Afterwards we will look at how Starbucks has

counteracted criticism thereby trying to maintain the positive meanings in the narratives.

Through word of mouth the company has succeeded in building a strong brand attached with

meaningful narratives. Moreover the influence of the narratives communicated by the surround-

ings can be seen as a proof of the consumers possessing power as to which meanings are associat-

ed with the Starbucks brand – a power also mentioned as being characteristic for the post-modern

consumer (cf. The Post-Modern Consumer, Section 5.1.7.4). In the following we will look into the

development of Starbucks’ narratives including how the surroundings have co-developed them.

The narratives analysed are the following: The narrative of Howard Schultz, the Third Place, the

Quality and Service, and the Social Responsibility.


11. The Narrative of Howard SchultzWhen saying Starbucks you also say Howard Schultz. The founder and CEO of Starbucks has

achieved to become deeply associated with the company and this, we argue, is not a coincidence

but a story carefully constructed by Starbucks over many years. The narrative about Howard

Schultz evolves around the idea of the American Dream and around being the embracing father

figure of Starbucks.

11.1 The American DreamHoward Schultz is an example of how the American Dream can come true to anyone who pursues

it. This is the story about Howard Schultz whose parents were part of the working-poor in Brook-

lyn, New York City which they later left for a housing project (Marketing Magazine, 2004). The

father had different low society jobs such as taxi driver, diaper-service truck driver and factory

labourer while the mother Elaine was a non-working housewife (Koehn, 2001; Serwer & Bonomici,

2004). The story about the family which had to go through an awful lot is further emphasised

when the father breaks his ankle and cannot afford the hospital bill and on top of that looses his

job (Bundgaard, 2004; Serwer & Bonomici, 2004).

Schultz started working early in his life doing different odd jobs and gave some of the earnings to

his mother as he knew that they were short of money at home. If it was not for the football schol-

arship Howard Schultz probably would not have attended college but he got it and got into Univer-

sity of Northern Michigan. The narrative also includes how Howard had different jobs but because

of being curious about why a certain Starbucks Coffee, Tea, and Spice bought so many plastic cone

filters from his current job at Hammerplast he visited the place to see what it was. He immediately

fell in love with the shop and the coffee – he saw that it had potential: “I felt as though I had dis-

covered a whole new continent […] By comparison, I realized the coffee I had been drinking was swill”

(Koehn, 2001:219). The rest of the story we know – Starbucks becomes a success in the US and

overseas and is the symbol of a real success story of how Schultz’ social circumstances does not

stop him from chasing his goals, and he becomes a strong example of the American Dream.

11.2 The Father FigureFrom discovering the specialty coffee potential in an American market ripe for a quality product

Schultz’s story goes on with how his passion for specialty coffee and the coffee bar concept all

started with a trip to Milan in 1983 where he tasted his first latte. Schultz described the first

coffee experience as a revelation something he had to share with the rest of US (Daehne, 1994;

Bundgaard, 2004); almost as though Howard Schultz was a symbol of the father of the US who

wanted to share his positive experiences with the rest of his country. Also the way he regards his

employees as being partners who can have a say in daily operational decisions expresses the caring


Schultz (Schultz & Yang, 1997; Michelli, 2006). The caring for the employees is emphasised again

and again. One example is how Schultz has introduced health insurance not only to the partners

but also to their cohabiting partner no matter the sex (Bundgaard, 2004; Lindstrøm, 2003, cf.

The Good Place to Work, Section 14.1). Schultz also acts as the omni controller of Starbucks by

not letting the concept be franchised, which can also be argued to facilitate the “small feeling” of

Starbucks – one can put a face on the owner and hence the company may not feel as corporate.

Being one man directed can be seen as a way to keep control in the hands of the company but it

is also sending a strong signal to the outside world supporting the narrative of the compassionate

CEO who will not let anyone in on his territories.

However Schultz steps down from his CEO position between 2000-2008 (Starbucks, 2008h). Dur-

ing that period Starbucks began to suffer and as the situation looked its worst Howard Schultz

came to Starbucks’ rescue. One can see this just as a way of getting the company back on track

but it can also be a carefully thought through marketing strategy supporting the narrative about

the caring father of Starbucks who will not passively be a witness to his company and personal

dream suffering. In addition a memo sent to the partners regarding how the company had to go

back to the roots and how the experience had become inauthentic got out (cf. Appendix 1). This

way all Americans were able to read Howard Schultz’s deepest concerns and how he was willing to

fight for his company in cooperation with his partners. Of course this memo was also made to cre-

ate a sense of internal unity but we argue that it was just as much released to tell the story about

the caring CEO coming back to save the company and do what has to be done. A quote such as:

“I’m glad Howard is back at the helm. Starbucks is his heart. I have every confidence he will turn the

company around…” (Stone, 2008:3), illustrates how one stockbroker characterises Howard Schultz

as an owner whose company is close to his heart and where customers and employees even just

call him by first name.

The connection between Starbucks and Howard Schultz is constructed to be emotional and in-

formal. Without accusing Schultz of not being genuine in his story telling one should also not be

naïve and think that the narratives have not been well thought through. There is no doubt that

the strong association between Howard Schultz and Starbucks is based on the narrative regarding

the way he got the idea for Starbucks and how he managed to build a strong coffee empire but

it takes up a lot of space when telling the story of Starbucks. This is also fortified by the books

written about Starbucks, such as Michelli’s (2006) “Five Principles for Turning Ordinary into Extraor-

dinary” (cf. Literature Review, section 3) but not least due to Schultz’s staging himself in a book

such as “Pour Your Heart into It – how Howard Schultz Build a Company one Cup at a Time” from

1997. Here the development and struggles of the company is made public and again relates Schultz

to the American Dream. How he is passionate about sharing good coffee with the Americans, how

he built the company up from scratch and how he cares for Starbucks including his partners. Fur-


thermore in Pour Your Heart into It emphasis is on how Howard Schultz was able to open the eyes

of the Americans to the need of specialty coffee – a need they did not know they had – and in this

way he acts the role of sender according to the classic actant model14. At the same time this story

of Howard Schultz is staged as a fairytale where Howard Schultz in the role of the hero has to go

through an awful lot before he achieves his dream – granting the Americans with Starbucks.

The stories told about Howard Schultz in the media and by himself all tell something about the

brand. The stories fill up the brand with meanings about Starbucks being a corporation where a

common hard working American man set the strategies. By “putting a face” on the corporation

it can be argued that Starbucks tries to avoid being seen as the big and ugly. Being a symbol of

the American Dream which the common American citizen believes in just like the Danish believe

in the welfare state (P1, 2008) has attached the brand with meanings which the Americans are

very likely proud to identify with and buy. It can be argued that buying the coffee at Starbucks is

like buying a little piece of success – success which can be transferred to the consumer’s identity.

The narratives also tell the story about Schultz as the caring CEO who wants the best for his fel-

low Americans not only by serving good coffee but also by supporting different social projects (cf.

Social Responsibility, Section 14). Together with the story of the American Dream which came true

for Schultz they support the development of a corporation which does not only want to achieve

profit – a message which is hard for the average American not to sympathise with. It can be ar-

gued that this narrative targets lower social strata as the American Dream appeals to the feelings

of success and opportunities to crawl up the social ladder.

11.3 Development of the Narrative of Howard Schultz In general Howard Schultz tries to counter-attack the criticism the coffee chain experiences from

the media. This is mostly done through communication from Howard to the employees using e-

mails and news letters. Howard Schultz’s communication is very personal and friendly which can

be argued to be intentional to distance him from being a hierarchic leader of a large corporation.

Thus he puts himself on level with the employees encouraging two-way communication. It seems

as if he tries to create an atmosphere and a feeling of community, strengthening the mutual feel-

ing among the employees and motivating them to engage in the customers (cf. Appendix 4). The

purpose of the communication is to explain to the partners and the surroundings the underlying

reasons why the media has attacked Starbucks and what the solution is to re-create the emotion-

al connection with the customers (cf. Appendix 3-5). Schultz underlines the values of unity – the

partners must all stick together to overcome critique. These very personal letters sent out to the

partners support the narrative of the caring founder of the corporation. But this communication

from Schultz can also be interpreted as a way to strengthen the narrative about Starbucks not

being a corporate titan but a company with a visible leader who cares.

14This model is applied as marketing tool in Fog et al. (2004).


When Howard Schultz decided to regain his position as CEO earlier this year a strong signal was

sent to the surroundings – a signal that the founder of the company still had faith in Starbucks

and that he still cared for the company and his employees. The following quote also shows the

influence on the stocks illustrating how Howard Schultz’s significance for the company did not

disappear over the years. Moreover it also illustrates the close connection between the brand and

Schultz and the way one stockholder again sees Howard Schultz as the hero coming to the rescue

of Starbucks:

“The day after the announcement, the price of Starbucks’ shares rose over 8 percent — “the

Howard rally,” Wall Street was calling it. At Starbucksgossip.com, Starbucks employees

weighed in ecstatically. “I have faith in Howard,” wrote one.” (Nocera, 2008)

By expressing in the memo that Starbucks has to go back to what it was before, that Schultz cares

about the Starbucks Experience of being a café where quality and service are still paramount fac-

tors it can be argued that the narrative of the caring founder is still being supported today (Ap-

pendix 1). However Joe Nocera an American journalist and author exposes a different picture of the

CEO which weakens the narrative of Howard Schultz. In his column in The New York Times Nocera

(2008) points out that not only is Howard Schultz a bad manager who never really gave up his

position as CEO in 2000 and that Mr. Donald the new CEO never made his own decisions without

consulting Schultz but he also argues that Howard Schultz is driven by growth and numbers much

more than he is driven by his heart. Thereby it is indicated that the book Pour Your Heart into It

is also a part of their marketing instead of just being a sincere Schultz leveraging his American

Dream story to his fellow Americans. Nocera (2008) thereby paints a much less romantic picture

of Howard Schultz. This picture of Howard Schultz is also supported by Pendergrast (2001) who

underlines Howard Schultz’s winner instinct; he is a businessman pursuing profit. Pendergrast

(2001) does not imply that Howard Schultz is not sincerely passionate about coffee and that this

is a cover for the real purpose of profit but one should not be fooled by Howard Schultz’s paint-

ing a rose-colored image of himself as the hero and his intentions. Nocera (2008) points out that

Schultz is pushing growth at all costs. Closing down shops in the US to get back to the authentic

Starbucks Experience does not work if the strategy is not carried out all the way which Nocera

(2008) indicates it is not – Schultz’s goal is still to expand on potential foreign markets a strategy

which collides with the narrative of the founder who wants to save his company and get back to

its roots.

Another downside to Howard Schultz being strongly identified with Starbucks is that when Star-

bucks takes a wrong step it can be argued that it rubs of on the narrative of Howard Schultz caus-

ing negative associations towards the CEO hence affecting the narratives’ credibility (cf. Develop-

ment of Social Responsibility, Section 14.4). Summarising on the above it seems as though the

narrative of Howard Schultz has developed through the years as criticisms of Starbucks had made


the narrative of Howard Schultz less glamorous and hence credible. He is however still presented

as the passionate founder of Starbucks and a symbol of the American Dream. However Starbucks’

recent struggles may have caused the American Dream narrative to fade slightly and the success

story is threatened by a less happy ending where Starbucks must close down several shops and

rethink their strategies. However, until recently the American Dream narrative has been intact

hence the meanings of being a symbol of success can to some degree still bee justified. You buy a

little of that dream when you buy coffee at Starbucks and the fact that the company has grown

surpassing all expectations is only supporting the American Dream narrative. But still it has to

be noticed that the tight association between Schultz and Starbucks may be moderated as the

company grows.

12. High QualityThe quality of Starbucks coffee and how Howard Schultz taught the Americans to drink good

coffee based on the Italian espresso bar idea is emphasised in almost any written paper about

the corporation (Serwer & Bonamici, 2004; Bundgaard, 2004; Daehne, 1994; Schultz & Yang, 1997;

Pendergrast, 2001; Luttinger & Dicum, 2006). The high quality narrative is comprised by three fac-

tors: the Italian coffee traditions, the service and how Starbucks controls the supply chain.

12.1 The Italian Coffee Traditions In Italy coffee was not the same as the brown liquid which the Americans were used to consume

but a drink made with dedication and a special precision combined with a place where people could

chat or read the newspaper all wrapped up in an authentic European café milieu. Telling the story

about how Schultz got the idea to open up a coffee shop based on the Italian coffee culture can

be seen as a way for Starbucks to be associated with the Italian coffee culture. The Italians’ coffee

culture is filled with meanings of tradition, quality and authenticity and the Italians are famous

for their coffee roastings such as Lavazza, Illycaffé, Pascucci, and Segafredo Zanetti and also

known for their traditional hand made espresso machines such as La Marzocco and Pascucci used

at home and in cafés all over Europe (Euromonitor, 2005 Euromonitor, 2007). To communicate

the meanings of being a café based on the Italian coffee traditions, Starbucks uses Italian words

such as barista, which is the Italian word for bar man and they use Italian coffee expressions such

as tall, grande, and venti to indicate the size of the coffee. Also the names of the coffees such as

cappuccino, caffe latte, tazza, doppio etc. are taken from the Italian coffee vocabulary all to attach

Starbucks with Italian coffee culture implying legitimacy of being authentic Italian.

To be sure that the best cup of coffee is brewed selection of the coffee is important and carrying

out a distinct selection process of beans serves as a means to emphasise the quality narrative

of Starbucks. They carefully select and buy the beans from different places in the world as the


location and seasons have an influence on the coffee flavour. On Starbucks.com one can also read

how to taste coffee, the history of coffee, the history of roasting, how to make the perfect cup of

coffee at home with a lot of specialist knowledge etc. – all sending a signal about Starbuck being

a coffee connoisseur who shares their knowledge with the customers (Starbucks, 2008f).

Therefore, by emphasising that Starbucks is founded on the basis of the Italian coffee culture, the

meanings from this culture are transferred to Starbucks and thereby Starbucks may be associated

with the Italians’ coffee culture with all of what that implies of intellectuality, traditions, quality

and authenticity. According to Simon (Appendix 2) the Italian café culture encourages intellectual

conversations, reflections and to linger. At the emergence of Starbucks the Italianess had a strong

association with something exotic and different due to the concept being unknown in the US at

that time. This implies that an Italian café milieu with the meanings of traditions, quality, intel-

lectuality and connoisseurship attached were a part of what the customers bought. As a contrast

to the coffee culture at that time in the US, Starbucks as a re-creation of the Italian coffeehouse

came to illustrate a bohemian lifestyle (Appendix 2). The traditions of quality, connoisseurship and

authenticity were transferred to the customers enhancing their self-image as well as sending a

signal of possessing status and high cultural capital to their surroundings. Thereby, they signalled

that they knew of the coffee traditions, what quality was and how to consume coffee. Especially

in the early days of the specialty coffee craze it can be argued that these meanings of quality and

the Italian origin had a strong value as this differed a lot from what was already known in the US

market (cf. The Industry, Section 7). Furthermore, buying Starbucks coffee in the beginning may

also have sent a signal of being trendy adapting to this specialty coffee as the first Flock. Building

the Starbucks brand around the Italian authentic café culture can be argued to have appealed to

a certain customer group with higher cultural capital. This will be further elaborated on in the sec-

tion, The Social Network of the Starbucks Brand, Section 16.4.

12.2 ServiceThe quality of the coffee is also assured by the extensive training of the baristas resulting in a

narrative regarding a high level of service. Working at Starbucks is not only about pouring coffee

but the barista must possess knowledge and show enthusiasm towards the job. Therefore, all

partners go through an at least 28-hour long coffee course including everything from company

philosophy to extensive coffee tastings assuring that the partners can guide their customers if

they should be in doubt of what to choose from the broad coffee menu (Locascio, 2007; Lind-

strøm, 2003; Michelli, 2006). All this supports the narrative about the corporation’s knowledge

about coffee and high level of quality.

The education of the partners also includes that the partners gain insight in the company philoso-

phy regarding the importance of interacting with the customers. The Green Apron Book is one of


the appurtenances to teach the partners the importance of communication and interaction with

the customers, as interaction is to create loyalty towards the brand. In this book the principles

of Starbucks are listed together with success stories especially regarding how the partners have

made the customers’ Starbucks Experience special and how the customers have shown their grat-

itude by contacting Starbucks’ head office thanking Starbucks for being the way they are (Michelli,

2006). This can be seen as a way for Starbucks to assure that also the partners show loyalty and

dedication towards their job resulting in a “living the brand” or brand citizenship behaviour where

the partners show extraordinary commitment to the brand which will be leveraged to the custom-

ers’ experience (Karmark, 2005; Burman & Zeplin, 2005).

12.3 The Control of the Supply ChainTo ensure high quality of the coffee, Starbucks has additionally found it necessary to have high

quality in all the activities in the supply chain as well (Schultz & Yang, 1997). Therefore, the selec-

tion of coffee farmers, the sourcing of the beans and the roasting process are integrated activities

in Starbucks. Starbucks has built their own roasting plants and the coffee stores are company-

owned (Appendix 2). Howard Schultz argues that quality control is essential when you are dealing

with a product like coffee as it is imperative to the final coffee product that the beans are fresh

and that they are roasted and brewed the right way, and that this quality control will be reduced if

the activities are outsourced (Schultz & Yang, 1997). Furthermore, he finds it difficult to keep the

company culture intact if the stores are franchised. Then it would be difficult to make sure that

the Starbucks service level is the same in every store and thereby that the customer has the qual-

ity experience they are to expect. Starbucks seems very determined on not to compromise with

the quality control.

Even though it may have the greatest significance for internal matters that Starbucks value the

control of their supply chain, it can still be argued to take part in creating an image of the company

which above all wish to express quality, and that the product is premium made with care. Thus,

this quality approach distinguishes Starbucks from the mass produced coffee products where a

low price can be argued to be one very decisive factor in the decision making. However, avoiding

influence from external suppliers signals financial superiority and independence resulting in an

image of Starbucks being a large and corporate company. Thus, Starbucks cannot get away from

the fact that they are a large corporation which distances them from the small feeling values they

try to express.

12.4 Development of the Narrative of Quality “I have been drinking Starbucks grande lattes for about 16-17 years. I remember that initially,

the price was a shocker for a cup of coffee, but the consistently exceptional quality proved to

be worth the price. Things have changed over the years and the pattern I’ve experienced fol-

lows: from always a great latte, to every now and then an ok latte, then usually an ok latte, to


presently every now and then a great latte. The shift has gone from quality to quantity and

you have lost the magic along the way. Bring back the consistent quality, please…” (Miclin,

2008)

As one can read from the quote above the trustworthiness of the quality narrative seems to have

suffered. Quality of the beans has in general been lowered due to the large batches of coffee

beans purchased – a demand which the suppliers find difficult to meet as the suppliers find it dif-

ficult to keep up with the pace of Starbucks’ expansion level (Batsell, 2004).

There seem to be a general consensus on mystarbucksidea.com that coffee brewing should rather

take the time it does instead of rushing the brewing process to keep queues and waiting time

down (Hb123, 2008; BII, 2008; Melody, 2008a; Jayded, 2008; Verum, 2008). Moreover, it is under-

lined that there is a lack of consistency in quality but also a lack of consistency from shop to shop.

This can be argued to be caused by the baristas being increasingly under time pressure as the chain

has grown but also that the chain has grown so big that it is difficult to control and maintain the

quality in every Starbucks (Hellow, 2008).

Most critique refers to the introduction of the Clover machine this year. The Clover brews one cup

of coffee from beans the barista selects on the automated machine (Schwaner-Albright, 2008).

But also the La Marcocco espresso machines were replaced with the automated Swiss-made Mas-

trena machine and should according to Howard Schultz replace La Marcocco in three-fourths of

the Starbucks in 2010 (Stone 2008) resulting in some customers preferring smaller coffee shops

such as Peet’s Coffee and Tea which handmakes the coffee and thereby also emphasises the

Italianess to a larger degree and therefore is perceived more authentic than Starbucks. As hand-

crafted coffee is associated with quality, it can be argued that customers feel that Starbucks has

reduced their quality by introducing automation:

“Ever since Starbucks went to the automatic machines (similar to McDonald’s) the quality

of the drinks have suffered. Top quality espresso can only be made from properly calibrated

automatic machines, or more often, from manual and semi-manual machines with properly

trained employees. Fans of espresso know this, as does Peet’s Coffee, which is why Peet’s

uses manual machines for “hand crafted” drinks. Peet’s is where the quality is because of

this. Some of the cappuccinos that I have purchased from certain Starbucks stores have been

close to undrinkable (great use of $3.50). The shots of espresso have been thin tasting, bitter,

and of poor quality. Starbucks will only thrive if it can get the quality back in its espresso. This

will be through the right equipment, maintenance, and training of employees. The training

aspect should include instruction on what makes good espresso and what it tastes like so

quality control can be maintained. If the barista is clueless about what good espresso is, they

will have no idea of when there is a quality problem.” (OC Mark, 2008)


Another comment, which supports the lack of quality in relation to the automated coffee ma-

chines:

“…I have spent thousands of dollars at Starbucks. You are losing me and TONS of other cus-

tomers simply because of these automatic machines. You used to teach baristas about the

timing of shots, humidity and air pressure. Now, they don’t know anything about pulling a

good shot, and have no idea what you’re talking about when you tell them the shot tastes like

water. They have no idea what can be done except give you a coupon.” (Trevor H, 2008)

It is not only that the new coffee machines brew coffee of poorer quality it is also the theatrical

experience of watching the barista making the coffee which is argued to be gone when the barista

only pushes a button. Coffee brewing on these machines does not call for extensive training ses-

sions and therefore making the coffee will have less character of handcraft resulting in the baris-

tas showing less passion and pride and hence interest in their jobs. One barista points out that he

left the company to another coffeehouse as he could not vouch for the quality of Starbucks’ coffee

anymore (BII, 2008). Also the meanings of Italianess attached to Starbucks are threatened when

replacing the Italian espresso machines with automated machines as this diminishes the Baristas’

otherwise central role of the Italian coffee shop. Moreover, the new machines and especially Clover

machines have been criticised for being too tall not allowing the barista to communicate with the

customer rendering the important interaction in the shops impossible and also hiding the barista’s

coffee-making (Stone, 2008).

The quality feeling of Starbucks has also been diluted when introducing sandwiches and breakfast

items. By doing that, the smell of coffee has been overruled by the smell of food – a problem many

have underlined on mystarbucksidea.com and by Howard Schultz himself, seeing that the smell

of coffee always has been a part of the coffee experience at Starbucks - an artefact which most

customers have valued highly (Appendix 1). The smells as well as the fact that the baristas have

become less educated are underlined in the following comment:

“…Starbucks has been dumped down to a McDonald’s level...5 or 6 years ago it was like: “yes,

finally a place where I can get great coffee, sit down and actually be a part of my community.”

Now, it’s just like every other American establishment: poor quality, bad smells and baristas

that have little to no idea of how to make a good espresso…Oh well, there’s always Italy.”

(Millim, 2008)

Like entering the food business, Starbucks has also entered other businesses such as the book and

music businesses. Hence, books and music are sold in the coffee shops. The fact that Starbucks is

no longer concentrated around the coffee experience but has diversified into other areas confuses

the perception of Starbucks as a coffee shop of the Italian traditions. Therefore, the authentic

meanings of the Italianess are weakened and make room for meanings of Starbucks as profit

pursuing to emerge.


It also has to be mentioned that the participants of the discussion on mystarbucksidea.com re-

garding the quality of Starbucks’ coffee display very connoisseural knowledge about coffee and

go into details about how long the brewing process should be, how warm the milk should be and

how the baristas should pack the beans the proper way. Thereby, they validate their arguments

about the lower quality, a fact also validated by the media (Smale, 2008; Stone, 2008; Grynbaum,

2008).

One of the initiatives to try and maintain the narrative of quality and to counteract the recent

criticism of Starbucks lowering their quality, was firstly the memo sent out to all the partners

explaining how Starbucks had to go back to its roots (cf. Appendix 1) and secondly a nationwide

training session was organised to revive the intimate, friendly feel of a neighbourhood coffee

shop. All Starbucks coffee shops were closed down for three hours, this being 7,100 shops at pre-

cisely 5:30 p.m. and then the re-education camp was launched with instruction in espresso making

– how the espresso shot should be made in glasses so every shot’s colour could be checked and

how milk was supposed to be steamed in a way that the right sweetness was obtained. Moreover,

Schultz announced that the chain would get rid of odoriferous breakfast sandwiches so that the

customers could smell the coffee again. Starbucks was according to Schultz, going back to their

roots (Grynbaum, 2008). Thereby, Schultz implies the wish to re-establish the original meanings

of the brand.

12.5 Development of the Narrative of ServiceThe quality of the service level also seems to have changed over the years. As the chain has grown

the partners have been under severe stress to keep up with the demand for Starbucks coffee. This

has resulted in less of the important connection between the partners and the customers as the

environment is too busy for small talking and the customers are so manifold that it is not possible

to remember what the regulars usually drink (Yum2me, 2008; Superman, 2008; CustIdea, 2008).

As Starbucks has grown it may also have been more difficult to control that all stores have the

same level of service and the right people behind the counters than it used to. However, some cus-

tomers still express that their local Starbucks provide good service and they praise the partners:

“The politeness and responsiveness of Starbucks employees is legendary and unequalled in business.

I have had ONE negative experience with a Starbucks employee in 23 years...” (Mza, 2008) and “My

local Starbucks is in Denville, NJ (Union Hill Mall) and anyone who wants good customer service

should come to this store. All of our Baristas ROCK! Most of them know my favourite Latte and some

even have it ready when I get up to the counter!” (Sadie, 2008). It is viewpoints like these which

demonstrate that some of the principles of connection between the customer and the partner,

which Michelli (2006) is referring to as one of Starbucks’ critical success factors, is still apparent

today. However, this connection has not been possible between all customers and partners. Thus,

it can be argued that the lowering of quality within service has resulted in customers showing less

loyalty towards the Starbucks brand.


However, introducing automated coffee machines also witness about the stores being busier, and

the need for speed coming into focus. As written previously the machines reduce the importance

of the interaction with the customer and may give a feeling of rush and less service. It is also

pointed out that while expanding aggressively the demand for partners to fill vacancies in newly

opened stores is high. Therefore, managers cannot afford to select the so-called “people people” –

employees who like to interact and small talk with customers and who are knowledgeable about

coffee. This was the kind of employee Starbucks initially focused on employing (Schultz & Yang,

1997:245). One blogger at mystarbucksidea puts it like this: “The desire to be truly customer service

oriented is not generally something that can be trained into a person. It comes from within. It is a

personality trait…” (Cafegirl, 2008). It seems like the workforce is characterised by a large amount

of students who understandably do not engage 100% in being a part of the Starbucks mindset re-

sulting in a lower service level – a problem which is also mentioned several times on mystarbuck-

sidea.com (Dalahest, 2008; CustIdea, 2008). There seems to be disappointment in the majority of

the comments on mystarbucksidea.com regarding the quality and service level as the customers’

expectation to Starbucks still remains the same despite the development of Starbucks. The cus-

tomers still expect to get the same good service and quality, not least due to the price premium

of the coffee. This signals that the meanings of quality and service are still closely attached to

Starbucks – at least some customers perceive it like this. However, the meanings have been dam-

aged as Starbucks is not able to live up to these meanings. Thus, meanings of standardisation and

a less intimate service are created – meanings similar to those of the fast food chains.

Expansion is still a pivotal point for Starbucks and the company has turned its focus to expansion

in foreign markets instead of expanding in the US (Nocera, 2008) – decisions which do not cor-

relate with the desire to go back to the roots and hence focus on the initial quality/service nar-

rative. Further expansion will not facilitate the neighbouring feeling of Starbucks coffee shops.

Therefore, we argue that the initial narratives of quality and service have developed during the

years, and the strategy of Starbucks has not permitted Starbucks to be true to the initial narrative

of quality. The strategy has resulted in lower quality and service and loyal customers who show

disappointment causing some to deselect Starbucks in favor of competing coffee shops such as

Peet’s Coffee and Tea. Does the Quality and Service Narrative Hold?

Starbucks keeps telling the narrative of them being a service minded quality brand. Due to the

fact that the company has made some strategic expansion decisions, the surroundings perceive

Starbucks as slacking on the quality. This results in the surroundings telling another story causing

the original meanings to have lost their values. Thereby, the image of being a re-creation of the

Italian coffee shop has been damaged resulting in the meanings of the Italian traditions and all

which this implies disappearing as well. The distinct and exotic character of Starbucks has been

removed and buying the brand it can be argued no longer creates the bohemian identity of being


intellectual, individual and focused on connoisseurship also characterising the post-modern con-

sumer with a high level of cultural capital (cf. Post-Modern Consumer Theory, Section 5.1.7.3). As

Starbucks has standardised the quality and service in all the coffee shops making procedures for

how to address the customers, the identity constructing meanings of the brand have disappeared.

Instead the brand has been commoditised and has become just a common coffee shop, which

can be argued to repel the customers who bought into the Italian coffee culture and the identity

creating meanings:

“I feel like [...] I just need this. And I think that’s why I feel so upset because it’s just like my

necessities are so basic. I just need a coffee. I just need some caffeine. I just need a place to

rest and drink my coffee. I don’t like these ridiculous names of coffees. They’re just like these

crazy made-up names, and they can be really long...Is it truly a name or just something that

the branding guru made up because it sounds cool and Italian?” (Laura in Thompson & Arsel,

2004:637)

This interviewee is one example of customers perceiving Starbucks as commoditised and hence

a coffee shop which fulfils a basic need for caffeine and a not place to carry out identity projects.

Toning down the Italian elements of the coffee experience by for instance putting less emphasis

on the role of the barista both in the coffee making and the connection with customers makes

Starbucks seem less authentic Italian. Therefore, the fact that Starbucks still holds on to the

story of the Italian traditions by for instance calling their beverages Italian names questions the

brand’s credibility and the Italian elements left today in the Starbucks brand appear comic and

misplaced.

13. The Third PlaceThe profiling of Starbucks as a Third Place is estimated to be one reason for Starbucks’ success

and a concept which Starbucks has adopted (Luttinger & Dicum, 2006; Koehn, 2001). Howard

Schultz’s vision has been to enhance the purchase of coffee to be more than just a cup of Joe. He

has focused on everything surrounding the coffee; the elements creating the coffee experience.

What he discovered on his trip to Italy was how coffee was a social rallying point to people and

how cafés provided citizens a place to meet and hang out – a place between home and work. This

idea of a Third Place is widely recognised for instance as the German beer gardens, the English

pubs, and the French and Viennese cafés – all with the common denominator of providing the

neighbourhood citizens an informal public place to gather and converse (Oldenburg, 2001). When

reading comments from Howard Schultz, there is no doubt that he consciously tries to create an

image of Starbucks as a Third Place and that he plays on the emotional benefits customers gain

from buying coffee in a Starbucks coffee shop.

“In an increasingly fractured society, our stores offer a quiet moment to gather your thoughts

and centre yourself. Starbucks people smile at you, serve you quickly, don’t harass you. A visit


to Starbucks can be a small escape during a day when so many other things are beating you

down. We’ve become a breath of fresh air.” (Schultz & Yang, 1997:119)

However, Howard Schultz is not alone in his postulation of Starbucks as a Third Place. In general,

there seems to be consensus about the fact that Starbucks can be associated with a Third Place

(Pendergrast, 2001; Thompson et al., 2006; Koehn, 2001; Locascio, 2004, Bundgaard, 2004; Lut-

tinger & Dicum, 2006). When searching for information about Starbucks in literature and the me-

dia, the narrative of the Third Place is one of the strongest and most repeated narratives in the

public profiling of the company.

Howard Schultz realised that the American citizens were without these kinds of gathering places

in the early 1980s and that there therefore was a social need for them. He felt that customers

were searching for romance and community, fuelling the need for a Third Place in the US (Schultz

& Yang, 1997). He expressed it like this:

“Serving espresso drinks the Italian way could be the differentiating factor for Starbucks. If

we could re-create in America the authentic Italian coffee bar culture, it might resonate with

other Americans the way it did with me. Starbucks could be a great experience, and not just a

great retail store.” (Schultz & Yang, 1997:52).

And he continued:

”People didn’t know they needed a café, comfortable, neighborhood gathering place. They

didn’t know they would like Italian espresso drinks. But when we gave it to them, the fervor of

their response overwhelmed us.” (Schultz & Yang, 1997:122).

Recreating this feeling of a social stamping ground has become the pivotal point in the creation

and branding of Starbucks. Being a rallying point to people is attached with meanings. It is a place

where people feel that they belong – an extension of the front porch – and they have a personal

connection to the place. It gives the customers a feeling of community and intimacy which they

are not able to find in a fast food restaurant where the purpose partly is to receive your com-

modity and to fulfil needs for eating. The coffee menu is also seen as a means to create a sense

of belonging. It is carefully calibrated in a way that only the people being a part of the Starbucks

community know how to order the specialty coffee. When you know how to order your personal-

ised specialty coffee and the order is easily understood by the barista, you belong to the Starbucks

community (Appendix 2).

The idea of the Third Place has been mainstay in the appearance of Starbucks’ coffeehouses and it

has provided the breeding ground for the narrative of Starbucks as a Third Place. This means that

the company has been very aware of creating the right atmosphere in the coffeehouse to make

people linger and hang out, and especially for them to perceive their local Starbucks coffeehouse as

a place they wish to spend time in and return to. In his book about Third Places, Oldenburg (2001)


emphasises that what, amongst others, makes a Third Place is the fact that the customers to

some extent are regulars. Due to the regulars’ acquaintance with other regulars and the employ-

ees, an atmosphere of homely comfort and a feeling of belonging are created. Starbucks seems

to be very aware of creating connections to the customers and that loyalty is a key to create and

legitimise the myth of Starbucks as a Third Place. Therefore, Starbucks has deliberately created

the physical setting with the intention of recalling the right atmosphere and thus invite custom-

ers to return. Thereby, the interior and atmosphere in the design of the stores can be argued to

be artefacts which have the purpose of supporting the narrative of the Third Place. The stores are

furnished with comfortable seating places, large armchairs and soft sofas. Besides, lighting and

background music are used to create the right atmosphere, which makes the customers want to

linger (Schultz & Yang, 1997; Appendix 2) – at least this is how the shops appeared originally.

Thompson et al. (2006) point to the fact that the decor of Starbucks expressed creativity. From

this it can be argued that Starbucks set the scene for absorption, conversation and a source of

creativity for the consumers to find inspiration. Thus, it gave Starbucks a personality which ap-

pealed to a more creative audience which also appreciated the intellectual meanings of a place for

substantial conversations. Therefore, these consumers bought into the meanings of a creative

and intellectual community which gave them a sense of status and value to belong to.

Furthermore, Starbucks has been very conscious about the employees’ significance for the cus-

tomer experience and feeling of belonging. Hence, Howard Schultz has felt that the employees’

involvement in the customers plays a decisive role for the atmosphere of the coffee shop and for

the customer to feel comfortable (cf., Quality Coffee and Service, Section 12). It all comes down to

the emotional connection created between the barista and the customer (Schultz & Yang, 1997).

Therefore, the employees are trained in and encouraged to be obliging, smiling, and small-talking

with the customers for them to feel at home (Michelli, 2006).

13.1 Is Starbucks Still a Third Place?During the years, the idea of Starbucks as a Third Place has been impaired which in the following

will be argued to be due to the development of the company. The great majority feel that the at-

mosphere is no longer the same, and that Starbucks has lost their identity of a Third Place:

“I remember going into Starbucks when I was younger, and the entire store smelled of coffee,

there were lots of couches and comfortable chairs for people to gather on, the baristas were

friendly, knowledgeable and always seemed to have a good time. Now, even at my own store, I

walk in and I smell a mix of breakfast sandwiches and chemicals, the coffee menu and aroma

are no longer existing, we have tiny tables and hard chairs, and the baristas (not all, but most)

have horrible attitudes [...] and the interaction between barista and customer isn’t personal or

casual anymore...its mechanical and robotic. It makes me sad.” (Mom_of_3, 2008)


“Does anyone have the long memories of what it once was? You could leisurely chat with a ba-

rista about coffee. The store smelled of coffee. Please don’t make me cry. You’ve GOT to pull

through this. Remember when there used to be a beautiful whole bean coffee menu? That’s

when things really deteriorated when that menu came down and a big picture of a breakfast

sandwich went in its place. Return to all things coffee. Give your employees the labour needed

to learn about coffee. Hire baristas who actually drink coffee and want to engage in coffee

tastings.” (Melody, 2008b)

Increasing customer traffic, noise, the lack of comfortable seating, the lack of obliging baristas,

and the fact that Starbucks has added food items to the menu are some of the common issues

customers have against Starbucks and in general what they feel diminishes the feeling of belong-

ing and relaxation. The idea of a Third Place is to be an extension of the front porch, a place the

customer feels that he belongs to, and where the employees know the names of the regulars (Old-

enburg, 2001). However, it can be argued that the strategy of Starbucks, which has been to locate

most Starbucks stores in busy areas such as close to shopping facilities and workplaces (Schultz

& Yang, 1997), goes against the idea of the Third Place as it may be difficult to maintain the local

spirit and atmosphere of neighbourhood in these areas. In the residential areas, it may be easier

to keep the neighbourhood citizens, but seeing that most Starbucks stores are located in areas

where a high number of different customers are passing through, it can be argued that the stores

lose the feeling of neighbourhood.

What cannot be ignored in the questioning of the Third Place narrative is furthermore the fact

that more and more customers take their coffee to go. In fact, “coffee to go”-customers account

for approximately 70% of the total number of customers (Thompson et al., 2006). Hence, it seems

that the customers come for the coffee but that the majority does not use Starbucks’ coffee

shops to hang out in. This raises the question whether the customers no longer perceive Starbucks

as a Third Place or if the need for a Third Place has diminished. Do customers seek elsewhere to

hang out and meet friends? Nevertheless, the large number of customers rushing in and out the

stores grabbing their coffee to go diminishes the atmosphere of relaxation for those customers

hanging out in the coffee shop. This tendency of customers having their coffee to go is also mani-

fested in the fact that as well Starbucks as the entire industry are experiencing growing sales in

their drive-through services and that more coffee kiosks not providing seating are opened. This

could indicate that customers who buy Starbucks’ products today have other demands of the cof-

fee shops, which can be argued to be more equal to the characteristics of the fast food segment.

Thus, it indicates that efficiency and speed of the service have taken over the agenda in Starbucks

and that the social element of the coffee shop as a stamping ground has receded into the back-

ground. However, on mystarbucksidea.com it is obvious that a large number of customers feel

repelled by the development of Starbucks and that they still wish for Starbucks to be their Third

Place (Deanphil, 2008; Sbx_eluk, 2008; OldDays, 2008).


“Sadly, I believe Starbucks has lost its way. No longer is it a cool, engaging, and interesting

experience. If Starbucks is trying to deliver a fast food experience, then they have exceeded.

The staff seems unmotivated, disinterested, and delivers an experience too close to that of

fast food.” (Otcem, 2008)

Furthermore, it seems that customers choose not to use Starbucks as a Third Place exactly be-

cause Starbucks has moved towards a fast food chain and thus that the atmosphere does not

invite for a Third Place.

“...I have witnessed a drastic decline in the atmosphere at Starbucks. Once a warm, coffee

house style and relaxing place to hang – it has become loud [...] cold and not conducive to

hanging out for long periods of time. Please go back to fireplaces and that warm inviting

place to take a break or catch up with friends. I have taken to drinking my coffee in the car –

not what I am paying a premium for!” (Pinkie, 2008)

Thus, it can be argued that the strategic choices of Starbucks to focus more on speed than ef-

ficiency is undermining the narrative of Starbucks as a Third Place. Some customers feel that

Starbucks is no longer a place to linger and relax because they feel treated like line items as if

Starbucks was a fast food store. Moreover, the quotes above may illustrate the views from disap-

pointed customers who appreciated the meanings of community and belonging. These meanings,

however, can be argued to have disappeared and the question regarding the customers no longer

wanting to be associated with the meanings of the brand – these being the standardised corpo-

rate concept – can be posed. Several interviewees in Thompson’s et al. (2006) analysis express

that they dissociate themselves from Starbucks due to the impersonal feeling which Starbucks

has come to represent. Furthermore, the interviewees state that they find it difficult to associate

a national chain with personality and intimacy as a standardised servicescape does not invite for

personal interaction. They prefer the local coffee shops indicating that these fulfil the role of a

Third Place providing the intimate atmosphere and personal connection between employees and

customers. This implies that the interviewees feel that the personal connection diminishes in line

with the growth of the coffee shop and that the informal feeling of belonging is more difficult to

maintain in a busy coffee shop environment (Thompson et al., 2006).

Many customers also complain about a too high noise level in the stores due to too loud music and

the increased customer traffic (Lindo, 2008; Jimbogpa, 2008). Besides, many customers feel that

the comfortable seating has been replaced with hard wooden chairs similar to interior of the fast

food chains, which does not provide comfortable seating to sit for longer periods (Joejunki, 2008;

Mom_of_3, 2008). The criticism of Starbucks’ development all point to the fact that Starbucks no

longer fulfil the same need of a Third Place.


In line with the questioning of Starbucks as a Third Place, it seems obvious to include the origina-

tor of the term “Third Place”, Ray Oldenburg (2001). He argues that popular chains often claim

to be Third Places when they, according to him, are not. Hence, he implies that large chains have

wrecked havoc upon the term and the real Third Places. Oldenburg (2001) thinks that large chains’

overshadowing focus on profit and their impersonal atmosphere and fast pace destroy the es-

sence of the Third Place. Instead, he describes the best Third Places as smaller, locally-owned and

independent places which can be characterised as “neighbourhood” restaurants. This is further-

more the same experience, which the interviewees of Thompson et al. (2006) have of a Third Place

– that this is apparent in the small local coffee shops where there is room for personal interaction

with the employees. This points to the fact that Starbucks due to their development and size has

moved away from the characteristics of a Third Place. Luttinger and Dicum (2006) also imply that

the narrative of Starbucks as a Third Place does not hold good anymore and they call Starbucks a

“Plastic Place” in stead, also indicating that Starbucks tries to characterise themselves as some-

thing they are not able to fulfil. Thus, it can be argued that is has been too difficult for Starbucks

to embrace the narrative of the Third Place at the same time as they wish to cater to the customer

segment which requires efficiency and speed of services. Seeing that these two missions require

two different approaches to the serving of coffee and the design of the coffeehouse, they are

argued to conflict. Therefore, it can be argued that Starbucks has exhausted the meanings as a

Third Place in order to comply with the grab to go segment (Appendix 1; Kowalski, 2006).

Therefore, everything points to the fact that Starbucks is no longer a Third Place. However, Star-

bucks tries to maintain that they are. Thus, the idea of the Third Place is strongly connected to the

brand as Starbucks in literature and articles is almost always referred to as a Third Place, even to-

day. Furthermore, customers talk about Starbucks which used to have the status of a Third Place

and they wish for them to go back to being a Third Place where baristas spend time having a per-

sonal conversations across the counter, and where the barista cared about the coffee making and

hence did not treat orders like line items (Hopetobegreat, 2008; Mom_of_3, 2008). Furthermore,

it can be argued that Starbucks led by Howard Schultz still brands and communicates Starbucks

as a Third Place and holds on to this narrative (Appendix 1; Starbucks, 2008c). However, Starbucks

cannot live up to being a Third Place leaving the narrative of being a Third Place less trustworthy

today (Luttinger & Dicum, 2006; Appendix 1; Kowalski, 2006). Thereby, the feeling of belonging to

a local Third Place has disappeared to some extent.

14. The Narrative of Corporate Social ResponsibilityCorporate Social Responsibility is a central theme in Starbucks’ business model and identity. The

way they have chosen to conduct their business reflects that being a responsible company takes

up a greater part of the agenda, not only for the company but also for society in general. This

responsibility manifests itself in a commitment to the environments and communities in which


Starbucks operates, meaning that Starbucks through the way they conduct their business wants

to contribute to a positive social, environmental and economic development. Thus, Starbucks is

conscious about establishing sustainable and economically secure working conditions for the farm-

ers, providing employees a great working place, and to minimise the company’s environmental im-

pact (Starbucks, 2008e). It is a narrative, which is constantly emphasised and Starbucks is open to

making new and environmentally friendly initiatives in their product development (Michelli, 2006;

Schultz & Yang, 1997). Furthermore, Starbucks is engaged in several organisations such as Saving

the Children, CARE, and Eartwatch (Starbucks, 2008e).

Starbucks acknowledges the benefits of being a socially responsible company as it can be worth

it to care about social, economic and environmental manners. Starbucks states that consumers

demand more from a producer today than just to provide products. They want companies to care

about the environment and to take action in matters they can improve (Starbucks, 2001). Thus,

it can be argued to be a threshold of today to be socially responsible. Contributing to better con-

ditions whether this being employee working conditions or environmental sustainability, it gives

the company something valuable in return. Not only does it provide more engaged and motivated

employees and more sustainable and secure supply conditions, the story told about the socially

responsible company also contributes to creating a beneficial image of Starbucks as a caring and

responsible company. Therefore, Starbucks sees their socially responsible actions as investments

(Starbucks, 2001).

14.1 The Good Place to WorkWhen reading about Starbucks and their concept one cannot ignore the constant story told about

how good a place Starbucks is to work at. In general, Howard Schultz is very conscious about the

conditions of the employees as he is aware of the fact that ensuring the well being of the employ-

ees and to make employees feel a sense of identity with Starbucks will be in the advantageous

for the company:

“Treating employees benevolently shouldn’t be viewed as an added cost that cut into profits,

but as a powerful energizer that can grow the enterprise into something far greater than

one leader could envision [...] If people relate to the company they work for, if they form an

emotional tie to it and buy into its dreams, they will pour their heart into making it better.”

(Schultz & Yang, 1997:6)

Therefore, Starbucks’ social responsibility towards the partners is closely related to Howard

Schultz’s caring character and is one of the predominant reasons for Starbucks being The Good

Place to Work.


In Starbucks the employees are referred to as partners, making the employees feel as an im-

portant part of the company and the experience delivered to the customers (Schultz & Yang,

1997). Furthermore, it encourages the employees to not just perceive their job at Starbucks as just

another job, but to engage in their role. This is also why Schultz in October 1990 introduced the

Bean Stock to all employees, changing their title from employee to partner. Schultz wanted the

employees to feel the success of the corporation too and the Bean Stock enabled the employees

to set the value of the company themselves. Their hard work would have a direct influence on the

stock value and hence link shareholder value with long-term rewards for the employees encourag-

ing them to devote themselves to Starbucks (Schultz & Yang, 1997).

Starbucks offers the partners a career, which provides opportunity to advance. Social security is

provided when working more than 20 hours a week also for the cohabitating partner no matter

sex. Being medically insured is not the norm in contemporary American corporate culture, where

usually only the full-time workers are eligible for this type of incentive (Marques, 2008). Also the

minimum wage is higher than the industry average (Schultz & Yang, 1997).

Additionally, Starbucks is certified as age friendly signifying that partners above the age of 50

can have special retirement positions where their age is taken into account. Also the extensive

training programme, where all partners must undergo a 28-hour course in coffee history, firm

philosophy and coffee making, and the opportunity to have a saying in decision making seems to

be a recurring motif in articles, books, and Starbucks’ own homepage (Starbucks, 2008g; Michelli,

2006; Bundgaard, 2004; Lindstrøm, 2003; Daehne 1994; Locascio, 2004). All the benefit initiatives

seem to have a positive spill over effect on employee turnover, which is far lower than the fast

food industry in general (Pendergrast, 2001) and that the health plan makes a huge difference

in attitude of the partners – as Schultz argues; “When a company shows generosity toward them

[the partners], employees show a more positive outlook in everything they do.” (Schultz & Yang,

1997:173).

Marques (2008) refers to Starbucks as a company which demonstrates spiritual behaviour, which

is broadly defined as a company which mixes capitalism with social responsibility (Serwer &

Bonamici, 2004) – meaning that they create win-win situations for both suppliers, partners and

customers. For instance, treating the partners with medical insurance make more dedicated em-

ployees who make better coffee resulting in happier customers as well as Starbucks benefit from

more loyal customers and lower employee turnover. The narrative about how Starbucks cares for

the employees is intimately connected with the narrative regarding Howard Schultz and that the

partners have benefited from Schultz’s difficult circumstances when he grew up. Howard Schultz

did not want the partners and their families to suffer like he did when he was young, especially af-

ter his father broke his ankle disabling him from working, and with no medical insurance his family

was in deep financial trouble (cf. Howard Schultz, Section 11): “I will never forget that episode”, says


Schultz. “I never want that to happen to our employees.” That’s why thousands of part-time workers

have full medical benefits” (Serwer & Bonamici, 2004:4).

The way Howard Schultz perceives and treats his employees depicts him as a helper15 wanting to

give them better conditions than what was the threshold of the American labour market in the

early 1990s and furthermore that the partners should not be exposed to the same difficulties in

life as his family experienced. This caring approach to the employees depicts Starbucks as a com-

pany which does not care about profit at all costs, but that they are willing to spend a little extra

to secure a good working environment – this attaches meanings to the brand. It may be difficult

to deduce exactly how people apply the meanings of Starbucks genuinely caring about their em-

ployees but it can be assumed that the meanings contribute to create an overall positive image

of Starbucks which consumers want to buy into and support. The narrative of The Good Place to

Work also has the purpose of increasing commitment internally in the organisation, hence brand-

ing the company to attract new partners.

14.2 Starbucks Still Strives to be the Good Place to WorkStarbucks tries to maintain the narrative of being the Good Place to Work by keeping focus on

the conditions of the employees and thus distancing themselves from similar workplaces by in-

troducing initiatives as mentioned above (cf. The Good Place to Work, Section 14.1). The fact that

Starbucks’ caring approach to the employees has resulted in the company achieving a rank as the

seventh best place to work by Fortune in 2008 (Fortune, 2008) can be argued to be very unusual

for the industry as Starbucks is the only one within the industry to be ranked. This shows that

employee commitment and care is still high on the agenda. Furthermore, it strongly supports and

strengthens the narrative about being The Good Place to Work.

However, Howard Schultz is not blind to the vulnerability of this narrative and how challenging it

is to make all employees feel respected and appreciated. Especially the expansion of the company

is posing a challenge as the increased size of the company creates a distance between the man-

agement and the employees. Howard Schultz acknowledges that it has not always been easy to

comply with the intention of treating employees with dignity and as individuals. He is furthermore

aware of how damaging it can be to lose the dedication of the employees:

“Sometimes we lose sight of that [the passionate devotion of our employees] at Starbucks [...]

But I know, in my heart, if we treat people as a line item under expenses, we’re not living up

to our goals and our values. Their [the employees’] passion and devotion is our number-one

competitive advantage. Lose it, and we’ve lost the game.” (Schultz & Yang, 1997:138)

15Fog et al., 2004


However, the fact that employees are not always treated with the respect and dignity, which

Starbucks intent to and tell in their narrative is not passed unnoticed. Thus, Starbucks has not

been able to avoid negative publicity in the media and criticism from their own employees – telling

a different story of being a Starbucks employee and staining the initial narratives developed by

Starbucks. For instance former employees who used to be devoted to Starbucks and the visions of

Howard Schultz indicate that the development has changed Starbucks’ attitudes towards the em-

ployees. Thus, to the former employees, Sherri Miller and Kevin Knox, Starbucks’ commitment to

the employees is perceived as a marketing gambit (Pendergrast, 2001). They feel deceived. Sherri

Miller puts it like this: “There’s a lot of talk about treating employees with ‘dignity’ at Starbucks,

but the reality often isn’t there.” (Pendergrast, 2001:304). Sherri Miller and Kevin Knox criticise

Starbucks for focusing on profit and the bottom line at the expense of the people employed. They

point out that there is no soul in Starbucks’ narrative about people being the most important in

the company (Pendergrast, 2001). This further fuels the narrative of Starbucks as a corporate gi-

ant using predatory business practises striving for profit.

Other criticism evolves in particular around Starbucks’ underpayment of the employees. One story

which has earned a lot of press coverage in 2008 weakening the narrative of being a Good Place

to Work has been the trial regarding Starbucks paying the supervisors with tips earned by the ba-

ristas. One barista sued Starbucks for giving the supervisors the tips which were predestined the

baristas. The superior court in San Diego estimated that Starbucks should pay back the baristas

$86 million plus interests and thus the court favoured the barista (BBC, 2008). Also in a trial in

2002, Starbucks was sentenced to pay back their partners who were entitled to $18 million for

overtime work (Ringkøbing, 2002). These stories and a consensus about the partners being paid

too low wages weaken the narrative of Starbucks being the Good Place to Work. The wage may be

above the quick service industry standards but it is still categorised as low and many employees

state that it is hard to make a living on this wage (Milan, 2008; Weca, 2008; UrbanVoy, 2008;

Fidm22, 2008). Despite the many benefits Starbucks ensure their employees, the fact that the

employees do not feel that they are paid what their job is worth may result in an increasing em-

ployee turnover which may be harmful for the overall Starbucks Experience. Starbucks has previ-

ously had a very low employee turnover compared to the industry, which can be argued to be due

to a high level of satisfaction among the employees. Howard Schultz has stated that Starbucks’

low employee turnover ensured the high quality and the Third Place – as regulars are more likely

to appreciate the ambience if the employees are not constantly replaced (Schultz & Yang, 1997).

However, as Starbucks are not able to satisfy their employees, the employee turnover is likely to

increase and hence Starbucks may attract less qualified candidates, which in the end affects the

Starbucks Experience. Thus, it seems that Starbucks’ intention of attracting employees who are

devoted to coffee and Starbucks has been more difficult to fulfil during the years seeing that the

wage attracts less qualified and less devoted employees. The less qualified employees further-

more distance Starbucks from the meanings of quality of the service. As many customers imply


that the employees seem unknowledgeable, young and not committed, meanings associated with

a lower service level are created – lower quality and lesser emphasis on the experience surrounding

the purchase.

Despite the criticism it is possible to find examples of satisfied employees on mystarbucksidea.

com which underlines the fact that many employees like to work at Starbucks (Miss_Paris, 2008;

Runfar1, 2008). Examples of Starbucks doing something extra for the employees are also given.

For instance on mystarbucksidea.com a mom of a former barista expresses how grateful she is

for all what Starbucks did to her son, while he was sick. Not only did they treat him with respect

and as a valued employee even though he could not work, Starbucks also kept paying him while he

was hospitalised and took care of all medical costs. This attitude towards the employees empha-

sises Starbucks’ caring approach and hence illustrates that it can be worth it for Starbucks to do

something extra for the employees. Furthermore, Starbucks takes the time to reply to the mom’s

message:

“Like the others on this post I am sorry to hear of your loss. As a father of two myself, I can

only begin to imagine what that might have been like. I am proud indeed that as a company

we made at least one aspect of that tragedy a little bit easier. Though no organization is

perfect, I can tell you that genuine concern for our partners is emphasized in a more real and

tangible way than at any other company I’ve ever worked at. I do not see that philosophy

changing.” (Sbx_MATT, 2008)

The personal reply from the head office and that Starbucks in general replies comments posted

on mystarbucksidea.com send a signal of an attending and caring company. However, Starbucks

only replies to comments when they feel it is necessary to meet critique and establish what they

stand for.

Even though the narrative about being the Good Place to Work can be argued to have suffered

from the recent trial and the criticism of the low wage, some stories told on mystarbucksidea still

emphasise that Starbucks is a good place to work:

“There is a whole side to this company customers don’t see. It’s actually pretty simple. We do

it because we love it. We really don’t make that much [...] I work at Starbucks because I love

what I do.” (Mariel, 2008)

Thus, due to this statement and a lot of others on mystarbucksidea.com it is possible to argue

that many employees feel that Starbucks is a good place to work despite narratives telling another

story as well. Furthermore, the fact that Starbucks has been ranked on the top ten best places to

work by Fortune in 2008 does in particular fuel the narrative of Starbucks as a good place to work

(Fortune, 2008). Thereby, the breeding ground for the narrative to be trustworthy is still intact.


Publicly, Starbucks has created the image that they are a company for which the conditions of the

employees are very important. Furthermore, Howard Schultz gives the impression that employ-

ees are listened to and involved in the actions of the company (Schultz & Yang, 1997). This all por-

tray Starbucks as a good place to work, but the reality of discontent employees and the media’s

increasing attention towards issues where Starbucks does not live up to the image, prick a hole

in the narrative. However, it can be argued that the narrative still circulates but that bad publicity

and unsatisfied employees create contra-narratives as well.

14.3 Fair TradeAnother narrative which seems to be emphasised when reading about Starbucks’ social responsi-

bility, is the story of Fair Trade and how Starbucks set the industry standards in that area of busi-

ness conduction. Starbucks began purchasing Fair Trade certified coffee in 2000. This certificate

secures that farmers receive a guaranteed minimum price for their coffee, a price that is higher

than in the conventional coffee market (Allison, 2006). It has even been stated that Starbucks

pays even higher prices to the farmers than the Fair Trade certificate requires (Hansen, 2001).

It is recognised that the majority of the farmers who produce coffee in the Third World countries

live in poverty and that their living standards are low. As a company like Starbucks decides to buy

Fair Trade certificated coffee, they signal that they try to fight this poverty. Furthermore, Star-

bucks portrays themselves as a company, which does not pursue low coffee prices at the expense

of the farmers’ living standards. Thus, they care about the social and economic consequences of

buying coffee in these communities. The fact that Starbucks shows this responsibility towards

the farmers and communities can be argued to distance them from the mainstream and the im-

age of Starbucks as a corporate titan. It brands Starbucks as a company, which will not let the

farmers live in poverty while they benefit from it.

It can be argued that the fact that Starbucks is a socially responsible company is not only about

caring for the conditions for the farmers. It is just as much about the fact that it sells products to

show this social responsibility towards the communities. Today, there is a tendency towards many

customers valuing the fact that they consume products which have been produced and traded

under orderly conditions and that companies show a business model which is not only about mak-

ing profit (Benjc32, 2008; Twen_01, 2008). Thereby, as Starbucks engage in securing the farmers

a good and secure working environment, meanings of social responsibility are created. Thus, they

create meanings of not wanting to conduct business at the expense of the farmers in order to gain

the highest possible profit. The fact that Starbucks carefully selects the farmers and the beans

they use in their coffee furthermore distances them from an image of being a mainstream con-

cept of mass produced coffee. This supports the meanings of the small feeling of the brand and

may apply a luxury feeling as well.


Simon (Appendix 2) states that after 9/11, it was obvious that some people did not like the Ameri-

cans that much – a fact that the Americans did not like – and some of the wanting to disassociate

from the American culture was related to the issue of globalisation. So by buying fairly traded

products, the American consumer could signal that he or she was a person who cared about what

was going on, and that he or she was involved in global issues. By putting the Fair Trade coffee

right at the entrance, Starbucks is sending a message about global involvement, which the con-

sumers can apply in their projects of acting politically correct (Appendix 2). Additionally, acting

politically correctly by consuming Starbucks can also be done on a micro level. Starbucks seems to

have understood that the Americans feel bad about their racists past and had for instance formed

a joint venture with former Los Angeles Lakers star Magic Johnson to open stores in lower-income,

more diverse communities around the US (The Wall Street Journal, 2007). Moreover, Starbucks

have opened up shops in largely African American and Latino neighbourhoods such as Harlem.

Simon (Appendix 2) argues that these initiatives are done to allow whites to dissociate from rac-

ism: “If you buy a product from a company that pursuit diversity […] you are washed from the sins

of racism, you’re innocent by association.” (Appendix 2:3). This also signals that Starbucks is open to

diversity within social class and race.

In the early days of Starbucks being a socially responsible company differentiated them from the

coffee industry. Therefore, at that time when buying Starbucks’ coffee, the customers transferred

the meanings of being engaged in others than themselves and furthermore that they were broad-

er minded and enlightened about what was going on in the world – thereby indicating that the

consumers applying the Fair Trade meanings in their identity projects brand may have belonged

to a higher level of society. This was especially apparent in the early days of Starbucks where Fair

Trade was a new concept and Starbucks was pioneering in this area. Moreover, being Fair Trade

expressed that the consumers had taken a stand on how Starbucks conducted business which

contrasted the mass produced products where the underlying business procedures were not a part

of the selling proposition and hence not based on individual stands. In comparison Starbucks came

to appear as a differentiated concept not only focused on the product but also the supply chain.

Therefore, buying Starbucks represented consumers making an individual choice breaking with

the conventional norms of conducting business and drinking coffee. It can be argued that these

meanings of individuality and taking a stand have appealed to a higher educated consumer equal-

ling the post-modern consumer.

14.4 Development of the Fair Trade NarrativeThe Fair Trade narrative has fallen victim to substantial critique. It is debatable whether the cri-

tique has been righteous or not. Nevertheless, especially co-branding from the media has harmed

the trustworthiness of Starbucks’ “Social Responsible” narrative.


In 2001 the prices of raw coffee declined drastically threatening the livelihood of the farmers in

the Third World countries. During three years the price of raw coffee beans declined from DKK8 to

3,50 a pound and the farmers were producing with deficit. Concurrently, the consumers expected

lower coffee prices in the supermarkets and the coffee shops, but this did not happen. Instead

Starbucks, and other coffee shops, prospered from the low raw products and in 2001 Starbucks’

profits increased with 41% due to the low coffee bean prices (Hougaard, 2001; Hansen, 2001). Be-

ing a big company and at the same time expanding rapidly as well – a growth facilitated among

others by the low coffee prices – resulted in strong reactions from NGOs who condemned Star-

bucks for making profits at the expense of the poor farmers in the Third World. The critique of

Starbucks harmed the narrative of being a Fair Trade company. Even though Starbucks in fact paid

their suppliers more than the average and the fact that they did not have a chance to control the

coffee prices, Starbucks got exposed as being the big greedy corporation who gained success at

the expense of the impoverished (Schultz & Yang, 1997; Hansen, 2001, Ringkøbing, 2002). Another

narrative harming the Fair Trade image tells how Starbucks tried to block the Ethiopian coffee

producers to trademark three types of coffee, resulting in lower prices and exclusive trading with

Starbucks – this is at least what Oxfam claims. NCA [National Coffee Assosciation] has rejected

the claim. However, the consumer has been left in doubt about Starbucks’ good intentions (BBC,

2006).

What is furthermore contradicting with the narrative of Social Responsibility is that the coffee

chain has been criticised for not buying enough Fair Trade Coffee. Only 6% of Starbucks’ total

coffee purchase is based on Fair Trade coffee (Ringkøbing, 2001; Appendix 2). Hence, complaints

about Starbucks not buying enough Fair Trade coffee circulate and are expressed several times

on the mystarbucksidea.com where customers ask of Starbucks to be more socially responsible

within this area:

“I was shocked to find out that only about 6% of your coffee is actually fair trade. You have

made an entire corporate image around what a “good guy” you are in the world. It’s time you

walked the talk and improved that percentage. Otherwise, you’re starting to smell a lot less

like fresh brewed and more like the stagnated burnt corporate coffee guys.” (Dulanie, 2008)

In general, customers do not like Starbucks oppressing the farmers and they expect of a big com-

pany as Starbucks to act socially responsibly and thus provide the farmers orderly conditions (Cm-

rced, 2008; Benjc32, 2008; Twen_01, 2008). The danger which Starbucks is facing is to be perceived

as corporate titan who exaggerates the image of them trading fairly. Thus, many customers feel

deceived and that Starbucks uses their low percentage of Fair Traded coffee as a marketing gam-

bit to make customers perceive them as socially responsible. This makes Starbucks’ narrative of

being conscious about the farmers’ conditions less trustworthy.


Despite the criticism, the reality is that Starbucks is one of the largest buyers of Fair Trade coffee

in the US (Michelli, 2006; Watson, 2006). However, though it may be the case that social respon-

sibility is highly placed on Starbucks agenda, the perception amongst customers of Starbucks not

doing enough to deserve the “socially responsible”-label may overshadow the reality and make the

narrative be less glamorous. Thus, the attacks on the Fair Trade narrative have damaged the initial

narrative of Starbucks being a socially responsible company. Therefore the meanings attached to

the brand may not be the same anymore, and the customers who bought into the values of the

Social Responsible firm, identified with it, and applied it in their identity project, may not find it

as useful and trustworthy as before. Seeing that being socially responsible during the years has

become industry standards, thus that most coffee shops trade fairly traded coffee, the meanings

of Fair Trade are not reserved for Starbucks making them distinct and more responsible than the

competitors. Additionally, before when the Fair Trade concept was not that widespread it can be

argued that it expressed that the consumer took an individual stand when consuming it. Choosing

Starbucks is not based on an individual choice as the meanings of being Fair Trade are embedded in

the competing concepts as well. The Fair Trade narrative can therefore be argued to move towards

rigidity. In line with this it is assumable that the people originally buying into the Fair Trade narra-

tive, when this was strongly attached to Starbucks alone, to a lesser degree find the meanings of

Fair Trade applicable to their identity projects seeing that the concept has become a standard and

hence mainstream. This is further strengthened by the increasing untrustworthiness of the narra-

tive due to the contra-narratives pointing to the Fair Trade narrative being blown up to something

it can not fulfil. Thus, the enlightened class does not want to put op with something it perceives

as fake.

15. What has Become of the Starbuck Experience? What has become conspicuous to us through the investigation of the narratives, which Starbucks

has intentionally tried to communicate during their 20 years in business, is that these narratives

still seem to be told by Starbucks. From the beginning it seems like Starbucks’ storytelling is

formed around the Starbucks Experience. Thus, the narratives of the American Dream, Quality,

the Socially Responsible Company and the Third Place all together have been told to strengthen

the Starbucks Experience. Thereby, it can be argued that everything Starbucks does is intended to

ensure the customer having a nice and comfortable experience while buying a high quality coffee

beverage. This intention has not changed through the years and the Starbucks Experience still ap-

pears to be the central theme in Starbucks narratives. To keep the Starbucks Experience intact, it

seems as though Starbucks more or less has stood by their original narratives. However, the many

comments from customers, employees, and the media give the feeling that the Starbucks Experi-

ence is not that intact after all – a feeling which Starbucks is not shy to admit themselves. Howard

Schultz expresses it like this:


“Over the past ten years, in order to achieve the growth, development, and scale necessary to

go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of

decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and,

what some might call the commoditization of our brand.” (Appendix 1)

In this statement, Howard Schultz opens up to what may be the root cause for the brand’s prob-

lems. Starbucks has made some strategic decisions during the years which may have seemed right

at the time they were made but which in the long run have been harmful to the value of the brand

and thereby the Starbucks Experience – at least when arguing that these decisions have been

made at the expense of the brand’s value and thereby without regards for the meanings of the

narratives. Thus, it can be argued that Starbucks has not developed the narratives in line with the

development of the company. Thereby, the narratives tell a story of Starbucks which the brand no

longer delivers and hence a gap between the narratives and what is delivered has emerged.

As we argue that Starbucks’ pursuit of growth and the wish of being the dominating coffee brand

within the industry conflicts with the narratives they tell, the following will illustrate how Star-

bucks’ strategic choices have influenced the narratives, the perception of the brand, and how they

have provided a breeding ground for contra narratives to be created.

15.1 Standardisation and Expansion StrategyStarbucks’ strategy has been to grow rapidly in order to capture the market (Schultz & Yang, 1997;

Nocera, 2008). Whereas competitors like Peet’s in the late 1980s and early 1990s seemed content

to be a regional brand, Starbucks’ intention has been to become a national brand and to make spe-

cialty coffee accessible to all American customers (Luttinger & Dicum, 2006). Due to high revenues

and the Americans’ enormous interest in specialty coffee, Starbucks has been able to achieve this

goal, increasing the number of coffee shops rapidly across the US. This aggressive expansion has

changed the character of Starbucks during the years because running a business of less than 100

shops, which they did in the late 1980s, is rather different to running more than 11.000 which they

do today.

With the high number of shops and a much higher number of employees (170.000), it has been

necessary to introduce systems and processes to secure that the standards are kept the same in

all coffee shops across the country (Appendix 5; Schultz & Yang, 1997:204). This has resulted in a

high level of standardisation regarding uniformity in product range, shop design and service. And

the Starbucks concept has been standardised to ensure customers always to have the same expe-

rience in every Starbucks coffee shop. However, it can be questioned whether the initial customer

of Starbucks is appreciating this uniformity. Furthermore, it can be argued that the Starbucks

Experience has suffered from the aggressive expansion and the standardisation across the shops


due to the fact that the narratives Starbucks tell are created to picture Starbucks as a company

built on small-business values which are difficult to comply with considering the size and behav-

iour of a large company. Some customers feel that the streamlining of the concept has taken the

soul out the Starbucks brand and many criticise Starbucks for moving towards becoming “just

another chain” (Krissibd, 2008; Chadbb26, 2008). This is indicated below:

“They [Starbucks] expanded rapidly, lost vision, created different drinks and foods, and be-

came a chain that was not what they used to be. From the employees, to the cleanliness

and even the quality of the drinks/food, Starbucks has lost touch with their market and the

consumer has paid.” (Prosen, 2008)

Now when the situation looks grave Howard Schultz seem to have opened his eyes for what is

going on with his business. He is now aware of how the perception of Starbucks is changing and

how customers to a larger extent perceive Starbucks as a chain store concept in line with fast food

stores (Appendix 1; Nocera, 2008; Smale, 2008; Susie C, 2008; Mathguy, 2008). Thus, Schultz in-

dicates that a risk of the decisions they have made during the years is that Starbucks has become

mainstream and commoditised in the minds of the customers (Appendix 1). Besides the high level

of standardisation, less committed employees and an increased focus on efficiency can be argued

to be reasons for Starbucks being perceived as a chain store concept. Furthermore, many feel that

the atmosphere in Starbucks’ coffee shops has turned into a fast food atmosphere, thus, that

they have lost their way (OldDays, 2008; Otcem, 2008; Mathguy, 2008).

The aggressive expansion and high level of standardisation can furthermore be argued to have

distanced Starbucks from the small-business atmosphere, around which they have intended to

build their brand and narratives. The fact that Starbucks originally has been able to live up to

the small-business atmosphere is not called into question. However the fact is that Starbucks

has tried to maintain this feeling while focusing on growth, and becoming the most recognised

coffee brand has resulted in the surroundings questioning the genuineness of the brand’s narra-

tives. Hence, many have perceived Starbucks’ narratives as a marketing gambit intended to cover

up Starbucks real identity as a corporate titan (Thompson et al., 2006; Thompon & Arsel, 2004;

Potrerohillman, 2006; Ensenadajim, 2008). This has created a negative picture of Starbucks and

they are criticised for being an ”evil empire”. Thus, it can be argued that a contra narrative to Star-

bucks’ narratives has been created – a narrative, which questions the intentions of Starbucks of

maintaining the small-feeling atmosphere while growing so aggressively.

15.2 Efficiency FocusAs the competition has been intensified by fast food chains introducing specialty coffee, Star-

bucks has focused on making their business and operations effective. The consequence has been

that many customers feel that the level of service has declined, as it seems that Starbucks has


shifted focus from the experience of the customer to an enhanced speed of the service, hence, to

have customers move faster through the line. However, customers find it difficult to see how this

focus on speed harmonises with Starbucks’ narrative of being a Third Place and that the brand is

build around quality and customer experience. To a larger extent, customers become line items

and it is not without reason that a narrative of Starbucks as a mainstream fast food chain is cre-

ated (Otcem, 2008; Mathguy, 2008). The distance between Starbucks and the fast food restau-

rants diminishes, which is further strengthened by Starbucks’ introduction of automated coffee

machines. The purpose of these coffee machines is to make the coffee-making effective, but at

the same time the automation can be argued to puncture the original narrative of quality and the

authentic Italian feeling. Customers have always valued the handmade espresso, which Starbucks

introduced to the Americans and Starbucks has always made a virtue of making the perfect cup

of coffee. The decision of automating the coffee making has probably been made to meet the

competition from the fast food chains but in turn it has been harmful to genuineness of the brand.

Thus, it can be argued to have confused the perception of Starbucks and what they try to be.

A consequence of the introduction of the automated coffee machines is furthermore that the role

of the barista has decreased – the barista who usually has been a cornerstone in the Starbucks

Experience. Thus, the fact that the importance of the barista has diminished due to efficiency

has damaged Starbucks’ emotional connection with customers. Howard Schultz has always em-

phasised that the people employed in Starbucks was the competitive advantage of the company

(Schultz & Yang, 1997; Appendix 1). Thereby, he has pointed out that good service and obliging

employees who can professionally guide the customers in their coffee purchases has been the fac-

tor creating the emotional connection with the customers, which can be argued to be the power

of the Starbucks brand (Schultz & Yang, 1997:245). Therefore, Starbucks has focused on hiring

the right people who are passionate about coffee. However, as Starbucks has grown and become

widespread, it has been difficult to maintain the same level of control of the employees ensuring

that people who are hired are dedicated to providing customers with the Starbucks Experience.

Both media and customers have criticised Starbucks for hiring less committed employees as they

feel that it has diminished the Starbucks Experience that Starbucks has loosened the control of

the training and hiring of employees (Nocera, 2008; PJDubs, 2008; UKCoffe, 2008).

The criticism of Starbucks is focussed on the fact that the emotional connection between cus-

tomer and barista more or less has disappeared both because the barista no longer has the time

to small-talk but also because the barista no longer possesses the engagement and commitment

to get involved with the customers. This takes away the meanings attached to being served by a

real barista who would be enthusiastic about coffee and his job. Thus, this can be argued to ques-

tion the narratives of quality and authenticity as the Starbucks Experience is built on enthusiastic

baristas willing to engage in the customers.


15.3 Change in the MeaningsThrough the analysis of the narratives, it has become evident that a lot of customers feel ag-

gravated by an uncertainty of what Starbucks stands for. Starbucks’ narratives and history imply

one thing whereas their actions imply another. From their emergence, Starbucks’ intention seems

to have been to create an alternative to the large, mainstream and mass produced coffee brands

and thus to provide customers an alternative approach to coffee (Luttinger & Dicum, 2006; Koehn,

2001; Schultz & Yang, 1997). Hence, with their narratives and ”word of mouth” approach to mar-

keting, Starbucks has tried to create a feeling of authenticity as a neighbourhood coffee shop

through small-business values (Schultz & Yang, 1997). This feeling, they have tried to hold on to

despite their growth.

When investigating Starbucks one gets the impression that Starbucks used to be a brand which

the customers wanted to be associated with due to the meanings embodied in the brand. How-

ever, the development of the narratives and thereby the meanings point to the fact that the

Starbucks brand no longer has the same status in the minds of the consumers. The meanings of

the Starbucks brand have lost their distinct character. It is assumable that initially the narratives

included meanings of possessing connoisseurship, having passion for the coffee, Italian traditions,

Italian atmosphere, being something distinct, exclusive and revolutionising. In contrast the mean-

ings today can be summarised to include more standardised meanings resulting in a commoditisa-

tion of the Starbucks brand. Furthermore, as Starbucks has tried to appear as a small neighbouring

coffee shop while actually acting opposingly, has resulted in the brand losing its credibility and

provided a breeding ground for contra-narratives to emerge. Therefore, as Starbucks hold on to

their old narratives, meanings of Starbucks being a corporate titan are created as the consumers

who valued the original meanings may perceive these as a cover for what Starbucks really is.

It was earlier mentioned that the specialty coffee industry has undergone changes since the con-

cept was first introduced and it has thus become more rigid. This can be argued to have rubbed of

on Starbucks’ meanings. For instance the fact that a lot of players have entered the industry and

that specialty coffee and specialty coffeehouses are common concepts in the American culture

today are arguments for Starbucks losing the distinct meaning of being revolutionising and bring-

ing the Americans something new. Starbucks entered the American culture as an identity brand

which meant that the brand represented more than just being the commodity coffee – they cre-

ated a new concept and a new way of consuming coffee attaching coffee with meanings. Hence

Starbucks coffee was not solely bought because of the coffee as a mere necessity but as well due

to the identity the consumer was transferred in the purchase. It was mentioned earlier, that the

specialty coffee concept and Starbucks in particular was regarded a luxury good in the early 1990s

– thus, it can be argued to be a way of expressing class and cultural insight to drink Starbucks cof-

fee. It was a distinct product differentiating strongly from the conventional coffee known at that

time.


Additionally, the paradox of Howard Schultz’s wish to make specialty coffee accessible to all Amer-

icans, is that it has resulted in that the specialty coffee concept has become a common property

for the American consumer. This is also the case for Starbucks. It has damaged the identity of be-

ing something distinct – an identity the customers may have bought into originally. Thereby the

meanings are no longer the same as when Starbucks emerged and the chain is neither a part of

that buzz it used to be due to the brand becoming mainstream.

15.4 Can You Grow Big and Stay Small?Considering the strategy which Starbucks conducts, it can be questioned whether this can really

be carried out; is it possible to grow big while trying to stay small? In his book, Pour Your Heart Into

It, Howard Schultz poses the question himself how to balance the values of the brand with the

wish of growing: “Can a company double and even triple in size but stay true to its values? How far

can you extend a brand before you dilute it?” (Schultz & Yang, 1997:197)

This quote indicates the vulnerability of the brand – the complex of staying small together with

the wish of increasing profit, hence, the danger of selling out to become big. However, Howard

Schultz argues that it is possible to combine the two just that it takes a lot of effort. He further

states that Starbucks is up against the perception which most people have of large companies

perceiving these as capitalists only focused on profit (Schultz & Yang, 1997). Analysing the image

of Starbucks today it seems as if Starbucks to a large extent has fallen into the trap of becoming

a large company at the expense of the values of the brand even though Howard Schultz was so

focused to avoid it. And another picture has also been drawn of Howard Schultz who is not only

driven by emotional care for his company but just as much to gain shareholder value. It seems like

Starbucks has not truly recognised the challenge of bringing the narratives into line with the busi-

ness strategy. In other words, Starbucks’ narratives picture the brand as one thing whereas the

strategy pictures them as another. They say they are something, which they cannot deliver. When

customers sense this discrepancy and conflict between the narratives and what is delivered, the

brand loses authenticity.

15.5 Authenticity The great majority of the customers expressing their opinions about Starbucks publicly ask for

Starbucks to go back to the original Starbucks. Thus, it can be argued that they ask for the Star-

bucks which was authentic and which was able to deliver what was promised through the narra-

tives. Starbucks has undertaken a lot of new initiatives which have changed the concept. Even

though many customers have embraced these initiatives, such as Starbucks providing access to

Internet in the coffee shops, the comments on mystarbucksidea.com give an impression of cus-

tomers wishing for Starbucks to keep to their core competences; the high quality coffee and the

Starbucks Experience.


According to the theory, authenticity, amongst other things, exists when a brand is able to deliver

what it says it is and promises to deliver and in the case of Starbucks through the narratives (cf.

Authenticity, Section 5.1.7.5). The fact that Starbucks has made decisions which question their

ability to answer for what they tell through the narratives, can therefore impair their authenticity.

This makes the brand untrustworthy. On the contrary, customers and media seem very certain

that what Starbucks used to be equalled authenticity, hence the brand was able to deliver what

was promised. From this, authenticity seems to be very important; hence that Starbucks must be

able to live up to what they say they are to be perceived authentic. However, it can be questioned

whether Starbucks has ever been able to live up to what they say they are.

Starbucks is built on Howard Schultz’s experiences with the Italian coffee culture, thus, the idea of

Starbucks was to re-create the atmosphere and coffee of the Italian coffee culture. Even though

the foundation of Starbucks is to be found in Italy, it can be questioned whether Starbucks is

authentic Italian. In the early days of Starbucks, even before Howards Schultz’s coffee shops had

the name Starbucks, the intention was to re-create a coffee shop designed to replicate an Italian

coffee shop as closely as possible and to be true to the authentic Italian espresso bar experience.

Thus, the coffee shop had the Italian name, Il Giornale, and was very true to the appearance of

an Italian coffee shop (Koehn, 2001). However, as soon as the coffee shops changed the name to

Starbucks and Howard Schultz started compromising the spirit of the Italian coffee to comply

with the demands of the American consumers, it can be argued that Starbucks started moving

away from being authentic Italian. For instance, Starbucks started compromising with the Ital-

ian espresso beverages by introducing lowfat milk although Italian espresso beverages were only

made of whole milk but also that they started to extend the coffee menu to include a vast variety

of coffee drinks which was far from the Italian coffee concept – such as flavoured coffees and the

Frappuchino. Furthermore, Starbucks diversified into other business areas selling books and CDs

in the coffee shops which is not authentic Italian either (Koehn, 2001; Schultz & Yang, 1997). Still,

the Italian authenticity has constantly played a decisive role in the storytelling of Starbucks. It can

be reasoned that Starbucks never was an Italian coffee shop and hence Starbucks was not what

they said they were – being a re-creation located in the US, founded by an American. However, we

deduce that Starbucks has been able to make the Italian foundation of a coffee shop American

and hence their own. Starbucks introduced a new approach to coffee to the Americans and even

though it is not true to the Italian coffee culture, it can be argued that until recently Starbucks has

been true to the concept they have created – a concept which to a large extent has pioneered the

American coffee culture. In other words, Starbucks is not authentic in the Italian sense but they

became Starbucks Authentic – meaning that they became an authentic American coffee shop.


Is what it says it is Real-fake Real-real Starbucks 2008 Starbucks 1985 Is not what it says it is Fake-fake Fake-real

Is not true to itself Is true to itself

Source: Gilmore & Pine (2007:97) and of own construction

Figure 7 | The Real/Fake Matrix

Applying Gilmore and Pine’s (2007) Real/Fake Matrix, the first years of Starbucks can be plotted

into the Real/fake Matrix being “Fake-real”. Thereby saying that Starbucks was not able to live

up to being Italian authentic although they tried to re-create the Italian coffee atmosphere but

that Starbucks was able to be true to their own Starbucks concept located in the US. Deduced

from the assessment of the narratives and their development caused by Starbucks being forced

to take strategic decisions based on optimising efficiency and creating standardisation, Star-

bucks can be argued to have moved away from being true to themselves. They do not carry out

the promises told in the narratives and hence they have moved to become inherently fake and

hence inauthentic. Thus, it can be argued that consumers find it hard to see Starbucks being true

to their concept and what they used to deliver. Thereby, it can be argued that Starbucks may

have lost some of their Starbucks authenticity as well. By plotting Starbucks into to the matrix

the otherwise fluffy and subjective concept of authenticity is getting more tangible and man-

ageable. Thereby it is seen how Starbucks may have changed from being to some degree real

but during time they have moved away from their narratives while still trying to convince the

consumers of the meanings being the same – a fact that the consumers have not bought into

causing some to turn their backs on the Starbucks brand.

16. Consumer Culture16.1 The Initial Subcultural Consumer of Starbucks’ CoffeeAccording to Thompson et al. (2006) Starbucks did, maybe not deliberately, target the higher

middle class characterised by Brooks (2000) as the bobos; a mix between the bourgeois and the

bohemian culture, hence achieved status as an iconic brand. Brooks (2000) describes how the old

categories of consumers did no longer make sense – throughout the modern period, it had been

easy to distinguish between who was bourgeoisie and hence was a part of the capitalist world

and the bohemian counterculture characterised by creativity. The bourgeoisies were the square

and practical ones who defended tradition and middle-class values. They lived in suburbs, which

was typical for that time, worked for corporations, and went to church. Meanwhile, the bohemi-


ans were the free spirits who flouted the traditions. They were the artists, the intellectuals – the

hippies (Brooks, 2000:10; Featherstone, 1991:45) who stood for all the values of freedom and ex-

perimentalism of the 1960s (Holt, 2002). On the other hand, the bourgeois expressed the values

of the enterprising yuppies of the 1980s (Brooks, 2000:10). In the 1990s, these two groups of soci-

ety somehow started to melt together and people seemed to have combined the countercultural

1960s with the achieving 1980s into one social ethos making it impossible to tell an espresso-sip-

ping artist from a latte-drinking banker. Brooks (2000) explains this as a cultural consequence of

the information age in which the intangible world of information merges with the material world

of money creating new phenomenon such as “intellectual capital” and “the Culture Industry”. One

subculture of this era was the bobos; a new kind of hybrid personage who had one foot in the

bohemian world of creativity and the other grounded in the bourgeoisie world of ambitions and

upper-class (Brooks, 2000:10-12) – a well educated upper-middle class whose, before seen, rational

pursuit of gaining had become a search for pleasure and pursuit for self-interest (Brooks, 2000:15;

Lash, 1979 in Rifkin, 2000).

Others have also described this new consumer. For instance, Bourdieu (in Feathersome, 1991)

names them the new petite bourgeoisies, who are fascinated by identity, presentation, appear-

ance, lifestyle, and the endless request of new experiences. They were not only represented by the

intellectuals but the petite bourgeoisie transmitted the intellectual lifestyle to a larger audience

and did somehow open up the inner circle of the bourgeoisie and were determined to be cultural

intermediaries. Also Arnold Mitchell (1983) reflected upon the new values within the American

consumers and developed an extension of Maslow’s hierarchy of needs; VALS (Values and Life-

styles), to explain the relationship between personal values and how these created matching pat-

terns of outer behaviour. The VALS categorisation system was based on the changing lifestyles in

the US during the 1970s where seven different value patterns were outlined. Here, also a new kind

of consumer was plotted in; the integrated, whose values are somewhat similar to those of the bo-

bos. These values being a mixture of the so-called achievers, who are the highly educated money

centred stereotype of the wealthy American, and the socially conscious type who is concerned

about societal issues, trends, and events. Additionally, the integrated are well educated, heavily

Caucasian (Mitchell, 1983), and could be argued to possess a high level of cultural capital entailing

emphasis on authenticity and connoisseurship (cf. Consumer Culture Theory, Section 5.1.7), as Holt

(2000) states that higher education leads to a higher level of cultural capital.

Additionally, the general gourmet coffee drinker has been identified to be more affluent than

the general US consumer and that he or she lives or works in big cities. Moreover, it has been es-

tablished that gourmet coffee consumption rises with the drinker’s educational level. Those who

have finished college buy in average 49% more gourmet coffee and those with some postgradu-

ate education buy 71% more. The gourmet coffee consumer has, by the SCAA, been described as:

“an educated urban resident with the disposable income to spend on fine coffee.” (Encyclopedia of

Emerging Industries, 2008).


The type initially drinking coffee at Starbucks, is in a blog described like this:

“I always feel like those people are the kind of people who go to all the openings in town, and

get on all the guest lists […] Those people look all the same too. They’re the IKEA types who’ve

graduated from the animal rights and environmental action groups. Now they’re “grown up”

and far more inward looking, sometimes they would call reflective” (Simon Jones, 2004)

This quote, reflecting one person’s image of a Starbucks customer, is of course very opinionated.

However, we deduce that the way trendy and animal right’s advocate is correlated may express

the bobo who possesses a dual personality of hippie and hip. We will in the following refer to the

bobo character as an upper-middle class, well-educated intellectual personage who appreciates

authenticity, experiences, individuality, and recognises the value of connoisseurship. Hence, to

some degree we juxtapose the bobo with the characteristics of the post-modern consumer pos-

sessing higher cultural capital. However, this is done being aware of Holt (1998) who rejects the

notion of social strata in the contemporary society. The bobos also reflect values from the bohe-

mian culture, hence, posses a more creative side to its personality.

Thompson et al. (2006) have argued that the bobo type, until recently, has given the Starbucks

brand its legitimacy. As Starbucks has been identified as a luxury brand emphasising high quality,

connoisseurship and intellectuality, and possessing an authentic ambience of the Italian coffee-

house (Koehn, 2001), the bobo character has been attracted by the brand. Therefore, they have

applied the meanings attached to the Starbucks brand in their identity projects hence expressing

their identity through the consumption of Starbucks coffee. Thereby they identified with Star-

bucks in the 1980s where the narratives of being a gourmet coffee shop was still trustworthy,

where the coffee shop was still associated with the neighbouring café, being their Third Place, and

where the atmosphere had character of the European intellectual café traditions.

Furthermore, the bobos have been participating in changing the perception of coffee being more

than just a mass-market product. Without being aware of the significance of the bobos, Star-

bucks has been dependent on them and their attendance in the stores. The bobos’ identity has

had a spill over effect, transferring meanings from the bobo to the brand granting the brand with

legitimacy (Holt, 2004; McCracken, 1986). However, this transformation process can currently be

questioned and we argue that the bobos have left Starbucks due to the narratives and hence the

brand not being true to itself anymore causing the original meanings to be less prevalent. The

perception of Starbucks has changed and made the narratives untrustworthy, causing the bobos

to seek towards other more authentic coffee grounds. This will be the pivotal point for analysis in

the following section.


16.2 Identity ProjectsDue to the time in which Starbucks emerged the approach to the Starbucks consumer is that he

or she fundamentally possesses the basic characteristics of the post-modern consumer thereby

defining this consumer of Starbucks as involved, individualistic, well-informed, critical towards

marketing, appreciating personal freedom and authenticity (cf. Consumer Culture Theory, Section

5.1.7). Additionally, that the consumers’ identities are fragmented and identity creation is done

through choices of consumption. The brand must, to survive appeal to these characteristics of

the post-modern consumer, hence include meanings in the brand which the consumers can use in

their identity projects (McCracken, 2005; Buhl, 2005). Moreover, brands are important but the con-

sumer can see through marketing affectation hence demands more from the marketers’ branding

initiatives.

16.2.1 The Original Identity Projects of Starbucks’ Customers

It can be argued that Starbucks has been what Klein (2000) calls meaning brokers instead of plain

product producers, signifying that customers buying Starbucks’ products not only buy them due

to the product features but also due to meanings and identity attached to the brand. Simon (Ap-

pendix 2) supports that Starbucks’ brand consists of meanings and that one of the reasons why

people go to Starbucks is because of the meanings from the brand getting transferred to the

consumer of the product. The products tell something about the consumer, the consumer’s values

and by consuming the product the consumer send a signal to the surroundings about who he is. Si-

mon (Appendix 2) calls it to stage a performance, one can act rich by consuming Starbucks coffee.

Simon (Appendix 2) underlines that Americans are obsessed with trading their identity by buying

into luxury goods showing that they can afford them. This is further stressed by the prevalent

perception of Starbucks as a luxury good (Koehn, 2001). Thus, consuming Starbucks, in the early

days, was attached with meanings of something classy and hip – especially due to the bobos at-

taching meanings to the brand. Thereby, their characteristics of being distinctive, intellectual and

their pursuit of unique authentic experiences were transferred to Starbucks, branding the coffee

shop as a way to achieve a bohemian lifestyle and furthermore made Starbucks juxtaposed with

a brand of high class and luxury. Consumers bought into this when consuming Starbucks coffee,

Simon (Appendix 2) argues. The artefacts in the shops as well as the quality narratives support

the luxury of the brand. Artefacts such as interior, the background music, the art on the walls and

newspapers lying on the café tables are supposed to strengthen the bohemian image of Star-

bucks.

16.2.2 The Identity Projects of Today

Simon (Appendix 2) indicates that customers still use Starbucks in their pursuit of creating an

identity of being intellectual, leaving one to suggest that the identity of Starbucks as a place for

the intellectuals, which was legitimised by the bobos, is still existing. He argues that Starbucks is


trying to buy in and lend themselves in to the traditional European café, the intellectual café by for

instance having little quotes on their cups and thematize the milieu of the cafés as the European

with big comfortable chairs, and corners where readings and conversation can take place. Also the

design of the cafés is underlining the bohemian feeling to them. Like for instance the ceiling in

glass and wood which is supposed to give an urban hip feeling. In this way, by visiting Starbucks,

consumers can get some of that intellectual life and can present themselves as someone who

cares about ideas but also as taking part of the bohemian culture (Appendix 2). However, follow-

ing Rifkin’s (2000) argument that culture changes continuously, it can be stated that since Bry-

ant Simon carried out his investigation or observations of Starbucks and its customers in 2006,

there have been some changes in the perception of Starbucks. The narratives have changed due

to strategies based on heavy expansion and hence the brand’s narratives may not correlate with

the external perception or image. Other stories are being told in the environment surrounding

Starbucks harming the trustworthiness of Starbucks’ brand. Therefore, the identity projects of

the average Starbucks consumer may have changed.

16.3 The Disappearance of the BobosPreviously it has been established that Starbucks has watered down their brand by heavy expan-

sion and standardisation, which has had an effect on the narratives and how they are perceived.

By not being true to the brand and deviating from their brand promise, there is a risk of appearing

untrustworthy to the consumers and not least to the bobos, who will react by turning their backs

on the brand as they no longer are able to apply the meanings of Starbucks’ brand in their identity

projects. Moreover, the bobos can be argued to have been the insiders of the brand’s network –

the ones who adapted and identified with the brand when it first was introduced, and thus they

were the first Flock. The bobos could be seen as a part of the before described “petit bourgeois”

with high cultural capital and hence focused on, among other things, connoisseurship and the val-

ues of both the intellectuals and the bohemian culture. By the narratives which Starbucks initially

told, they were able to create meanings which the bobos could use in their identity projects. Thus,

the meanings of Starbucks as a luxury brand for the intellectuals, hip and creative were applicable

for the bobos at that time, creating an identity of them as connoisseurs. However, the fact that

Starbucks has expanded and grown into a large corporation conflicts with the meanings of the

narratives. This has resulted in the bobos having difficulties in applying the current meanings in

their identity projects as the meanings are no longer the same which Thompson et al. (2006) also

indicate. The dissociation the bobos show for Starbucks is very equal to the post-modern consum-

er with high cultural capital. The bobos do not want to identify with mass culture which Starbucks

can be argued to have come to represent during the years. Additionally, they pursue an authentic-

ity which they cannot find in the mass-produced products and commercialised experiences. They

want what is real and individual, expressing subjectivity.


16.3.1 New Meanings Attached to the Starbucks Brand

In general, it seems like various consumers are visiting Starbucks from all social strata of society

to socialise, grab a coffee to go, or just to be able to be “alone” among people. Various articles

determine that students find Starbucks’ premises useful for carrying out their studies when not

having anywhere else to do this (Smale, 2008; Harden, 2005). One student even suggests that

she would appreciate if she could book a table to study at in her local Starbucks (Mylanta, 2008).

It also seems like Starbucks has chosen to meet the demands of the students by setting up study

rooms in at least one location; Lawrence and El Camino, maybe realising that investing in the stu-

dents now may result in loyalty in the long run. However, it can be questioned whether targeting

the students is an optimal strategy. It is difficult to say whether the students use Starbucks as

a part of their identity projects as it more seems like the premises offer them a good environ-

ment to carry out their studies without being at home alone or at the library – Starbucks offers

them a pleasing environment where also other students are working (Jason; Kevin; Florian, 2008).

However, as students account for a large part of Starbucks’ customers, the meanings attached to

being a student may be transferred to the brand – for instance that students have low economic

resources with contrast the luxury feeling which Starbucks tries to express but also that they

represent a younger segment which may posses other values than the intellectual bobos – two

aspects contradicting with what Starbucks has tried to express through their narratives. On the

other hand, business meetings held at Starbucks also seem to be popular (Sarah, 2008; Captain,

2008). In contrast to the students, these are more affluent customers who create a more serious

atmosphere raising the image of being an upper-middle class brand.

16.3.2 Why the Bobos Left the Brand

“I am generally not a complainer, I have been drinking Starbucks forever and I remember

drinking Starbucks in your first stores in Vancouver. In the last few years in New York, your

service and experience has become awful and it correlates with your stock price. Rather than

being an Italian coffee house experience, it raises my level of anxiety in the morning! Today by

Grand Central, one employee was screaming at the other to come out of the back room and

start making the bar drinks! […] I am confused. I read the book ‘pour your heart into it’ and

how the coffee experience was supposed to be authentic and best in class. It makes me sad

because I actually bought stock in the company a few years ago after I read the book because

I believed in the company. Now, I see fruit flies, screaming employees, empty cups being given

out and bad milk.” (ZEE123, 2008)

This statement shows how the assumable insider perceives Starbucks as having lost the authen-

ticity and that the whole experience of going to Starbucks have been damaged by yelling and not

well educated teenage baristas (Simms, 2007), fruit flies etc. The perception of Starbucks being

dirty and baristas being inattentive teenagers is shared by many Starbucks customers (Kitkat11,

2008; Olan, 2007) and the narrative of high Quality and Service has been stained, hence not living


up to the post-modern consumer’s demand for the company to posses connoisseural knowledge

about the coffee (cf. High Quality and Service, Section 12). Another factor exposed to critique from

the bloggers is the loss of Italienness and central European ambience. They find Starbucks being

more and more sterile in its décor resulting in too identical shops compared to for instance Peet’s

and Caribou Coffee which do not have the same industrial feeling to the concept. Also the clover

automatic espresso machines are being centre of critique in many of the bloggers’ opinion (Bbella,

2008).

“I used to love Starbucks because of the quality of the coffee and my drink, until the Italia

was brought in. The automatic espresso machines just don’t taste the same as a hand brewed

shot of espresso. I feel strongly that Starbucks should return to the La Marzocco or another

hand brewed espresso machine – it made the Baristas unique and the experience unforget-

table.” (Lilmis84, 2008)

Also the diminishing of the coffee smell in the cafés seems to have scared the insiders off. Some

express with disgust how the cafés smell of burnt toast, cheese and even vinegar from the mak-

ing of sandwiches. And that these smells dominate the smell of freshly grounded coffee that they

appreciated so much from Starbucks before – it was a part of the whole experience (Mike Clem-

mer, 2008; Etties, 2008; Prexec, 2008, and cf. Third Place and High Quality, Sections 13 and 12).

In a general perspective, the defection of the insiders, the bobos, can be argued to be due to the

standardisation and streamlining of Starbucks and their corporate image of wanting to target a

mass audience. As insiders and representatives for the populist world on which Starbucks build

their narratives, the bobos represent an authority to assess the authenticity of the brand and to

see whether Starbucks is sponging on the values of the populist world to make a profit. Therefore,

they dissociate themselves from Starbucks seeing that they are commercialising these values of

the populist world. Thus, they take away the legitimacy of the brand.

In the early days of Starbucks, the coffee shop appeared as a Third Place where consumers could

meet, be social or just to be alone amongst people. Thompson et al. (2006) argue that the bobos

were drawn by Starbucks as the coffee shop in its appearance encouraged to creativity in an en-

vironment which stimulated the consumers in a way to unfold both their professional and bohe-

mian lifestyles. Thus, as a new concept and innovation to the American culture, Starbucks invited

for and expressed accept for alternative lifestyles which may have attracted individuals whose

positions and lifestyles were marginal and who did not feel like belonging to the mainstream

society (Thompson & Arsel, 2004). However, the way Starbucks appear today the bobos perceive

Starbucks as a conservative, standardised and uniform place which no longer invites for creativity

and time for reflection. Thus, they feel that the coffee shop appeal to a corporate clientele. This is

largely due to the development of Starbucks; that they have standardised the concept across the


coffee shops making the experience of visiting Starbucks less personal and individually marked,

and furthermore that Starbucks has become mainstream (Thompson & Arsel, 2004; Thompson

et al., 2006).

In general, the bobos seem repelled by standardisation. They appreciate the feeling of small, indi-

viduality, personality and authenticity which they feel can be achieved only through unique cus-

tomer experiences. Thus, they try to show their distinctiveness and sophistication by purchases

and consumption of authentic brands as a means to create their self-image. This identity cannot

be achieved through mainstream and standardised experiences. The gaining after authenticity

can neither be achieved through commercialised experiences like the experience which Starbucks

provides it is argued (Thompson & Arsel, 2004). Due to the standardisation of Starbucks, the

fact that they have diversified and entered into business agreements with large corporations,

and their movement towards mainstream, the bobos perceive Starbucks as a large corporation

pursuing profit. Thus they feel that what ever Starbucks does is to please the customers and to

make profit and is not done from a genuine dedication for the coffee and the authentic feeling.

For instance, the interviewees dissociates themselves from the decor of Starbucks’ coffee shops,

as they see the streamligning of the furnishing as a sign of Starbucks’ lack of authentic feeling.

One interviewee perceives Starbucks as calculating and analytic: “Some major metropolitan area

design team has come in [at Starbucks] and “okay, here’s how we’re going to design the cafe of the,

then, ‘90s, right? I’m sorry, that just doesn’t work for me.” (Patrick in Thompson & Arsel, 2004:636).

This feeling is supported by Kate: “I walk in [at Starbucks] and get this feeling that this is how they

think people want a coffee shop to be. They’re doing marketing research. They probably interviewed

a thousand people.” (Kate in Thompson & Arsel, 2004:637). These comments imply that these

customers perceive Starbucks as a corporation which consciously shapes and designs their coffee

shops the way they think the majority of customers want it to look like. Therefore, meanings of

Starbucks as a calculating corporate giant are created – meanings which the bobos as well as the

post-modern consumer with a high level of cultural capital find difficult to apply in their identity

projects as they do not want to be associated with a mainstream concept created deliberately

to target the average American. They want the authentic feeling, and the feeling of dedication

behind the coffee shop. Additionally, they feel that the authentic feeling is diluted as Starbucks

looks the same no matter which Starbucks coffee shop you enter, hence it is the same experience

to expect always. The bobos furthermore express that Starbucks has lost their bohemian char-

acter, which used to encourage all kinds of people to mingle and interact. Instead they feel that

Starbucks’ sterile and uniform decor dominantly attract the bourgeoisies (Sandra in Thompson et

al, 2006:58; Scott in Thompson et al., 2006:56).

What is clear from the statements of the bobos is that they are not indifferent towards Star-

bucks: They no longer feel attracted by Starbucks and do not feel that they can apply meanings

from the Starbucks brand in their identity projects but they still have an opinion about the coffee


shop. They perceive Starbucks as a wrong place, diluting their own self-image if they are seen

consuming Starbucks because the brand for the bobos is attached with meanings which do not

correspond with the image the bobos want to create of themselves. Thus in the circles of the bo-

bos, consuming Starbucks does not seem to be socially acceptable. Sandra even calls it tabooed to

frequent Starbucks, although she actually likes their coffee:

“For a long time I wouldn’t go to Starbucks because in my circle of friends it’s not socially ac-

ceptable to go to Starbucks because it is just a big corporate and that it destroys all the local

coffee shops [...] if I want to go to Starbucks and carry something out, I will bring my own cup

so I can walk around without having a Starbucks cup in my hand in public. [...] So I go there

anyway and hope that nobody sees me walking out of there who will think less of me for be-

ing there.” (Sandra in Thompson et al., 2006:636)

This signals that the bobos in general attach negative meanings to the Starbucks brand. They are

corporate, expressing materialistic objects and as a widespread chain concept they have become

standardised and uniform, expressing conformism – values which the bobos do not want to iden-

tify with. They want what is small, authentic and genuine, what is expressing anti-conformism

and anti-materialism but Starbucks has come to represent the antithesis to this. They are very

conscious about brand image and the fact that Starbucks has become mainstream and that the

brand is accessible to all Americans does not seem to attract the bobos. This has created mean-

ings of Starbucks as a brand for the masses. This is negative in the eyes of the bobos as being

accessible to everybody takes out the unique and the distinct of the brand. Furthermore, this im-

plies that Starbucks is sponging on the values of the populist world represented by the bobos. As

Starbucks cannot live up to what the post-modern consumer with high cultural capital and thus

the bobos want, they have left the brand.

16.4 The Social Network of the BrandEven though losing customers on an overall sense, Howard Schultz has recognised the problem

of losing what he calls the right customers these being the ones who were drawn in by the whole

theatrical experience of coffee making (Schultz in Simms, 2007). This can be interpreted as if

Howard Schultz has realised that the insiders who have legitimated the brand have disappeared

effecting other customers’ perception of the brand. Furthermore, the way Starbucks is perceived

by the consumers seems to have affected who consumes Starbucks and how the brand fulfils the

customers’ identity projects. As Starbucks has turned into a common coffee shop not as distinct

in its character as when it emerged, the bobos find it difficult to attach meanings to Starbucks as

being distinct, authentic and creating unique experiences, thus, they do not feel at home anymore

in Starbucks’ mass concept shops (Smale, 2008). One explanation can be that while the meanings

of the narratives have developed, Starbucks has tried to cling on to the original meanings and nar-

ratives while trying to cater to the mass-market at the same time. Therefore, the surroundings


have perceived Starbucks’ contradicting actions as a marketing affectation from which the post-

modern customers dissociate themselves. This results in the surroundings co-branding Starbucks

with contra-narratives – diluting the brand and making it less trustworthy.

The bobos have very likely attracted a larger group of consumers with less cultural capital and

thus a less intellectual crowd to the Starbucks brand. This is due to Holt’s theory (2004) about the

insiders’ significance for attracting other customers to the brand. Customers with lower cultural

capital, and hence a lower ability to be trendsetting, have adopted the values of the bobos by buy-

ing coffee the same place as them. It is that little luxury, which Starbucks represents, which the

less affluent part of society can afford, and this luxury feeling attached to the brand can accord-

ing to McCracken (1986) be transferred to the less affluent customer’s identity when consuming

the product and hanging out in the café. Schultz also mentions this fact; the blue-collar man may

not afford the Mercedes the surgeon just drove up in but he can order the same $2 latte (Schultz,

1997:119). Thereby, indicating that buying a latte can express the same sense of luxury as the Mer-

cedes just in an affordable way. Simon (Appendix 2) extends this meaning transfer by explaining

that people among other things go to Starbucks, paying a price premium to give themselves a

treat – to somehow self-gift themselves.

Starbucks has gradually gained a greater reliance on less-affluent consumers and the customer

base is now predominantly the middle and lower wealth classes (Palmer, 2008). Smale (2008)

moreover, supports this by stating that it previously was white collars, who went to Starbucks.

These are now visiting smaller chains such as Peet’s Coffee & Tea and local coffee and independ-

ent coffee shops which posses the meanings which Starbucks used to have. The blue collars go

to Dunkin Donuts and McDonald’s – thereby indicating that fewer consumers are really left for

Starbucks. Most likely, this is due to the less affluent consumers choosing cheaper alternatives –

a tendency which might be intensified by the fact that the meanings attached to the brand has

been blurred and that it is harder to justify to buy a more expensive product which seems to have

the same taste and quality as coffee at McDonald’s (Schwaner-Albright, 2008). As the bobos have

been argued to posses high cultural capital, it can be deduced that a Veblen effect may have been

another reason for the lower class being more willing to pay the price premium to obtain some of

the status of the bobos. Since the bobos have left the brand, the customers striving to gain status

may to a lesser degree have the incentive to buy the more expensive Starbucks alternative and

cannot justify the purchase.

It is difficult to draw a complete picture of Starbucks’ social network regarding followers and feed-

ers on the basis of the empirical data available in this thesis. As we argued in section 5.4 regarding

our empirical evidence, we deduce that the customers participating in the blog on mystarbucksi-

dea.com are followers as we see that they illustrate the behaviour of followers due to Holt (2004).

Therefore the following conclusions will be based on the overall impression of the bloggers after


having visited mystarbucksidea.com. These bloggers express their dedication to Starbucks and

many comments picture the customers as devotees of the brand because they are so eager to

make proposals for improvements of Starbucks. These customers show a sympathy and sup-

port to Starbucks but at the same time they show a contempt and fear of the development of

Starbucks currently. Many customers point out how significant Starbucks is to their everyday life

and how they feel that Starbucks is losing the soul and dedication of providing the customers the

right experience. Furthermore, they show a strong loyalty towards Starbucks indicating that the

brand has to step out of line really badly before they leave the brand for real, which can be seen as

characteristic for the follower in a brand’s social network (Holt, 2004). This is further underlined

by some bloggers who discuss with each other, who know each other and even the employees

from the head office of Starbucks engage in these discussions and know the regulars by their

usernames (e.g. Melody, 2008c; Sbx_nric, 2008; Brodave, 2008).

It is also expressed in the customer comments, that Starbucks create a feeling of belonging (e.g.

Tsthomson, 2008; Quad3spl, 2008). The customers like to be a part of the Starbucks universe and

to be initiated in for instance the Starbucks language when ordering their custom-made bever-

ages – a language which may be difficult for an outsider to take part in (Appendix 2). Furthermore

is seems like the brand is elevated and hence the follower seem to look up to the Starbucks brand

as a kind of a lifestyle leader (e.g. Melody, 2008d; Missyjkl, 2008).

The many customer comments can be seen as disappointments and an expression for the cus-

tomers buying into the original Starbucks’ meanings and that they wish to point out to Starbucks

that they want for them to seek back to their roots (e.g. Tlb4222, 2008; Scraig29, 2008; Sue1660).

The customer comments can also be interpreted as a fear for Starbucks developing into a concept

which will damage the values put into the brand. Whereas the brand’s untrustworthiness and

lack of ability to fulfil the meanings attached to the brand has resulted in the bobos turning their

backs on the brand, seeking other coffee grounds, it seems more difficult for the followers to

give up on Starbucks. Compared to the bobos, they seem to stick to the brand for a longer time

and to fight for maintaining the identity which up to now has attached to the brand. They iden-

tify strongly with Starbucks and the meanings attached to the brand are vital for fulfilling their

identity projects. In other words it can be deduced that they rely strongly on the meanings of the

brand. Whereas the insiders are more risk-seeking, the bloggers on mystarbucksidea.com, hence

followers, express a more risk-averse approach. As Starbucks was not able to live up to the mean-

ings which the bobos originally attached to the brand, the bobos have lost credibility in the brand

as they feel that the brand has sold out. Thereby, Starbucks have lost their legitimising spokes-

men for the brand and as the brand no longer have opinion leaders to influence the rest of the

social network, this is likely to disintegrate.


In Thompson et al. (2006), other characteristics are given of the customers frequenting Starbucks

– these customers may be characterised as followers – and furthermore reasons for them to stick

to the brand despite the disappearance of the bobos are given. Thus, it is stated that they do not

seek the same authenticity as the insiders. Instead they are stuck to Starbucks due to a feeling

of safety. Due to the fact that Starbucks has turned mainstream and standardised, the Starbucks

Experience has also become standardised which creates safety for some customers. They know

Starbucks and what to expect and as they are not keen on new and unknown experiences they

value the standardised experience where they can feel at home and as a part of the community

(Ellen in Thompson et al., 2006:57). This furthermore stresses the risk-averse characteristic of the

followers not wanting to take the risk of stepping out of line trying something new and untried.

This also pictures the followers as the second and third Flock in the Kauffman Continuum, who

do not buy the brand until it has been legitimised by the early adapters of the first Flock. It is fur-

thermore essential to point out that it is due to this legitimacy of the insiders that the followers

are attracted to the brand. The narratives and the meanings which the insiders legitimise are very

important to the followers. They are carrier of the meanings. Seeing that the insiders leave the

brand giving the impression that Starbucks sponges on the bohemian/bourgeois identity to make

a profit, the followers may also gradually leave the brand. If the followers do not feel that the

Starbucks identity is untenable they may also turn their backs on the brand, but because they are

brand magnets and risk-averse they stick to the brand for a longer time compared to the insiders.

That the followers are sticking longer to the Starbucks brand is also apparent through the com-

ments on mystarbucksidea.com where the bloggers express their disappointment towards the

brand but still stick to the brand, believe in it, and come up with suggestions on how to improve it

(e.g. Hb123, 2008; Miclin; 2008; Sbx_eluk, 2008).

Due to the large popularity of Starbucks and the status which has been attached to drinking Star-

bucks coffee, the brand has naturally attracted a lot of customers who attracted by the status

symbol Starbucks has represented and furthermore the social cohesiveness of using the brand.

Compared to the followers and the insiders, these customers, the feeders are not attracted by the

myth of Starbucks. In other words, they do not buy into Starbucks’ meanings to create an identity

in the same way as the insiders and the followers use Starbucks to create their own self-image.

This is due to the feeders not being alert to the identity which Starbucks contains. They create

their identity on the basis of what is in and by this they have created an identity of being a part of

the group. Thereby, it is argued that a lot of Starbucks’ customers have not bought into the brands

narratives for instance as rallying point to people who had a need of a social gathering point for

those who represent lifestyles on the edge of society. They have fed on others’ identity creation.

Due to the specialty coffee concept becoming more and more common to the American citizens

it has been argued that Starbucks is moving down the Kauffman Continuum towards rigidity all

causing bobos to leave the brand which in the end will cause the brand’s network to gradually


disintegrate (Kafmann Continuum, Section 8.1.5). Additionally, Starbucks is argued to move faster

down the funnel than the smaller specialty coffee shops which have been able to preserve their

core competences of coffee and hold on to the authentic values of a coffee shop. Due to Star-

bucks compromising with their foundation in order to correspond with the intensified competition

from the fast food restaurants, it was earlier established that Starbucks has undertaken some

meanings which normally are connected with the fast food restaurants which all things consid-

ered has taken part in eroding the initial meanings of Starbucks as the meanings of the fast food

restaurants do not meet the demand for individuality, and not least the demand for authenticity

described in the Theory Section 5.1.7.5. Thereby, the coffee experience at Starbucks no longer ap-

pears as the same unique experience as it used to be:

“Customers [at Starbucks] felt like connoisseurs because the coffee quality was at the heart

of the brand – they were proud to be associated with SB. But now with so many concepts like

SB there is no different meanings put into the brand than in any other of the competitors’

shops.” (Smale, 2008:3)

This quotation shows what may have happened to the brand due to changes in the industry. Thus,

Starbucks has moved down the Continuum losing their legitimising customers, the bobos, be-

cause they no longer attach meanings which are applicable in their identity projects to Starbucks.

The bobos were the most risk-taking and the ones to set the trend, thus representing the first

Flock. This first Flock provided the Starbucks brand with legitimacy causing followers and feeders

to identify with the meanings of the brand as well, and made them follow the lead of the first

Flock after a short while. The result may have been seen in the huge growth potential Starbucks

had during the 1990s where many Americans adapted the concept maybe resulting in the second

and third Flock buying into the specialty coffee culture.

The bobos have gradually left the brand and there is no personified evidence of the brand such

as the intellectual bobo sitting in a corner drinking the coffee or walking on the street with the

branded cup in his hand – thereby leaving Starbucks without legitimacy of the brand. In line with

Starbucks losing their distinct identity, lacking their competitive advantage as they have become

more equal to the competitors, it can be deduced that the feeders will defect gradually seeing that

they seek towards the brands which are popular giving status. They do not have any thorough

commitment to Starbucks and do not live of the meanings attached to the brand. As the most

heart-feeling customers it can be argued that the followers are the customer group which will

stick to Starbucks the longest. They will not give up on the meanings of the brand.


Starbucks 1985 Starbucks 2008


Bobos Bobos Followers Followers Followers

Followers Feeders

Feeders


Figure 8 | The Starbucks’ Brand Social Network

Source: Holt (2004), McCracken (2006) and of own construction

The consequence of the social network dissolving is that the social network is closely connected

with customer loyalty of Starbucks – meaning that the different customer types are interlocked.

Therefore, as the bobos leave the rest of the network will follow suit eventually and the customer

loyalty will be diluted. This dissolution of the social network is what is happening in Starbucks. It

is difficult to point out exactly where Starbucks is situated currently in the figure above but the

bobos have left and Starbuck is approaching rigidity leaving us to believe that Starbucks is some-

where between Flock 4 and 5.

16.5 The Starbucks Consumer and Hyper ModernismThe theory of Gilles Libovetsky (2005) concerning the coming of the hypermodern consumer may

to some extend help to explain Starbucks’ recent difficulties. According to Holt (2002; 2004) it is

necessary for Starbucks to take the consumer culture into account when branding. They may not

have done that in the first place, by following an emotional branding strategy but still they seem

to have targeted some of the post-modern consumers’ demands. However, according to theory

consumer culture is undergoing continuously change (Rifkin, 2000) and hence also post-modern

consumerism is gradually changing – changing into what Libovetsky (2005) identifies as the hyper-

modern consumption. Therefore, Starbucks may not only face difficulties being inauthentic, they

also face a whole new consumer group with different demands patterns than seen before. This

culture is less focussed on status. Not being focussed on social status may be a problem as Star-

bucks coffee earlier described has been attached to the sense of luxury and a way to express that

you can afford to buy your coffee at Starbucks. On the other hand Starbucks seems to, with their

initial narratives to live up to the hypermodern consumers demand for ethical business execution,

as a lot of focus has been on social responsibility. However, this narrative has been stained by stirs

in society telling another more negative side of Starbucks, which likely does not appeal to a hyper-

modern consumer. The Starbucks Experience being less trustworthy can be a hindrance for Star-

bucks considering the new consumer type, as the hypermodern consumer values experiences to a

larger degree than before seen. This is due to experiences being able to satisfy their needs for self-


fulfilment and enjoyment (Libovetsky, 2005). However, as earlier mentioned the consumer culture

only changes gradually and is affected by the current culture. Therefore, it is difficult to conclude

how large the concentration of the hypermodern consumer is in the US, if the post-modern con-

sumer may already contain some of the hypermodern values, or whether this discussion about the

new consumer type is still only apparent in France where the discussion currently is being carried

out. Consequently, we are not able to come with a final conclusion on whether he American soci-

ety is influenced by hypermodernity but Starbucks must take this new tendency and its impact on

coffee demands into consideration when telling their stories and branding Starbucks.

17. ConclusionThe purpose of this thesis has been to investigate whether Starbucks’ current decline can be ex-

plained by the meanings attached to the brand, and hence, to what extent Starbucks lives up to

their brand promises.

During the investigation of the narratives and the meanings attached to Starbucks, it was unfold-

ed that Starbucks deliberately has made use of storytelling in their branding focussing on creating

emotional connections with the customers. Thus, meanings have intentionally been put into the

brand making the purchase of coffee more than just coffee. Starbucks has created the Starbucks

Experience containing the meanings of Italian coffee traditions, intellectuality, Starbucks as a

Third Place encouraging to creativity and conversations, social responsibility, the American Dream

and high quality coffee. Seeing that Starbucks is an identity brand, these meanings have been

identified to be a means in the customers’ identity projects; thus, the meanings attached to Star-

bucks have been transferred to the customer when consuming Starbucks to create the customer’s

self-image. The meanings can be concluded to be legitimised by the bobos; a subculture melting

bohemian and bourgeois values and furthermore a representative of the post-modern consumers

with high cultural capital. Thus as an authentic neighbouring coffee shop encouraging to lingering

and conversations, Starbucks managed to cater to this high cultural subculture when they entered

the market. This has provided a breeding ground for later Flocks to embrace the brand as well

ensuring the success of Starbucks. Starbucks lead by the visions of Howard Schultz revolutionised

the coffee industry and the perception of coffee when introducing their specialty coffee concept

and since then Starbucks has set industry standards. However, it can be concluded that the fact

that specialty coffee in general has become widely accessible and common to the American con-

sumers has pushed specialty coffee towards rigidity. Furthermore, it can be concluded that stra-

tegic decisions made by Starbucks have made the brand more rigid compared to smaller, local and

independent competitors. This rigidity and the strategic decisions such as aggressive expansions

and attempts to comply with the intensified competition from the fast food segment have cre-

ated contra-narratives about the brand and attached less flattering meanings to Starbucks. Thus,


it is deduced that Starbucks by some is perceived as a mainstream and standardised brand, which

no longer possesses a distinct character of a neighbouring coffee shop.

In an overall perspective it can be concluded that Starbucks has lost their authenticity; customers

and media perceive that Starbucks is not living up to their brand promises seeing that they com-

municate narratives of themselves which they are not able to deliver. Thus, the fact that Starbucks

tries to portray the brand as an authentic coffee shop is to some degree perceived as a marketing

affectation to cover the real identity of Starbucks as a corporate titan who has commoditised the

concept to target the mass-audience. From this it can be concluded that Starbucks has become

inherently fake and no longer is true to themselves. Therefore it can be concluded that consumers

has lost trust in Starbucks as the brand has not been able to live up to its brand promises. The

Starbucks Experience and the brand have been diluted. The consequences of no longer being per-

ceived as real are vital as Starbucks has lost their legitimacy due to the bobos who are deduced to

be the insiders of Starbucks have turned their backs on the brand. This will eventually disintegrate

the social network of Starbucks. Starbucks appearing commoditised and mainstream opposes the

values of the bobos who appreciate authentic brands, unique experiences and personality. The

meanings attached to Starbucks portray the brand as an antithesis to this. The inauthenticity and

less flattering meanings furthermore result in customers not wanting to apply the meanings in

their identity projects and it can be concluded that consumers deselect the brand due to this.

Therefore, it can finally be concluded that Starbucks’ decline can be explained by Starbuck sticking

to their original narratives while the context fills the brand with conflicting meanings resulting in

the consumers not finding the meanings applicable in their identity projects.

17.1 Implications of the ConclusionStarbucks lead by Howard Schultz has realised that the brand has lost its credibility and now faces

difficulties in maintaining the customer traffic, which have resulted in the coffee chain closing

down a lot of coffee shops across the US. Furthermore, Howard Schultz has recognised that the

brand must go back to its roots. However, Starbucks does not seem to be aware of the root cause

for their current decline as the future strategy of the brand is to expand further on the interna-

tional markets and initiations such as introducing the automated coffee machines are still carried

through (Nocera, 2008; Starbucks, 2008c). Therefore, the strategy of Starbucks conflicts with

the intention of going back to the roots. The question is moreover if going back to what Star-

bucks originally was is the optimal solution for overcoming the current difficulties of the Starbucks

brand. This is due to the meanings of the original Starbucks being legitimised by the subculture,

the bobos, providing a breeding ground for Starbucks’ social network to develop. However, wheth-

er this subculture is still apparent in the US and whether Starbucks would still attract it again is

questionable. Therefore, it can be seen as a failure to pursue the old success, as the conditions for

this may not be apparent no more. Furthermore, the development of the company has to be taken


into account, as this can be a hindrance for going back to their roots. This is due to the fact that

going back to the roots implies to go back to narratives evolved around the neighbouring coffee

shop, the Third Place where the visitors are acquainted with each other, and where there is time

to interact with every single customer. This conflicts with the expansion level and hence the size

of the company.

Therefore we instead suggest that Starbucks should go about their branding in another way if

wanting to be re-vitalised. They must target a new sub-culture in the US society. This is easier

said than done and we do not have the exact suggestion to who this subculture could consist of.

However, it could be a culture with some characteristics of the hyper-modern consumer. As this

hypermodernity is argued to be a successor to the post-modernity which gradually will gain a

footing in the consumer culture, it could be a suggestion that Starbucks re-invent themselves to

be able to target the anxieties of the hyper-modern consumers. They are anxious about what the

future brings, they do not consume to obtain personal status but to feel inner pleasure about their

choices, and they are concerned about the environment. Moreover it can be imagined that the

anxieties are further accelerated by the fact that US has been a target for terrorism and political

critique under the Bush government. However, it is not suggested that Starbucks ignore all their

initial values and meanings to pursue new grounds to address a new segment. Due to the brand’s

status as an iconic brand it can, according to Holt (2004), be deduced that Starbucks can take ad-

vantage of their historic ability to target a subculture’s identity desires. Thus, through the nation’s

memory of Starbucks’ previous myth and what this myth provided for people using it, Starbucks

has earned the authority to tell the same type of myths and to target a similar and current sub-

culture’s identity projects.

Starbucks was able to create a Starbucks Authentic concept and maybe that is what Starbucks

should re-emphasise, thus be true to what they really are and acknowledge what they have be-

come. Therefore the myth to be told should be based on what they have become and not focus

on being the small neighbouring coffee shop and instead find their authenticity in being their own

concept – an American coffee concept inspired by the Italian coffee traditions where the customer

can have their beverage in a comfortable and relaxing setting. Moreover, Starbucks must be re-

alistic, and consider whether it is possible to go back to their roots at all and therefore consider

whether it is possible to target a culture that value the small neighbouring coffee shop as Star-

bucks has grown apart from his concept. However to meet the demand of being more individual

and express distinctiveness instead of being the omnipresent titan it is suggested that Starbucks

on individual coffee shop basis adapt to the local environment. This could be done by letting the

local coffee shop managers get more authority to take independent decisions. Moreover, local

managers should be encouraged to set their own mark on their shop. Thereby leaving their own lo-

cal mark and facilitate diversity in the Starbucks concept – the ambiences would be different from

Starbucks but still keep the overall focus on quality. Also a suggestion to meet the raising problem


of busyness caused by the to-go customers is to somehow separate the coffee to-go segment

with the sitting café guests. One suggestion is to have separate shops where it is not possible to

order coffee to go in the Starbucks Cafés and vice versa.

18. Implication for Further ResearchThe research of Starbucks’ brand has indicated that the meanings attached to the brand are play-

ing a decisive role for the sustained success on the US market. Starbucks have during the last 13

(Starbucks, 2008i) years expanded heavily in overseas markets too and have also, until recently,

achieved success on these markets. Howard Schultz comments the cross-boarder success with “…

that our passion transcends language and culture” (Starbucks, 2008i). However, considering that

the same branding strategy is followed in all markets, we find the underlying reasons for success

very interesting, as according to theory (Holt, 2002; McCracken, 2005) brands should face difficul-

ties if not corresponding to national culture. Also Lindstrom (2005) underlines that a brand cannot

expect to be accepted and gain success if not adapting to local cultures, hence a global and stand-

ardised brand strategy cannot be applied to local markets. Nonetheless this is what Starbucks

has done since 1995. Therefore, we suggest that further research can be carried out regarding

the underlying reasons for the Starbucks brand appearing to have success with a global branding

strategy regardless of national culture.

The research could be demarcated to focus on analysing the Japanese market – the first overseas

market of Starbucks, where they experienced huge success (Starbucks, 2008i). How come the

brand has success in Tokyo with a standardised concept hence telling the same narratives and in

a market, where the culture could not be more unlike the American? Especially an analysis of the

narratives and the perception of these could be interesting. Such as whether it really are the same

narratives that Starbucks tells in the Japanese market, if focus is laid upon some specific narra-

tives, and whether the narratives are perceived in the same way. For instance it could be proposed

that a narrative evolving around the American Dream is ineffective in a Japanese context due to

the narrative’s tight connection to the US culture. Hence different cultural principles can be argued

to be apparent in the Japanese market, which make the research of the narratives and meanings

even more interesting, as according to the theory different rationale for applying the narratives’

meanings must be apparent on overseas markets. Additionally, an analysis of the identity projects

and hence how the Starbucks brand is being “used” in a Japanese context could bear witness to the

reason for Starbucks success. Thus the Japanese consumer may apply the brand in their identity

projects in a different way than the American consumer and the projects may as well give an idea

of the underlying reason for the Japanese consumer taking the Starbucks brand to heart. Thereby

the study cannot avoid possessing some character of a comparative study between the US con-

sumer and the Japanese consumer comparing what the difference in brand perception is between

the two cultures. Hence what the success criteria have been in the Japan and the US respectively.


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appendix 1

Ea Elisabeth Finn Nielsen & Tina Holm Mortensen | The STory of STarbuckS | Appendix 1 1

Starbucks Continues to Implement Transformation Plan, Announces Organizational Changes

to Support Long-term Growth

As part of its ongoing transformation, Starbucks communicated organizational changes today

including a realignment of its executive leadership team. Additionally, on the Q3 earnings call on

Wednesday, July 30, Howard Schultz, president, CEO and chairman, will provide an update on the

progress the company has made, both in elevating the customer experience and in the significant

actions the company has taken to structure the business for long-term, profitable growth. Schultz

sent the following email to all Starbucks partners earlier today:

July 29, 2008

To: Starbucks Partners

From: Howard Schultz

Re: A message from Howard---Building a stronger company for the future

Dear Partners,

I want to acknowledge from the outset some of the difficulty that many of you

may be experiencing given the tough operating environment we are facing. But

let me assure you that there has been a relentless focus on making the decisions

necessary to put us all in a position to win. Unfortunately, some of the decisions

will result in not only store closures, which we announced earlier this month, but

a restructuring of our organization that will eliminate some positions. Although I,

along with the leadership team, made the hard choices to close stores and

reduce the number of positions, which will result in loss of jobs, ultimately, I feel

that they rest with me. I fully understand the seriousness of these actions and

the concerns you may have, but please be assured that we will treat all departing

and remaining partners with respect and dignity.

We have been a public company for more than 16 years and, together, we have

created one of the most recognized and respected brands in the world, while also

providing our shareholders with significant long-term value. In the early days of

building our company, the naysayers didn’t believe in us or that our company

would even survive. And now, we can hear those drumbeats once again from

people who think that our best days are behind us. But I strongly believe that,

together, we will create an even stronger company for the future.

In January 2008, I, along with the senior leadership team, created our


transformation agenda and simultaneously, we initiated an ongoing, thoughtful

and thorough examination of all parts of our business. We framed our

transformation around three key strategies: strengthening our core business—

our coffee and our partners; elevating the customer experience; and making

decisions and investments to benefit the long-term growth of the business. I

believe, without a doubt, that these are the right strategies for us to execute in

order to make the necessary changes that will enhance the experience for our

customers and partners.

We are well into the implementation phase of transforming Starbucks, which has

included many new initiatives and corrections to our business. This month, we

announced and/or have begun implementing the following business strategies:

the closure of approximately 600 underperforming company-operated stores in

the U.S. market, with approximately 70 percent of partners in the first 50 closed

stores successfully transferred to positions in other stores (July 1); posted the

complete list of the 600 U.S. store closures on starbucks.com (July 17); the

closure of 61 stores in the Australia market, with 23 remaining open (July 29); a

reduction in our workforce of both the number of positions and partners across

the company by almost 1000 (July 29); and the realignment of the executive

leadership team (July 29).

As I have stated in previous communications, the U.S. store closure decision was

one of the most angst-ridden choices that we have made in my more than 25

years with Starbucks. Our decision to close underperforming stores in the

Australia market was just as difficult, and it in no way reflects the state of

Starbucks business in countries outside of the United States, which is quite

strong. Our challenges in Australia are unique, and there are no other

international markets that need to be addressed in this manner. Although it is not

easy, hopefully, we realize that part of transforming Starbucks is our ability to

look forward, while pursuing innovation. We strongly believe that our decisions

to close underperforming stores and reduce our partner workforce will help

support Starbucks continued growth.

As we have continued to execute our strategy, it became increasingly more

evident that a razor-sharp, unrelenting focus on our business is vital to our

success. As ceo, I understand this is a non-negotiable requirement and

concluded that I need a direct line of sight into our businesses and functions, with

a concentration on the U.S. Business, Starbucks Coffee International and

Consumer Products Group.


With this in mind, I have asked Martin Coles, chief operating officer (coo), to once

again, assume the role of president, Starbucks Coffee International, a business

that achieved great success under his previous leadership. We are excited

about Martin’s return to our International business at a time of tremendous

opportunity. Concurrent with this, we have eliminated the coo position.

In order to effectively integrate our marketing, innovation, and customer

experience, Michelle Gass, senior vice president, Global Strategy – Office of the

CEO, has assumed the leadership of the newly redefined marketing and

category team as senior vice president, Marketing and Category, which includes

Food and Beverage. Michelle’s unique experience in both strategy and

marketing will provide the organization with a clear focus in this area.

Dorothy Kim, executive vice president, Global Supply Chain Operations, has

demonstrated an expert understanding of our supply chain operations, process

and strategic implementation, which will be utilized extensively in her new role as

executive vice president, Global Strategy -- Office of the CEO; and Peter

Gibbons, senior vice president of Global Manufacturing Operations, who led

manufacturing operations, has been promoted to executive vice president, Global

Supply Chain Operations.

Vivek Varma, general manager of Communications and Public Relations for

Microsoft Platforms Services Division, has been named senior vice president for

Starbucks Public Affairs. He will assume his new position on September 8.

Please join me in congratulating Martin, Michelle, Dorothy, Peter and Vivek on

their new roles.

I would also like to take this opportunity to thank Jim Alling, who is leaving the

company. I am personally grateful to Jim for his numerous contributions to

Starbucks during his 11-year tenure and we wish him continued success as he

enters the next chapter of his life.

We have experienced a lot of change since we embarked on our journey to

transform the company. And I know that the difficult and emotional nature of our

decisions has weighed heavily on every partner in the company, which is the

most distressing part of our current business state. With sincere gratitude and

thanks for your commitment to Starbucks, I ask that we all resolve to stay the

course and remain strong as we move forward.


And please do not forget that we have had many successes that we can be

proud of such as: our nationwide Art of Espresso training in the U.S.; introduction

of innovative brewing equipment with MastrenaTM espresso machine and

Clover® brewing system; engagement with our customers through

mystarbucksidea.com; the Starbucks Card Rewards Program; and introduction of

our health and wellness platform with VivannoTM Nourishing Blends and Sorbetto

beverages. We are also receiving recognition for listening to our customers

during these tough economic times. Based on the responses received from over

1 million newly registered Starbucks card holders since we launched the program

in April, we will enhance and take our Starbucks Card Rewards program to the

next level of increased value in the fall. This will continue to demonstrate our

sensitivity to current economic conditions, as well as further our attachment with

our customers.

We have not had a Leadership Conference in two years, and I am very excited

about our upcoming Leadership Conference in New Orleans in October, when

our leaders come together---over 10,000 strong---to share our plans to build our

company for the future. We will also participate in community service projects

that will give us an opportunity to give back and help improve the lives of the

citizens of New Orleans. We are also looking forward to unveiling our fall,

holiday and FY ’09 product and promotion calendar, which I believe is the best

work we have done in years. As in the past, I know we will leave the conference

energized and aligned around the goals and objectives for fall, holiday and FY

’09, which we will share with all partners upon our return to our respective work

locations.

As I have said many times and sincerely believe, the best days for Starbucks are

ahead. This is another defining moment for our company and we will succeed!

Respectfully,

Howard

Source: www.starbucks.com/aboutus/transform/Howard%20communications%20July%2029.

pdf [assessed 27/09/08]

appendix 2


Bryant Simon at Taste3 Conference – Wine, Food, and Art, 15/06/06

“Thanks, it’s great to be here. As Chris said I’m a historian but I’m not really anymore, luckily I have

ten years. But over the last few years I have been involved in a kind of ethnography – observing,

observing Starbucks mostly. And my son the other day asked another kid what that kids dad did

and the kid said his a banker and my son said that I work at Starbucks. And I really have spend

around 12 hours a week there and looking and watching what people are doing and talking to peo-

ple about Starbucks and it’s sometime a painful experience, I listen to more Alanis Morisette than

any person should have to in their life and in acoustic no less. But, so in all seriousness I started

this book project with a kind of single proposition and that was: “That what we drink has mean-

ing”. It says something about who we are. And that we in many ways that consumption a kind of

a democratic form, and I don’t want to push this too far. We make choices with the money that we

have, and those choices again tell us something about who we are. And so what I study in many

ways is a mass phenomenon.

Starbucks started out, and you’ll see, in 1971, this isn’t the store it’s a kind of whole earth kind of

entity, with some counterculture to it. And quickly that was bled out. And now there is 13.000

Starbucks around the world in about 30 countries, you know and this is just a kind of Starbucks

is everywhere – [showing photos on slides] this is Paris. But part of what is going on here, I mean

just a sort of look at the phenomenon itself I mean again, there is 13.000 this is in China in the

Forbidden City [showing photos on slides]. But again 13.000 stores they employ 100.000 people

they open a store every six hours. But most importantly to me is, I love this one, I can’t wait one

terminal to get to a Starbucks. But most importantly to me, you know not a bold prediction here,

but most importantly to me 44 million people a week go to Starbucks, that’s a lot of hits. And

that’s what I’m interested in. What these 44 million people are doing a week. A lot of them are

repeat customer obviously, and people do different things at Starbucks and I want to talk a little

bit about the meaning here. First thing here as you know the coffee is not cheap it’s not wildly

expensive but it’s not cheap and so one of the thing I want to propose and want us to think about

is something I think about is why people pay the premium? Not long ago I was at a Starbucks

at 18th and Broadway and I don’t know if any of you have ever been to the store but it’s a really

long store and the line was literally out the door. But I was facing out of the 18th street and there

was a little cart selling “gourmet coffee” for 15 cents – there was nobody there. So again I want

us to think about why people are willing to pay the premium and here’s the story about, apropos

of yesterday right and what was going on – there’s a guy in line complaining about the price of

gasoline and then I pays 24 dollar for a gallon tall latte. So why are people paying the premium?


And again, you know, what could we learn from the purchases we make? I would suggest that

there is a kind of three ways to think about this about this consumption. One would be functional,

one would be emotional and the third would be expressive. And I just wanna kind of run through

these categories. And you can tell than I’m a teacher, you’ll have to have a list of three so that

people can take notes. Sorry I don’t mean to be talking down to you. But part of it is functional:

this is the molecule for caffeine, and you know, you can say whatever you want about caffeine but

people are addicted to caffeine, and Starbucks, I don’t want to push this too far, but, all right well,

Starbucks is I think not by accident the most caffeinated coffee on the market: a cup of Starbucks

has twice the amount of caffeine as a cup of Folgers. Now, you could be conspiratorial here and

think like cigarette companies that they try to hook people early but that will be for you to think

about. But I would suggest in other words there is a functional sort of aspect to this, I think, that

people need to serve their addictions. And that Starbucks wouldn’t work, I think, if it weren’t an

addictive product. And not only do they sell highly caffeinated coffee they sell it in mass amounts.

Not just to everyone, I mean, 20 ounces of highly caffeinated coffee is enough to addle anyone’s

brain. So in the functional terms they’re a caffeine delivery service, legalised right. So that’s the

functional part.

There is also an emotional part to it. By emotions it means that you feel better about yourself

simple as that. And, ehm, I talk to people all the time and I ask them why they go to Starbucks,

why would you buy that drink – I think that’s a caramel mocc..whatever. It’s a caramel something

that cost a lot of money, and what people will say is, you know I had a test so I bought myself

a treat, I had a hard week so I go on Fridays to treat myself for the week. The emotional part of

Starbucks and a part of why it’s working is that’s a form of self-gifting and it gets repeated again

and again and again and this is something you know, it’s a cheap form of self-gifting but it’s a

form of self-gifting and then again I talk to people all the time we talked about Starbucks and

self-gifting. Another kind of emotional sort of aspect of Starbucks ehm, many of you might live

in suburbs, we live in a world, where we are desperate for belonging if you saw the movie Crash

the opening line of Crash actually talks about how we are so desperate for a touch that we bang

into each other. Starbucks offers that language is carefully calibrated in it’s carefully calibrated you

have to master it and one you’ve mastered it you belong. They are trying to form a community of

belonging corporately sponsored and they coach their baristas and it’s in the manuals and it says in

that, it basically tells people to remember names all of this to form a connection in a world where

we are desperate for connection. That part is the emotional part of it. I don’t have a slide for this

and I know it’s a kind of criminal in such situation. But I would say that a third form of emotional

connection that people have developed to Starbucks is a desire for predictability. No these are not

all things that have to work for everybody and I think this is important some work for some peo-

ple sometimes. And so many people are desperate for predictability. We talked about you know

the consistency of for instance fast wine yesterday [referring to a Taste3 seminar carried out the

day before]. They want that predictability people tell me all the time when you’re in an airport


you want something predictable, when you go to a new town you don’t want to invest in what

economists call discovery costs, checking out every coffee shop you go to the one which is predict-

ably ok. Now, there is a reassuring sense that people you know, Americans travelling abroad go

to Starbucks for the predictability. For some of you that may see it as some form of a thin way of

travel, but then again it works on an emotional level for many people.

I think the strongest and what I’m most interested in right now is what I would call the expres-

sive branding. And that’s the form of branding that you buy something because you want to tell

something about yourself to the people that are looking at you. In other words it a performance.

A consumption is a form of performance, and Starbucks is staging these performances. I would

not think about Starbucks in terms of, I would think about it like a multimedia corporation in the

way it’s staging performances and make you the customer the centre of that performance. And

so if you like look at the basic Starbucks you know first thing you supposed to notice is, it’s not

McDonalds. It’s deliberately calibrated with stuff that looks expensive to a kind of mass audience.

I mean it’s reassuring too in its naturalness and all that, but it’s supposed to look there is ???

there is no sharp ??? right, those chairs you can buy online it’s supposed to sort of look like luxury

and the reason is that luxury is a part of performance it says “I can afford this”, and you present

yourself to the people looking at you as someone who can afford luxury. We are a nation currently

obsessed with trading up. It used to be that you proved your middle-class values through ???

and thrift your ability to safe. Now you prove it by acting rich. Starbucks offers a way to present

yourself as somebody who can afford to a sort of trade up. So let us talk a little about the art for

instance. You know why do they put that there? In a sense I think what they are saying is they’re

artistic, and let’s just think about the interiors now for a minute, they’re artistic and you get to be

artistic by going there. A little of it bleeds of and shades into you. And they, this is the art speaks

to one other thing about Starbucks there’s an attempt to engage with hip but it can’t be too hip.

Cause if you take too big a risk you’ll alienate people. Remember this is a mass-audience. But the

art again is carefully calibrated to a sort of fifties a kind of pop-art stuff. Boy that’s a crappy slide.

This was actually Starbucks really first kind of musical collaboration and it was Miles Davis. You

know Miles might have been the hippest person ever to live but they’re picking a very distinct

form of Miles Davis and that was the early fifties blue-note stuff. As I said to Chris before this is

not bitches brew. They are not pushing you to that point. But what does jazz say? As a vocabulary

it says a certain urban sophistication the play it because you can imagine yourself and you can

present yourself to someone else as sophisticated and urbane. Ehm, Dave Matthews, is now an

attempt to tap into 20 something market, I don’t think, and I’ll come back to this in just a second

??? it’s an attempt to a kind of reinvest the brand with hip, which is something I’ll come back to

as well. These, eehm, Starbucks puts quote on its cups. And it’s a kind of a crazy thing and they a

kind of hide them as well, I don’t want to put them on the couch, you know there is something go-


ing on here. And, but, they’re very clear about this. They are trying to buy in and lend themselves

into the traditional European café. To the intellectual life in the café. And you then get some of

that intellectual life. You present yourself as someone who cares about ideas. This cup interest-

ingly enough, the cups are actually, according to Starbucks, meant to stimulate the conversation

that we have in cafes. This is a cup that says wildly political proposition of a man who wishes he

haven’t been living in a closet all his life. And when students at Bay…ehm, the administration of

Bailors University complained they pulled the cups, because you can’t have too much conversation.

But again the idea is to link you, the consumer with the intellectual culture and present yourself

as a member of it.

Ehm, Starbucks in it’s architecture if you think about it is a design nightmare. If you take the natu-

ral wood, the natural floors the kind of, like, pottery barn thing of the furniture and the ceilings are

always like urban loft hip. It’s pastiche in some ways and I mean maybe pastiche is in, but it’s not

consistent. But that pastiche of the ceiling is the boho part of it. And you then represent yourself

as a kind of part of a bohemian culture. You present a version of yourself through it.

Another, you know expressive branding the comfortable chair. I want to talk now a little bit about

politics, ehm. Something we haven’t actually talked about at all. Starbucks as you know sell fair-

trade coffee, well you might not know, but they do sell fair-trade coffee. But what I think they

really are selling here, is what I would call innocence by association, and let me just talk about this

for a second. In the wake of 9/11 we learned that people around the world didn’t like us that much

– some people. We’ve learned that globalisation is a really dicy proposition filled with exploitation,

filled with inadequacies and frankly we don’t feel very good about it. And what fair trade coffee in

a sense does is it allows you to say look, I’m involved in the global world and I’m innocent of any

crime or any wrongdoing, but that’s what it is. And Starbucks places it one step further they’re

the largest consumers of fair trade coffee in the world yet it represent only about 3% of their

total buy. But go into a Starbucks and they almost always, and particularly in university towns,

and they put the fair trade coffee right by the door. I don’t know if you know anything about the

science of selling, but that’s not a selling place that’s a message place. They’re planting the idea

because it makes people feel good about themselves. It’s not, I mean, I’m not sure that fair trade

coffee can solve for instance the problems of Rwanda where they now are buying fair trade cof-

fee. We probably feel, I mean erhm, white America probably feel worse about racial issues than

anything else. Ehm, there’s a new book by S. Steel professor at Stanford called “White Guilt”. And

we work very hard in this country, we I don’t mean to exclude anyone, I talk specifically about the

white middle class, to dissociate from our nations racial past – it’s an ugly and difficult past. And

I think Starbucks understands that and they form deals with Magic Johnson to open up Starbucks

stores in underserved neighbourhoods around America. But I would suggest here, and I went to

the Starbucks in Harlem and it was the crappiest store I have ever been to, that that store was


more about Westchester than it was about Harlem. It was more about allowing whites to dissoci-

ate from racism. If you buy a product from a company that pursuit diversity, that have stores in

largely African American and latino neighbourhoods you are washed from the sins of racism you’re

innocent by association, you express something about yourself. And I think none of these works

for everyone they work for some people.

Let me end just quick, by talking about one kinda last thing, and it’s just if you load your brand

with all these meanings you run the risk of people really not liking you. Let alone taking over a lot

of street corners, errr, you run the risk of people not liking you. And one of the interesting things is

the way in which Starbucks has not only become a way that people express their values by identi-

fying with the firm but the also express their values by not going. People tell me all the time I don’t

go to Starbucks, I’m not that kind of person. I go, I wont speak their language. It’s become such

an important kinda marker that even by not going you’re marking who you think you are – a form

of expressive branding. And just a couple of anti-starbucks propositions. So this is erh, breeds like

rats. There’s lot of like jamming, re-working the erhh logo. This is a woman from San Francisco

that Starbucks sued. This is, speaking about globalisation and Starbucks, this is the battle of Seat-

tle from the late 1990’ies and Starbucks actually changed its policies in the wake of it. The woman

who threw the cash register through the window was only there by accident. Here’s the boycott

you know by not consuming you’re staying who you are. And last and sort of iconic but disturbing

image is, well this is not it, this is Delocator it’s a webpage where you can plot in the address of

the Starbucks and you can get all the independent coffee shops nearby and it’s one of the hottest

websites in America. And this is a kind of disturbing image of America, in a kind of meaning, but

represent playing around with it. Thanks for listening and having me here.

Source: http://www.youtube.com/watch?v=Fxpfx8W8C20 [assessed 18.06.08]

appendix 3


Howard Schultz Transformation Agenda Communication #1

SEATTLE; January 7, 2008

Letter To: All Partners


Twenty-five years ago, I walked into Starbucks first store in Seattle’s Pike Place Market, and from

that day forward we have taken the road less traveled. Working with an exceptional group of

people and summoning all the courage we could muster, we created a new kind of place – one that

served the kind of coffee that most people had never tasted, an environment that didn’t look like

any other store, and hiring people who were fanatically passionate about coffee and celebrated

their interaction with customers. To do this, we focused every ounce of our beings on creativity

and innovation.

Over the years, together we have built one of the most recognized and respected brands in the

world. When we went public in June 1992, we had 119 stores. We now have more than 15,000

stores and a significant and growing presence in 43 countries, serving 50 million customers a

week. These customers have placed their trust in us, and for them and for each other we need to

ensure that our future is as exciting as our past.

If we take an honest look at Starbucks today, then we know that we are emerging from a period

in which we invested in infrastructure ahead of the growth curve. Although necessary, it led to

bureaucracy. We will now shift our emphasis back onto customer-facing initiatives, better aligning

our back-end costs with our business model. We are fortunate, though, that the challenge we face

is one of our own making. Because of this, we know what needs to be done to ensure our long-

term future success around the world.

Transforming the Starbucks Experience

The Board decided that I should lead this transformation. Given this, effective immediately, in ad-

dition to my existing role as chairman, I have returned as chief executive officer for the long-term.

Jim Donald is leaving the Company. I want to pay tribute to Jim’s leadership. He was a passionate

and tireless advocate for Starbucks, and his contribution to our company cannot be overstated.

Looking ahead, the reality we face is both challenging and exciting. It’s challenging because there

are no overnight fixes. Rather, our success will come in the rigorous execution of several new stra-

tegic initiatives – that capitalize on our heritage to drive our successful future. And our reality is

exciting because there is so much opportunity ahead for Starbucks.

Our new transformation agenda includes:

- Improving the current state of the U.S. business: by giving our store partners better training and


tools, launching new products – some of which will have an impact as significant as Frappuccino®

products and the Starbucks Card – and introducing new concepts in store design, among other

enhancements to the Starbucks Experience. At the same time, we will slow the pace of our U.S.

store openings and close a number of underperforming locations, so we can renew our attention

on store-level unit economics and be laser-focused on flawless execution.

- Re-igniting our emotional attachment with our customers by restoring the connection our cus-

tomers have with you, our coffee, our brand, and our stores. Unlike many other places that sell

coffee, Starbucks built the equity of our brand through the Starbucks Experience. It comes to life

every day in the relationship our people have with our customers. By focusing again on the Star-

bucks Experience, we will create a renewed level of meaningful differentiation and separation in

the market between us and others who are attempting to sell coffee.

- Building for the long term, which has two distinct pieces: re-aligning Starbucks organization and

streamlining the management of the organization to better support customer-focused initiatives

by ensuring our support and planning functions -- from back-end IT systems to store operations

-- are most effectively dedicated to the customer experience. This will help us to make smarter

decisions about new products and initiatives and bring them to market more quickly than ever in

our past.

- Expanding our presence around the world, by building a profitable business outside the U.S., and

capitalizing on the enormous, untapped potential for our brand. We will redeploy a portion of the

capital originally earmarked for U.S. store growth to the international business. Though we have

5,000 international stores today, we are just at the beginning.

Taken together, these initiatives will help drive our enduring success. And they will come with

changes in our organization…some big and some small. I will be decisive in making them. Right

now, I can tell you they will include a realignment of our leadership structure, as well as a series of

actions to reduce costs and reallocate resources to customer-focused initiatives.

But even as we execute this transformation, there are certain integral aspects of our company

that will not change at all. These include our commitment to treating each other with respect and

dignity, providing health care and Bean Stock for all of our eligible full- and part-time partners, and

our commitment to our community efforts, our ethical sourcing practices and encouraging our

coffee suppliers to participate in our CAFE practices program in our origin countries.

Stay Tuned

I know that you may have a number of questions. Attached is a brief Question and Answer docu-

ment that answers some of them. And you have my commitment that there will be more infor-

mation to come over the next few weeks and I will keep you informed. Specifically, I will be meet-

ing with the leadership of the Company in the near future to discuss our transformation agenda,

and in the coming weeks we will communicate these details with you, including your role in it.

In the meantime, I want to thank you for your dedication to Starbucks and for your commitment


to earning the trust of our customers every day. Our success is up to us. We know what we need

to do to win, and we will do it.

Onward,

Howard


Voicemail To: All Partners


Hello partners, this is Howard Schultz. Today, Starbucks is announcing a series of strategic initia-

tives to increase shareholder value and capitalize on our significant U.S. and international oppor-

tunities.

Going forward, we will be refocusing our entire organization on the Starbucks Experience, by going

back to our heritage and what made us so successful in the first place; putting the customer back

at the center of everything we do.

The execute this transformation, the Starbucks Board of Directors has asked me to return as your

chief executive officer, in addition to serving as chairman, effective today. This is not an interim

role for me. I’m in it for the long-term and I promise to be decisive and do all I can to lead Starbucks

to new heights.

Jim Donald will be leaving the Company and let me just pay special tribute to Jim who has been a

passionate and tireless advocate of the company. I’m grateful and I thank him for his significant

contributions and I wish him nothing but the best in the future. He’s been a business partner and

a dear friend and I’m sorry to see him leave and I think it’s clear to say that his contribution to our

Company cannot be overstated.

The success of Starbucks rests on the emotional connection we have with each other and with

our customers. It also rests on how we implement our strategy and innovate to stay ahead in a

competitive marketplace and tough economic environment.

I think recently we have become victims of our own tremendous success. We are emerging from

a period in which we have invested heavily in infrastructure ahead of the growth of the company

and, although necessary, it has lead to bureaucracy that has both slowed us down and cost us

money. We now shift our emphasis back to consumer facing initiatives, betting aligning our back

end costs with our business model.

In refocusing our Company, we are going to play to our strengths – to what has made Starbucks

and the Starbucks experience so unique; ethically sourcing and roasting the highest quality cof-

fee in the world, the relentless focus on our customers, the trust we have built with our people,

and the smart, entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our

company.

To this end, in the coming months you will be seeing internal changes and exciting new develop-

ments at Starbucks.

We’ll share the specifics as soon as we can. But in general, I can tell you that our transformational

agenda will have three objectives:

- To improve the current state of the U.S. business

- To re-ignite the Starbucks experience through driving improvement and change in all areas that

“touch the customer”; and

- To build for the long term; this has two distinct pieces;

- Realign our organization and streamline the management of the organization to support cus-

tomer focused intitiaves and

- Accelerate our International success story and growth even further

In closing, let me say that we are truly in this together. Every partner plays a critical role. I am ask-

ing that each of us focus on carrying out our responsibilities in the best way possible, and help to

create welcoming and distinctive places that are truly a “third place” for customers and the com-

munities that we serve.

Let me just say to everyone who is listening, I am sincerely excited and energized by the challenges

and the opportunities we have. I am here for the long term. I’m here to help every one of you suc-

ceed and to restore the company to the greatness it has been.

But our success is up to you, not only me, but all of you and all of us. We know what we need to

do to win and we will do so.

Thanks for all you do and all you have done and for contributing so much to Starbucks and to all

those people who work so hard and tirelessly behind the scenes who contribute to so much.

Thank you very much. All the best.

Howard

Source: http://www.starbucks.com/aboutus/pressdesc.asp?id=814 [accessed 10/10, 2008]

appendix 4



Howard Schultz Transformation Agenda Communication #4 Howard Schultz Partner Update:

What I Know to be True

February 4, 2008

What I Know to be True

Dear partners,

As I sit down to write this note (6:30 a.m. Sunday morning) I am enjoying a spectacular cup of

Sumatra, brewed my favorite way – in a French press.

It has been three weeks since I returned to my role as ceo of the company I love. We have made

much progress as we begin to transform and innovate and there is much more to come. But this

is not a sprint – it is a marathon – it always has been. I assure you that when all is said and done,

we will, as we always have, succeed at our highest potential. We will not be deterred from our

course – we are and will be a great, enduring company, known for inspiring and nurturing the hu-

man spirit.

During this time, I have heard from so many of you; in fact, I have received more than 2,000

emails. I can feel your passion and commitment to the company, to our customers and to one an-

other. I also thank you for all your ideas and suggestions ... keep them coming. No one knows our

business and our customers better than you. I have visited with you in many of your stores, as well

as stopping by to see what our competitors are doing as well.

It’s been just a few days since my last communications to you, but I wanted to share with you

what I know to be true:

• Since 1971, we have been ethically sourcing and roasting the highest quality Arabica coffee in the

world, and today there is not a coffee company on earth providing higher quality coffee to their

customers than we are. Period!

• We are in the people business and always have been. What does that mean? It means you make

the difference. You are the Starbucks brand. We succeed in the marketplace and distinguish our-

selves by each and every partner embracing the values, guiding principles and culture of our com-

pany and bringing it to life one customer at a time.

Our stores have become the Third Place in our communities - a destination where human connec-

tions happen tens of thousands of times a day. We are not in the coffee business serving people.

We are in the people business serving coffee. You are the best people serving the best coffee and

I am proud to be your partner. There is no other place I would rather be than with you right here,

right now!

• We have a renewed clarity of purpose and we are laser-focused on the customer experience. We

have returned to our core to reaffirm our coffee authority and we will have some fun doing it. We

are not going to embrace the status quo. Instead, we will be curious, bold and innovative in our

actions and, in doing so, we will exceed the expectation of our customers.

• There will be cynics and critics along the way, all of whom will have an opinion and a point of

view. This is not about them or our competitors, although we must humbly respect the changing

landscape and the many choices facing every consumer. We will be steadfast in our approach and

in our commitment to the Starbucks Experience - what we know to be true. However, this is about

us and our customers. We are in control of our destiny. Trust the coffee and trust one another.

• I will lead us back to the place where we belong, but I need your help and support every step of

the way. My expectations of you are high, but higher of myself.

• I want to hear from you. I want to hear about your ideas, your wins, your concerns, and how we

can collectively continue to improve. Please feel free to reach out to me. I have been flooded with

emails, but believe me, I am reading and responding to all of them.

As I said, I am proud to be your partner. I know this to be true.

Onward ...

Howard

P.S. Everything that we do, from this point on (from the most simple and basic), matters.

Master the fundamentals. Experience Starbucks

Source:

http://www.starbucks.com/aboutus/pressdesc.asp?id=825

[accessed 10/10, 2008]

appendix 5


Howard Schultz Transformation Agenda Communication #8

Seattle, February 25, 2008

To: All Partners


Re: As we embark on Espresso Excellence Training

Aged Sumatra … that’s what I’m drinking as I write you this note. Hands down, it’s my favorite

coffee. Aged for three to five years in a warehouse in Singapore, then shipped as green coffee to

our plant in Kent, Washington, and roasted to perfection. The result is a stunning cup of coffee.

The velvety mouthful, the full-body of one of our classic Indonesian coffees, and the subtle but

ever-present earthiness and spiciness brought to life by our proprietary aging process. It’s rare, it’s

exotic, and it’s ours. What a gift … and we get to share it with one another and with our custom-

ers.

Tomorrow evening, we will come together in an unprecedented event in our company’s storied his-

tory. We will close all of our U.S. company-operated stores to teach, educate and share our love of

coffee, and the art of espresso. And in doing so, we will begin to elevate the Starbucks Experience

for our customers. We are passionate about our coffee. And we will revisit our standards of quality

that are the foundation for the trust that our customers have in our coffee and in all of us.

But, as I think about it, there is another perhaps equally important reason why we have scheduled

this training. It’s to celebrate who we are.

We are Starbucks. We should be incredibly proud of what we have built. We are the worldwide

leader of specialty coffee. And, believe me when I tell you, we are just getting started. We will

overcome the difficult and humbling challenges we face, and will be stronger for it. You have my

word on that.

We are Bean Stock, we are Healthcare, and we are also the Cup Fund.

We are at our best when we are entrepreneurial and courageous, push for innovation and reject

the status quo. We are leaders not followers--we leave that for others.

We are the third place in the lives of millions of our customers. We are the coffee that brings peo-

ple together every day around the world to foster conversation and community.

As Starbucks partners, we are bound together by the passion we have for our coffee and the

customer experience. More than 170,000 of us stand for quality and an uncompromising ethical

standard. We uphold our guiding principles by demonstrating respect and dignity for one another,

and for our customers.

Thank you in advance for embracing tomorrow night in the spirit in which it is intended. Have fun,

but also make it matter. Learn, teach, and share with your fellow partners.

Celebrate our coffee, one another, and the respect we have for our customers.

Onward,

Howard

Source: http://www.starbucks.com/aboutus/pressdesc.asp?id=833 [accessed 10/10, 2008]

Documents

The Story of Starbucks