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COST SAVINGS THROUGH GROWTH

When a company rapidly expands, costs can be saved through standardization and automation.

However, if cost-effective growth is the top and overriding priority, the customer experience can suffer. While this may be far from the intention, small cost-saving changes can incrementally detract from the customer experience.






SOCIAL GATHERING PLACES AS A BUSINESS MODEL

Starbucks is more than just a place where you buy goods and services - it has positive externalities for customers as the modern-day social gathering place. At social gathering places, customers avoid the unpleasantries of life and will stay and linger.

Consumer studies show that the number and amount of purchases you make increase with the number of hours you spend at a location. For many people, Starbucks is now integrated into their daily life and routine, in some ways similar to how church was historically. There is brand loyalty.





The customer derives value from the experience, not just the product itself, and this applies to Starbucks more than most.


STRATEGIES FOR GROWTH

Cost-effective growth through increasing the number of stores is very important, but should not be the only avenue of approach. A single strategy runs the risk of failure.

Instead, growth can come from multiple high-potential ideas and strategies, particularly those that do not degrade the customer experience. Some strategies may be duds, but some will be successful too.





For Starbucks, this meant greater depth in their product line to adjacent markets, such as VIA for the instant coffee market, 'lighter' coffee for different tastes, as well as other strategies involving employee retraining and emerging market growth.