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©2019 Lee Kuykendall

The Ask

Develop a product extension that will elevate the brand and increase sales growth.

Background

Starbucks’ purpose is “to be a different kind of company. One that not only celebrated coffee but also connection. We’re a neighborhood gathering place, a part of your daily routine.”

Problem

Starbucks is experiencing a slowed growth in sales because their product innovation isn’t working. Seasonal and regional introductions lead to short-term spike in sales, but don’t have lasting growth for the company.

Research

We structured a brand architecture to analyze Starbucks’ portfolio. Its product innovation in food and drinks were not increasing sales. The company was settling for short-term gains instead of lasting growth.

Insight

Starbucks’ strongest product is not the menu that customers come for. It’s the coffee shop atmosphere that they want to stay for.


Starbucks has the largest mobile payment app in the U.S. The app is built for utility, but lacks the social intimacy offered at a coffee shop.

Opportunity

Challenge the perception that Starbucks is a grab-and-go spot by focusing on community over coffee.

Solution

Before the internet, the bulletin boards at Starbucks were the hub for community information.


Today’s digital age moved these connections out of Starbucks' shops and made their bulletin board an ignored space.


We crafted a solution that brought communities back together by bringing their bulletin board to the Starbucks app.


The app extension, called Starbucks' Bulletin, is designed to connect Starbucks' customers in their local area.

Forecasting

In the near future, Starbucks plans to open Reserve roasteries in major cities across the globe. To better utilize the large space in Starbucks Reserves, we recommend including group meeting rooms that can be booked through Starbucks Bulletin.


The number of people working remotely for four-five days a week has increased from 24-31% since 2017. Within five years, co-working spaces are estimated to reach 1.2 million members. This change in work style is an opportunity for Starbucks to become the preferred meeting space for young professionals.

Growth Potential

Starbucks’ annual revenue is $6.4 billion. $882 million is from mobile payments. Mobile payments are growing 15% YOY.

 

 

In total, Starbucks has 30 million app users. 13 million are heavy users who spend, on average, $768 per year, and 17 million are regular users who spend, on average, 

$384 per year.

 

We project that Starbucks Bulletin will capture 5% of heavy users and 7% of regular users to purchase an additional three cups of coffee per year. This will increase revenue by $22 million in the first year, translating to a .35% sales growth. If app usage continues to grow at the same rate, this extension will provide exponential growth in the long-term.

Team:

Mason Shuck - CBM
Michelle Lee - CBM