Summary
What is interesting about Starbucks coffees is that it is a hip drink. Everyone wants to go to a Starbucks store because it has a nice atmosphere, you get a free wifi connection, and the coffee is very good, addicting good!
So, what can I say? Howard Schultz, the man behind the making of the company, is a smart business person. He is popular and a rock star who knows how to make his customers feel happy and relaxed in the coffee lounge environment.
Now, if you think about it. His product and service cater to the natural tendencies of human nature. Personal note: I don’t drink any Starbucks coffee, not because I am trying to save money or boycott it. I just don’t drink any coffee at all.
- Addicting drink – body craves it; caffeine influences the mind
- Good ambiance – comfortable environment, good chairs to sit on and relax
- “Free Wifi” which you actually pay for in your cup of coffee
- Hip feeling – feeling you are cool as you drink the coffee (emotion driven)
These things are all part of Starbucks’ marketing plan. A lot of the big businesses spend billions of dollars in research and marketing. They study consumer behavior, buying patterns, branding, and so many other aspects of the shopping experience. If you don’t believe me, check the marketing model below taught in business schools:
So What Am I Saying?
You need to understand why businesses exist. They are there to make money. They are there to win customers’ loyalty. They have strategies; they have tactics to implement their plans. When you understand this, you understand how to act and respond accordingly.
I can’t list all the marketing models and frameworks business establishments use, but if you focus on understanding yourself (your vulnerabilities and weaknesses and strengthening your weak spots), you will most likely avoid their their marketing efforts and be at an advantage.
Related Topics
Differentiating Businesses
There are certainly many businesses that customers can’t live without. They provide you with what you need – food suppliers, home builders, internet providers, transportation, telecommunication, others.
There are also those who cater to your pleasures and wants – self-image, luxury, too much convenience, etc. One can live without these things; you can avoid them.
Small things count
The $2,640 spent annually on Starbucks may be too small or too big depending on one’s income. But, remember it is the little things (attention to detail) that count, and out of small things grand things come to light. See the chart below how $11 turn to $2,640.
What Is $2,640 Worth?
What Would I have Done With That Money?
I would have invested that money in Callon Petroleum (NYSE: CPE). This has been one of my favorite stocks since 2011. The stock then traded at ~$5/share. It currently trades at $15/share. I just sold my position.
This company is an oil and gas company that had historically focused on the Gulf of Mexico. They were hit hard during the financial crisis. They had a lot of debt then.
But management was smart. They reduced their debt. They removed their exposure from the Gulf of Mexico and transferred to land based oil production in the Permian Basin of Texas. They worked on increasing their production and lowered their costs.
They have been prudent.
I made 3x my original investment in this company over a 4 year period.