Trade-off Map for Starbucks

Inexpensively Leapfrogging the Competition
WHY MORE STARBUCKS MEANS LESS PROFITScenarios and Strategies for Moving From the Fidelity Belly to the Hit ZoneDr. Rod King

DELIGHT-PAIN BALANCE Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
MARKET (CUSTOMER MAIN DESIRED EXPERIENCE/INTENT/NEED/OBJECTIVE/JOB): …………………………………………………………………..……….
DELIGHT (Fidelity)
PAIN (Inconvenience)

Quality (Content/Performance)
Cost (Price)
Differentiation (Social Status/Cachet)
Inaccessibility/Unavailability
Personalization (Identity/Character)
Complexity (Time)

TOOL
ALTERNATIVES: ………………
Trade-off Quotient (TQ)
= Pain/Delight
= Inconvenience/Fidelity
= Customer Exp. Quotient
SELECTION/ACTION: ………
Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

TRADE-OFF MAP for the Starbucks Experience Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
Zero Trade-off
(cf. Wrecking-ball moment;
Fidelity mirage)
MARKET (CUSTOMER JOB): Drinking, eating, and meeting in a delightful and surprising ambience Period/Year: 1990s to 200X
Luxury Spot –
Starbucks
(1990s – Early 2000s)
High
Luxury Spot
Oasis –
Starbucks
(2007 – Date)
Disruption Spot –
MacDonald’s
Disruption Spot
DELIGHT –
Fidelity
Low
Strategic Choice
(Super-)convenience
Low
High
PAIN: Inconvenience

TRADE-OFF STRATEGY of StarbucksStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
Name of Business: Starbucks Year: 1990s - Date
Sector/Ecosystem/Industry: Food/Entertainment
Mission/Vision: To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time
ELEMENTS OF “EXPANSION” STRATEGY FOR STARBUCKS:
Trade-off (Value Chain) Strategy

DELIGHT (Fidelity) TACTICS:
Eliminate ……………………………………………

- Reduce Social Aura/Cachet, Identity (Character), Love (Loyalty/Fun), and Need
- Increase ……………………….……….……………
- Create/Procure ……………….…….……………

PAIN (Inconvenience) TACTICS:
Eliminate ……………………………………………

- Reduce ……………………………..…..……………
- Increase Accessibility/Availability and Simplicity

Create/Procure More Stores or Franchises

Customer Value Proposition
High end-content at premium price, everywhere
Targeted Customer Segment(Interviewees)
Well-to-do customers in the ‘short head’
Customer Experience/Value Proposition: Drinking, eating, and meeting in a delightful and surprising ambience
Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

TRADE-OFF INTERACTION DIAGRAMImpact on Customer Experience Factors: After Expansion Strategy of Starbucks Facilities
Quality
(Content/ Performance)
Need
Accessibility/
Availability
CUSTOMER
Love
(Loyalty/Fun)
Cost (Price)
Social Aura/
Cachet
Simplicity
Identity
(‘Character’)
Key
: Strategic Move : Increase : Decrease : No Change

Inadequate conception and execution of expansion (Sweet Spot) strategy: proliferation of a ‘luxury’ brand has to be accompanied by continuous innovation that enhances the product/service’s quality and identity as well as love and need. (cf. Cirque du Soleil)
Starbucks’s emergent and tacit value proposition has inherent conflict:
High-end content at premium price, everywhere.
(cf. Law of supply and demand)
Misalignment between positioning of brand and actual customer experience:
Starbuck’s original brand is in the ‘Luxury Spot’ while its latter products/services/ customer experiences are in the Oasis of the Fidelity Belly.
The original target - High-end customers - experience a higher degree of trade-off and a fewer number visit Starbucks. For high-end customers, Starbucks moved away from its Luxury (high fidelity-high inconvenience) or ‘exclusive’ spot.
SUMMARY OF
WHY MORE STARBUCKS
ARE RESULTING IN
FEWER CUSTOMERS AND LOWER PROFIT
‘Good-enough’ customers are not strongly attracted to Starbucks products because of availability of good enough, cheaper, and convenient alternatives such as in MacDonalds’.
(cf. Competitive Degree of Trade-off)
Starbucks did not significantly increase the quality of its products.
The Starbucks experience is in the Oasis of the Fidelity Belly. However, Starbucks does not change its business model or pricing strategy. One option of making Starbucks’s products more convenient is to reduce the price of its items.
Brand confusion: Starbucks is diversifying and moving away from its core meaning and experience. Consequently, it is currently not easy to define Starbucks’s business as well as customers.

5 HIT STRATEGIES & CUSTOMER EXPERIENCES FOR STARBUCKS Moving From the Oasis of the Fidelity Belly to the Hit Zone
Zero Trade-off-Experience
(cf. “Wrecking-ball moment”)
‘Hit’ Zone
MARKET (CUSTOMER JOB): Drinking, eating, and meeting in a delightful and surprising ambience Period/Year: 2009to 200X
High Fidelity
SuperHit-Experience
Sweet Spot-Experience
Luxury Spot-Experience
Oasis Experience-
Starbucks
(2007 – Date)
Disruption Spot-Experience
DELIGHT:
Fidelity
Low Fidelity
Fidelity Belly
(Super-)convenience
Inconvenience
PAIN: Inconvenience

THE 10 TRADE-OFF STRATEGIES & CUSTOMER EXPERIENCESStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
Zero Trade-off-Experience
(cf. “Wrecking-ball moment”)
‘Hit’ Zone
MARKET (CUSTOMER JOB): ………………………………….
Period/Year: …………….…………………………………………..
High-end
SuperHit-Experience
Sweet Spot-Experience
Luxury Spot-Experience
Disruption Spot-Experience
Oasis-
Experience
Volcano- Experience
DELIGHT:
Fidelity
Low-end
Green Ocean- Experience
No Man’s Land- Experience
Red Ocean- Experience
Fidelity Belly
Convenience
Inconvenience
PAIN: Inconvenience

WHO?
WHAT?
WHERE?
WHY?
MARKET
(CUSTOMER JOB):
WHEN?
HOW MUCH?
HOW?
WHAT NEXT?

BRAND EQUITY
PROFIT (REVENUE/COST)
COMPETITIVE POSITION IN SECTOR
CUSTOMER LOYALTY
Higher Level Criteria for
ASSESSING IMPACTS OF A BUSINESS STRATEGY
CORE COMPETENCE (KNOWLEDGE)
SHAREHOLDER VALUE
STRATEGIIC FIT IN VALUE NETWORK
ECOSYSTEM GROWTH/SUSTAINABLILITY

REFERENCES
Christensen, C.M. (1997) The Innovator’s Dilemma. Boston: Harvard Business School (HBS) Press.
Kim, W.C.; Mauborgne, R. (2005) Blue Ocean Strategy. Boston: Harvard Business School (HBS) Press.
King, R. (2009) Fractal Box Thinking: A Simple Visual Tool for Total Problem Solving and Innovation. Fresno, California: TOAD Publishing.
Maney, K. (2009) Trade-Off. New York: Broadway Books.
Verganti, R. (2009) Design-Driven Innovation. Boston: Harvard Business School (HBS) Press.
Dr. Rod King

Thought Leader, Speaker, Consultant, and Trainer on Trade-Off Mapping & Strategies
rodkuhnking@sbcglobal.net & http://tradeoffmap.ning.com
http://twitter.com/RodKuhnKing