Starbucks has one of the most recognizable brands. In recent years, however, the expansion strategy of Starbucks's business has not been doing wellas met with success. Kevin Maney, in his new book "Trade-Off," describes Starbucks as being in the 'Fidelity Belly.' This presentation maps the customer experience of Starbucks while providing instruments and ideas for improving the customer experience and consequently, profit in Starbucks.

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

3. Cost (Price)

4. Differentiation (Social Status/Cachet)

5. Inaccessibility/Unavailability

6. Personalization (Identity/Character)

7. 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

8. 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 Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

12. 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 Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

13. 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. Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

14. 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 Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

15. 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 Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

16. WHO? WHAT? WHERE? WHY? MARKET (CUSTOMER JOB): WHEN? HOW MUCH? HOW? WHAT NEXT? Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

17. 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 Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

18. 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