Apr 24, 2010

Starbucks: America’s Third Space between Work and Home

American consumer buying habits is one of Starbuck’s direct forces that strongly influence the company’s progress. In order to illustrate this, it’s empirical to start out by describing the American consumer. Americans tend to be a very goal-oriented, brand loyal and demanding consumers in respects to the brands they purchase. In regards to food consumption, according to the 2004 United States Census Report, Americans consumption of food away from home has grown 10.1%, contributing to the 8.3% increase in overall food spending that same year.

The consumption of coffee in America is rising, in part due to Starbucks phenomenon. More than one-hundred nine million persons consume coffee in a daily basis. In addition, fifty-two million drink coffee occasionally. According to Chicago-based market-research firm, Mintel Consumer Intelligence, a third of Americans drink coffee away from home: in offices, restaurants and coffee shops. This leads to gourmet coffee brands being responsible for most of the U.S. growth in coffee sales (Cuneo, Advertising Age 1994).

While conducting his own research to write a story on Starbucks, the journalist Bart Cleveland, from Advertising Age, explained, “As I walked to my neighborhood Starbucks, I did my usual people watching. There was a myriad of sharply dressed business people, college kids studying, a woman in running attire and two guys in cowboy hats. Everyone belong here.” The company reaches out to a multiethnic diversity and this sense of belonging is what makes the company differ from other coffee stores; As Starbucks Chairman, Howard Schultz, once stated: “Starbucks’ stores are a place to feel like you belong.” Starbuck’s American consumer works or studies in high-traffic areas, who wish to decompress from their daily productivity. They either have the time to have their drink while relaxing in the store or need to go in an out with their purchase. An interesting fact is that almost half of the company’s consumers customize their drinks and the average consumer visits the store five times a month. In terms of percentages, 45% of the Starbucks consumers are women, 13% are between the ages of eighteen and twenty-four, 37% are of color and 56% are college graduates (O’Conner, BC Business 2005).

Why people don’t mind paying four dollars for a latte, instead of paying two dollars somewhere else? The company has established itself as not only a coffee destination, but as an “experience” itself, a destination if you will. People who go to Starbucks are looking for privacy and anonymity, but yet want to be in a public space. Consumers are not looking to build enduring relationships while in the store, but yet they have the opportunity to glimpse at other people’s lives by feeling part of a community. (Thompson & Arsel, Journal of Consumer Research, 2004).

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