As one of the leading players in coffee& snacks retail industry, Starbucks is a well- known brand all over the world today. Holding a market share of 39.8% among all coffee chains in US and 25% in the UK, the firm is the main target of competition for many rivals (Statista, 2016). For instance, Dunkin Brands, the closest competitor of Starbucks in the US market, has a share of around 25% and many other rivals such as Costa Coffee and Tim Horton’s are closely following Starbucks in terms of share and quality (Geereddy, 2014). Within the North American coffee retail market, the players usually distinguish themselves with specialty and quality of their coffees. This is also what Starbucks had been doing by offering differentiated products such as various flavors of Brazilian, Ethiopian and Arabic coffees in their stores. High- quality service within stores had also been an area of competition among these big players for a long time until very recently. Every specialty coffee retailer in the market is characterized by having trained staff and an efficient way of serving in stores.
The event that changed the course of this game was a campaign by Starbucks in 2014. After seeing that the conventional ways of competing are not effective enough in 21st century, the firm tried and found a gap for improvement in the value they provide to their customers. Considering that coffee consumption was highest among younger generations with increasing trends in previous years (MordorIntelligence, 2018), Starbucks aimed to improve their relations with these customer segments and also benefit from their involvement with the campaign. In order to differentiate their new environment friendly cup, Starbucks decided to benefit from the wisdom of crowds and initiated a crowdsourcing campaign in US and Canada. The firm asked its customers to paint their traditional white cups with any design they want and share its picture with the #WhiteCupContest hashtag (Starbucks, 2014). The business problem in this case was Starbucks’ need for a strategy to contact its customers and run an environment friendly campaign. So, their problem was clear and structured, which enabled them to use crowdsourcing as a means of solving this (Tsekouras, 2019).
To address this problem, Starbucks announced that the winner of this contest would receive a gift card worth $300 and their design would be mass produced and sold at Starbucks stores throughout North America. Starbucks also benefitted from the terms technical and social marginality and how they interact in this project. As described by (Tsekouras, 2019), technical marginality is a solver’s self-assessed technical expertise distance from the problem field, whereas social marginality is a solver’s distance from the social group that is prevalent in the relevant field. Any customer who were confident with a decent level of drawing technique could attend the contest, so the contest only required a basic level of technical marginality. Being common people instead of designers or painters provided them a room for creativity due to high social marginality. With the combination of a basic technical and high social marginalities, the contest provided ideal circumstances for attendants in terms of creativity in crowdsourcing (Tsekouras, 2019). Knowing that most of Starbucks customers already painted their cups for fun during their store visits (Starbucks, 2014), this initiative helped the firm to positively reinforce those in store experiences.
By asking their customers to come up with a design for their white cup, Starbucks actually outsourced the task of designing the cups on their own. Since those cups were to be produced in a way that enabled up to 30 uses, their design was an important part of the initiative. People would of course prefer to use a cup for 30 times when they like its design if not for environmental reasons. Calling for creative and fun designs helped Starbucks to target young adults which represented the early adopters of specialty coffee in terms of age. People at those age usually start adopting their coffee habits, mostly with limited experience on the topic. These age groups represent “the chasm” which is the state of a customer in their journey when they are at the early stage of adopting a product. And according to (Tsekouras, 2019), customers from the chasm is a good source for new ideas to businesses that aim to conduct crowdsourcing. Even if Starbucks was not aware of this, the choice of target customers was correct for the aim of this business idea.
Bottom line: Was this an efficient idea?
As a result of this campaign, more than 4000 cup designs were shared and a 21 years old student from the University of Pittsburgh won the $300 prize. Her design was then printed on the mass produced and reusable white cups Starbucks started to manufacture the following year. The campaign has helped Starbucks to advertise their sustainability efforts with the reusable cup. Afterall, the managers were so happy with the results, they launched the campaign again in 2015 for their store employees (Starbucks, 2015). Considering the efficiency of the idea, these results should not be a surprise. For instance, the idea provided joint profitability by granting customers product utility through giving them the chance to design their daily cups in their own way, and also giving the chance to be the one whose design is used throughout US and Canada. Participating customers received the opportunity to raise their design ideas and receive $300 on top of the feeling of success. On the other end, Starbucks benefitted from advertising their sustainability efforts to the whole North American market and also fostering customer relations by listening what they had to say.
Moreover, the idea was feasible in terms of required allocations; since it did not require any internal arrangements except using their social media accounts for advertising the campaign. They were going to produce and sell reusable cups anyways, so crowdsourcing the design of the cup was actually one less expense entry from the business proposal. Starbucks also did not have any environmental bindings or expenses that would hinder the application of this idea. In fact, they have supported the feasibility of their relationships with environment- concerned social groups with the White Cup Contest. This initiative of Starbucks can be an example for many other retailers which try to incorporate their customers in certain phases of product development.
Geereddy, N. (2014). Strategic Analysis Of Starbucks Corporation. [online] Available at: https://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf [Accessed 28 Feb. 2019].
Mordorintelligence (2018). Coffee Market Analysis, Share, Size, Value | Outlook (2018-2023). [online] Mordorintelligence.com. Available at: https://www.mordorintelligence.com/industry-reports/coffee-market [Accessed 28 Feb. 2019].
Starbucks (2015). Starbucks. [online] Stories.starbucks.com. Available at: https://stories.starbucks.com/stories/2015/starbucks-white-cup-contest-exclusively-for-partners/ [Accessed 28 Feb. 2019].
Starbucks (2014). [online] Stories.starbucks.com. Available at: https://stories.starbucks.com/stories/2014/starbucks-invites-you-to-decorate-its-iconic-white-cup/ [Accessed 28 Feb. 2019].
Statista (2016). Market share of major U.S. coffee chains, 2016 | Statistic. [online] Statista. Available at: https://www.statista.com/statistics/250166/market-share-of-major-us-coffee-shops/ [Accessed 28 Feb. 2019].
Tsekouras, D. (2019). CCDC Lecture 3.