Introduction:

Products are the lifeblood of any business. Businesses live or die by the goods and services
they produce. The current market climate necessitates a robust product portfolio if a business
is to survive the intense competition. This paper examines Starbucks in an effort to pin down
the exact components that have contributed to the company's meteoric rise to fame. Using
Kotler's three-tiered product model, in this article, we'll take a closer look at Starbucks'
Product offerings to see how they've contributed to the company's dominance in the coffee
industry. This report makes further effort to investigate the Starbucks product in further
detail, focusing particularly on the attributes like product quality, Features, Design and style
given by Starbucks. With such a wide range of offerings, it's crucial to grasp what sets the
company's flagship product apart from the competition. This report concludes with an
investigation into Starbucks' Star product category, drawing on an examination of the
company's historical performance from the obtainable secondary sources.
Understanding the Product:
As Highlighted by Kotler, Armstrong and Opresnik, (2019) Products now a days are more
than just tangible things which are sold in the market. Instead of just offering mere Products
and services companies are focusing on providing the additional value to differentiate itself.
Using the Three product level model we’ll try to understand different layers of the product
being offered by the Starbucks.

Image source: Kotler, Armstrong and Opresnik, (2019)

What is the Core Customer Value being offered by starbucks?

As a core product we can Identify Coffee is the physical product every Starbucks customer is
buying. “Coffee is at our core. It is where we started and why we are here” Starbucks (2022).
But if we dig a little deeper Starbucks isn't just selling coffee, but rather a way of life.
Everything else revolves around it to provide consumers with the signature Starbucks
atmosphere they've come to expect. Each element—from the coffee to the loyalty systems to
the store layouts—adds to the whole, resulting in the signature Starbucks Experience.

What is Starbucks Product classification?

When it comes down to it, the great majority of the items sold at Starbucks are what one
might refer to as "convenience products." This is due to the fact that customers buy these
items in large volumes and that they are available at every Starbucks location. According to
Garcia (2022), the products sold by Starbucks can be categorized as falling into the following
categories:
a. In-Store Coffee Beverages and the Frappuccino Line – Hot & cold coffee drinks,
Iced Frappuccino’s.
b. Non-Coffee Beverages Such as Teas and Juices – Hot/cold ice teas, Chocolate
drinks, sodas etc.
c. In-Store Range of Food and Meal Selection – sandwich, wraps, pastries, cakes,
doughnuts, Processed or packaged food, cookies & Chocolates
d. Coffee Capsules and Instant Coffees – Roasts, single use coffee capsules
e. Company-Branded Merchandise Items – Mugs, tumblers, water bottles, reusable
straws, shopping bags, cold cups.

How does Starbucks actually create core customer value?

Next, we'll investigate how the coffee giant create the core customer value. At the end of the
day the customer is going to buy the actual Coffee product. We’ll try to understand the key
attributes of the Coffee being created at Starbucks, i.e., what is quality of the product? What
is the feature of the products? And what is the styling and design of the products
 Coffee Product Quality- Linda (2022) argues that Starbucks pays close attention to
detail when processing its coffee. They take every precaution to guarantee that their
roasted coffee is of the finest quality, beginning with the beans they use. Because of
this, every cup of coffee is full of robust flavour. As Dudovskiy (2022) elaborates, in
order to guarantee a high standard of coffee, after sourcing 100% unroasted café
arabica coffee from throughout the world, Starbucks transports it to the United States,
where it is roasted in-house and supplied to stores around the world. This is done so
that coffee is always perfectly roasted and the same high standard is maintained all
throughout the world. Starbucks cultivates its own coffee beans to guarantee a reliable
supply of raw material for future product development experiments. Starbucks also
never skimps on quality when it comes to how the product is delivered to the client in
the locations. Service at Starbucks is never hurried, even if modern life is increasingly
hectic and the pace of customer service is quickening. The goal is to make a drink
from scratch that tastes like a Starbucks beverage but isn't a Starbucks drink.
 Coffee Product Features – Features is what we get extra on a basic product. It is
what differentiates our product from the other competitors. Starbucks customers can
customize their drinks as per their lifestyle. As highlighted by Callahan (2022) this is
what the Interim CEO has to say about the customization aspect of their business
“There is no other coffee company anywhere in the world that has our ability to
respond instantaneously to a customer’s request about customization," said Starbucks
Interim CEO Howard Schultz in an earnings call. "Nor is there a coffee company that
has our ability behind the counter in terms of flavours, syrups, modifiers, foam, et
cetera, to provide the customer what they want.”
This high level of customization helps Starbucks in distinguishing itself from its
competition.

 Coffee Product Design and style:

Starbucks products always has a very modern style to them. Nixon (2021) explains
how the Starbucks uses a mix of both functional and expressive design language.
Good examples of functional design are menus, cups, and bags, all of which serve the
purpose of directing and informing the customer. The shopper's attention is thus more
easily focused where it needs to be, and ambiguity is reduced in favour of clarity.

Functional coffee cup Design: Image source Starbucks, (2022)

Whereas All of their customized cups and gift cards come in a rainbow of colors and
patterns, allowing customers to find something that speaks to their individual sense of
style.
 Expressive Design: Image source Starbucks,
(2022)

Starbucks coffee Branding, labelling & Logos –

Packaging for Starbucks coffee has always stood out from that of competitors.  Shopify
(2022) observed that the adoption of the siren emblem in its trademark green hue is essential
to Starbucks' brand awareness and that this is one of the company's most distinguishing
features. Customers have an almost innate familiarity with the brand name. The Starbucks
logo features an emerald mermaid that is easily identifiable to customers. Kotler, Armstrong,
and Opresnik (2019) highlight the ways in which the Starbucks logo has evolved throughout
the years, despite the fact that it has kept its signature green and white colour scheme.
Starbucks has become a well-known brand in large part because of the consistency with
which the corporation brands its products and the distinctive appearance of its emblem.

Champion Product category and the reason for its success?

As per financial year report 2021, Beverage Product Category can be identified as star
category for the Starbucks (Appendix 1). 74 percent of the revenue has been generated from
this single category for the year 2021. one might think that Starbucks leading selling product
category must be a hot beverage but it is actually not. Matrous(2022) explains article how the
shift has been made to the cold beverages and they are the one deriving the demand now. In
an earning call the Interim CEO Howard Schulz said
“Customer demand for specifically customized cold coffee beverages, a category Starbucks
single-handedly created and is now expanding around the world, is so strong that cold
beverages now account for roughly 75% of our total beverage sales in US company-operated
stores,”.
Now the question arises why Starbucks are selling more beverages or specifically more cold
beverages than its competitors. The answer to that is the endless customization option to the
drinks people get in Starbucks. Matrous(2022) further explains in her article Consumers are
progressively modifying their cold beverages with additives that allow for the development of
a nearly infinite range of taste, flavour, and colour profiles, and then sharing their
individualized cold beverage creations with the world via social media. Because no other
company can match Starbucks' ability to provide handcrafted, customized cold beverages that
satisfy customer desires and different need states while also creating opportunities for
customers' self-expression, Starbucks has built a strong relationship with its clientele and
maintains a significant competitive advantage.as highlighted by Dean (2021), Gen Z
customers are exploring the endless opportunities of customizations. Customer are ordering
complicated and more expensive drinks. One of the supervisors said disclosed the average
ticket size has risen to 9$ which is primarily due to added customizations. Higher ticket size
can explain why the beverages, specifically cold beverages, forms the major chunk of the
generated revenue.

Conclusion-
Following this, the report establishes that coffee is the primary offering that Starbucks has to
offer. It's important to make coffee, but it's even more important to give customers the full
Starbuck's experience. Starbucks provides its devoted clientele with a variety of products,
including hot and cold beverages, food, meals, instant coffee pods, and branded merchandise.
These products can be purchased at any of the company's locations. One of the most
important things that sets Starbucks apart from its competitors is the company's dedication to
providing high-quality coffee. From the time the beans are sourced to the time the coffee is
served, the mission of the company is to provide customers with the highest quality coffee-
drinking experience that is humanly possible. They ensure that their coffee maintains a
consistent level of quality by roasting it at their headquarters in the United States and then
shipping it to locations all over the world. Starbucks has an advantage over competitors who
do not offer the same level of service in that it is able to personalize customer orders. All of
Starbucks's products feature a combination of design elements that are both functional and
expressive. They employ expressive designs in addition to functional designs in order to
assist the customer in recognizing his or her own one-of-a-kind personality and sense of style.
This allows them to direct the customer's attention to where it needs to be. Consumers have
been helped to form an enduring psychological image of the brand through consistent
branding over a long period of time, which has resulted in the brand being easier to
recognize. Because there are not a lot of coffee companies that use green in their branding,
this one has been able to differentiate itself from the competition by using an iconic green
mermaid logo and a color scheme that consists of green and white. It has been determined
that the most profitable offering that Starbucks has to offer is beverages. This part of the
business brings in the majority of the total earnings. Additionally, cold beverages have been
identified as the category that brings in the most revenue overall. This shift is largely
attributable to the interest shown by customers in various options for personalization.
Starbucks is in a league of its own when it comes to the degree of customization available. As
a direct consequence of this, average ticket prices have increased, which has led to an
increase in financial gain.
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Appendix 1: Starbucks Fiscal annual 2021 Report