Stop Advertising, Start Strategizing

How Starbucks Can Boost Your Business

43According to a recent survey, nobody in the United States is more than 100 miles away from a Starbucks at any given time (and that’s only if you happen to live in the middle-of-nowhere, Montana). In fact, if you were to take a trip from Boston to Philadelphia (approximately 300 miles up and down the East coast), you would never be more than ten miles away from your next Iced Caramel Macchiato.

With a Starbucks sprouting up on virtually every street corner (literally, have you seen a map of Chicago lately?) you might not be surprised to discover that the multi-billion dollar franchise is opening approximately 3 ½ coffee shops a day worldwide — and hiring a whopping 250 employees to maintain them. It’s all part of their “every corner” marketing scheme which is, well, exactly what it sounds like… and it’s working!

But they certainly didn’t do it alone.

Starbucks is the bread and butter (er…the cream and sugar?) when it comes to forging those oh-so beneficial strategic alliances (the fancy term for “referral partners”). In fact, their focus on relationships has been the key to Starbucks’ success.

Their marketing tactics are less about aggressive advertising and more about alliances. It all started in 1993 when the budding Starbucks joined forces with the almighty Barnes and Nobles. Combining a coffee shop with a bookstore isn’t a “novel” idea by any means (pun intended), but the two singlehandedly defined the designer coffee, bookish culture we all know and love today.

Three years later, Starbucks made headlines yet again when they partnered with Pepsico in effort to bottle and mass distribute their most popular beverage; the frappucino. The bottled frappe now accounts for more than 20% of the company’s total coffee sales.

From there, Starbucks thought to themselves, “Why not shoot for the stars?” Literally. The company forged an alliance with United Airlines to ensure that every overtired businessman arrived at their destination with a belly full of frappucino, and later teamed up with several hotel chains to keep the lattes flowing all night long. Their partnership with Kraft foods landed Starbucks on the shelves of virtually every grocery store across the country, and their more recent alliances with big-brand ice cream manufacturers even managed to land Starbucks flavored ice cream in every freezer.

Before long, Starbucks could be found in every gas station, airport, and vending machine from Los Angeles to New York City. By 2008, they were easily the most powerful and fastest growing coffee chain in the world, but no one really expected what happened next; Starbucks took over the music scene. By the end of 2008, they were quoted as “one of the most powerful music retailers in the market.” Wait, what?

That’s right, Starbucks set their sights on the music industry and formed alliances that quickly set the standard for “premium music.” Thanks to the company’s selective (and refined) taste, artists soon swooned to be featured on Starbucks’ shelves and both the franchise and the singer came to benefit from increased album sales. The coffee shop took it one step further when they partnered with the omnipotent iTunes and formed the “Pick of the Week” program. The program allows Starbucks customers to download the song of the week (which later grew to encompass apps and iBooks) as long as they were in a Starbucks store and logged on to the Starbucks in-store wifi. The alliance not only drew customers to the counter like moths to a flame, but also increased the amount of iTunes traffic and boosted song sales for the artist — now that’s a win/win/win situation!

By now it’s pretty clear that Starbucks will partner with just about anyone when it comes to forming strategic alliances — but their choices certainly aren’t random. In many cases, the company has proposed alliances in attempt to utilize the other company’s innovations and resources without having to invest in them themselves. It might seem like a bit of a cop-out… but why invest in your own bottling service when Pepsico already has the goods? And when the alliance benefits both companies, it’s simply a cost-effective way of moving forward.

Take a page out of Starbucks’ book (literally) and set your sights on strategic alliance!

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