How Starbucks Won the Market with Just ‘Okay’ Coffee

We’re always told: to succeed, your product has to stand out. But what if your product is just...average? Starbucks is the prime example of how a brand can dominate an industry by focusing on experience over product.

Starbucks became a coffee giant without the “best” coffee—and how their approach is a masterclass in brand-building:

Competing in a Commodity Market:

Most industries selling everyday products face a serious problem: too many competitors, no customer loyalty, and minimal room for improvement. Coffee, school supplies, flights—all of these are called “commodities” because they’re widely available and often indistinguishable from one another.
Companies in these markets often struggle because, 1. Lowest Price Wins,
2. Indifference, 3. Crowded Competition​
​
That’s what makes Starbucks’ success so surprising. They took a commodity—coffee—and wrapped it with a different experience around it.

Starbucks’ Winning Strategy: Creating the “Third Space”

When Howard Schultz, Starbucks’ former CEO, visited Italy, he noticed something unique: Italian cafes weren’t just about coffee; they were a social hub. Having learned this, he went on a mission: to make Starbucks more than a coffee shop. He envisioned a “third space”—a place people could enjoy outside of home or work. His mission was to not just sell coffee; but also a space to relax, meet, and work.

Here’s How Starbucks Crafted the Perfect Experience:

1. A Personal Touch with a Purpose:​
   Starbucks transformed the transaction into an interaction. Writing names on cups is a small gesture, but it makes every customer feel recognized, building a subtle but powerful bond with the brand.
   ​

2. Consistency Everywhere: Whether you’re in Seattle, Mumbai, or Tokyo, every Starbucks feels like home. This reliability builds trust—customers know exactly what to expect, and that familiarity keeps them coming back. In a crowded market, this feeling of “home” sets Starbucks apart.
   ​

3. The Power of the Logo: Starbucks cups aren’t just coffee carriers; they’re mobile ads. Every customer holding a Starbucks cup becomes a walking billboard, showing others that they’re part of the Starbucks community. This free advertising tactic spread the brand like wildfire.
   ​

4. Attention to the Smallest Details: From the background music to the lighting, Starbucks crafted every element to feel intentional. Every store is designed to be comfortable, with cozy interiors and the perfect ambiance. Even the pace of the service is managed to make customers feel relaxed, not rushed.

How Starbucks Made "Average" Coffee Feel Special:

While other cafes focused on product, Starbucks focused on feeling. Their strategy is what Jim McKelvey, co-founder of Square, calls an “innovation stack”: it’s not just one big idea but a combination of small, smart tweaks that create something unbeatable. Starbucks’ innovation stack isn’t about coffee quality but about the experience.

Most customers may not notice every detail, but together, these small touches create a space that people associate with comfort, familiarity, and reliability.

The Real Lesson:

Starbucks shows us that you don’t need the best product to win—you need the best experience. While competitors focused on coffee beans, Starbucks focused on customer experience. That last 1% of effort—the extra touch of atmosphere, the personalization, the design—is what made Starbucks the icon it is today.

In business, it’s easy to focus on the product itself, but often, it’s how your product feels that makes customers return.
​
​What do you think? Hit 'reply' and tell me one small detail in your business that makes a big impact.
​
​Talk soon,
PrimePulse.