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This is a business of engaging people, and through a variety of ways, according to fans of Starbucks. Do they mean it? By Aresh Shirali Even non-customers have had a whiff of it. It is not its Latte, rousing as the beverage may be, that makes Starbucks the café brand it is. It is something else, if a 'thing' at all it must be. This is, after all, a different sort of business. A business of engaging people. A business, to be vaguely more precise, of 'experience value', where this fuzzy notion outweighs the actual worth of that hot cup of coffee (beans plus overheads). So the important thing, really, is what goes on in the customer's head, regardless of the stimulatory mechanism, whether it is the impact coffee once had on the architectural freedom of Oxford, how Ridley Scott's cinematic mind has been whirring since he made his blockbuster Apple commercial, or even the relevance of Kishore Mahbubani's eclectic opinions to the GDP-per-head of Singapore. If it's internet hubs that make that sort of stuff happen, internet hubs are what cafes need. If it's audio sensation, audio sensation is what cafes need. If it's new sorts of smells, new sorts of smells. Therefore, diversify, diversify, diversify. Whatever it takes to get that ambience. Yeah, and hey, don't let go of the espresso nozzles in the meantime. Except that not everybody would want to be thus engaged. Some people, for instance, may actually be caffeine addicts, plain and literal. People who simply need their fix. Some may have heard of Brazil's coffee crop taking a dip. Some of them may have noticed this little price chart that shows Arabica's price as a commodity having doubled in less than 19 months. Doubled? Yes, the bean price took a U-turn towards the end of 2003. This, despite the Brazil Frost-inspired coffee planting mania of the late 1990s, captured best by the 'Vietnam glut' that followed. Calls for café experience diversification, by the way, are not that much more recent than the price upturn. It was sometime in 2004, if memory remains unimpaired, that Starbucks started refocusing (if that's the word) its customer engagement strategy. So---is all this diversification talk just a clever way to calm jitters on account of raw material volatility? No matter how you look at it, that is undeniably a major motivation. Any businessman will tell you it's an old trick to underplay one's business dependence, as a signal to suppliers, on a volatile-but-vital input. If one can hint of alternatives, even better. If one can look 'em square in the face and say it without wincing, boy, nothing like it. But that's not the whole story. For one, the most elaborate of bluffs can be called (at a big credibility loss too), so they could end up raising the risk quotient instead of lowering it. Smart managements know this, and prefer fact over fiction as a resource for all their dealings. For another, as cafes get busy with so much more, the actual beans make up a thinning slice of the cost pie-chart. Ask marketers who understand touchy-feely value generation. It is true that Starbucks and a few other premium café chains are actually brands that transcend the literal worth of the substance they are seen to sell. It is indeed about the café experience... even if coffee cannot be dispensed with. Truly smart marketers are sincere about genuine diversification---and stimulation.
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