How Starbucks uses its menu design & plays your mind to spend more.…

BRAND

Premium brand means premium customer base

By setting its prices higher, Starbucks attracts clientele that are relatively price insensitive.

Starbucks frequently raises its prices with little negative effect to its bottom line.

CULTURE “More than coffee”

Former Starbucks CEO Howard Schultz created the premium feel by emphasizing experience:

Positioned the brand a place to be between home & work

Brought bean grinding in-store (for aroma)

Banned auto espresso machines (enhanced customer experience of getting a freshly brewed cup)

LIGHTING & VISUALS

Concept of “flow”, efficiently moving people around the store+ getting them to spend.

To form lines, it directs people to well-lit areas (usually the merchandise, which provides the added benefit of nudging products for sale).

SHOP LAYOUT

Starbucks places its cashiers in the middle or back of the cafes.

As customers work through the line, they’re watching other patrons enjoy their beverages and bites.

This is all priming them for their eventual orders.

STARBUCKS CARD — the big cash cow

Customers have $1.6B+ on Starbucks apps/cards (hence the joke “SBUX is a bank”).

In a concept called “mental accounting”, people irrationally classify money in different buckets and treat them differently.

That SBUX money is way more *spendable* than cash.

REWARDS

Starbucks Loyalty Program has 20M members and they contribute ~50% of the company’s revenue.

The retailer takes all customer data and is able to provide individualized offers at scale.

The freebies are habit forming and keep people coming back.

SIZE

Through the 90s, the 3 sizes that Starbucks listed were Short, Tall and Grande.

It has since bumped Short (you can still order it but its not on menu) and added Venti.

Now, the most popular size is the Grande (the new middle option and larger than SHORT).

Price steering is also a common phenomena used worldwide now wherein you would choose a slightly larger option as compared to a lower size for a minimal price increase, not realising that the smallest one would have actually satisfied your urges.

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Cheers