Prepared for Economics 411 Gatton Student Research Publication | 31

The Starbucks Coffee Company is at a pivotal point in the history of its brand development. What Starbucks means to the consumer amongst other major specialty coffee retailers may not currently be what it once was, and Starbucks executives are desperate to understand the causes and the consequences of the brand’s evolution. Ever since 1984, when current CEO Howard Schultz introduced the Café Latte inspired by his encounter with espresso bars in Milan, Starbucks has aimed to cultivate a coffeehouse culture in its stores (“Company timeline, ” 2009). Before the advent of Starbucks, America had not yet seen such an environment pervading its social structure. Yet, today, it is common for any hub of social activity to include a coffee shop. The catalyst of such a phenomenon is Starbucks ’ guiding philosophy within its retail outlets—that of a third place for its customers, a place of social identity apart from the home and workplace. In recent years, however, Starbucks has faced pressure from many of its competitors. Several fast food and dine-in retailers have successfully launched product lines of espresso beverages, incorporating specialty coffee into their menus and challenging Starbucks ’ market power over the coffeehouse experience. Starbucks had made decisions regarding its franchising structure and target market, resulting both favorably and unfavorably in its attempt to maintain its brand’s image of luxurious hospitality. The primary challenge that Starbucks now faces forming strategies that cultivat