Whittaker Associates: Giving Information Meaning">Whittaker

By Maria O’Connell

An average of six new Starbucks cafés open in the world each day. In fifteen years, Starbucks has not only seeped into 37 countries and all 50 states, but has grown from100 stores to 13,000. The chain serves about 40 million customers each week, giving jobs to 25 million coffee farmers. Starbucks infiltrated the American landscape more quickly than any other company in history; it was rated by Interbrand as the fourth-most effective brand in the world, after Apple, Google, and Ikea.

Fascinated by Starbucks’ rise to fame, Taylor Clark, a freelance journalist from Portland, Oregon, recently released his first book–Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture. In it, he creates a detailed picture of Starbucks’ road to success, explaining how the organization integrated its way into society so effectively and so quickly.

Taylor claims that the secret behind Starbucks’ appeal is the incredible amount of control it exercises over its image. All decisions start and end with the company’s ringleader, Howard Schultz. Everything at Starbucks is planned. It is not just a Starbucks’ coffee that you get when you walk through the café doors; it is a Starbucks’ experience.

It was after careful psychological research that the company first decided to have white cups with green writing, “tall” lattes, natural materials, and round tables. Starbucks interviewed hundreds of coffee drinkers, seeking what it was that they wanted from a coffee shop. The overwhelming consensus actually had nothing to do with coffee; what consumers sought was a place of relaxation, a place of belonging. They sought an atmosphere.

The round tables in a Starbucks store were strategically created in an effort to protect self-esteem for those coffee-drinkers flying solo. After all, there are no “empty” seats at a round table. Service counters are built out of natural materials like warm woods and stone, rather than plastics and metals, to create a homier atmosphere.

Instead of ordering a “short” coffee or tea, one orders a “tall” at Starbucks.  The company intentionally formed their own coffee lingo, which by now could be recorded in a dictionary of coffee terminology. The terms “tall,” “grande,” and “venti” are the size options that Starbucks offers. The company was correct to assume that once their customers learned the lingo, other coffeehouses, where you must choose from a small, medium, or large, would make them feel uncomfortable and out of place. Starbucks’ coffee lingo gives the customer a chance to escape from American monotony and experience a charge of European sophistication.

Not surprisingly, the white and green Starbucks’ coffee cups were deliberately designed as well. These cups were created to be a walking advertisement for the company. Evidenced by more than 2 trillion customers each year, it worked.

Starbucks also has other branding secrets. The company will never discount drinks. Schultz is all about the image. He makes the point that you would never see a “buy one, get one free” deal on a Jaguar. In an effort to create brand prestige, he refuses to allow discounts. In addition, print ads for Starbucks often thank customers for their support of specific humanitarian concerns, such as tsunami relief. Starbucks donates money to many social causes. Thus, people are not only buying coffee or enjoying a relaxing atmosphere, they are also positively contributing to society.

The creation of Starbucks is a true story of success. Its marketing techniques have and will become an example to retail stores around the world. Undoubtedly, the Starbucks brand has been imprinted into history – making it one of those companies that will never disappear.

Starbucks Fact: “Contrary to popular belief, Starbucks actually boosts sales to nearby mom-and-pop coffee shops.”

For more information, please refer to Taylor Clark’s Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture.

by Tammy Hart

Recently in Maryland , Governor Robert Ehrlich Jr. vetoed legislation that would have forced Wal-Mart Stores, Inc. to spend more on employee health benefits. Ehrlich’s action came during a ceremony in which he was joined by a top executive from the Arkansas-based company, which has been on the defensive on several fronts nationwide. The bill would have required for-profit companies with more than 10,000 employees to spend 8 percent of their payroll on health care benefits or give an equal amount to the state’s health program for the poor. Ehrlich’s position attracted heavy criticism and controversy from leading Democrats, union representatives and health-care advocates. Wal-Mart is considered one of Maryland ‘s 25 largest private-sector employers, and advocacy groups do not believe Wal-Mart pays an adequate share of taxes. UFCW members claim that employers who don’t provide affordable coverage are abusing the system and their workers by passing the costs onto taxpayers, other businesses and their own workers. They also claim that Wal-Mart, the largest private employer in the US, is also the largest abuser of the system, especially since its high insurance premiums and deductibles keep more than two-thirds of Wal-Mart workers (that’s nearly 700,000 workers) from participating in the Wal-Mart health plan. As Wal-Mart increasingly competes directly with union grocery stores and retailers that pay family-supportive wages and offer affordable, quality health plans, the 90,000 UFCW members now on strike at grocery chains in California and elsewhere over employer demands for big health benefit cuts understand the possible threat Wal-Mart poses.

In June 2005, Susan Chambers, Executive-VP-Benefits Administration for Wal-Mart, issued a statement in advance of a UFCW-backed press conference for a campaign against Wal-Mart, stating the following about its health care plans:

-Wal-Mart associates are entitled to go to the best medical facilities in the world and get the highest quality care.

-Wal-Mart offers eight different options within the Associates Medical Plan to meet the medical and financial needs of associates. Premiums start at less than $40 per month for single coverage and less than $155 per month for family coverage. In some states, it also offers HMOs to associates, as yet another health insurance option.

-Both full- and part-time associates are eligible for coverage.

-Many plans stop paying after medical bills go higher than a million dollars. Wal-Mart’s plan has no lifetime cap on most expenses, protecting its associates from financial ruin.

-Wal-Mart is currently looking into additional options that provide associates a wider range of offerings, including Health Savings Accounts beginning next year.

-In regards to the myths about Wal-Mart and public assistance health care, we estimate Wal-Mart has taken 160,000 people off the list of America ‘s uninsured.

She also stated that Wal-Mart is very aware of the tough health-care issues we are facing as a country and that Wal-Mart will continue to work with state legislators and the Congress to develop sensible, workable solutions to address America ‘s health-care challenges.

Earlier this year, State Senator Ken Toole of Helena , Montana , introduced a bill that would impose a gross- proceeds tax on big-box retailers like Wal-Mart. The tax would only take effect if these stores did not pay their employees an entry level wage of at least $22,000 a year , counting both pay and benefits. It only applies to a store with annual gross receipts over $20 million. Under this proposal, if big-box retailers continue what is considered by some activists to be abusive behavior, those companies would be forced to pay for their practices. Toole said businesses can avoid having to pay the tax by paying their employees the wage levels spelled out in the bill. He told the committee, “These are very profitable businesses. They make a lot of money. They can afford to pay their employees a living wage.”

In November 2004, activists in California went to the ballot with Proposition 72, a statewide initiative that would require big employers, such as Wal-Mart, to offer adequate, affordable healthcare coverage to all of their employees or else pay into a state insurance fund. Wal-Mart campaigned strongly against Proposition 72 and stated, “Wal-Mart believes companies should have the opportunity to provide benefit choices that both they and their employees can afford.” In a close vote, Californians rejected the proposed plan.

Local communities also claim that Wal-Mart’s medical benefits are so expensive that workers choose to go without it and instead get their coverage through state programs such as Medicaid or hospital charity. Financial watchdogs see this as a nation-wide trend that is putting pressure on state health-care systems. To address the tendency of big-box employers to shift the cost of health care to taxpayers, twenty-six state legislatures are currently considering bills to require states to disclose which employers are abusing state public health care programs in this way.

A November 2004 New York Times article cites a study in Georgia that found 10,000 children of Wal-Mart employees were in the state’s healthcare program at a cost to taxpayers of $10 million a year.

In California , a study released in August 2004 by researchers at the University of California at Berkeley determined that the healthcare expenses of uninsured Wal-Mart employees were costing taxpayers $32 million a year.

In Arkansas (headquarters to Wal-Mart), the Department of Human Services released figures stating that Wal-Mart consistently leads the list of top 10 employers whose workers are receiving state aid and/or welfare.

The Department of Health and Family Services in Wisconsin reported that Wal-Mart employees topped the list of recipients of BadgerCare, a state health-care program for low-income residents. Consequently, a Wisconsin state representative has introduced a bill that would force big-box retailers to reimburse the state for providing for the health care needs of their under-paid and under-insured employees.

The UFCW notes that it is not just Wal-Mart employees who are the victims. Wal-Mart, being an economic power, has a social obligation to set higher standards for competing retailers to follow. Instead, it is creating a negative domino effect, forcing other retailers, large and small, to cut their own costs in order to compete, risking the health-care benefits of their workers.

According to information gathered by the UFWC, more than 40 million working families nationwide are uninsured.  The UFWC believes Wal-Mart’s continued growth will coincide with the number of the working uninsured; by mandating a universal employer-provided health-care system, they are trying to find a way to hold Wal-Mart and other employers accountable for their employees’ health care.

www.thinkprogress.org

The Washington Post

www.frontline.com

2004 New York Times

www.startribune.com