Tag Archives: Starbucks

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Why California students prefer Dutch Bros over Starbuck

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Dutch Bros Coffee is growing faster than Starbucks and becoming one of the most successful coffee chains in the U.S. It is now the fourth-largest coffee brand and continues to open new locations.

One reason for this success is its business model. While Starbucks spends heavily on store remodeling, Dutch Bros focuses on small drive-thru locations. This strategy allows them to expand quickly at lower cost.

However, fast service alone is not enough. Dutch Bros succeeds because of its superior customer experience. Unlike Starbucks, which can feel transactional, Dutch Bros creates a warm and personal experience. Their “broistas” (baristas) often remember customers’ names and favorite drinks, making visit feel like a conversation rather than a purchase. The company’s motto, “We may sell coffee, but we’re in the relationship business,” reflects its focus on customer connections.

Many students also enjoy the secret menu and customizeable drinks, such as Golden Eagle and Rebel Energy.

Dutch Bros understands what Gen Z wants, that is, a fast and friendly experience. Rather than focusing solely on coffee taste, it focuses on the experience of coffee buyers. Customer experience matters.

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Reference

Lemon, K. N., & Verhoef, P. C. (2016). Understanding customer experience throughout the customer journey. Journal of marketing, 80(6), 69-96.

Understanding customer experience and the customer journey over time is critical for firms. Customers now interact with firms through myriad touch points in multiple channels and media, and customer experiences are more social in nature. These changes require firms to integrate multiple business functions, and even external partners, in creating and delivering positive customer experiences. In this article, the authors aim to develop a stronger understanding of customer experience and the customer journey in this era of increasingly complex customer behavior. To achieve this goal, they examine existing definitions and conceptualizations of customer experience as a construct and provide a historical perspective of the roots of customer experience within marketing. Next, they attempt to bring together what is currently known about customer experience, customer journeys, and customer experience management. Finally, they identify critical areas for future research on this important topic.

Cases

Why Americans stick to Keurig while the world prefers Nespresso

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After arriving in California, I was struck by a coffee pod brand completely unfamiliar to me: Keurig. Despite owning a Nespresso coffee machine at the office and a De Longhi espresso machine at home, I was surprised that I had never seen or heard about Keurig before.

In California, Keurig machines are everywhere. The brand holds 41% of the single-serve coffee machine market in the United States and is estimated to have three times the sales of Nespresso nationwide.

However, Nespresso is the leading coffee capsule brand in most other markets. In Korea, it dominates the coffee machine market with a 52% share.

The biggest advantage of Keurig is that many coffee companies produce pods or capsules compatible with its machines. Brands like Starbucks, Peet’s Coffee, and Dunkin offer options for Keurig users. Additionally, Keurig machines and K-Cups are generally more affordable than Nespresso machines and capsules.

However, Nespresso has gaining market share in the United States. Since introducing the VertuoLine system, which brews full-size coffees in addition to espresso, Nespresso increased its US market share to 14.4% in 2023 up from 11% in 2022. During the same period, Keurig’s share declined from 56.2% to 53.1%. The competition between the two brands is intense and dynamic.

Does this mean cultural differences explain their dominance in different markets? Do Californians value variety and quantity, while Koreans appreciate premium experiences?

Cultural differences are unlikely to be reasons. The real explanation is much simpler: people rarely switch from the brand they first encounter. Californians often start with Keurig because it is the most accessible option, while Koreans are introduced to Nespresso through advertising. Once preferences are formed, they tend to stick.

Each brand’s popularity may not be driven by taste or luxury but by who enters the market first. This is why Uber holds an advantage over Lyft in ride-hailing services and why Waymo continues to thrive while Cruise failed in the self-driving car industry.

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Reference

Carpenter, G. S., & Nakamoto, K. (1989). Consumer Preference Formation and Pioneering Advantage. Journal of Marketing Research, 26(3), 285-298.

Examined whether pioneering advantage could arise from the process by which consumers learn about brands and form their preferences (PFs). In 2 experiments with 103 MBA students, hypothetical emerging markets were constructed, varying the order of brand (computer software packages or down quilts) entry across Ss and the types of competitors that subsequently entered the market. Analysis showed that PFs were influenced by the order of brand entry. Moreover, the PF formation process produced a PF structure that made a pioneer’s market share largely invulnerable to competitors, even if switching costs were minimal and brands could reposition.

Cases

Uber and Lyft: More than just a ride

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At San Jose International Airport, app-based ride share services like Uber and Lyft dominate the curbside scene. Travelers lining up next to the Uber signs look for their cars while taxis become rare.

During the CES 2025, the Uber/Lyft pick-up area at Las Vegas airport was also crowded with people eager to check in their downtown hotels.

Similarly, at Stanford University Hospital, designated areas show that ride share is now mainstream in California.

While many view ride hailing services such as Uber and Lyft as modern conveniences replacing taxis, I see them as cafes such as Starbucks or Tim Hortons where people meet and talk. Over the past two months, I learned a lot about California from numerous drivers.

Some drivers were quiet, but others shared their stories. One driver at San Jose said he worked as a software marketer for 20 years and remembered meeting Steve Jobs. Another driver at Mountain View worked two jobs to support his family. A driver in San Diego was a history teacher driving to make ends meet. Another in LA said he was preparing a birthday party for his son.

In the US, many people do things by themselves and might feel lonely. But inside these “moving cafes,” there is a chance to meet someone and talk. It might help people feel less lonely for a short time.

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Reference

Talmage, C. A., Knopf, R. C., Wu, T., Winkel, D., Mirchandani, P., & Candan, K. S. (2021). Decreasing loneliness and social disconnectedness among community-dwelling older adults: The potential of information and communication technologies and ride-hailing services. Activities, Adaptation & Aging, 45(2), 89-117.

This study explores self-reports of 241 older adults (aged 63–95) regarding loneliness and social disconnectedness, and the potential for information and communication technologies (ICT) and ride-hailing services to mitigate these phenomena. The samples are drawn from four older adult living communities in Maricopa County, Arizona. Lonelier older adults and older adults desiring greater social connections with friends, family, and outsiders appear to use ICT less and might benefit from ride-hailing services more than their less lonely and more socially connected counterparts. These findings are nuanced and depend on ICT device, type of ride-hailing service, and purpose of use. While desires for ride-hailing services were generally low, these services show promise in alleviating loneliness and increasing social connectedness, especially as older adults prepare to cease driving. Advice for implementing interventions and strategies to decrease the loneliness and increase social connectedness of community-dwelling older adults is elucidated and shared.

Cases

Why are we attracted by Starbucks toys?

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Starbucks Coffee Korea recently launched a set of limited edition Playmobil toy figures. Customers get one of six tall-size beverages with an accompanying Playmobil figure for $12.

Today at a nearby Starbucks, I found several customers paid extra to have a barista figure. Another Starbucks was crowded even though customers have to leave store shortly due to social distancing regulations. It suggests this campaign increases offline store traffic.

Why do adults like Starbucks toys? Although brand power and scarcity play key roles, a more deeply rooted reason is that Playmobil figures are whimsically cute. “Cute products (e.g., an ice-cream scoop shaped like a miniature person or a dress with tropical colors and pink flamingos) can have whimsical nature, which is associated with capricious humor and playful disposition. Whimsical cuteness is … associated with fun and playfulness.” (Nenkov and Scott 2014, pg. 327).

Interestingly, whimsically cute products do not necessarily appeal when they are designed for kids. Contrary to our belief, whimsical cuteness attracts adults. This argument is supported by the experimental findings obtained from a marketing paper.

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Reference

Nenkov, G., & Scott, M. (2014). “So Cute I Could Eat It Up”: Priming Effects of Cute Products on Indulgent Consumption. Journal of Consumer Research,41(2), 326-341.

This article examines the extent to which consumers engage in more indulgent consumption when they are exposed to whimsically cute products and explores the process by which such products affect indulgence. Prior research on kindchenschema (baby schema) has found that exposure to cute babies or baby animals leads to more careful behavior (see the study by Sherman, Haidt, and Coan), suggesting restraint. The present research uncovers the opposite: consumers become more indulgent in their behavior after exposure to whimsically cute products. Drawing from research on cognitive priming, kindchenschema, anthropomorphization, indulgence, and regulatory focus, this research posits that exposure to whimsically cute products primes mental representations of fun, increasing consumers’ focus on approaching self-rewards and making consumers more likely to choose indulgent options. These effects do not emerge for kindchenschema cute stimuli, since they prime mental representations of vulnerability and caretaking. Four empirical studies provide evidence for the proposed effects and their underlying process.

When two cookies were presented under “The Cookie Shop,” participants indicated significantly weaker preference for the healthy entree when they had earlier viewed the whimsically cute cookie than when they had viewed the neutral cookie. However, no such differences occurred when two cookies were presented under “The Kid’s Cookie Shop.”