Growth is attractive. It’s no secret really, when an organization has momentum it is more marketable. One of the ways to create this effect is to increase your core offerings.
The core offering is typically the product or service that provides the greatest source of revenue for your company, and it’s where your reputation among your target audience began. It can also be the single activity that leads to the fulfilment of your mission.
Organizations often maintain the status quo, doing what they’ve always done because it’s what got them to where they are today. Don’t get caught in that trap, always tweaking and adding elements can keep you relevant in the eyes of your consumers.
There is, of course, a balance to be found. For example, let’s look at Starbucks. This International brand is loved by millions of customers and, though I don’t know Starbucks intimately and have never consulted with them, I can speculate their strategy from a marketing perspective. It’s clear to me that expansion of their core offerings played a major part in their success.
The Starbucks core offering is the European-style coffee bar that began in busy office buildings in Seattle (although it wasn’t called Starbucks at the time). This core included being coffee experts not only in bean selection but also in delivery of specialty coffee drinks. The ideal location was to be the “third place” for consumers where service, comfort and style were synonymous.
From this core, you can see where Starbucks has emerged from. In order to achieve growth, they began a rapid expansion strategy in which they focused on opening stand-alone locations throughout North America, and the world, as well as alternative locations typically run through third-party food distributors in airports and college campuses. Another area of growth included increasing same-store sales, which is accomplished by offering complementary products such as baked goods, breakfast sandwiches, a selection of beans, branded merchandise such as mugs, tumblers and coffee machines, and even their own line of music.
Another strategy included expanding through strategic partnerships and introducing their glass cappuccino drinks in retail locations including mass merchandise (e.g., Wal-Mart, Target), club (e.g., Costco, Sam’s Club), grocery (e.g., Safeway, Loblaws) and other retailers that can sell bottled beverages. These distribution strategies have led to significant growth and profitability for Starbucks and worked because their core remained strong. However, in February 2007, 19 years after the first Starbucks opened, CEO Howard Schultz wrote an email to his senior leaders telling them they had lost their core and share prices were faltering because of it. The rapid growth of Starbucks forced them to hire faster and place less emphasis on training, meaning their employees were not experts in coffee and didn’t have time to get to know their regular customers as they once did. The focus on merchandise and faster machines reduced the quality of the specialty drinks and the locations started to resemble more of a fast food franchise than a “third place” that fit the lifestyle of their target audience.
Starbucks is and will continue to be a major player in the out-of-home coffee market, but their situation is a great reminder to never lose sight of your core business for the sake of growth or the foundation of your company will crack.
At Relevention we use our Expansion Map tool to help hone or develop core offerings as a way to grow an organization organically. It’s a fifty thousand foot strategic tool that provides a powerful vantage point on how best to look at the ways and means you can grow your organization.