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Value Proposition (IV). Progression of Economic Value (part A)

Happy weekend!

I wonder if many of you were shocked to see my own interpretation of Starbucks Value Proposition and to see that Starbucks mission has not included the word “coffee”, even though Coffee is still its core business.  What I am trying to say is that Starbucks is more than coffee.

Starbucks started selling coffee several decades ago. But Starbucks has progressed and has built not one, but many value propositions over the years. The process of building value propositions and then adjusting business models is super dynamic, it is variable. It is not static.

There is a book I had the opportunity to read several years ago. The Experience Economy by Joe Pine and James Gilmore. It is extremely interesting. For those who know me, if they read this book, they immediately understand why do I, define as “Actors” to the  “Movers and Shakers” from a society, and I mean it seriously… Read the book, please.

“Economic activity and the progression of economic value start with raw commodities that are transformed into goods, which are then wrapped in services and finally transformed into experiences. Each level increases the total value to the customer, and accordingly, the total price the customer is willing to pay”. 

If you see the following figure, now you can understand why does Starbucks sell an experience and not just coffee. Particularly when Starbucks is planning to open a new format called Starbucks Reserve Bars!

progression economic value coffee

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