Commercial Awareness Case Study: Starbucks

Published on June 14, 2017 by Laura

At one point or another, all law students and hopeful lawyers hear the mysterious phrase “commercial awareness”. When applying for vacation schemes or training contracts, you might find yourself completely bombarded with this term and yet the meaning remains elusive.

Commercial awareness essentially refers to your general knowledge of business, particularly your work experience, as well as your understanding of a specific industry. However, just understanding the definition of commercial awareness is unlikely to make you more able to demonstrate it to prospective employers. A good rule of thumb is to identify a popular issue, form an opinion on it, and then come up with examples of how companies and brands are dealing with the challenges this issue generates.

However, law firms are sometimes looking for more detailed analysis or expecting you to demonstrate your commercial knowledge by reference to personal experience. This can be quite a daunting prospect but a simple case study will hopefully help you come up with your own examples of commercial awareness.

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Commercial Awareness Case Study: Starbucks

Many students have had a part time job in a shop or café and this sort of personal work experience could form the basis of an excellent commercial analysis of that shop or café as a business. Take Starbucks for example.

1. Social Media

Starbucks is a brand which has used social media to its advantage by announcing new drink flavours and reaching out to its customers with a range of online promotions. However, its social media prevalence has backfired in the past, particularly when it was accused of paying minimal corporation tax and customers took to Twitter and Facebook to criticise the brand. This backlash resulted in sale increase for competitor Costa Coffee. Nonetheless, Starbucks used their online presence to mitigate the negative publicity. After issuing a statement and making a tax payment as a gesture of goodwill, Starbucks added a page to their website to explain their tax payments and repair customer relations.

2. Personal Brand

A unique strength of the Starbucks brand has been to build a personal relationship with customers. Its themed drinks and loyalty cards have proven effective when it comes to customer retention. Starbucks has also made the process of purchasing coffee an experience, for instance by writing customers’ names on cups. Even when names are misspelled, customers eagerly post pictures of their Starbucks cups on social media, thus effectively opening up a free form of advertising for the brand. As a result, customers are being persuaded to pay extra just to carry a cup with the iconic brand logo.

3. Innovative and fast-growing brand

Starbucks operates as a franchise business which has the advantage of allowing the chain to spread quickly. However this business structure has its downsides, one of which is that local brand reputation can be easily damaged by individual franchises. Comparatively, Pret-A-Manger is not a franchise, meaning it cannot expand as quickly but also does not need to relinquish any control when it comes to operating its branches.

Starbucks have also sought to remain innovative. The brand was one of the first to trial “Apple Pay” technology which is now widespread. Furthermore, its sustainable coffee farming campaign is designed to promote it as a socially responsible brand.

4. What can Starbucks do better?

In the face of growing competition from individual coffee bars and cafes as well as its established rivals, Starbucks will have to fight for its place in the market. While Starbucks has been criticised for expanding too rapidly and harming local businesses, it is loved by consumers and highly followed on social media. However, as boutique coffee shops are becoming more popular in the UK, Starbucks may have to focus on identifying itself as a brand. Is their focus great coffee or a form of branded fashion? By placing more emphasis on the exceptional quality of their products while maintaining a close connection with customers, Starbucks may be able to maintain their unique market position.

Ultimately, the best lawyers advise their clients in the context of their business. For instance, the importance of Starbucks’ reputation may mean they would prefer to avoid any public litigation or they may require advise on how to draft their franchise agreements for new branches. Ultimately, it is very impressive when a candidate can show true consideration of clients’ businesses.

Words: Mariya Rankin