How one man turned a commodity into a category, and why ordering a “medium coffee” suddenly felt so… average.
Remember when coffee was just coffee?
You’d walk into a diner and say, “Coffee, black,” and no one would ask about your take on Ethiopian Yirgacheffe beans.
Howard Schultz changed how Americans drink coffee. He created a new category that made regular coffee shops seem like they were just selling hot bean water.
🎯 Discover how Schultz changed a commodity into a category. Here’s what business owners can take from his smart market moves:
- Name Your Category Before Someone Else Does. Schultz didn’t just call Starbucks a “coffee shop.” He created the “third place” category. This space is not home and not work but a cozy spot between. Starbucks changed the game. They stopped competing with Dunkin’ Donuts. Instead, they focused on a different human need. (Spoiler alert: You can charge more to fulfill human needs than to sell coffee.)
- Make the Ordinary Feel Extraordinary. Schultz didn’t just rename cup sizes; he created a new language. “Medium coffee” became “Grande Pike Place.” Why? Because nobody compares prices on things they can’t pronounce. When was the last time you price-shopped a Venti Caramel Macchiato with extra drizzle? Exactly.
- Turn Features Into Cultural Statements. Those green aprons weren’t just uniforms but symbols of coffee expertise. Baristas weren’t just employees; they were “partners.” Every feature became a statement about belonging to a more sophisticated coffee culture. Other coffee shops were busy debating whose filtration system was the best.
- Create Problems You Can Solve. Before Starbucks, nobody knew they needed coffee customization anxiety. Schultz didn’t just serve coffee; he created the “personalized beverage experience” category. Choosing from 87,000 drink combinations became normal. Now, regular coffee shops seem less impressive.
- Own the High Ground. Schultz chose a different path for Starbucks. Instead of focusing on low prices and easy access, he made it a leader in coffee culture and community. They weren’t selling coffee but “inspiring and nurturing the human spirit, one cup at a time.” Try competing with someone’s spirit; I dare you.
- Make your category visible. The green mermaid cups became walking ads for the “premium coffee experience.” Carrying a Starbucks cup said something about you. Meanwhile, other coffee shops still used generic white cups as if they were living in 1987.
- Expand Your Category Without Losing Its Soul. When Schultz took Starbucks into retail. He didn’t just sell coffee beans—he exported the “third place” experience into homes. The category was more than just coffee. It was about being part of a coffee culture in the store or elsewhere.
The Market Authority Lesson: Schultz understood what many business owners overlook. Creating a category isn’t only about being better. It’s about being different enough to make the competition irrelevant. Starbucks stands out from other coffee shops. While focusing on price and convenience, Starbucks offers belonging, status, and identity.
Think about it: When did you hear someone bragging about saving 50 cents on their coffee? But we’ve all seen people post their Starbucks holiday cups on Instagram.
Schultz might charge $5 for that insight. He could say that the category you create is more important than the product you sell.
Want to learn more about creating your category? Explore our “6 Rules of Market Authority” course. We’ll teach you how to make your business the Starbucks of your field (overpriced drinks are optional).
