Premium price is one of the key to differentiate Starbucks from other brands. Brand values of Starbucks could be as simple as the products itself. Either it could be the new coffee experience or Starbucks’s success on making its stores the ‘third living place’, after home and office. To justify its premium price, Starbucks has to deliver an effective experience such as create positive emotions and memories while deliver their target brand values.
Promotion and Education
Starbucks had done many range of promotion with targeting mainly the vast younger consumers (over 20s), educated and socially conscious customers. Starbucks fully utilizes marketing communications mix by employing both personal communications and impersonal communications. For personal communications, one of Starbuck’s primary objectives is to provide a superior level of customer service. In building customer loyalty, not only does Starbucks offer high levels of customer service, but they also strive to educate customers about coffee quality. There is an information section in each store that provides customers a good resource for becoming more knowledgeable about the world of coffee. The company has several other initiatives to enhance the customers’ experience at Starbucks retail stores. For example, Starbucks has introduced a T-Mobile Hotspot service which allows the Starbucks customer to have access to wireless internet (Wi-Fi) for a free.
Moreover, for impersonal communications, Starbucks is continuously searching for ways to better a customers’ experience. Therefore Starbucks has effectively employed its advertising, public relations, and sales promotion. Examples of advertising strategies, the Company advertises a lot through Print Media such as magazines, journals, and newspapers, as Starbucks’ target market tends to be educated people who do more reading than the average person. Starbucks also publishes and distributes a mail order catalog and a catalog of business gifts that offer coffees, certain food items and select coffee-making equipment and accessories. Whereas in employing public relations, Starbucks has a to origins, environment, communities and partners. The company also has carried out its corporate responsibility in its program “Green Teams” and recycling program with one of the objectives that is to actively seek opportunities to minimize our environmental impact and help create a healthy planet. In sales promotion, in order to give their customer special attention and ensure continue to be better than the competition, Starbucks have their seasonal offer drinks and give their customer to tasting of new flavors frequently. Recently, Starbucks is offering two new drinks such as Jelly Frappuccino and Green Tea Frappuccino targeted to the non-coffee drinker.
Process
Starbucks uses their philosophy “Starbucks experience”, which customers can relate to that lead to brand loyalty. By this, Starbucks has their own process which will make sure it is running smoothly between customer and their business partners.
At the customer position, the company launched “Starbucks.com” to improved user experience, which is the online face of Starbucks for customers. It provides the ability for customers to purchase various coffee accessories, beans, brewing devices, and gifts. (Business & Company Resource Center, 2002) It also allows customers to explore the world of coffee and to learn more about its origins.
To their business partners, Starbucks is successfully integrating all sources of demand and matching it with the supply by using Oracle's automated information system for manufacturing (called GEMMS). The system handles distribution planning, manufacturing scheduling, and inventory control. The coordination of supply with multiple distribution channels requires timely and accurate information flows about demand, inventories, storage capacity, transportation scheduling, and more. (Business & Company Resource Center, 2002) The information systems are critical for doing all of these functions with maximum effectiveness and reasonable cost. Finally, Starbucks must work closely with hundreds of business partners.
Productivity and Quality
Among the main reason Starbucks can perform well in the flattening global economy is due to they focus on quality and productivity rather than the price. Starbucks image is one of the key elements to their success, Starbucks coffee experience is like no other because of their great lengths to find the world’s finest coffee. Starbucks is committed to conduct business with the highest level of integrity, Corporate Social Responsibility. Starbucks seeks the world’s best coffee to ensure there is always a ready supply to their customers.
Starbucks is improving their customer service through service, hygiene, quality and effectiveness. The growth of the company will occur through expansion of the retail market, product innovation, and finally service innovation. They will try to cluster their stores by locating them in close proximity so they can saturate the market. Starbucks will focus on building a loyal customer base that will use their services. Starbucks employees must know how to make drinks in a timely manner. That’s why hands-on training is necessary.
Starbucks provides a place where every one can enjoy a cup of coffee and also utilize the latest technology in their upscale atmosphere as they provide wireless internet connection services in every store. Starbucks can be found almost at everywhere from the street corner to the airport .They wishes to create new products annually and add on new combinations to diversify their menu and increase customer satisfactions in the future.
People
Employees at Starbucks are very important for them because they realize that one of their most valuable resources is their employees. All employees at Starbucks are referred to as “partners”, no matter what job position they occupy. Each partner (even part-time employees) is eligible to receive health care, participate in the Bean Stock program, and get a free pound of coffee each week. Under the Bean Stock program, employees are offered stock below the fair market value several times a year. Starbucks’ employees also participate in a profit sharing plan. Starbucks believes they are in the coffee business as well as the “people development” business. (Michael Lowenstein, 2006) Each employee is required to complete an extensive training program that includes product expertise, a commitment to customer service, and well-developed interpersonal skills.
Besides that, Starbucks also devotes significant efforts in handling its customers. It is proven by the company philosophy, ‘customer first’ that claim its starting point is the customers. Starbucks is keeping the customer’s desires and expectations firmly in mind and devote primary organizational focus such as suggestions and complaints to meeting customer expectations and extending long-term customer relationships.
Physical evidence
Starbucks set their outlets image as a "" (besides home and work) to spend time, and store design is intended to achieve this. The cafe section of the store is often outfitted with stuffed chairs and tables with hard-backed chairs. Most stores provide free electricity and high speed Wireless Internet Access (Wi-Fi) complimentary to its customers. Now the customer can enjoy a great cup of Starbucks coffee while their surf their favorite site. Further, Starbucks have some type of music playing the background and this is a key identification feature that further expands the experience.
The company is noted for its policy at almost all of its outlets. According to the company, the smoking ban is to ensure that the coffee aroma is not adulterated. The company also asks its employees to refrain from wearing strong perfumes, requires employees to cover all tattoos and remove certain piercings and concerns obligate them to strictly enforce the company dress code for similar reasons.
5 Factors that influence the service quality in Starbucks
Tangibility
Starbucks lay stress on the tangible parts of a service include the physical facilities, tools, equipment, personnel and communication materials used to provide the service.
The physical facilities are visually appealing such as having plenty of comfortable seating so that people feel welcome to stay longer than they might have planned. Moreover, Starbucks own coffee-related accessories and equipment such as coffee grinders, coffee makers, espresso machines and coffee filters that can serve out a cup of quality coffee which has a direct impact on the customer’s experience and satisfaction.
While for personnel, Starbucks required all of their employees neat in appearance and dressed appropriately while in working hours. This has ensured Starbucks corporate image and reputation. (Joseph A. Michelli, 2008)
Reliability
In its broadest sense, reliability means that the company delivers on its promises about the delivery service provision, problem resolution and pricing. For Starbucks, reliability plays an important role. Starbucks will provide their services at the time they promise to do so. For instance, everyone can use the wireless (Wi-Fi) to access to the internet no matter in which branch.
Additionally, Starbucks will insist on error-free records. For example, each bill of Starbucks customers is free of error and will not over charge for any transaction.
Responsiveness
Responsiveness emphasizes attentiveness and promptness in dealing with customer request, questions complaints and problem.
Starbucks does provide a “comment card” on their web site that allows customers to give constant feedback about their experiences or concerns them may have. This is used as a means of improving the business where necessary and gives prompt service to their customers when they have a problem.
Starbucks will never be too busy to respond to customer requests. Through the customer service doing a good responsiveness, the customer will have a good relationship with Starbucks. For example, some customer wanted to drink Starbucks coffee in the morning, they can write an e-mail or call the customer service, if Starbucks see that lots of customer have this request, Starbucks will provide a prompt responsiveness to their customers. However, if they cannot manage it, they must communicate with the customer promptly too.
Assurance
Starbucks has been recognized for exceeding expectations by the quality of their products, competency of their skills and knowledge to perform the service and consistently courteous with customers. This is what will create their loyal customers due to the knowledge of employees and their ability to convey trust.
Firstly, Starbucks having high quality coffee variations made up from high quality coffee beans as it’s core competency to maintain a certain type of standard. These provide a quality brand image for Starbucks and have a good reputation to their customers.
Secondly, every employee for Starbucks such as professional coffee bartenders complete up to 24 hours of training before entering their assigned store. This training gives them knowledge to answer any questions about coffee or the Company, and the knowledge to arrange sample tastings and demonstrations with any of the equipment in the store. Thus skilled employees in Starbucks who treat customers with respect and make customers feel that they can trust the firms exemplify assurance.
Thirdly, Starbucks Barista (employees) is willing to assist all guests/customers in the Starbucks in a friendly, courteous and helpful manner. The behavior of politeness and friendliness of employees to customer will instill confidence in customers.
Empathy
It is vital for a company to caring, individualized attention to customers. For Starbucks, they are focus on approachability and ease of contact, listening to customers and making the effort to know customers and their needs.
For access, coffee aficionados can also find Starbucks coffee in a variety of places, including urban and suburban areas, as well as many rural communities worldwide. It is conveniently located to all their customers.
For communication, Starbucks drives one of their five principles which are “embrace resistance”. As long as it's a customer complaint, Starbucks tries to listen and respond positively, not defensively.
Besides, Starbucks is embracing a highly streamlined approach in communicating to and understanding their customer with this online initiative maximizing on a CRM tool (customer relationship management) such as through MyStarbucksIdea.com to better understand customers needs, desires and complaints.
Recommendations
Overall Starbucks performance is actually sufficient to attract loyal customers and position themselves as a leading coffee retailer in Malaysia. Nonetheless, there are some areas still can be improved. The product part for example; Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time. Due to this, Starbucks have to being more flexibility that not only provides coffee product but also others alternative such as juice. Furthermore, Starbucks should enhance further their supplementary service such as facilities for handicap people. For example, provide wheelchair to them.
While for the place part; aggressive expansion of Starbucks could lead to managerial and financial problems. The company should continue to take excellent care in picking locations. It is extremely important that Starbucks’ international stores reflect uniqueness in their location and layout. Having locations in a variety of locations will ensure large market exposure.
Conclusion
Starbucks is known world-wide for its high-quality food products and differentiated “Third Place” atmosphere, it has changes the behaviors and view points of global consumers to coffee and caught the global attention. Starbucks should renew the “Starbucks Experience” through driving improvement and change in all areas that “touch the customer.” Even as the company was focus on coffee, but it is still vital to innovate by creating new products and experiences that complement the coffeehouse experience and drive transactions.
References
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Joseph A. Michelli, Ph.D. “The Starbucks Experience” (online) (cited 14 June 2008). Available from:
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Michael Lowenstein, Ph.D., CMC, Harris Interactive Loyalty (14 Feb 2006). “The Trust Equation: Build Employee Relationship Credibility, Rapport and Integrity To Leverage Customer Advocacy” (online) (cited 8 June 2008). Available from:
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- Valarie A. Zeithaml, A.Parasuraman, and Leonard L.Berry (1990) Delivering Quality Service: Balancing Customer Perceptions and Expectations, New York: The Free Press.