Starbucks is one of the most trusted brands in the world with more than 20,000 stores in 62 countries (Loxcel, “Loxcel Starbucks”). In order to achieve those results, the company had to implement high standards for employee training, customer service, real estate acquisition, and product quality. With a mission statement that focuses on building a great working environment, embracing diversity, promoting human dignity, high standards of product creation, Starbucks does not offer only products to consumers, but it also offers satisfaction to both employees and customers in different communities.
BACKGROUND
Successful Store Positioning. It is possible to notice that Starbucks is located at high-traffic areas, such as airports, commuting routes, or college campuses. Location can be a significant factor that determines success because the company can gain more exposure, thus saving resources on marketing campaigns.
Starbucks Focuses on Expansion Constantly. New stores are constantly opened because of licensing and international expansion. While the company had only 6,000 stores in 2003, they currently have stores opened at more than 20,000 locations worldwide.
Employee Quality. When compared to the average fast-food industry turnover rates, Starbucks has one of the lowest barista turnover rates in the industry, which is estimated at 70 percent (Moon and Quelch, “Starbucks”).
Diversification of Products. Although Starbucks started out as a coffee shop, they expanded into other markets to increase revenue. For example, they currently offer tea, iced tea, smoothies, and other beverages in addition to coffee. When the company added sandwiches, hot breakfasts, and other food items on the menu, they also started competing with fast-food companies, such as McDonalds, which responded to the challenge by adding coffee to their own menus.
Reduced Quality. Because of high demands, Starbucks had to place more emphasis on efficiency rather than product quality. An example is the introduction of flavor-locked packaging, which does not provide the same taste as fresh ground coffee. Apart from minor sacrifices, it is possible to notice that the company still follows the guidelines used to ensure their decisions are in compliance with their mission statement.
PERSONAL AFFECT
Positive Aspects. The first positive aspect I appreciate is high-standard employee training and customer service. Because Starbucks focuses on both employee and customer satisfaction, they deserved their success as an international brand. Second, Starbucks frequently creates new coffee-based drinks, and I respect their ability to produce innovative products that capture attention and entertain the customers.
Finally, Starbucks has an environmental mission statement that recognizes the importance of using environmentally friendly products and promoting environmental responsibility as one of the corporate values. Because of their commitment to environmental leadership, they are more likely going to gain trust and credibility among their consumers.
Negative Aspects. Because Starbucks is a chain store, some sacrifices need to be made in order to satisfy the needs of a growing audience. I personally do not agree with the company’s choice to venture into other types of beverages, such as tea and smoothies, or include a variety of foods on their menu.
The second critique is the over-saturation caused by opening too many locations after real estate acquisition standards were lowered to satisfy the needs for rapid growth (Stone, “Lax Real Estate”). Although expansion is required to increase revenue and profitability, it is important to consider that increasing revenue by diversifying offers can lead to lower product quality because it is exchanged in favor of quantity.
Gourmet Coffee Buying Decisions
Target Market. According to Starbucks CEO Shultz, the target market in the early stages of the company’s development consisted of white-collar patrons, who were well-educated and between 25 and 44 years of age (Moon and Quelch, “Starbucks”). Because of that description, is possible to notice that their primary market is more likely going to be inclined to gourmet coffee.
Market Needs. Tending to the needs of their market is one of the key reasons for Starbucks’ success. According to the company, people who visit Starbucks want a cup of coffee, but the ambient invites them to stay (Moon and Quelch, “Starbucks”). In a sophisticated environment, gourmet coffee becomes a primary choice over regular coffee.
Innovation. Drinking coffee has become a routine for most people, so it is natural to assume they will desire new experiences occasionally. Because Starbucks offers a variety of products, customers can experience drinking coffee as a pleasure rather than a habit. The need for new experiences and the availability of those experiences is one of the reasons people are more likely going to buy gourmet coffee.
Fear of Missing Out. Scarcity is an important principle in sales. Because several gourmet drinks and featured offers are branded by Starbucks, they cannot be obtained in other stores. Some offers may also be a limited edition drink, which makes them desirable to consumers.
Incentive Programs. To reward customers for their loyalty, Starbucks offers a loyalty program for frequent customers. According to their Terms and Conditions, customers are entitled to several benefits, such as free drinks and meals on their birthday, personalized offers, and more (Starbucks, “My Starbucks Rewards”). With an incentive program, customers are more likely going to choose gourmet coffee for better rewards or as free gifts for their loyalty.
Environmental Influences in Buying
Ambiance. Several regulations and decoration choices contribute to the ambiance in Starbucks stores. The goal of their ambiance is to create returning customers by encouraging them to stay in an environment that emphasizes building a community, features suitable music, and offers a comfortable physical layout.
For example, the seating areas in stores are designed to encourage lounging. The music needs to be soothing because the customers will desire to stay longer and relax in a slow-paced environment, which helps them distance from the fast-paced environments they are usually exposed to both at home and work (Thompson and Gamble, “Starbucks Corporation”).
Regulating the Aroma in Stores. Aromas help people make buying decisions because smell affects taste significantly. According to Starbucks’ regulations, employees are encouraged to avoid strong perfumes and colognes (Moon and Quelch, “Starbucks”). The food is also covered and smoking is forbidden. With those regulations, the smell of coffee is emphasized as the strongest scent in the store, and may influence the buyers’ decisions as gourmet coffee smells more appealing than regular coffee.
Employee Training. Starbucks understands that satisfied employees can offer better customer service (Moon and Quelch, “Starbucks”). For the company, both customer and employee loyalty are important because employees can form bonds with customers and (Moon and Quelch, “Starbucks”). Several regulations are in place to ensure customer service is exceptional. For example, employees are taught to offer free refills to customers who spill their drinks or offer compensations, such as coupons, to dissatisfied customers (Moon and Quelch, “Starbucks”).
Building Trust. Demonstrating expertise in the area of service is critical for gaining trust among the customers. Employees at Starbucks are not only trained to treat customers with respect, but they are also taught how to brew excellent coffee and how to make recommendations to customers. By presenting their knowledge about coffee, employees are observed as expert baristas and have more influence over the customers’ decisions.
Exposure to High-Quality Brands. Apart from serving coffee, Starbucks also has a store in which they sell premium coffee. As visitors become regular customers, they will be frequently exposed to those brands, and they may eventually decide to try one of the gourmet coffees offered at Starbucks.
Starbucks Web Site Review
Although the professional graphical design is evident on the Starbucks web site, the content and elements are most likely not distributed in a way that will maximize their marketing efforts. The main drawback is offering visitors too many options, which makes it difficult for the customer to make a decision when buying products. However, it is also important to note that the landing page shows news related to their menu or offers and recent informative blog posts. With that approach, the visitor has the option to notice important updates and offers immediately.
In the featured offers, Starbucks shows concise descriptions and an image for each featured product. When a visitor clicks on a product, the description also includes nutritional values. Their approach is excellent because presenting fewer products always improves conversion rates, and a beautiful image makes the product more desirable (Gehl, “12 Ways”).
However, it is also important to consider that the description is aimed at describing the flavors, which is an effective way of marketing a product to people who are already inclined to gourmet coffee or enjoy experimenting with new flavors. While the featured offers may increase sales among that population, they probably do not increase sales among other customers because they do not understand how buying those products will benefit them (Gehl, “12 Ways”). For example, clearly stating health benefits in the product description of the ingredients used could increase more sales because people will have a reason to buy the product other than great taste.
Works Cited
Gehl, Derek. “12 Ways to Increase Online Sales.” Entrepreneur, n.d. Web. 7 June 2013.
Loxcel. Loxcel Starbucks Map Showing 20,834 Stores. 2013. Loxcel, Toronto. Loxcel Cell Tower & Map Consulting. Web. 7 June 2013.
Moon, Youngme, and John Quelch. Starbucks: Delivering Customer Service. Harvard College. Boston, MA: Harvard Business School, 2003. Web. 7 June 2013.
Starbucks. “My Starbucks Rewards™ Program – U.S.” Starbucks, 2013. Web. 7 June 2013.
Stone, Brad. (2008). Lax Real Estate Decisions Hurt Starbucks. New York Times, 2008. Web. 7 June 2013.
Thompson, Arthur A., and John E. Gamble. “Starbucks Corporation.” The McGraw-Hill Companies, 1999. Web. 7 June 2013.
