Starbucks Case Study
Several factors explain Starbucks’ extraordinary success. The first piece that stands out is the vision and long-term goal of Starbucks. Schultz wanted Starbucks to be a “third place” in the United States for a coffee chain. A place as necessary as at home and at work, but different and offering the client the opportunity to relax. Three other key factors for the success of a business are the expansion of retail trade, product innovation and service innovation. Starbucks stores are popping up across the country in high-traffic, high-visibility environments. But that was not enough for the company.
Starbucks continued to expand to find businesses in urban and rural areas. In the United States, coffee consumption has increased again and almost half of the American population drinks coffee daily. In response, Starbucks opened stores in emerging markets, as well as in regions where stores already exist in that market. Self-healing is important, but necessary to increase sales (Devia et al.,161). At the time, the company also intended to develop worldwide and open several stores on different continents. Another important factor was product innovation. Not only does Starbucks offer a variety of products, including coffee drinks, groceries, whole coffees and appliances, but Starbucks is constantly creating new drinks.
New products are introduced regularly. However, employees can also prepare personalized drinks for customers who meet their needs. This desire for innovation and constant expansion of the product portfolio is linked to the objective of reaching customers where they work, travel and have dinner. Service innovation is also an important factor in Starbucks’ success (Devia et al.,161). The company wants customers to interact and interact with its brand and therefore offers a prepaid card. The satisfactory service in the company stems from the partners’ desire to remain in the business. Starbucks values its partners and gives them a reason to remain happy with what they do. Health insurance and stock options are offered to beginners, and transportation is encouraged with a low turnover rate across the company (Devia et al.,161). When a partner is satisfied with his position, the customer experience becomes much more pleasant and allows for more service innovation.
Starbucks is fighting for a “live” coffee mantra; The company is trying to create a coffee experience that can be integrated into customers’ daily lives. The three components that contribute to this goal are the coffee itself, the service and the atmosphere. Starbucks coffee comes from the regions of Africa, Central and South America, as well as the Asia-Pacific region, and can be considered one of the highest quality coffees in the world (Lee et al.,55). Thanks to Starbucks’ tight control over the supply chain, the company can work with several manufacturers in their home countries to buy “green coffee beans”. In this way, the company can also monitor customized roasting processes for different mixtures and get an idea of the overall retail business.
As mentioned earlier, proximity to customers is crucial for Starbucks. The company wants to create a pleasant and stimulating experience each time a customer enters the store. This component created the Just Say Yes policy for employees. If a customer drops a drink, the bartender can make another one. If a customer doesn’t like the taste, the bartender can create another one. If the customer wants something that is not on the menu, the bartender will have space to personalize the drink (Lee et al.,55). All these little details allow the customer to walk with a smile on their face. After all, the atmosphere brings the total value of coffee. While some customers come for coffee, the atmosphere encourages them to sit and stay. Stores should encourage customers to rest and have fun (Lee et al.,55). Although the designs are relaxing, they have a unique but attractive charm. The three components are brought together and this creates the value that customers praise and deliver.
Reduced Customer Satisfaction
Starbucks saw customer satisfaction decline. Tests have shown that there is a direct link between customer satisfaction and loyalty. Starbucks began to see a change in its customer base. Instead of wealthy and well-educated workers, aged between 25 and 44, the profile was extended to younger, less educated and low-income clients. These new customers also visited the store less often and were less familiar with the Starbucks brand (Kharif, Olga, and L). They look at the brand for more convenience than for other values that make it such a precious coffee. There was also a gap in service expectations. Many customers thought the service was lacking. When all of these parts started to collapse, Starbucks focused on growing its business and losing contact with its customers. After research, it became clear that Starbucks needed to improve its service in categories such as team and speed.
Ideal Starbucks Customer
As mentioned earlier, Starbucks has focused on wealthy and well-educated workers and employees (mostly women) aged 25-44. However, changes in customer profiles have shown that more and more customers are younger, less educated and with lower income levels. However, these typical customers visited Starbucks much less than established customers. They also have very different attitudes towards Starbucks, which has a much weaker effect on the brand. In Appendix 8 of the case study, new customers rank Starbucks much less in different categories, such as quality brand, trust brand, value for money, proof of betting, etc. Therefore, the most ideal Starbucks customer will be a frequent visitor more than the “typical customer”. Someone who is very satisfied each time and who spends more on each visit. A customer who is a regular customer and loyal to the brand expects it to reach an average useful life of 8.3 years. Starbucks must reach out to these customers to remain loyal to the Starbucks brand and review its product portfolio.
Starbucks has a huge presence on social media. Social media includes: Facebook, YouTube, LinkedIn, Twitter, Pinterest and Instagram. The company has a blog on its website that has created an online community. Starbucks has a huge fan base, they have over 37 million followers on Facebook. His latest contribution was the announcement of the new “Ultra Caramel Frappuccino”. Starbucks received 2,5000 emoji characters, 882 comments, 234 shares and 54,000 views (Kharif, Olga, and L). Different social media platforms feature a market segment that appeals to different customers on this social media page. Pinterest shows a more artistic and less commercial design. Pinterest supports the consumer with various tea and coffee creations. Instagram is dedicated to photography and design. This is the image that Starbucks wanted to show its consumers. Instagram shows that Starbucks has 20 million subscribers and Pinterest has 5,000 pins.
Starbucks has enjoyed great success on LinkedIn with consumers from around the world. Since LinkedIn is a professional site, it is best to advertise on that site. Seattle has more than 738,000 subscribers. Starbucks presents a professional view of the company that meets LinkedIn’s expectations. Starbucks’ biggest success in recent years was its introduction to the mobile app. In 2011, the electronic form for the Starbucks customer card was introduced. The customer’s card developed a field service. The customer card opens the door for consumers to offer a new experience to customers who order, pay, skip the line and much more. This is the biggest success of the company’s online marketing plan. Generation X and Generation Y know computers better than baby boomers when they use mobile technology and smartphones. Starbucks has found the perfect way to make the “third screen” a powerful marketing tool for its consumers.
Starbucks’ growth and loyalty is based on digital marketing. Between 2011 and 2015, Starbucks increased sales to $ 19.1 million. The launch of the Starbucks mobile app resulted in a 10% increase in annual sales. In the past two years, Starbucks’ value has reached 18% (Marie, 56), although the app covers only about 4,000 of its stores worldwide. The richness of the mobile app is so important that it is an essential element of the company’s marketing strategy. Starbucks has significantly increased its investments in digital marketing to support these strategies. The cost of Starbucks to market its plan will require sales to drop from $ 145 million to $ 300 million in 2016. The company is implementing an expansion of its mobile application to Asia, Europe and Latin America (Marie 56). Targeting these countries to in-app purchases will increase your sales by 50%. To understand the level of dedication to digital marketing, we need to research that the customer must have a Starbucks customer card for the application to work. Starbucks’ share of revenue comes from customers who participate in the loyalty program. Some program members have a card, but do not make purchases through the app.
Business loyalty can also be determined as a bet behind any social platform where Starbucks is located. Corporate gifts can be the number of likes or followers on Facebook, Pinterest or Instagram. Starbucks attracts customers through social media. Dunkin Donuts has half of Starbucks fans and they are in competition. Starbucks is determined to determine how many clicks, tastes and tweets become a cup of coffee or tea. Starbucks’ presence is clearly in the coffee industry and has announced its brand (Marie 56). The tools installed by Starbucks have increased business. Marketing tools are the result of your marketing strategy. Starbucks has a defined target group that is managed through the social media platform. Starbucks is aimed at adults aged 25 to 40 who occupy almost 50% of its activities. An article on the Motley Fool investment website said, “The company considers that its main customers are educated with an average age of 42 and a median income of $ 90,000”. Consequently, 40% of customers are young people aged 18 to 24 (Marie 56). Starbucks’ target audience is more than enough revenue and most members are active users of mobile technology.
Customer Satisfaction
The cognitive dissonance theory interprets a psychological conflict of thought developed in the 1950s by the American psychologist Leon Festinger. The theory explains the balance of psychological conflict that is achieved through emotional balance. For example, maintaining mental stress that alters an individual’s beliefs and behaviors requires emotional balance to restore balance and prevent suffering. For example, smokers (behavior) know that smoking causes cancer (dissonance), but are in a state of mental balance known as cognitive dissonance.
The theory focuses on explaining people’s behavior patterns to achieve their internal coherence. The theory shows a situation that leads to activities based on reducing dissonance, since hunger would lead to activities to reduce hunger. The level of cognitive complaints depends on several factors, such as: B. specific beliefs and the inconsistency of different beliefs. Therefore, the cognitive dissonance theory selects a behavioral communication theory for this task, as it can model people’s communication patterns by balancing opposing ideologies.
Factors that affect the level of cognitive dissonance include personal meanings, shock ration and pressure on discomfort. People-oriented knowledge leads to greater dissonance. The importance given to knowledge (value) leads to greater dissonance. The relationship between dissonant (conflicting) ideas and consonant thoughts (harmony) also determines the level of cognitive dissonance, as explained in theory. The strength of the dissonance is also proportional to the pressure exerted on relieving thoughts, attitudes and feelings. Cognitive dissonance applies to different horizons and not just to communication. An individual’s behavior contradicts the innate beliefs of personal identity, hence the need for balance to make the right decision. For example, when you buy a product that is a decision you make regularly, the value that one person assigns to a product based on need determines the other.
Cognitive Dissonance Theory
The cognitive dissonance theory interprets a psychological conflict of thought developed in the 1950s by the American psychologist Leon Festinger. The theory explains the balance of psychological conflict that is achieved through emotional balance (Chapanis, Natalia and Alphonse, 116). For example, maintaining mental stress that alters an individual’s beliefs and behaviors requires emotional balance to restore balance and prevent suffering. For example, smokers (behavior) know that smoking causes cancer (dissonance), but are in a state of mental balance known as cognitive dissonance.
The theory focuses on explaining people’s behavior patterns to achieve their internal coherence. The theory shows a situation that leads to activities based on reducing dissonance, since hunger would lead to activities to reduce hunger (Chapanis et al, 116). The level of cognitive complaints depends on several factors, such as: B. specific beliefs and the inconsistency of different beliefs. Therefore, the cognitive dissonance theory selects a behavioral communication theory for this task, as it can model people’s communication patterns by balancing opposing ideologies.
Factors that affect the level of cognitive dissonance include personal meanings, shock ration and pressure on discomfort (Chapanis et al, 116). People-oriented knowledge leads to greater dissonance. The importance given to knowledge (value) leads to greater dissonance. The relationship between dissonant (conflicting) ideas and consonant thoughts (harmony) also determines the level of cognitive dissonance, as explained in theory. The strength of the dissonance is also proportional to the pressure exerted on relieving thoughts, attitudes and feelings (Chapanis et al, 116). Cognitive dissonance applies to different horizons and not just to communication. An individual’s behavior contradicts the innate beliefs of personal identity, hence the need for balance to make the right decision. For example, when you buy a product that is a decision you make regularly, the value that one person assigns to a product based on need determines the other.
Individual Reflection
Based on Starbucks case studies and some research, I found that Starbucks uses online marketing a lot to increase its customer base. Starbucks operates its own website, which contains the various products available and what they offer. There is a section on the website where you can learn more about the different types of coffee and how to make coffee with your products. This is another section with your special teas on offer and how to make them at home. Starbucks brands its products to improve the customer experience.
I considered several online marketing options. I didn’t find any online advertising suggesting that Starbucks use search ads. Looking for Starbucks ads online, I found many Dunkin Donuts ads. Starbucks was looking for “coffee specialties”. I realized that customers like to interact with companies by email. I like Starbucks because I can register my name and get the customer experience, and they show me my favorite drink. I can really say that it helped me stay organized when I am a Starbucks customer card member and use the app. Starbucks teamed up with the New York Times to make the perfect morning with coffee and newspapers. Young adults are attractive because of the benefits of free Wi-Fi music and Pandora. Starbucks is a place where everyone can relax, learn, work or meet other people.
When comparing many uses of digital marketing, I found that Starbucks is making its mark on all social media platforms and customer loyalty. Starbucks describes its strategies for email, social media and video. The company chose the least popular and least used mobile app. A 2016 Business Insider article mentions that it takes many companies to copy Starbucks’ success and make integrative in-app marketing an essential strategy for their business.
An alternative approach to using an application is still controversial. Some argued that not all possible audiences are people who spend time with mobile technology. Baby boomers are a good group of coffee consumers who have time to shop, but are not the primary target of mobile companies using Starbucks mobile apps. Baby boomers will be part of Starbucks’ marketing plan. Starbucks’ solid knowledge in app marketing can help your sales in the long run and attract more customers and investors. With the Starbuck customer card, you get free music and you can become the next loyal customer for Pandora and iTunes.
Starbucks may offer other awards that its partners, such as the New York Times, Pandora or iTunes, can help with. For example, download the song of the month and get free coffee, tea or cake. Buy a movie and enjoy a complete coffee and pastry experience. Some of the benefits of Starbucks can help you generate more revenue for your business. Starbucks can also take advantage of these benefits to attract potential business partners. People use different apps to buy tickets, dinner, clothes and gas. Starbucks can work with several travel agencies to help people waiting for a flight. If they have the mobile app and are loyal customers, they give them a free drink while waiting on the plane. This can open the door to a new customer experience.
When traveling, you can access Google Maps and find the nearest Starbucks. Starbucks can also perform multiple surveys and provide a code at the end of a survey to receive a $ 3 discount the next time they buy or receive a free drink. Starbucks is great at discovering new tools that will make your brand stand out from the rest of the coffee industry. Starbucks can grow in mobile connectivity for today’s consumers.
I think Starbucks should invest $ 40 million. Relaxing opening hours to add 20 hours of work per week to business, Starbucks speeds up service and satisfies customers. Starbucks’ priority is to keep customers happy to bring them back. This investment achieves that priority. Faster service and a more attentive and friendly team are two achievements that make customers feel more valued in business. Other aspects of better perception are improving efficiency and creating better incentives for customers. As a result, this investment will improve customer perception and reverse the decline in customer satisfaction rates.
I think for a company that faces a lot of competition they should always make the customer right. This is because the customer has options. He or she can look for other places where he can get the same product and still be satisfied. The other thing is to use tools such as big data that shows customer satisfaction rate. Some customers may also prefer using online shopping to order for their goods. Having such information can be very helpful.
Work Cited
Chapanis, Natalia P., and Alphonse Chapanis. “Cognitive dissonance: Five years later.” Attitude
Change. Routledge, 2017. 116-153.
Devia, Aldeline Nolita, Siti Aisjah, and Astrid Puspaningrum. “The influence of brand experience and service quality to customer loyalty mediated by customer satisfaction in Starbucks coffee Malang.” MEC-J (Management and Economics Journal) 2.2 (2018): 161-170.
Lee, Ying-Lan, et al. “Applying GM (0, N) Model in the Study of Relationship between Service Quality and Customer Satisfaction in Hualien Starbucks.” International Journal of Kansei Information 7.3 (2016): 55-63.
Marie, Andhalia Liza. “The Effect of Service Quality and Servicescape Towards Customer Satisfaction, Starbucks Coffee, Jakarta.” TRJ Tourism Research Journal 3.1 (2019): 56-70.
Kharif, Olga, and L. Pattron. “Starbucks takes its pioneering mobile-phone app to grande level.” Bloomberg Technology (2016).