Falling leaves, yoga pants, hoodies, homecoming, Huskers Football and Pumpkin latte with extra cream and spices. It seems that it is now impossible to perceive the fall season without Starbucks’ seasonal coffee offers.
When in 1982, Howard Schultz reinvented the brand, and it was with a vision of raising the very act of coffee drinking to a lifestyle statement. Inspired by the social role that espresso bars played in Italian culture, he changed the company’s business from selling “whole Arabica beans” to offering specialty coffee beverages and creating a “place that would be separated from home or work, a place that would mean different things to different people.”
In about 20 years, Starbucks grew from a small coffee shop to a global coffeehouse chain that served over “20 million unique customers in well over 5,000 stores around the globe” with a net income around $ 215.1 million.
So what’s the big success of this growth? This is because of a grassroots marketing focusing on a close and personal relationship with the clients. The company invested internally on the satisfaction of its employees, first point of contact of the brand with potential customers and externally on increasing store units in order to maximize its reach and proximity.
Yet Moon and Quelch present the case of a consumer oriented Starbucks Company that finds itself out of a phase with its customers’ wants and facing growing customer dissatisfaction and who is considering a major $40 million labor investment and subsequent task restructuration in order to remedy it.
The analysis of this case will be made from a SWOT perspective after presenting the brand’s value proposition, the milestone of its whole customer satisfaction orientation.
There are three factors of the Starbucks value proposition. The first is the coffee and the special offerings provided for its customers. The high quality product was sourced from Africa, Central America, and the Asian-Pacific areas. This is important because it proves that the service is superiority other than other competitors. The second value proposition is the service. The statistics prove that the average customer visits a Starbucks about 18 times a month. They know exactly what to expect and will want the drinks just the way they love it. And the third is the atmosphere. Starbucks wanted to create a place for customers to relax and for people to come together.
The Starbucks value position was really compelling because of those aspects but also because of the HR policy. Starbucks wanted the customers’ satisfaction along with its partners’ happiness.
Starbucks Human Resources policy was unique, because partners were allowed to tell what they thought to the upper management about products about Starbucks policy, even if it was critics. Hard skills and soft skills were learnt to partners in order to teach partners’ knowledge about products, but also a way of behaving with customers. When Starbucks developed products the partners’ opinions were taken in account. Therefore, the value proposition will be enhanced by the followings:
To create an “experience” around the consumption of coffee, an experience that people would weave into their life
To create an uplifting experience in “customer intimacy”
To create an “ambience” based on human spirit, sense of community, and the need for people to come together for peace, pleasure and harmony to have fun and relax.
First let’s take a look at some factors that make Starbucks a successful company, and also its bran image.
Experiential branding strategy -- SB designs a strategy that communicates brand consistency, and scales, while also demonstrating respect and taking advantage of the individual locations and communities in which it operates. Starbucks has made a significant commitment to implement sustainable, globally recognizable and locally relevant design.
Atmosphere -- This concept was really innovative.