Creation Of The Starbucks Experience Marketing Essay

Creation Of The Starbucks adopt intercourse Marketing EssayStarted up in 1971, Starbucks is unrivaled of the worlds largest mountain com reelects of chocolate ho physical exercises. Starting out as a wiz shop that specializes in high feel hot chocolate and brewing get acrossways, the ships company grew to be the largest roasters with multiple locations in America the early 80s. From there it spread out its trading operations and gain to North America, Europe, Middle East, Latin America and the Pacific Rim. Worldwide there argon approximately 35 million clients that contact c atomic number 18 a SB Coffee house each week.Starbucks is all round purchases and roasts high- fiber whole bean coffee beans and sells them along with unfermented, rich-brewed, Italian style espresso beverages, a compartmentalisation of pastries and confections, and coffee-re recentlyd accessories and equipment primarily finished its company-ope sayd retail investment firms. In addition to gross sales do their company-operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarts. The ships companys objective is to establish Starbucks as the most recognized and esteem blot in the world.The company grew from 17 stores in 1987 to much than than 16,000 planetary instantly (ONeill, 2008) depend Table 1. The stores atomic number 18 all company own except for the licensing arrangements for kiosks in buzz off out of the closets such as airports and hospitals. Recently, Starbucks was in the wises for closure down 500 of its stores and laying off 7% of its dissemble impel (Adamy, 2008). The reason for the store closings were that moolah were down and the stock scathe has tumbled since late 2006. Other than the economic recession in the U.S. and around the world, the downslide in Starbucks earnings is also attributed to a slowdown in consumer sp eat uping and an increase in competition from other coffee and pla cidityaurant chains, especially McDonalds (Adamy, 2008). Today, Starbucks is put to working to line up market sh be, and improve productivity and profitability without sacrificing the quality and reliability of its products and go.2. Starbucks Experience (Process Technology)Starbuckss strategy in targeting its customers is to position itself as a third regul come in the lifestyles of its customers. That is to say, the prototypical Starbucks customer allow for spend their snip at home, at work, and at Starbucks. To encourage this liking, Starbucks locations be furnished with well-provided seating, take into account outlets for electronic equipment, and a blanket no-smoking policy ensures that all customers ar comfortable in the environment, refer to Figure 2.Coffee Drinks MenuPromotionsPastriesEspresso Bar severMagazinesProductsCondimentsEntranceFigure 2. Basic Starbucks Coffee Store Layout in a Penang, MalaysiaMaking customers more comfortable while spending time in the s tores causes them to stay longer and, in doing so, indulge in more of what Starbucks has to liberty chit. As customers linger, they atomic number 18 more likely to buy a second cupful of coffee or a snack, to pay for wi-fi internet access, to burn a CD, etc. In addition to diversify its product offerings, Starbucks is also aspect to broaden its customer base beyond just young urban professionals and college students. Many of the more recent adjustments to how Starbucks conducts its argument are aimed at suit the varied lifestyles of the not-so-traditional Starbucks customer.The Coffee (Capa urban center Management Supplier chain strategy)3.1 Managing Operations former(a) On at Starbucks Today, Starbucks is a publicly traded company, more than a retail store its an importer, a manufacturer, a wholesaler, and a direct mail seam composition. However, in the beginning, before expiry public in 1992, the roasting coiffe and headquarters were located next to each other in the c ity of Seattle, Washington. This close proximity allowed Howard Schultz, to be involved in the operational prep and control of this enterprise on a day-to-day basis (Schultz and Jones, 1997)..3.2 azoic Supply Chain A tot up chain (SC) is the electronic ne 2rk of activities that show a product or aid to the customer. It is the sourcing of raw materials, assembly, warehousing, request entry, distribution, and delivery. In other words, a turn in chain is the sequence of organizational facilities, functions, and activities that are all involved in the production and delivery of a quality product or service at an affordable and competitive worth (Gates Gill, 2007 Wisner et al, 2005). By facilities meaning warehouses, factories or plants, processing centers, distribution centers, retail outlets, and offices. By functions and activities we mean beseech forecasting, purchasing, inventory anxiety, knowledge management, quality assurance, scheduling, production, delivery, and cu stomer service (Russell and Taylor, 2011). It is no wonder that supply chains are also referred to as value chains, because the ultimate value of a product or service takes draw a bead on along this chain from raw material purchasing to receiving to remembering to operations and finally through the distribution system to the end drug user (St razeson, 2009).Supply chain management (SCM) is the business function that coordinates all of the network links, thereby, coordinates efficient movement of high-priceds through the supply chain from suppliers to manufacturers to distributors, and promotes sharing of data such as the demand forecasts, sales data, and sales promotions along the chain (Stevenson, 2009). The main reasons for supply chain management are twofold (1) a total systems approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer and (2) the strategic coordination of busi ness functions in spite of appearance a business organization and end-to-end its supply chain for the purpose of integrating supply and demand management and creating a balance surrounded by supply and demand (Wisner et al, 2005). effectual supply chain management is a key component of competing self-madely in todays cutthroat global marketplace. Without effectively managing the flow of goods, supplies, and even services, no company chiffonier hope to maintain control of their quality, greets, or call for their customers needs.Starbucks learned early on that the quality of the coffee that ends up in the customers hands can be easily ruined by mishandling activities in the supply chain. To control process quality, Starbucks had to manage its own supply chain. exclusively put, if the farmer does not get a good price for the discolours coffee beans, they then would not invest in fertilizer and the alimony involved in growing quality coffee beans (Schultz and Jones, 1997 Wi kipedia II). The coffee can be under or over roasted. If the coffee beans sit on the shelf for too long they go stale, so the right cadence of inventory is a crucial factor, which in turn relates to the effectiveness of supply chain management. Starbucks prefers to handle its own supply chain, open company-owned stores, and has resisted franchising in cultism of giving up its control over selling a high-quality product.3.3 wherefore Dark Roast The highest quality coffee beans have always been gamey roasted which is what polariates Starbucks from other coffee sellers. By roasting the coffee beans dark, Starbucks gave up a way to improve the productivity of the roasting process the luminance the roast the more specie is saved (Schultz and Jones, 1997). Starbucks has always struggled with maintaining its value of helping high-quality dark roast coffee even though there are galore(postnominal) non-customers who think the dark roast tastes like burnt coffee.3.4 unbalance in the Supply Chain Purchasing green coffee beans from ontogenesis countries brings several risks such as bad weather, political risk, and inconsistent quality. at that place were times when the weather affected the price of green coffee beans. Starbucks managed supply chain be by locking in the price of green coffee through long contracts at a fixed price which ensured a constant flow of inventory. In June of 1994, the cost of green coffee had been locked in at 0.50 cents a pound. Then a severe halt in Brazil caused the price of green coffee beans to increase 330%. A decision was make to pass the incremental cost on to the customers earlier than interchangement cost as the gasoline stations are doing today each time the price of oil goes up. Immediately, profitability was affected by an adverse effect in the supply chain. An unstable supply chain can cause an immediate reaction from Wall Street when loot for a company are expected to be affected by adverse conditions (Carier, 2007) .4. node Service (Lean Production)Each Starbucks store has customer input cards available at the condiment stations. The comment cards help Starbucks management keep in touch with what customers want from the coffee products and The Starbucks Experience. The cards furnish the customer a chance to judge the screw they just had and obtain suggestions on in the altogether products. Starbucks has a cover statement posted in the store as Our Promise that states the customers can get a coffee intoxication the way they want it. If the customer is not satisfied with a drink another one depart be do to their satisfaction. If a customer wants to try the taste of the coffee before purchasing, the criterionista will offer a sample. The Starbucks guarantee statement is as follows.Our Promise Your drink should be perfect, every time. If not, let us know and we will make it right.4.1 Customer Requirements Starbucks continuously solicits feedback from customers via a wide variety of mean s. These include but are not limited to direct feedback at the counter customer feedback through the Starbucks Customer Connections (SCC) website and questionnaires on the Corporate Social Responsibility (CSR) report (Starbucks Company Timeline).Customer requirements are considered when designing the quality and reliability of the coffee drinks and the make out at Starbucks. As the stores became popular as a third place for the customers, Starbucks responded by finding ways to respond to the requirements of the customers and enhance the spirit of the stores. watch out Table 2, Starbuckss Quality Table, for an organized list of customer requirements, be in the rows of the table, gathered from research and talking to peck who drink coffee. The corresponding solutions, appearing in the columns of the table, describe how Starbucks is responding to meeting the customer requirements. It is suffice to say that Starbucks has act to meet all the requirements of the customers. The Quality Table also demonstrates the kin amongst the customer requirements and the Starbuckss solutions. The strength of relationships is determined using the conventional symbolism of the quality function deployment (QFD) process. What follows next are some highlights on how some of the requirements were met.sbucks.jpg metier of relationships Strong , Medium , Weak4.2 Training Improves Customer Service dependableness The coffee drinks are inert (Schultz and Jones, 1997). Its the people that work at Starbucks that pass on the passion and knowledge just well-nigh(predicate) coffee. Because baristas are expected to be more than transaction handlers, the skill involved is higher than is required from a server at McDonalds, for example. Starbucks has traditionally invested more on schooling than on advertising. Employees, partners as they are called, all go through 24 hours of training on making a quality cup of coffee and learn about the all coffee varieties that are served at Starbucks. At Starbucks, the customer is in control of the process, thus, the baristas are trained to prepare a drink the way the customer wants it. This can make the order process take longer time, but improves the sales opportunity. One thing a barista will not do, for sanitation reasons, is make a drink with milk that customers may bring in to the store with them (Schultz and Jones, 1997).In addition to training, there are other ways that Starbucks guarantees a reliable coffee drink. A poka-yoke (error-proofing) proficiency is used to help relay an espresso drink order to the barista nates the espresso bar (i.e., callout order, repeat order), see Figure 2.A typical service outline of the order process at Starbucks is shown in Figure 3. To start the order process, the barista behind the cash register gives friendly service by odoring the customer in the eye and then greeting the customer. The customer gives the order. If the order is for an espresso drink, the barista repeats the order, out loud, and states the ingredients in a predefined order (size, type of milk, type of coffee, etc.) (Gates Gill, 2007). The barista behind the espresso bar repeats the drink ingredients in the same order. This simple poka-yoke technique helps to guarantee that the drink will be made correctly the setoff time (Gates Gill, 2007). This process was observed at the Michigan store with one addition, the barista asked for the customers denote and repeated it with the drink order. In the early days, the baristas were trained to ask the customers name. Howard Schultz has brought this stair back as another way to differentiate Starbucks from the other coffee shops this act, in turn, has had a positive impact on improving market parcel.4.3 Benefits Reduce Partner Turnover Starbucks employee turn-over rate is 120% less than the industriousness mediocre for retail coffee shops (Michelli, 2007). on that point are three reasons for this low- swage rate (1) hourly wages are higher than the industry average, (2) partners are offered health care benefits, and (3) a company stock plan is given if they work more than 20 hours per week. Starbucks employees tend to be young and healthy which keeps the cost of health benefits low. The benefits package at Starbucks is a key competitive advantage.The wage, health benefits, and company stock plan have all helped to reduce Starbuckss employee turnover in turn, low partner turnover has reduced training costs. In 1997, research showed that the average customer returned 18 times per month (Schultz and Jones, 1997). Customers devise a relationship with the baristas serving coffee. One may reasonably ask that low-turnover contributes to a reliable Starbucks Experience and customer loyalty.The Starbucks Experience (Performance improvement strategy)5.1 Stores muddle Selection Decision attitude decisions are not easy and many factors affect them. Location decisions are closely tied to an organizations strategies, low-cost, conven ience to depict market share, effect on capacity and flexibility, represent a long-term commitment of resources, effect investment requirements, operating costs, revenues, and operations, impact competitive advantage, and richness to supply chains. Definitely a multivariate constrained optimization problem. Location decisions arise for a variety of reasons such as addition of sensitive facilities, as part of a marketing strategy to expand markets, growth in demand that cannot be satisfied by expanding existing facilities, depletion of basic inputs which requires relocation, shift in markets, and cost of doing business at a position location which makes relocation attractive (Stevenson, 2009 Wisner et al, 2005). Starbucks uses its own real-estate strategy for locating company-owned stores. When debut a new market, analysis is made to determine if multiple stores will survive in order to take advantage of economies of scale. A major(ip) customer complaint is the long lines waiti ng for coffee drinks at Starbucks stores. Starbucks opens new locations close to work locations in order to relieve the wait in lines and increase service rates. The downside to this strategy is the new location tends to cannibalize sales from the busy store. To establish a new store, Starbucks also experiences rampart from arcadian communities who feel a Starbucks store will put the local coffee shops out of business and change the character of the rural community. There have been times that Starbucks declined to move into a new community because of this local resistance sentiment (Schultz and Jones, 1997).Starbucks management is sometimes able to reverse this sentiment by becoming involved in the community with donations and charitable events or contributions. There are many jokes about Starbucks becoming ubiquitous. Traditionally, when a new store would open the customers would come by word-of mouth without spending large add ups of money on advertising.5.2 Store Layout Evalu ation Layout is about the configuration of departments, work centers, and equipment, with position emphasis on movement of work, customers or materials, through the system (Jacobs and Chase, 2011 Russell and Taylor, 2011). Facilities layout decisions arise when designing new facilities and/or re-designing existing facilities. Basic layout types are product layouts, process layouts, fixed-position layout, and combination layouts which contain hybrid layouts and cellular layouts ((Jacobs and Chase, 2011 Stevenson, 2009). From the beginning the idea behind the Starbuckss stores layouts was to recreate the experience in the espresso bars in Italy where customers come in workaday and stand to enjoy an espresso drink (Schultz and Jones, 1997). Over time, Starbucks has make out a third place for customers to go to get away from daily hectic, enjoy a cup of coffee, listen to music, do some work using the Internet service, societalize with friends, and even hold a business meeting. Young customers drink lots of coffee and enjoy having a place to go where alcohol is not served. Before moving into a new location, research is done to understand the culture, and art work is displayed in the stores that think over the communitys culture.The store layout shows that Starbucks mainly uses the product layout approach where customers stand in line, going from station to station so to speak, to be served while interacting with the baristas to place an order. No credit cards or checks are taken which helps keep the lines moving. During busy times, at this store, one or two baristas take the order and requital while one makes the basic coffee and tea drinks and another fills orders at the espresso bar. Everything happens in view and in control of the customer. The customer watches the barista grind fresh coffee beans before brewing which is a change that Starbucks has recently made to re-introduce the spirit of the Italian espresso shops. This spirit or Starbucks Experience i s more important than the mere productivity improvement of, for example, the quick opening of a package of pre-ground coffee. The customer watches a drink order being made while, concurrently, having a converse with the barista. This high-degree of customer contact is enhanced in two ways when a barista take the airs around the store offering samples of products or when a master barista is holding a coffee seminar or demonstration. The espresso bar is garbled from the theatre of operations where the drink order is taken, so the customer must walk to the bar to pick up the specialty drink. One of the changes that Starbucks plans to make is to replace the espresso machines with the old style machines that sit lower. The downside to this decision is that the old style machines are not as efficient however, the customers will be able to see the barista as the drink is being made which adds to the ambiance of the Starbucks stores and provides the spirit of the Italian espresso shops. futurity Trend and ChangesGoing yard and creating awarenessStarbucks, appearing to be an agent of environmental protection, has been busy promoting responsible environmentalism by minimizing their carbon impression. Starbuckss valuation their infrastructure too has led the company to implement their own initiatives by dialoguing, building a foundation called Business for Innovative Climate and zippo Policy (BICEP), collaborating with representatives supporting environmentalism, designing and constructing green storefronts and utilizing the conservation of natural resources within their operations.Back In 1992, Starbucks became a publicly traded company. Shortly thereafter, a cross functionalteam of Starbucks partners adopted an environmental military commission statement. What evolved was an Environmental affairs team that seeks to develop environmentally responsible policies and procedures. As new environmental issues arise, this group examines our current measures and identi fies opportunities for improvement.Environmental Footprint AnalysisTo determine our environmental impact, or footprint, as a company, in fiscal 2001 Starbucks worked with The Natural Step, a nonprofit consulting and education group helping organizations take steps toward sustainability. We canvass Starbucks supply chain-from coffee bean to coffee cup-looking for opportunities to make our footprint smaller.throughout the process, we focused on achievable measures that could significantly reduce our footprint or environmental impact. Some solutions were obvious, such as addressing packaging, energy, emaciate, and recycling issues. Other measures are more challenging but necessary if we are serious about demonstrating environmental leaders.Thus, our efforts are focused on four areas Coffee, tea and writing sourcing Transportation impacts (people and goods) Electricity, gas and water use Store design and operationsStarbucks identified ways to measure our performance for each focus ar ea and developed specific initiatives to improve our resource efficiency.Our store recycling system of measurement measures the percentage of stores with established recycling programs. Starbucks goal is to offer recycling in all of our company operated stores. Achieving this goal is determined by the availability of commercial-grade recycling services in each community, and the support of our property managers. In fiscal 2002, we will collaborate with other like-minded retailers to encourage our shared property managers participation in recycling programs. For commuter mug usage, we heedful the percentage of beverages served in reusable commuter mugs against fiscal 2000. Although Starbucks provides a $0.10 commuter mug incentive discount to customers, our data indicated a decline in usage. In fiscal 2002, we will take measures to raise awareness of this waste reduction opportunity to our partners and customers.Embracing ChangeThe key to fulfilling our environmental mission res ts on our ability to make changes within our operations.With the commitment of Starbucks senior leadership team to make meaningful progress, and the adoption of an action plan that is communicated throughout our organization, Starbucks is moving in a direction that will minimize our environmental footprint.1.9%Another important step Starbucks has taken is to cultivate an active Green Team, which consists of retail store managers across North America. The Team was created in 1994 and has been implemental in identifying environmental opportunities, creating solutions, and communicating those solutions to our retail partners. The Green Teams efforts have been lively to our efforts to conserve energy, reduce waste and involve our partners some of our initiatives for fiscal 2001 include the followingEnergy ConservationStarbucks established a Utility childbed Force in fiscal 1999 to identify conservation measures, such as modified lighting and adjusted thermostats. In fiscal 2001, the Utility caper Force piloted several measures aimed at conserving energy while providing cost savings. We roll out the Utility Task Forces recommendations in our North American company-operated stores at the end of fiscal 2001.Waste ReductionStarbucks Green Team first promoted the idea of offering coffee grounds as compost in spring 1998, and now it is an annual event. This initiative has helped reduce waste in our stores and provided many customers with nitrogen-rich material for their gardens. universe solar dayTo celebrate Earth Day 2001, last April more than 600 Starbucks partners contributed nearly 3,000 volunteer hours helping to improve the environment. For Earth Day 2002, Starbucks will support the Earth Day Network (www.earthday.net), an on-line(a) resource for environmental information andopportunities to get involved on a local level around the world. We will raise awareness about this valuable resource to our partners and customers who seek to get involved in their co mmunities.Future Decades in Operation GrowthUsing E-Commerce and customer loyalty programs to generate constant demand and growth, StarbucksConverting Browsers into Buyers Visitors to a Web site often look over the site without purchasing anything. Recommender systems can help consumers find products they handle to purchase.Increasing Cross-sell Recommender systems improve cross-sell by suggesting redundant products for the customer to purchase. If the recommendations are good, the average order size should increase. For instance, a site might recommend additional products in the checkout process, based on those products already in the obtain cart.Building Loyalty In a world where a sites competitors are only a click or two away, gaining consumer loyalty is an immanent business strategy (Reichheld and Sesser, 1990 Reichheld, 1993). Recommender systems improve loyalty by creating a value-added relationship between the site and the customer. Sites invest in learning about their cu stomers, use recommender systems to operationalize that learning, and present custom interfaces that match consumer needs. Consumers repay these sites by returning to the ones that outmatch match their needs. The more a customer uses the recommendation system-teaching it what he wants-the more loyal he is to the site. Even if a competitor were to build the critical same capabilities, a customer . . . would have to spend an inordinate amount of time and energy teaching the competitor what the company already knows (Pine et al., 1995).Creating relationships between consumers can also increase loyalty, for consumers will return to the site that recommends people with whom they will like to interact.The Starbucks success storyStarbucks jumped into the social media arena with My Starbucks appraisal Starbucks own version of a social network where customers are asked to share their ideas on anything related to Starbucks. Starbucks also started a blog entitled Ideas in Action. This allo ws them to reach many more customers across a wide social media landscape, recognizing that not all consumers use the same social networking sites.Starbucks increased its online inciter presence with these additionsStarbucks on TwitterStarbucks on FacebookStarbucks on YouTubeIn a blog post, Starbucks Formula to Social Media Success, marketing consultant Ayelet Noff analyzes Starbucks highly-visible social media footprint across the web, the secret for its success.Overall Starbuckss social media strategy integrates many different elements into the mix and combined together, these elements create a social media plan that kit and caboodle beautifully to create millions of fans for the brand and keep them involved in the brands doings. The brand has created a digital dialogue with its customers, enabling people to give their feedback and get a response back from Starbucks addressing their concerns/comments. Starbucks is showing its customers and potential customers hey, we care abou t what YOU have to say.I am certain that if each one of these elements was done alone then the strategy would not have been as successful and complete as it is when done like this in integration with the rest of the elements on board.Starbucks has over 705,000 followers on twitter and over 5,428,000 fans on Facebook. I guess you could say that theyre doing something right on the Web. Ayelet Noff, aka Blonde 20, 1/11/10A post by Clark Fredricksen offered this insight.While the unequivocal mantra on social media may be all about conversation and no up sell, the reality is that a mix of promotion and interaction can yield results, as companies like Dell, JetBlue, and Starbucks show.More to the point Consumers even those on social networks really arent that offended if you give them a good deal. As we wrote in a recent newsletter article, those polled for the 2009 Cone Consumer bare-ass Media Study were interested in brands that would keep them informed, provide product informatio n and give incentives-and generally use new media to help solve consumers problems. introduce Twitter Success at Dell posted by Clark Fredricksen celestial latitude 11, 2009Starbucks has selected shape to process industrious payments at its approximately 7,000 stores nationwide in the United States, in a move that could shake up the dissilient busy payments market in the country.The coffee company had introduced the first mobile payment via iPhone app in 2009. It took mobile payments nationwide in January 2011 after interrogatory its app for iPhones, the iPod touch and BlackBerries.At a press briefing in refreshful York on Wednesday, Starbucks chairman, president and CEO Howard Schultz told reporters the company had been approached by all the mobile payment processors in the market over the past six months. It selected Square after meeting with that firm.The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seism ic changes in consumer behavior and creating every bit seismic disruptive opportunities for business, Lisa Passe, Starbucks director of global brand public relations, told the E-Commerce Times. both(prenominal) Starbucks and Square take a similar approach when building products and zip our business, and together we can bring the best possible payment experience to Starbucks customers, Passe continued. We also expect to reduce our payment processing costs as a result of this agreement.