Starbucks
The green siren, the logo that belongs to the most important coffee shop in the world, has been a reference of a good customer service and a place to buy high quality coffee cup. I´m talking of Starbucks, a company that opened its first store in 1971 in the city of Seattle and in 1987 was purchased by Howard Schultz, the actual CEO, who has been an important factor in decision making for the growth and success of enterprise.
The company has more 24,000 stores around the world and it has presence in 70 countries. But, what’s the difference between Starbucks and other coffee shops? Why most of the people think in Starbucks when someone ask them for a coffee cup? Let´s explore the company to determine its key success factors.
Schultz’s vision for the company was to offer a place in which people could have a conversation place between their house and work, and where society felt the store is part of the community. Since its foundation, the firm was focus not only in sell a high quality coffee but also in provide a genuine service, and to help and supports the community.
Coffee´s quality
How Starbucks obtain the best quality coffee? In words of Starbucks, “We go where the best grains are: up.” The company developed a program in which their engineers and personnel analyze and study the land. Also they collaborate and advise the owners of the land to obtain the best coffee grains.
The strategy to buy correct coffee grains is simple, “zero tolerance to defects.” This means that Starbucks has developed its own quality standard for it. The process to select only the best grains is the next: select and classified the product using its own tolerances (size, color and density). Then, Starbucks tests the coffee to confirm that the batch of coffee agrees with the correct taste (the correct taste is a standard stablished by the company).
To audit quality, Starbucks has its own laboratories in Seattle, and are called the “last line of defense.” They taste more than 1,000 coffee cups per day and evaluate every batch at least three times before to be approved.
Genuine customer service
The company has developed a full strategy to provide a good experience to its customers. All the baristas, employees, are trained under a rigorous training to be able to connect with their customers and know how to respond to any situation. The training is called, “The latte method.” In this training, the baristas know how to recognize the negative feelings and then they canalize and feelings into a positive result. Quoting the method[1], “We listen to the customer, acknowledge their complaint, Take action by solving the problem, thank them, and then explain why the problem occurred.”
The company has been focused correctly providing customer experience. Starbucks has changed to be a B2C to F2F business. Starbucks respects their clients, the firm has recognized that they are not leading with numbers or statistic; they are leading with people, with persons. Every person has its own sense of humor, identity, feelings, name, etc.
[1] (Ubel, 2012)
F2F business model is a process in which companies has to start to see the customers as a face or human being instead of a number. This concept is also important because in a world in which many people can be anonymous or behind technological devices; how companies will know to interact with them? Fortunately for Starbucks, the contact with customers is face to face and it has taken advantages of this interaction.
Even when the corporations know that they depend of the customers to survive, most of them are more worried about to satisfy their shareholders instead to create a genuine connection with their customers. It is very common to hear that CEOs and manage directors of many enterprises continue stablishing objectives to reduce costs, time, etc.
For Starbucks, it is different. The CEO, Howards Schultz, encourages continuously their personal to enhance the customer service. Schultz strongly believes in his employees and he constantly remembers them that they are part of Starbucks experience. A happiest and prepare worker will enhance the customer experience. The value generated by the top management will be proportional at the value generated by the consumer.
In the case of Starbucks, all the levels of the company are focus in personalize the customer experience, from CEO till baristas in stores. The training of its employees creates this differentiation. I consider that Starbucks instead to see customers, it visualizes consumers. According to Reset and Reload1[1], “customers buy because a company offers us quality products, with a great value. But we leave them, frequently, because it fails at the time to give us a good customer service.”
Being part of the community
Part of the Starbucks´ success has been due to the connection the company has with its suppliers. With a constant growing in the last years, the providers should be able to supply and maintain the quality of the product. For this reason, Starbucks developed the Farmers Support Centers to support and supervise the production of the coffee grains.
The company is totally commitment with its suppliers. Starbucks collaborates directly with the farmers in order to have the right agreements and fair prices for their products. Additionally, the brand has implemented projects to support the local communities such as the employment program for veterans of the 9/11, green buildings, etc.
Starbucks wants to bee see it as part of the communities. That’s the reason they are looking constantly programs to help or collaborate with the society. As personal experience, when I was studying in the university in the Tecnológico de Monterrey, Starbucks helped us in a reforestation campaign in the city of Leon Guanajuato México. The company allows us to put advertising in the coffee shops and also the baristas went with us to reforest the areas and at the end of the event they gave free coffee for all the participants.
Strategic analysis
Let’s analyze the coffee shops of Starbucks. I´m going to take the reference the Starbucks coffee shop that is positioned next to my house in León, Guanajuato, México and another famous coffee shop in the same city, Starlight (Attachments #1 and #2) .
[1] (Rovira, 2011)
Both coffee shops are positioned in a commercial space, with chairs and tables, bathrooms, windows, Wi-Fi, parking. The products that a Starbucks coffee shop offers are obviously the coffee, tea, drinkware, coffee equipment, gifts and the sale of subscriptions. And for Starlight is practically the same, the only difference is that the last firm doesn´t sale subscriptions.
When we compare a Starbucks coffee shop to any other similar company of the city, they look almost exactly equal. Both have the principal product, the coffee, tables and chairs to talk and discuss, maybe you will find other products but talking in a general way is the same, a place to buy coffee and talk.
The minimum factor of Starbucks is the sale of coffee, whether it be toasted coffee beans or in a drink. As they put in their web page “Our cafeterias has been point of reference for coffee lovers around the world.”
Differential factors of Starbucks are listed below:
- High quality coffee. This quality title is stablished by the same company due to their own developed standards.
- Excellent customer service. It is excellent due to the training programs for the employees.
- Being part of the community. Different programs implemented to create a link with the communities.
These differential factors are going to create the link between the customer and the brand.
The revenues of Starbucks come from:
- Sale of its products in the shop or via online: coffee, tea, drinkware, coffee equipment and gifts
- Subscriptions to receive coffee in your house: They have two kinds of subscriptions, “FOR YOURSELF” and “FOR SOMEONE ELSE.”
- Sale of stocks.
Model
What resources Starbucks has? (Resources)
- Baristas
- Raw materials to prepare drinks and food
- Furniture and decoration
- Equipment to prepare drinks and food
- Gifts (CDs, cups, cylinders, etc.)
- Coffee equipment that are in sale for the customers
- Real estate acquired by the company
- Laboratories to test the quality of the product
What does Starbucks know to do? (Skills)
- Recipes to prepare drinks and food
- Training programs for employees, such as “Latte method”
- Quality standards to select the best grains of coffee
- Agronomist engineers to study and select the correct land to cultivate the grains
- Developed responsible programs
Definition of the customer
Potential customers: could be anybody who wants a coffee or any kind of the products offered by the Starbucks
WOW customer: it is the people who buy the coffee of Starbucks because he likes the taste, also he knows that the company is doing or implementing social programs to create links with the community and finally because he enjoys the customer service offered by the baristas of the coffee shop.
Market segmentation
The market segmentation of the company is focus in medium and high social class. It belongs to the quadrant BE. Big market segmentation and external sources of competitive advantages. The products of Starbucks have differentiation such as flavors, size, cold or hot, etc.
The prices are considering at least two or three times more than the competition, for this reason the brand is focus on medium and high social class. In many countries like Mexico or China, to buy a cup of coffee of this brand is considered a luxury. According to the webpage Redorbit2[2], “Consuming at Starbucks offers more than a cup of coffee to the urban Chinese middle class. It is an instrument to demonstrate their status.” Starbucks has become synonym of social acceptance.
The company knows that its prices are higher than the competition but the brand won´t do anything to reduce them. The Starbucks have launched advertisements in which they encourage their customers to not switch for a cheaper coffee. Here the ads “Beware of Cheater Coffee. It Comes with a Price,” “If Your Coffee Isn’t Perfect, We’ll Make It Over. If it’s Still Not Perfect Make Sure You Are in a Starbucks.” (Attachment #3 and #4)
Projective positioning
The prices of their products are expensive when these are compared with other companies or brands. However, the cost is defined high due to all the differential factors it has. For example, you can find a coffee with higher quality in Juan Valdez, but someone goes to Starbucks because he knows that probabilities to find someone to do a business or have a conversation are high.
People are willing to pay more because due to the connections that Starbucks has made in its community campaigns. The company makes you feel that they are part of your city. Additionally, the relation with the employees while you are buying can make you to feel important or welcome.
Compared with other similar companies, there are not specific or strong differentiators that make you go to taste the coffee of the competitors. At least in Starbucks you know that you will have a good coffee or product. The customer experience is a positive plus; in many times in the Starbucks coffee shops I have heard the phrase, “the employees treat me better than my wife.”
For this reasons, Starbucks belongs to the concept “you like me more.”
[2] (Rannals, 2014)
Try, continue and return
Try
The image Starbucks has around the world is extremely positive and this has happened due to the optimistic feedback the people have done. The voice to voice communication is the first reason to make a potential customer to go and taste it. For example, when a foreigner arrives to a different place where he doesn´t know the local brands, what is going to do? The answer is easy, he is going to the companies that already know or heard about it.
Coffee is part of the daily consumption. So, this habit together with the factor of a positive image of the company will make a potential customer to buy it. Also, some Starbucks stores during its first days of inauguration apply special discounts to the products. Besides, there are stores that have sales promotion, such as buy one and get one free and happy hours.
The community projects of Starbucks are a good way to position the brand because the company presents its real commitment with the society. In these programs the companies are seeing as a closely entity instead of a big monster. Also, this helps to establish a bond with the potential customers; start with the right foot.
Continue
The customers continue to buy in Starbucks for the next reasons. The first is that this represents a high status. Additionally, the customer service is unique, even when the baristas wrote your name wrongly; this is also part of the experience. Customers will stay with the service instead of the product. Respect to the coffee lovers, the clients knows that the quality of the coffee is good.
A reward program for loyal customers has been implemented, “My Starbucks Rewards™ program.” With this system clients will collect stars and after a certain number the user will obtain special rewards. Furthermore, Starbucks could apply the sales promotion explained in the last section to keep the customers buying the products.
Return
Additionally for the sales promotion and rewards program previously mentioned. The other way to return customers is thru the community projects. According to the implement programs, people could collaborate in one of them and clients will stay in contact again with the brand. This will help to reestablish the relation between brand and customer.
Senses
One of the specific characteristics of every Starbucks store is the smell. Since the customer enters to the store, the sense of smell is triggered because he perceives the essence of coffee. This characteristic creates a pleasant experience and cause that clients in their brains could associate and remember the company with this particular scent.
The second sense that Starbucks stimulates is the taste. Whereby, if the company wants to be remembered, then, it should prepare all its products with a pleasant taste or at least it should be able to fulfill the minimum characteristics of every product. This means that, if a customer buys a Frappuccino caramel, this should taste to a mix between caramel and coffee.
The sense of the sight is also stimulated in every shop, the green siren logo can be found almost in every corner of store. Also, all the products have a good presentation. Moreover, when someone sees the desserts almost immediately everybody falls in love with them, they look perfect and delicious. Additionally, the way in which Starbucks has suited the shelves, put the personalized boards and the baskets with the coffee are very attractive to the sight of the customer.
Related to sound and touch, these are the least stimulated senses. The Starbucks stores plays relaxing music for the customers to create an environment of peace and tranquility. Respect to touch sense, the clients can pick the products that are in the shelves. This gives the sensation of freedom because the products could be in a locked shelve or behind a window.
Conclusions and recommendations
Actually, Starbucks is one of my favorite brands related to the management and business decisions. But now that I did the analysis respect to the strategic marketing point view, it’s incredible how the company is concerned about the minimum details. Since the way in which Starbucks buys the coffee directly to the farmers until the way the brand has implemented training programs for its employees to manage customers’ behaviors.
The first recommendation is referenced to the invasion of Starbucks in the cities, there are too many and people could see the brand as something usual and many times the usual is boring. Like McDonalds and Burger King, I don’t go there because I know that everything will be always the same. People like the different, forget the routine.
The company should be ready to continue preparing its employees to keep the high standards to provide a perfect customer service. The company has more than 24,000 so it is almost impossible to see if the stores are going in the same direction. It’s not the same to take care of two children instead of one. Starbucks needs to continue with the empowerment program for its employee. I believe that the secret of a company to be success is its people.
Other recommendation is related to the social responsibility campaigns. I’m comparing Starbucks with Juan Valdez. Every time you search in internet Juan Valdez, you’ll find the typical coffee farmer and this gives the image that they are humble. In the case of Starbucks, you only find the logo and nothing related to its community projects. Starbucks should sell more this part of the business model.
Finally, due to Starbucks is now a big corporation, this can be seen as a monster that is looking only for money. So, if Starbucks wants to sell the image that they are part of the community, they have to participate in more programs. Now, it is like Starbucks has already forgotten that they want to be “locals.”
Summarizing, I consider Starbucks is a full and strong brand because it’s a transparent company showing to the customers how it collaborate and works together with their suppliers, also it presents the community projects to be socially responsible. Additionally its product is good, not the best but is quite good.
About the customer experience, it is incredible. The company is fully commitment to offer the best customer service with specialized developed trainings. Starbucks is an example of F2F concept. Additionally, everybody in the company is following the same direction, since the top management until the baristas of every coffee shop. It is like if the coffee shops were a reflection of the organization. All the details are handled correctly. As the commercial director of Lievant Studio, a digital marketing company, told me once, “In the details the greatness.”
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Attachments
#1 Starbucks
Coordinates
#2 Starlight
http://starlightcafe.com.mx/
https://www.google.es/maps/@21.1075441,-101.6604171,3a,75y,341.31h,111.59t/data=!3m6!1e1!3m4!1sWpfk9nTVZNIWxhEeKCJ_tw!2e0!7i13312!8i6656
Attachment #3
Attachment #4
