Case Study- Starbucks

Starbucks is an American coffee company that was founded in Seattle, Washington in 1971. The company was started by three partners, Jerry Baldwin, Zev Siegl and Gordon Bowker who were students at the University of San Francisco. The name Starbucks was gotten from the Moby Dick book chief mate character, Starbuck and its first store located at 2000 Western Avenue from 1971 to 1976 only sold roasted coffee beans and did not brew coffee to sell. The only brewed coffee offered were free samples but now offers brewed coffee in all its locations worldwide, which span to over 23 thousand with over 238 thousand employees.

Starbucks mission is to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time. The company has distinguished itself from other coffee making services based on its quality, taste and customer service. It is a top competitor in the coffee service industry and has created a big market for itself because of its quality and expansion in its services.

The Starbucks brand has created value and has developed a relationship with its consumers by the different characteristics it possesses and strategies. First of all, the company is known as the place for everyone. It doesn’t just serve great quality coffee alone but also provides an environment for almost everyone. Because of the growth in its menu options, like selection of foods, tea, wine and also free Wifi the company is known as a place where family and friends can just chill, which has also grown the company's audience. Parents can now take their children with them because of the children friendly snacks available now.

The company has worked towards making the brand the third place, which means a daily community lifestyle like home and the workplace. Great coffee, a comfortable environment and attentive staff is what has given the company such great value.

What distinguishes Starbucks from it’s competitors and promotes brand loyalty is because of its relationship marketing. The company is so good at it. Customers are able to stay at starbucks and feel at home. They treat you as a family member by writing your name on your cup, they provide free Wifi, let you hang out there for how long you like and don’t care about how much sugar you take. The company also provides certain promotions like a free drink after 15 purchases. Above all this, the one that catches my attention the most, is how you are able to see the person taking your order at the drive through.

The company has also expanding this through social media. Facebook, Twitter, Youtube and websites like MyStarbucksIdea.com are platforms where the company grows their relationship and loyalty.

In 2008, the brand created My Starbucks Idea which was a way to get suggestions from customers on how to improve the Starbucks experience. Starbucks listened to their customers and a 100 ideas were adopted. An example is how the company donates unsold pastries to homeless shelters and food kitchens and giving the baristas name badges.

So you can see why the brand has created such a good relationship with its customers; by making everything they do a relationship and creating a great environment for their customers.

Starbucks like many other companies go through many challenges. For example the company being able to manage its operating margin and the increase of coffee bean prices. Because of this, the company has continuously increased the cost of its products and has been trying to be careful when it comes to the loyalty of its customers. The company works on improving the experience of the customers above its competitors to avoid this problem.

Another challenge that Starbucks has been facing is the amount of closing stores. In July 2008, they announced that they would be closing 600 stores in the United States. Starbucks stated, “Actual store closures may differ depending on a variety of factors including, but not limited to, risks related to finalization of third party agreements, expected costs savings, income tax and other benefits associated with the store closures in the anticipated time frame, if at all.”

The company also took hits from its misspelled names on cups, which the company then turned around and made into an opportunity.

Recently, Starbucks CEO, Eric Schultz announced that the company was going to take a stand on race. In response to the US president's ban, the company said it was going to hire 10,000 refugees in the next 5 years. Although the company means well and sees this as a way to change the world as well as show them as a company that accepts diversity, they have received backlash from many of customers who don’t agree with the statement. This has brought up boycotts to not purchase from the brand and brought a decline in the brand image.

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References

Hennessey, R. (2013). 3 Reasons Why Starbucks Still Shines, Despite Market Shortcomings. Retrieved from https://www.forbes.com/sites/rachelhennessey/2012/08/06/3-reasons-why-starbucks-still-shines-despite-market-shortcomings/#85a6f1a1cd09

Why Starbucks Rocks at Relationship Marketing. (n.d.). Retrieved February 28, 2017, from

http://yourmarketingcoachonline.com/why-starbucks-rocks-at-relationship-marketing/

Building a Community -- Why Starbucks Gets Customer Service Right. (2013, July 12). Retrieved February 28, 2017, from https://www.qualitylogoproducts.com/blog/building-community-starbucks-gets-customer-service-right/

Starbucks. (2017, February 26). Retrieved February 28, 2017, from https://en.wikipedia.org/wiki/Starbucks#Products

A. (2017, February 25). BAD DECISION: Starbucks’ Brand SPIRALS DOWN After Plan To Hire 10,000 Refugees. Retrieved February 28, 2017, from http://americanlookout.com/bad-decision-starbucks-takes-a-massive-hit-after-announcing-plans-to-hire-10000-refugees/