Marketing Concept to the 21st century Business of Starbucks - Essay Example

Marketing Concept to the 21st century Business of Starbucks Introduction With competition increasing in every aspect of life, the corporate world is not left without its repercussions. Products and services have increased to the point of saturation which makes the job of the marketers even more difficult. They have to develop a competitive edge over the industry despite the heavy competition or otherwise the brand will eventually die out. This requires marketers to constantly upgrade their marketing tactics and strategies. In the 21st century, marketing is quite different from what it used to be a century before. One concept that has gained interest among the marketers is relationship marketing. Relationship marketing deals with developing long and lasting relationships with the stakeholders of the organization. One company that has truly adopted this concept is Starbucks that continues to provide services and products while remaining customer and employee oriented. This paper will delve on relationship marketing and its application within one specific organization which is Starbucks. Description of the Marketing Concept As competition is increasing throughout the world, companies have to constantly readjust their marketing strategies in order to gain an edge over the competition. In this era, companies are becoming increasingly people oriented, that is, they develop their operations to suit the needs of their stakeholders. These usually include in most cases the consumers and with new concepts developed, employees have also become the central focus on the companies. Employee oriented companies have become more common in the service industries where employees form the face of the company. Thus the concept of relationship marketing has emerged in today’s world that companies are increasingly adapting to in order gain a good share of the market. In relationship marketing, the aim of the company is not profit maximization but rather retaining good relationship with its stakeholders, specifically the consumers. Palmateir, 2008 defines relationship marketing as ‘the process of identifying, developing, maintaining, and terminating relational exchanges with the purpose of enhancing performance’. This relationship, though is falsely attributed to extend to only the consumers, is in fact developed with all stakeholders including the consumers, employees and the community. Gummesson, 2002 further broadens relationship marketing to total relationship marketing where marketing is extended from CRM approaches to developing relationships with all stakeholders of the company. He defines the concept in the following terms, ‘Total relationship marketing is marketing based on relationships, networks and interaction, recognizing that marketing is embedded in the total management of the networks of the selling organization, the market and society. It is directed to long term win-win relationships with individual customers, and value is jointly created between the parties involved. It transcends the boundaries between specialist functions and disciplines’ (Gummesson, 2002) In terms of the consumers, the aim of the company in relationship marketing is to develop long lasting relationships. This is done by orienting the company to meet the needs of the consumers. Companies that aim at relationship building conduct regular surveys and feedbacks. The purpose of these surveys is to better understand the customers and to align the operations of the company with the changing needs of the consumers. Companies practicing relationship marketing consistently innovate their products and services to better serve their customers. For example, recently many retail outlets have developed their android presence. Consumers can easily download applications and order for their products through their cell phones conveniently. While this means added costs for the company in terms of developing and maintaining the application, it translates as better relationship with the consumers. In terms of the employees, relationship marketing deals with inculcating a sense of ownership for the organization. Relationship marketing with the employees is known as internal relationship marketing. Employees are allowed to participate in the decision making process and they are allowed to good compensation for their work. Front-Line employees, especially in the service industry, are given a good position in the organizational hierarchical structure. For instance, the US retailer, Nordstrom gives its front line sales person the second position after the customers. The joint presidents occupy the lowest position. The sales person have the authority to make decisions pertaining to sales as they see fit considering the demands and needs of the customers (Christopher, Payne and Ballantyne, 2013). Starbucks- Introduction Starbucks is a company that has become synonymous with the American culture. Whether it has the American love for coffee that made the company successful or whether Starbucks inculcated the love for coffee in the Americans is still unknown. It is an American Seattle based coffee house. It is one of the most visited coffee house retailer with over 20,000 stores in more than 60 countries of the world including Canada, China, UK, Turkey, Japan, Philippines, Germany, Mexico, Dubai etc. Starbucks is an affordable luxury coffee shop that boosts one of the best coffees in the world. Apart from coffee, the company sells appetizers and other beverages including beer and wine. It has penetrated into almost all of United States and Starbucks is found is almost every corner of the country. People visit Starbucks not just for the coffee but for the environment that is offers which is relaxing and comforting after a hard day of work or before beginning work. The company was founded by Jerry Baldwin and Gordon Bowker but the success that the company achieved through major expansions into different states of US and even globally was under the leadership of Howard Schultz. It was Schultz passion and love for the company that the company was able to go through one of the biggest expansions in the history of food retailer (Gilbert, 2008). Marketing of Starbucks Starbucks is positioned as an affordable luxury product. This means that the company has offered the best quality of coffee products that come from the best coffee beans in the world. Starbucks comes from a history of being a coffee bean retailer that later opened up its own coffee shop under the leadership of Schultz. Having an experience of coffee beans, the coffee produced at Starbucks had to be one of the best coffees. The coffee beans used in Starbucks’ coffees are ethically sourced and are roasted top quality beans. They are selected as buyers visit farms in Latin America, Africa, Arabia and Asia-Pacific region for the best top quality beans (Bussing-Burks, 2009). Though, this does increase the price of the coffee products but consumers have acquired the rich roasted flavor of coffee and are willing to spend an extra dollar for a good cup of coffee. They consider the Starbuck coffee as a luxurious treat after a hectic day or before beginning one. Apart from the best coffee beans, Starbucks offers a great experience to its consumers. With competition increasing in every industry, Starbucks is no exception. Therefore, in order to provide the edge over competition, Starbucks focuses on marketing its experience. It offers more than just coffee, it offers a lifestyle. When Starbucks’ customers visit a typical store, they have the option of listening to music or reading to a book, depending on their preference, while enjoying their cup of coffee. Starbucks when developing its marketing strategies has truly managed to take the lifestyle of the consumers when opening up their stores. In the west where the lifestyle if generally fast, the coffee offers options of driveways and off-highway stores. Similarly, when Starbucks opened its stores in different countries, it took into account the lifestyle of the consumers of that area. For example, in the tea loving Japanese culture, Starbucks offered a wider variety of tea and smaller portions for the smaller appetite. Again when Starbucks opened its stores in Saudi Arabia, it segregated the stores for both the genders considering the religious pressure (Bussing-Burks, 2009). Starbucks’ expansion strategy is also something that contributed to the overall strategy of the company. By expanding rapidly, the company was able to extend its reach to customers from all over the world. Starbucks placed its stores in premium locations so that consumers would have easy access to the stores. They even became their own competitors when they opened up stores facing each other, thus running the risk of cannibalizing their brand. However, this did not backfire because the aim was to reach out to traffic going in both the directions. The extensive expansion strategy allowed consumers to develop a familiarity with the brand. Even if consumers were leaving their own home area, they felt secure to find a Starbucks near (Hill and Jones, 2008). Corporate Social Responsibility is another strategy that the company has adopted to retain its outlook of a consumer oriented company. In the recent years, there has been an increasing pressure from consumers towards companies to adopt a more socially responsible attitude towards the environment and the people. Starbucks was no exception, as media began to criticize the company for the way it managed its supply chain that defied responsibility to the environment and the people. Also the company was criticized for its use of paper coffee cups that were found to litter the surrounding landscape to a great extent. In light of this, Starbucks developed its CSR policy. By implementing fair trade practices, Starbucks became one of the most ethically traded coffee shops around the world. Also to combat the issue of increasing pollution caused by Starbucks coffee cups, the company introduced the concept of reusable cups and offered customers to buy customized coffee cups. This has helped develop a goof image of the company in the eyes of the consumers (Starbucks, 2012). Though, these practices increase the costs for the company, they help in developing a positive image of the company. Customers, in today’s era, are proud to be associated with such companies and this result in loyalty towards the company. The second aspect of Starbucks’ marketing strategy is focused on its employers. Being a service company, the attitude of the employees is a major factor that contributes to the success of the company. The employees of the company are referred to as partners of the company. The company has initiated a work/life program that aims to create a work balance in the lives of the employees working in the company. Starbucks’ turnover rate is as low as 120 per cent less than that of the company’s competitors, which is the lowest in the retail industry. The company also boosts a low absenteeism rate and low health care costs (Michelli, 2006). The company has been able to achieve this by developing a sense of community among the employees. The employees are given the flexibility to manage their work life balance. They even have the option of choosing their desired mental and dental health plans. Under the Starbucks’ Bean Stock Program, employees are also offered to buy shares in the company (Hellriegel and Scolum, 2007). Conclusion In conclusion, it can be said that Starbucks has truly initiated a relationship marketing strategy by reaching out and developing long term relationships with both its customers and its employees and also the community as a result. Customers, at Starbucks, enjoy a total experience when they visit the coffee shop. They are aware that they are enjoying one of the best roasted coffees that is ethically manufactured. The employees are also happy in the knowledge that the company cares for them. It is evident in the way that the company boasts the lowest turnover rate in this particular industry. This shows that the employees have truly developed a sense of ownership with the company. References Bussing-Burks, M., 2009, Starbucks, New York: ABC-CLIO Christoper, M., Payne, A., and Ballantyne, D., 2013, Relationship Marketing, New York: Routledge Gilbert, S., 2008, The Story of Starbucks, USA: The Creative Company Gummesson, E., 2002, Relationship Marketing in the New Economy, Journal of Relationship Marketing, Vol. 1, No., 1 Hill, C., and Jones, G., 2008, Essentials of Strategic Management, Ohio: Cengage Learning Hellriegel, D., and Slocum, J., 2007, Organizational Behavior, Ohio: Cengage Learning Michelli, J., 2006, Starbucks Experience, New York: Tata McGraw-Hill Education Stokes, D., and Lomax, W., 2008, Marketing: A Brief Introduction, Ohio: Cengage Learning   Starbucks, 2012, 2012 Global Responsibility Report: Year in Review, Retrieved from http://globalassets.starbucks.com/assets/581d72979ef0486682a5190eca573fef.pdf [Accessed 16 July, 2013] Bibliography Bussing-Burks, M., 2009, Starbucks, New York: ABC-CLIO Christoper, M., Payne, A., and Ballantyne, D., 2013, Relationship Marketing, New York: Routledge Gilbert, S., 2008, The Story of Starbucks, USA: The Creative Company Gummesson, E., 2002, Relationship Marketing in the New Economy, Journal of Relationship Marketing, Vol. 1, No., 1 Hill, C., and Jones, G., 2008, Essentials of Strategic Management, Ohio: Cengage Learning Hellriegel, D., and Slocum, J., 2007, Organizational Behavior, Ohio: Cengage Learning Lynch, R., 2007, Corporate Strategy, USA: Pearson Education Michelli, J., 2006, Starbucks Experience, New York: Tata McGraw-Hill Education Stokes, D., and Lomax, W., 2008, Marketing: A Brief Introduction, Ohio: Cengage Learning   Starbucks, 2012, 2012 Global Responsibility Report: Year in Review, Retrieved from http://globalassets.starbucks.com/assets/581d72979ef0486682a5190eca573fef.pdf [Accessed 16 July, 2013] Ungson, G., and Wong, Y., 2008, Global Strategic Management, New York: M.E. 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