Service Marketing Issues - Case Study Example

1. Introduction: In the earlier days, the marketing was only confined to the manufactured products. But now the scenario has been completely changed. The process of marketing has gained equal position in promoting both products and services. It is the service sector that offers new job opportunities. The yield of the service sector is increasing hastily and it accounts for partly or extra than the GDP in the country. 2. Case Summary: Starbucks is a leading coffee manufacturing organization in North America which is 20 million customers all around the world and on an average it opens three new stores per day. “Starbucks brand strategy was best captured by its "live coffee" mantra, a phrase that reflected the importance the company attached to keeping the national coffee culture alive” (Moon and Quelch 3). As it was operating around the world, it was having supply chain all across the world. The company gave more priority fir three components. That was coffee, service and finally the atmosphere within the organization. The organization termed the concept of service as ‘customer intimacy’. The goal of the company is “to create an uplifting experience every time you walk through our door” (Moon and Quelch 3). In the earlier days it was easy for the company to sell its products, but as the scenario changed the marketing process became more complex in nature. Baristas was responsible for producing and selling the products. But the problem aroused when the taste and preferences of the customers changed. The only way to solve this problem was to hire more number of baristas and train them well, but due to the current economic condition the company is not in a situation to carry out this function. The company was facing serious issues related customer satisfaction, centralised marketing system, managing human resources and failure in meeting the customer expectations. 2.1 Service Marketing Issues in the Case: The important service marketing issue in this case is that the company wants to increase its quality in delivery, but due to the poor economic condition, it is not able to perform at its best. The one and only solution for the company is to increase the number of baristas. And for the time being the company trained the existing baristas and eliminated all the unwanted tasks done by them so that their productivity can be increased. 3. Literature Review: This paper involves the analysis of the case and the identifying the various concepts that are related to the service marketing in Starbucks. 3.1 Background of the study: Starbucks is the biggest coffee company in the globe. Service marketing in any business is focused on promoting its products and services. Since star buck is a coffee company, the service marketing in star bucks is proposed to market its coffee. Even this company is leading a highest position in the international market, for the past few years there are some issues in this company. 3.2 Service Marketing Issues in Starbucks:        According to Matt Andrejczak the present financial atmosphere of Starbucks company is weak due to increased cost of the energy. Due to the rise in energy price the company decided to shut down around hundred stores in United States which are under performing. This made the employees to reduce their productivity level. Another reason for the failure of Starbucks stores in some countries is recession. The demand of their product decreased during the period of recession and sale of their product reduced. “Schultz, considered the architect behind Starbucks rapid growth throughout the 1990s and much of this decade, returned as chief in January after growing concerned about the companys growth strategy and faltering stock price” (Andrejczak). Even though Starbucks is excellent in their product and service, they do not given importance to their strategic capability to strengthen their company in order to sustain and to avoid risk in future. Coffee market is an unstable business and there may competitors in vast amount. Sequentially to defeat with the competitors the company should carry out their policies by mainly focusing on the exclusive, precious and foremost capacity and resources, relatively than their service and product.   According to G Serrano the marketing methods of star bucks do not meet its goals of marketing. It failed in its attempt to expand because it could not achieve the needs of the market. The high price of its products was an issue in the less economic market. “That is why the new market base does not frequent Starbucks stores because the brand seems to be anachronistic to their character. The whole packaging of Starbucks was targeted towards a high-end market. It would naturally see a lower growth rate amidst a market base that is shifting to low-end” (GSerrano). The policies for growth were also not up to the expectations. The goods and services were not meeting the needs of the market. Star bucks were worried about the increase in the amount of stores. Another issue was the lack of customer satisfaction on star bucks. The relationship with customers was not efficient. The business of star bucks often fails to attract the market.             According to Guy Minto and Jasveen Samra, star bucks lacked a system of centralized marketing. There was accumulation of the sales information and the management had to ask for the particular data that need to be examined. Starbucks failed to satisfy their customers and they did not consider any importance in pleasing the customers in the progress of their business. Starbucks functioned only in some of the metropolitan areas of the states. It occupied only a small percentage in the market. The Harvard review article of 2004 discussed about the importance of customer satisfaction in Star bucks. It focused on the need to improve the customer service quickly in star bucks. The article described that the marketing system of star bucks have to be reorganized to bring improved satisfaction of the customers. For the development of star bucks the tastes of the customers have to be taken into account. It will bring profit to the company and also lead to its expansion.        Dan Mitchell in his article “the State of Starbucks” mentioned about the condition of star bucks at present. He mentioned that the cost of coffee at star bucks is expensive than other companies. This became an issue during the time of recession. At the time of recession, star bucks had a bad period. It had to shut many of its stores and dismiss many of its employees. The number of customers also had an unexpected decrease. The sales were reduced rapidly during the period of recession. The emergence of huge competitors had also become an issue for the star bucks.        According to Terri Feldman Barr, David W. Rosenthal and Thomas C. Boyd of Miami University there were issues of public relations in star bucks. One of the customers of star bucks had complaints on the machines that he purchased from them.  There were defects in the machine and also it was an old machine that sold as new. Moreover the services the company provided was very poor according to him.    According to the author Zeithaml, there were issues of employing, training and motivation in star bucks. The problems of recruitment of mangers were solved by aiming young men who were experienced in managing restaurants in America. Job fairs and ads were conducted to recruit such employees. The issue of motivation was solved by employing managers to Seattle to learn about the culture of Starbucks. Motivation could be improved by structured training in star bucks.   3.3 Service Marketing System: Doran has examined various marketing strategies that have been implemented across the world, for improving the quality of service marketing in an organization. Wide investigation has been conducted on this topic and this depicted the changing behaviour of he customers with respect to the services rendered by various organizations. Nowadays the customers pay equal attention to both the services and the products that are offered by the organization. Berry in the year 1988 put forward an approach that helps in evaluating the quality of the services in an organization. This approach is termed as SERVQUAL. “Incorporating five service quality dimensions of tangibles, reliability, responsiveness, assurance and empathy, SERVQUAL has been well utilised within the literature” (Tang and Bougoure 1). Babakus and Boller, 1992 and Schneider and White, 2004 stated that these concepts were introduced in to the service marketing to apply in all areas of the service marketing system. This was an effective element that can be applied to various limitations that usually arises in the service delivery. Spreng and Mackoy state that here is a very close relationship between the service quality and the degree of customer satisfaction. 3.4 Core and Supplementary Elements: The core elements refer to the central elements in the service delivering system. The supplementary elements are those that are used that facilitate the core elements in performing the task of service marketing. The core elements in the services marketing are information, taking orders, billing process and immediate response to the customer’s queries. The supplementary services include transportation facility, hospitality, safekeeping and consultation activities. 3.5 Service Recovery: The service marketing is completely oriented towards the direct approach of the customers. The researcher suggests that there are five key service strategies that can be used for improving the quality of services. They are rewarding system, recognition of employees, empowerment, and consistency in the reward methods and training given to the employees. By using these strategies in an effective manner the quality of the services can be recovered. 4. Conclusion: All these reviews depict the importance of the quality that has to b maintained in the delivery of services. The customer focuses more on the services that is been delivered to them. Therefore by implementing appropriate service recovering strategies and by concentrating on both the core and supplementary elements the issue in the service marketing can be minimised. Works Cited Andrejczak, Matt. Starbucks Issues Profit Forecast Below Expectations. MarketWatch. 23 Apr. 2008. Web. 23 Feb. 2010. . GSerrano. The Starbucks Weakness. Trends Updates. 19 May. 2009. Web. 23 Feb. 2010. . Moon, Youngme, and Quelch, John. Starbucks: Delivering Customer Service. Harvard Business School, 2006. Tang, Keang Meng, and Bougoure, Ursula. Service Quality: An Investigation into Malaysia Consumers Using Dineserv. . Read More