The Specifics of Marketing Services on the Starbucks' - Case Study Example

 Introduction The report seeks to establish how the knowledge of the differences between products and services can help the marketers to design effective marketing strategies that can help the organisation to achieve its marketing goal of satisfying the customer’s needs profitably. It attempts to highlight some of the major factors which led to the decline of services at Starbucks and measures that can be put in place to correct the anomaly. Products vs Services 1. In attempting to explain the key differences between marketing of products and services, it is important to clearly explain what marketing is and define the two terms, product and services by highlighting their differences as a way of gaining knowledge about how the marketing concept can be executed. A clear understanding of whether Starbucks is specialising in the retail of products or services or a blend of both should be made from the following explanations. This section defines marketing followed by a differentiation between a product and a service. Basically, marketing is referred to as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy the individuals and organisational goals, (Lamb et al 2000). A close analysis of the definition shows that marketing is primarily concerned with satisfying the needs and expectations of the customers while the company is also able to satisfy its profit oriented goals. The marketing mix in this particular case aptly describes the key functional aspects of marketing which include what McCarthy (1960), dubbed the four Ps namely product, price, promotion and place (distribution). However, additional three Ps namely people, process and physical evidence relate particularly to the service industry because of its intangible nature as explained below. A product is also referred to as a good and it can be seen or touched hence it is tangible and can be owned. On the other hand, a service is a deed performed by one party for another (McCarthy & Perreault 1990). Unlike a good, a service cannot be owned, it is rather experienced, used and consumed. Products are usually produced in a factory then sold whilst services are produced and consumed within the same time frame. The main difference is that goods producers may be far away from the customer but service providers often work in the customer’s presence. Therefore, understanding the differences in goods and services can help fine-tune marketing strategy planning. To a greater extent, it can be noted that Starbucks is concerned with providing services to its customers in the form of offering a third place of relaxing. Whilst coffee and other beverages can be considered as physical goods, they are offered as services. As outlined above, the marketing tools for goods and services differ in some instances though they attempt to fulfil the same marketing principles. The marketing mix outlined above describes the functional aspects of marketing over which the company has control such as the four Ps. Marketing of products is primarily concerned with fulfilling the four functions namely product, price, promotion and place unlike marketing of services which take into consideration the other three Ps namely people, processes and physical evidence. People carry out the function of marketing and they interface with the customers and they are regarded as key elements of the marketing function of services. In marketing of products, tools such as the use of media can be used instead, where physical interaction may not be necessary. As a result of the intangible nature of the service industry, process is particularly relevant in the transactions where customer interaction is high especially in Starbucks coffee houses. An attempt must be made to involve the customer as much as possible so that they depart with a good feeling towards a service provider and give reapeat business again. Physical evidence refers to the relative intangibility of the services so attempts must be made to highlight the service through such things as cleanliness of the house as well as general presentation of the service providers. Taking the definitions of services and the degrees of tangibility, it can be seen that there is a difference between a product and a service which needs to be considered by marketing managers when developing marketing programmes. The unique characteristics of services according to Strydom (2004) include the following: intangibility, inseperability, perishability, heterogeneity and ownership. Intangibility entails that the customer cannot touch the service which makes it difficult for him to decide if it is wise to purchase that particular product service. In some cases, a service cannot be seen or even be smelt hence it takes necessary steps on behalf of the marketer to convince the customer that he would be able to derive satisfaction from a particular service. This characteristic is very important to Starbucks since they would need to offer satisfactory services to their customers fully knowing that they have to enjoy them since they are not able to touch them physically or carry them away to their respective homes. Inseparability means that the production of a service occurs during the same time the customers consume that particular service. The service providers should be experienced in order to avoid making mistakes in the full glare of customers which would otherwise discredit their performance levels. This means that the service providers must always meet the standard expectations promised to their customers. This is also very important to Starbucks since they would risk loosing their customers if they fail to maintain satisfactory services during the periods they would be serving them. Poor performance would result in the customers shunning the place and give their business to other dedicated competitors concerned with satisfying the customers. The services are often heterogeneous in that they are produced by different people at different times hence there are variations in the services. However, these variations must not compromise quality hence the responsible staff at Starbucks should always ensure that the services offered meet the expected standards. On the other hand, the aspect of ownership distinguishes a service from a physical good. With a service, you are only entitled the right to use or enjoy a particular service without claiming ownership like a physical good for instance, consuming coffee in a nice environment does not entitle you to ownership of anything. This therefore, must be the guiding principle as far as fulfilling the goal of marketing is concerned. A service is a perishable product which cannot be stored like a tangible good. Marketers should always make sure that they perform to the best of their ability since they risk loosing customers if they do not carefully manage their activities meant to satisfy the customers. Plans must be executed according to schedule as failure to do that would result in loss of prospective business. Factors leading to decline of services 2 a) The services declined at Starbucks when the company introduced customised services. A conflict emerged between product quality and customer service. Starbucks is taking pride in the retail service but according to data, it is not meeting customers’ expectations in the area of satisfaction. Under the current situation, it becomes difficult and very challenging for Starbucks to strike a fine balance between the two. Whilst customised service is a positive gesture in fulfilling customer needs with the exact products they want, it is likely to compromise on general customer service as more customers would be forced to wait for longer periods than normally expected. The customised services resulted in most customers preferring handcrafted beverages which are a bit complex in that they are time consuming. The result was the emergency of lines usually stretching outside the door which led to limited time for baristas to talk with the customers. The complexity of the barister’s job has also been increased. For instance, making a venti tazoberry and crème requires ten steps which is equally time consuming. On the other hand, the baristas are likely to relent on the standard expectations of their performance as they would be exposed to more pressure on top of the already existing strain of coping with mixing a large number of equally sophisticated beverages. The current Starbucks customers were used to be served within three minutes as set out in the company goals and this is what they referred to as “excellent service.” Kotler (1999), concurs that excellent service can be achieved when a company practices “customer intimacy.” This is often done when it customises its offering to a particular customer’s requirements and is often characterised by interaction between service providers and customers where they can have a chit chat while the order would be processed. By virtue of the fact that, coffee houses are generally regarded as places to relax, the services offered can be classified as luxury ‘goods’ to a larger extent as people can do without them or can easily get them from somewhere else. It is easier for clients to brew their own coffee in the comfort of their homes but they are driven to the coffee shops by the need to relax and enjoy the ambience offered. Therefore, a decline in services would result in them shunning the place. Ideal customers for Starbucks b) The idea of coffee shops was moulded on the premise of providing another “third place,” away from home and work where the customers could relax and enjoy the hassle free environment while at the same time discussing social issues of importance to their lives. Therefore, services offered by Starbucks constitute luxury products where the consumers seek to refresh themselves or just enjoy the charming environment characterising most coffee houses. In essence, the rich and affluent are the target audience that frequent coffee shops because they can afford to enjoy the luxury without offsetting their budgets compared to the lowly educated members of society within a lower level income bracket. In view of the argument above, the rich and affluent are the ideal customers for Starbucks as they can afford to frequent the coffee houses. One main advantage with this target group is that the affluent people have consistency in going to the coffee houses. According to statistics given in the case study, the customers who have consistency in visiting Starbucks’ coffee houses constitute 62% of its total transactions hence they are the ideal customers. Some of these customers have become loyal and strongly attached to the brand to the extent of priding themselves by being identified with it. Other customers from lower level income groups can be considered more as temporary customers as they occasionally visit the coffee houses, may be less than five times a month. There is need to increase speed of service as a way of improving customer service that would in turn increase customer satisfaction. A satisfied customer is likely to come back again and he is also likely to tell others about the good service rendered especially by Starbucks in this case which is advantageous in that the customers become the company’s marketing tools. Importance of highly satisfied customers c) Highly satisfied customers are very valuable to Starbucks as they form the bulk of consistent customers who account for the larger percentage of total transactions. These in turn are likely to be loyal customers who would have trust in Starbucks which would entail that they are likely to invite new customers also. The aspect of customer satisfaction should also be viewed from the context of the other companies’ offerings. Thus, with so much competition characterising today’s business, providing exceptional customer service is no longer an added benefit, it’s a necessity (Evenson 2005). Customers who are not satisfied with the way they are treated can easily take their business somewhere which would result in the decline of sales. Starbucks should always strive to maintain records of high levels of customer satisfaction as a way of retaining its customers as well as attracting new customers. Service blueprint for Starbucks 3 a) The tangible cues or indicators of quality from the customer’s perspective are based on physical evidence which refers to all the aspects of the organisations physical facility, as well as other forms of tangible communication such as the logo type or even the presentation of the workers such as wearing neat uniforms (Lancaster and Reynolds 1999). Neat environment is likely to attract customers and make lasting impressions. b) The steps involved in service delivery at the Starbucks include making a strategy. Thus, according to Zyman (2000), without a strategy, any business is doomed to fail. The strategy formulation involves careful planning which encompasses the creation of a positive image of a service, the identification of the needs of the customers, finding means of satisfying them and service delivery among others. Planning is the first step in establishing and running a business as it sets out the necessary steps that act as guidance in the direction the company ought to follow in pursuing its goals. The overall image should be attractive and compelling to customers. Implementing the plans is also one major step which is mainly concerned with monitoring progress. All these steps are very important as they form an integral part of delivering quality service to the customers. c) Standardisation involves sorting of products according to quality (McCarthy 1990). It is important in that it reduces unnecessary confusion as the services being offered would be differentiated. If all the services are sorted according to their quality, then it reduces the hassles of service providers in identifying what the customers would need which would be advisable as far as upholding the principle of customer service is concerned. This also reduces unnecessary delays as some workers would be readily available to offer certain services. Standardisation is very important throughout the process of satisfying the needs of the customers as they are particularly interested in getting valuable services that are proportionate to the money they would spend on the given service. Substandard services normally detract the clients who are after getting value for money from the services rendered to them and they may decide to offer their business somewhere else given that Starbucks is operating in a highly competitive environment. d) The potential fail points are located along the process of customising services to the clients. Meeting the requirements of all the customers in this process is not an easy task. This whole process involved is time consuming hence more time would be needed in the preparation of beverages that meet the customer expectations. The result is that customers would have to wait for longer periods for their turn in the queue. This is likely to result in loss of patience among the customers who may decide to go to other coffee shops. This can further result in loss of confidence over what could be described as lack of good customer service which would be a negative development for Starbucks whose business aims to provide customer satisfaction. Steps such as clearly designing a positive brand would go a long way in attracting the customers. Efforts should be made to fulfil the promise especially categorising services in the event of customising the products. The customers must know where exactly each particular service can be obtained which can greatly help in the reduction of time wasted by other customers in the queues. The workers ought to be divided into categories where some would offer specialised services. This can be a good solution in ensuring smooth flow of business as it would reduce confusion among the customers. e) The potential measures of performance can be seen through different factors such as the satisfaction of the customers, positive suggestions from customers as well as an increase in the number of customers. Positive feedback would entail that the customers are satisfied with the service offered which would mean that the company is performing well and ought to keep up the good standards. In this particular case, the customers’ needs can only be satisfied by quality services. On the other hand, a decline in the number of customers would indicate that customers are not satisfied with the service offered which is an indicator to measure performance. It stands to reason that especially loyal customers can not easily desert an offering by their long time coffee house as long as it is giving quality service. Therefore, any sign of a decline in the number of customers is an indication of poor performance which needs attention in order to attract more customers. In this way, it is very important for any organisation to keep record of its customers so as to be able to quickly notice if there has been some changes in the trends of business. Another measure of performance can be seen through an increase in the number of customers who would visit the coffee house. In this scenario, it would mean that the other customers are inviting more customers through talking about the good services that would be offered. This is a handsome way of marketing the organisation as potential customers will come to learn the good things about it through the other people which may not be doubted as mere attempts to attract customers. Conclusion In conclusion, it can be noted that products and services are different in that products are tangible goods while the services are not. Therefore, the marketing approaches are different in that a product can be marketed as a single and separate entity where a customer can buy it and carry it somewhere else. In contrast, marketing of a service cannot be separated from the process of offering it since it is created and consumed at one place. Starbucks can improve its operations by minimising the time spent by the customers waiting to get their services. References Cravens, D.W. (1997), Strategic Management, 5th Edition, Homewood, Irwin Du Plessis, M. (2002), Customer Relations For Retail, Service and Field Sales People, 2nd Edition, CLS Publishers, C.T. , SA Evenson R. (2005), Customer Service Training 10: Quick and Easy Techniques That Get Great Results, Amacom Books, USA Kotler, P. (1997), Marketing Management: Analysis, planning and control, 9th Edition, Upper Saddle River, New Jersey: Prentice-Hall Kotler P. (1999), Kotler on Marketing: How to create, win and dominate Markets, Free Press, London. 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