Starbucks: A Marketing Analysis in the Service Sector - Case Study Example

Starbucks: A Marketing Analysis in the Service Sector Table of Contents Summary 2 Introduction 3 Overview of the Company 3 The Marketing Structure of Starbucks 5 Characteristics of Services 5 The Marketing Blueprint 6 Analysis of the Company 8 Conclusion 9 References 10 Summary Starbucks Coffee Company is one of the fast growing and most successful companies in the service sector. The study is aimed to present an overview of the company structure specifically the techniques applied in marketing, the characteristics of services and the critical analysis of the methods employed. Through the research process, the main perspective employed targets the determination of the importance of the principles of service provision and relationship marketing specifically applied by the company under study. Introduction The service sector is the most rapidly emerging sector of the business world. This can be demonstrated by the significant number of companies in the field classified to give services of different types. The study is undertaken to present the importance of the service sector through the analysis of a specific company. The company in focus is Starbucks, one of the chain restaurants and cafes known to have franchises and branches around the world. Through the presentation of the marketing structure of the company, the evaluation of the difference between goods and varying forms of service provisions can be achieved. In addition, the different issues regarding the service industry can be given attention. Overview of the Company Starbucks is a company that operates in different aspects. One is through retail cafes that serve coffee, coffee-related accessories and beverages, pastries and confections. Another is the whole sale of coffee beans through a company-based operation in specialty sales groups and supermarkets. One of the reasons for the significant market share of the company is the exclusive sale of brands of drinks that are attached sole to their name such as Frappuccino and the products of Tazo Tea Company. The main focus then is marketing the quality of the sources of the product, the services and partnership with other service providers to achieve the products and services that Starbucks offer (Starbucks Official Website 2010). When the company was established in 1971 in the name Starbucks Coffee, Tea and Spices, the main objective is to achieve a market share in the Seattle area by providing high quality of coffee and other beverages. From the said origin and by following the trends and demands in the retail and service sector diversification and following the need of the clientele and target market, Starbucks is recognized as one of the most successful companies in the specific market niche (Starbucks Coffee Company, 2008). In the 2008, Starbucks already achieved an important share in the international market. In the United States alone, 7,087 company-operated stores and 4,081 licensed stores had been established. Starbucks also operates in 50 states which includes the District of Columbia. In addition, the company operates either through company-operated or licensed store in 43 countries outside the United States (Starbucks Coffee Company, 2008). With the said coverage, Starbucks became renowned and recognized by the clientele of the said service. This can be viewed through the growth of the company to 6500 stores worldwide and the achievement of the title ‘last great growth story’ by the Wall Street analysts (Kurtz, MacKenzie & Snow, 2009). The achievement of the Starbucks Coffee Company is the main reason for the choice of being the focus of the study. It is important to analyze the marketing structure of the company in order to achieve the objectives of the research undertaken. The Marketing Structure of Starbucks Marketing is basically defined as the provision of products or services on the basis of the demands and needs of the consumers. Marketing as a discipline is divided into the sector that provides services and the sector that produce goods (Rose, 2004). The Starbucks Coffee Company can be classified as a corporation that provides both types of services. Through the retail cafes and shops, service provision is the main objective. On the other hand, the company is also involved in coffee products and beverages wholesale (Starbucks Official Website 2010). Characteristics of Services The Starbucks Coffee Company is a corporation of a multitude of services and lines. Generally it is a business largely operating in the service sector but it is also involved in sales of coffee products and beverages and the expansion of the business through partnership and franchise. The complete package of the company can be considered as one of the main reasons of the massive explosion of the value of stocks related to the name and the continuously increasing profit of Starbucks (Michelli, 2007; Starbucks Coffee Company, 2010). There are two areas that can be given attention in the services offered by Starbucks. One is the operation within the retail cafés which includes the brands of beverages which the company is known for. Based on the main mission of the company, serving high quality coffee is utmost, thus, Starbucks is known for its coffee. Through the promotion of the said product, the interest of the consumers is drawn to the company. Once a Starbucks café is visited, other services are known such as the other kinds of beverages and delicacies (Starbucks Coffee Company, 2010). Another is the expansion through partnership and franchise. Basically, the principle of the company is to have a balance between giving the trade mark Starbucks service and giving the owner the chance to have their own unique methods in the principle “Make It Your Own” principle for each branch. Also within each coffee shop of Starbucks, the “Five Ways of Being” is being imposed as a service strategy to ensure proper treatment of the clientele. The technique involves being ‘welcoming, genuine, considerate, knowledgeable and involved (Michelli, 2007). Aside from the main services of the company, marketing strategies such as customization of the brand and services had been applied by the company, although there are limitations in selling the American coffee taste. Starbucks can be considered to create its own trail in the business world through innovation that resulted in the growth of the company (Kurtz, MacKenzie & Snow, 2009; Serwer, 2004). The method employed by the company can be considered under the Law of the Niche which can be described as innovating ways to be able to create a unique market considered exclusive for the company. This can be analyzed as creating the need for the consumers to realize they want to avail the particular product or service (Rose, 2004). For the case of Starbucks, the realization of the need to typically drink coffee for the worlds’ active and busy lifestyle had been achieved regardless of the limitation in culture. By creating its own niche, the company had grown rapidly in the international arena (Kurtz, MacKenzie & Snow, 2009; Serwer, 2004). The Marketing Blueprint Starbucks Coffee Company has established its own market and has achieved the reputation of being a third place where people want to stay next to the home and the workplace (Thomson, 2006). The marketing blueprint of the company is the balance between the customer needs and the organisational needs through the effects of different factors surrounding the market (Rose, 2004). By creating its own niche, Starbucks can be considered to have the advantage to control the different factors that are important in marketing such as the price, the place and the employees (Rose, 2004). In terms of the price, the brand name can be considered to have the affordable price. This is evident in the target market which includes the younger generation of consumers. Through the different types of promotions and marketing strategies such as customization of the products offered and provision of services such as internet wireless connection within the shops, Starbucks is becoming a place where people and clients cannot stay away from (Kurtz, MacKenzie & Snow, 2009; Starbucks Coffee Company, 2010). These techniques are even strengthened by having strong partners with every promotion and project that is implemented. This is to be able to provide the best service in the retail shops. The corporation then can be considered to have the ability to provide a multitude of services in different aspect due to the partnership with different companies specializing in different fields such. Examples of these partnerships that can be cited are Sazaby Inc., a handbag manufacturer in Japan and Grupo Vips, a known family-owned restaurant operator in Spain (Kurtz, MacKenzie & Snow, 2009). The recognition of the company as one of the fastest growing business in the global perspective can be considered as the main evidence that in the consumers’ point of view Starbucks is doing a good job of providing a total package that the customers need. In a study of the company, it had been concluded that through the introduction of Starbucks as a place where people can meet, socialize and do business, the term ‘coffeetalk’ had been established to mean conversations within the coffee shops that can be considered as an important event for having business transactions and other interactions related to different socio-cultural situations (Gaudio, 2003). In addition, by being one of the fastest growing companies according to the Fortune 500 and Wall Street, it affirmed the success of the company in providing for the needs of its consumers and target market (Kurtz, MacKenzie & Snow, 2009; Serwer, 2004). Every process in the marketing blueprint of the company can be considered necessary since it is giving them success and continuous growth. In addition, the company is also aware of corporate social responsibility, thus, effective implementation of the said vision is enough to give back to the environment and the communities the effect of the company Starbucks Coffee Company, 2010). In terms of standardization, a balance between the companies marketing and structural blueprint and the needs of the clients in different location is important, specifically in a company that continually studies and takes into consideration the needs and the demands of the consumers. The complete standardization of the processes then can take away the flexibility of the marketing methods of Starbucks. In terms of the possible fail points and limitations, it can be considered that the localized policies of service provision can be one of the main sources of difficulties and challenges. But this can be resolved through the improvement of policies within the particular retail shop. Another possible challenge is upholding the Starbucks ambience and experience while giving the needs of the local clients. Every perspective then is needed to be considered to be able to resolve related issues. Analysis of the Company The Starbucks Coffee Company can be considered as an important example of the application of relationship marketing. This can be attributed to the provision of the needs of the clients to have the total experience. For that matter, it had achieved the third rank in the place the need to go almost to the point of being a necessity where they can do different activities they need for the other important places such as school and work. The service aspect of the company understudy then can be considered to operate largely on the basis of the relationship marketing. This is compensated by generating profits through partnerships and wholesale of products (Kurtz, MacKenzie & Snow, 2009; Starbucks Coffee Company, 2010). For the company, the service quality then comes from the services offered. Primarily, it involves the coffee and other food and beverages in terms of quality and price. Then, when it is too much for the consumers below the middle class, the amenities and services within the café such as internet connection can be considered attractive especially for people working and studying. The combination of these techniques is the main formula of Starbucks success. Conclusions The application of the different marketing strategies for the Starbucks Coffee Company has been important its success. These include the creation of its own niche, the provision of the needs of the consumers and the availability of different amenities in addition to main services offered. The success of the marketing structure of the company then is dependent on the application and combination of these techniques specifically in the service sector wherein the satisfaction of the consumers is dependent in quality service. References Berg, D. and Einspruch, N.G. (2007) ‘Recent Corporate Growth Trends’ in IAMOT Conference Archives (12 ed). The Integration of Technology and Business Strategies. Available at: http://www.iamot.org/conference/index.php/ocs/4/paper/viewFile/462/14 (Accessed: 10 February 2010). Gaudio, R.P. (2003) ‘Coffeetalk: StarbucksTM and the Commercialization of Casual Conservation’. Language in Society, Vol. 32 (5): 659-691. Kurtz, D.L., MacKenzie, H.F. and Snow, K. (2009) Contemporary Marketing. Cengage Learning. Michelli, J.A. (2007) The Starbucks Experience: 5 Principles for Turning Ordinary into Extraordinary. New York: McGraw-Hill Professional. Rose, P. (2004) Basic Marketing: Marketing in the Third Millennium. New Zealand: Thomson Learning Nelson. Serwer, A. (2004) “Hot Starbucks to Go” [Online] Available at Fortune: http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/26/358850/index.htm Starbucks Coffee Company (2008) Company Factsheet. [Online] Available at Starbucks Corporation Website: http://www.starbucks.com/aboutus/Company_Factsheet.pdf (Accessed: 10 February 2010). Starbucks Coffee Company (2010) The Company. [Online] Available at Starbucks Corporation Website: http://www.starbucks.com/aboutus/overview.asp (Accessed: 10 February 2010). Thomson, D.G. (2006) Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth. John Wiley and Sons. Read More