Starbucks Corporations

Subject: Integrated Marketing Communication

Paper Model: APA

Paper Type: Application Essay

Total Words: 889

Document Outline

Starbucks Corporations
What factors accounted for the extraordinary success of Starbucks in the early 1990s?
What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?
Why have Starbucks’ customer satisfaction scores declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?
Describe the ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied? How valuable is a highly satisfied customer to Starbucks?
Should Starbucks make the $40 million investment in labor in the stores? What is the goal of this investment? Is it possible for a mega-brand to deliver customer intimacy?
References


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What factors accounted for the extraordinary success of Starbucks in the early 1990s?

Starbuck earned success in early 1990s. Many factors contributed towards its success. It owns one-third coffee bars in America. It has combined five competitors. In North America, stores are located in high visibility, high traffic, for example in retail centers, university campuses and office buildings. These different locations made it competitive in the market. It offered other products in addition to coffee with whole beans. These products include espresso drinks, beverages, premium teas and coffee with rich-brewed. Product mixes were depended on location and size of store.  

Variety of sodas, pastries, juices, coffee related equipments and accessories, novelties and games are offered on different locations. It also sold products via non-company retail stores like airlines, restaurants and hotels. It also established joint venture for distributing frappuccino with Pepsi-Cola and for distributing ice cream with Drayer’s Ice Cream. It allowed this brand to known through freestanding stores but also through other channels. It increased Starbuck brand awareness. It also expanded its stores and innovation strategy. On regular basis, new products were introduced. Value card was also launched for minimizing time of transaction. Due to brand’s recognition and equity, it achieved success.  (starbucks.com, 2015)

What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?

Brand strategy of Starbuck was compelling in its value proposition. It was made from three components. Its phrase of “live coffee” is reflection of its culture of keeping coffee alive. First component of its brand is coffee. It offers high quality of coffee to its customers. It is controlling its supply chain for ensuring process of customer’s roasting. Second component is service. It included remembering drink and name of person. Third component of its brand image is atmosphere. It focused on atmosphere for stay of customers. It was important for Starbuck to provide convenient atmosphere for customers that allowed feeling of community. These all elements were compelling about its value proposition. Starbuck developed good brand image not the best. Customers are satisfied with its products. They were satisfied with clean stores. Its gross margin ratio is 58.30 for 2014. This ratio is not increasing in the manner, as it should be. It is reflecting that brand image of company is good but declining.  Its operating margin ratio is 19%.

Why have Starbucks’ customer satisfaction scores declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?

Overall service of company has not declined. Customers are provided good quality, compelling atmosphere and cleanliness. Waiting time is increasing. Wait time is important for satisfaction of customers. Loyal customers are still satisfied with the service of company. Customers are seeing it more towards making money rather than providing customer’s value. It should focus on improving speed of service for gaining customer’s satisfaction.

Describe the ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied? How valuable is a highly satisfied customer to Starbucks?

            From profitability perspective, atmosphere and customer’s satisfaction is important. Low price is not success factor for Starbuck. Its high quality made it competent despite of higher prices. Now people are willing to pay more for high quality products. . Ideal customer for Starbuck would be a person that visits it eight times in one month. Its customers have grown with the passage of time. After 1990, younger, low-income, and less educated customers were entered into its customer’s base basket. Customer’s base also expanded towards Cuban American and Hispanic.

Many factors should be ensured by stores and employees of Starbuck for measuring satisfaction of customers. Clean and comfortable atmosphere, customer’s convenience, friendly staff and customer’s value are factors for measuring satisfaction of customers. Highly satisfied customer for Starbuck is a loyal customer. Starbuck maintain high customer’s satisfaction for its loyal customers. Valuable customers are very important for Starbuck’s sales. This is the reason that its revenue is increasing with the passage of time. Its revenue for 2014 is recorded as $16447.8 million. Sales growth is recorded as 7%, 8%, 8%, 7% and 6% for 2010 to 2014. (Fiscal 2014 Annual Report, 2014)

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