Analysis on the Business Proceedings Of the Starbucks Based on Global Scale - Case Study Example

STARBUCKS: A Case Analysis on the Business Proceedings Of the Organization Based on Global Scale of Submission ABSTRACT The economic issues attacking the world finances at present affect every business entity. It could be observed that through these primary situations business organizations today are facing a great challenge of remaining in the industry beyond all the hardships. In this paper, examining the status of Starbucks then, now and even the future shall be tackled carefully so as to show how a company as huge as Starbucks has been trying to survive business challenges and how they should be prepared further challenges that are still to come. STARBUCKS: A Case Analysis on the Business Proceedings Of the Organization Based on Global Scale Introduction Starbucks is one of the most-known names in the industry of coffee marketing services. The creation of a unique taste that carries the trademark of the business has made it possible for the owner of the organization to make a great name in the face of global market. Undeniably, this strategy of making everything unique while continuously developing has helped the entire business to make it possible for every plan to get along with the aims of the business. In this study, an understanding on how Starbucks operates as a part of the modern industry of commerce and servicing businesses in the world making it possible to make a great name known to many markets around the globe. Primarily, this paper shall focus on how much the business is able to create effective marketing strategies that are noted to have a great impact on the global recognition of the business' trademark. The Involvement of Marketing in the Success of the Business In the aspect of providing specific services to the public in exchange of personal gains mainly the profit, marketing plays an important role. Using effective marketing strategies, one can actually publicly discuss their intentions and the nature of their services to the society attracting prospective clients willingly to avail it as an answer to their respective needs. One of the most important elements to be considered in marketing services in the public is the aspect of pricing. Pricing basically identify one's offered services apart from the others. This concept, if used properly, can be a significant advantage of the one offering or a detrimental factor to the public identity of the person or corporation offering the service. Thus, the important elements regarding pricing must always be considered in effectively applying this approach. In the aspect of pricing, one must always consider competition with the general group and with the other entities offering the same service. The established price must be competitive to that of the others with an attractive nature with the general public to convert them to prospective clients. The price must cater to the public giving them the capability to acknowledge and utilize the service being offered by that of the specific servicing entity. Another element is the quality wherein the price can significantly stand as a marketing agent for the quality of the service. The price should be established not too low to be viewed as a low quality service but not too high to become an expansive mean of acquiring the said service. The price must be determined in the middle signifying that it is commensurable to a high-quality service in the cheapest possible approach. In addition, the price must also be established as appropriately synchronize with the present economic condition and preference of the society making it highly noticeable in the present market. In determining the effective price in the aspect of marketing services in the public, one must critically consider the important elements such as economic competition, quality identity, current market trends, and the public preferences regarding the service being offered. With a significant consideration of the said concept, servicing companies can establish an efficient price identity for their marketing approaches. As for Starbucks, using an effective marketing with regards the use of coffee in the health of human individuals in an aim of trying to make great change on the realization of people with regards the facts of coffee intake among humans. Besides that, creating a trademark based on unique taste of coffee that is likely acceptable to most of the target clients of the business made it possible for the organization to make a name internationally. It could be observed to that the adjustment that the Starbucks trademark taste with regards the culture of the people living within the area where their branches are established served as a key placement on the procedures used by the organization to attract their customers. In this diagram, the adjustment of the business in connection with the country that they are serving could be seen to take place in the carrier logo of the organization which in turn also affects the taste of the coffee mixtures that they offer to the said market. With this process in mind, it becomes easy to believe that marketing to different cultures becomes an essential factor that contributes to the international recognition that the business itself receives from the market groups that they ought to serve. The Branding Strategy of Starbucks Branding is one of the main factors that determine a strong strategic approach in marketing. Hence, in this manner, branding itself must be considered one of the most important parts of launching new products into the market. However, the beliefs of the public today with regards to brand names are indeed affecting the branding processes by several manufacturing companies. As for example, when shopping, many consumers aim not to be much attracted with brand names anymore. They believe that a popular brand may lead in sales but not necessarily in nutrition. Popular brands are usually higher priced to cover advertising and packaging. Store brands may be just as good. This factor of public belief is indeed a challenge to the branding activities within manufacturing companies. Therefore, this only means that the innovative ways of creating brands that would sure be a hit in the market is a necessary aspect of marketing mix that must be considered before any brand line is decided to be released to the market. In this regard, a brand name that has already been created shall be analyzed with regards to its supposed impact on the market and the essential factors implemented to ensure its effectiveness in the industry it is involved with. Brand Evaluation The brand chosen by the author of this paper is Starbucks Company. The said company has been known to totally offer the best coffee choices found in almost every part of the world. By being able to meet the needs of their consumers through branching out to other countries, the said coffee company has been known to be one of the top grosser in the industry it is involved with. The brand choice of the said company is indeed appealing to many consumers. The idea that the coffee offered within the establishments of the said company are for 'stars', the consumers have the feeling of being very special whenever they tend to buy coffee and dine in the establishments of the said company. The elements making up the branding processes of Starbucks indeed helps in the built-effectiveness of the attraction implied by the company towards its consumers' thinking. With regards to the service provided by Starbucks to their consumers, the brand itself lives up to the promise of giving the customers a state of the art service. All around the world, every Starbucks branch tries to reach its standard of a hundred percent of customer service with their everyday transactions. As seen, in every place, the said company aims to offer an "at-home' ambiance of the location and the makeup of their establishments to make the consumers feel that they are welcomed enough by the family of Starbucks to dine in. As a result, the following diagram showing the competition strength of the business in the industry makes a certain proof that Starbucks lives up to its name. Certain Necessary Changes and Company Evaluation The main targets of the company are adults having the ages 16 and above who loves to drink coffee along with some certain pastry selections. In this regard, instead of simply offering coffee and pastry, the establishment should consider offering other products depending on which country they are hosting. For example, within their branches in Asia, it might be considered effective that they offer native choices of food that goes well with coffee. This would mainly attract the locals of the said locations to appreciate the offered products of the said company as well. With regards to packaging options, several native locals of the different branches of the said company around the world would love to take home some orders in a special native way of packaging. The options though might be costly. However, through effective innovation, the establishment could be able to come up with the look-alike types of packaging which are accepted on the locations where their branches are established. On the matters concerning their price offerings, the service as well as the product quality received by the consumers should be highly considered by the company to be able to say that what they offer and the prices are reasonable enough to be paid at a high rate. However, since the target market is within an age-bracket, the company could still be said to have a fair pricing system, since the consumers within the said bracket could actually afford the price rate. On the other hand, their branches on the third world countries may have a hard time competing with the price offering of native coffee companies. In this regard, it would be much advisable for the company to adjust their pricing with regards to the location their branches are established at. Their product offerings could be adjusted, as well as the crew compensation to be able to balance everything. In this regard, although the contents of some of the products may have been reduces, the sales revenues could still be saved. Most of the establishments of the said company are situated within malls or within the business arena. This matter could be considered an effective location choice for the company marketing strategy. Bringing the establishment near to those who would naturally appreciate it is indeed a wise decision. Hence, it would be reasonable for the company to further extend their branches, however, they should be able to find 'coffee-loving' market to be able to make considerable. The advertising system of Starbucks in some ways could be considered a bit weak. Since they are globally known, they could be advised to host some television and internet advertisements to attract more consumers. In this regard, it would be expected that the company could attract more consumers around the world. It would be helpful to have television advertisements that are especially created for the age bracket of their prospect consumers. Furthering their System of Marketing: the Basics Having more customers for a certain company is among the most important goals of any business organization. Certainly, it is thus considerably rightful to consider that the consumers too have their own goals, their own expectations from both the products and the services that they receive from different companies providing the said necessities to them. Once the companies are able to provide the expectations of the said consumers, the loyalty of their regular customers is gained, thus the profit of the said company improves. However, this is not an easy task for any management group. Since this involves a more strategic approach. As it is said by much business experts, this process of gaining people's loyalty to a certain company is more of an indirect management process. With regards to this, Frederich Reichheld authored a book entitled "The Loyalty Effect: The Hidden Force behind Growth, Profits, and Lasting Value" to highlight the necessary factors that would contribute to a successful people-influencing strategies. The author Frederich Reichheld is known for his enthusiasm in creating ways by which business owners could get the best results from their business organizations. Almost all the books that came form the said author has been aimed in making business activities more effective not only for the business owners but also for the customers of the different companies. By so doing, Reichheld has been able to garner a title in the business industry as one of the best selling writers of the century. His views have been proven practical and many readers of his book who chose to apply what they learned from his books have proved his suggestions effective. In the paragraphs to follow, the necessary contents of his book mentioned earlier shall be tackled and examined. The effectiveness of some of the main suggestions of Reichheld with regards to gaining loyalty would also be discussed. The main theme of the book authored by Reichheld shall be analyzed and distinguished as to how it directly could affect the human business activities. IN his first lines as the introduction of his book, Reichheld stated: "LOYALTY IS DEAD, the experts proclaim, and the statistics seem to prove them out" (1). Certainly, at first glance, it could be seen how much the author views loyalty as a factor of the human society, which is near enough to being extinct. It may occur to the readers that whatever the author has to say with these opening lines may as well be themed against the possibilities of having an existing loyalty among men especially in the business industries. However, the preceding words of the author towards the chapter of his book lead the reader into another point of view. The entire theme of the book is however in contradiction to the reality of reasons that the first sentence suggests. As the author tries to etch his ideas wit regards t loyalty, it becomes quite obvious how much he believes that loyalty is but a simple attitude that could be created and gained by people even in the filed f business. With so much competition among the companies involved in service and production activities in the business world, it is indeed hard to say that it is possible for one company to be able to gain TOTAL LOYALTY both from their own people and their consumers as well. However, Reichheld suggests the other way around. To him, honesty is but a sense of trust and respect, which could be cultivated through the utilization of several strategies of business owners with regards to the activities they ought to do for the sake of their customers. True, it may not seem to be that easy. Yet it is not an impossible factor to consider of happening either. At the first lines of this paper, it could be recalled how much business owners crave for gaining profit from the activities that they do everyday. OF course, this is normal. Nobody puts up a business simply because he or she wants to serve. Certainly, what a business enthusiast has in his mind upon establishing any business organization is the profit he ought to have upon the completion of his plan of putting up a business. However, according to Reichheld, there is more to a business than just the wanting of profit. In other words, gaining profit may be the main goal, but to be able to reach that certain goal, a company must be able to shift its priorities and still receive the best results in connection with the profit-oriented idealism of business organizations. Although seeing the world situations today, implying such fine idealism may not be that easy to apply. A strong contributing factor is the rapid technological and economic development in society during the 20th century. An article in the German newsmagazine Die Zeit stated that we live in a "dynamic epoch and not, as during former centuries, in a world characterized as being static." The article explained that this has led to a system of market economy, which is based on competition and propelled by selfishness. "This selfishness," the article continued, "could not be stopped by anything. In its wake grows the brutality that marks our daily life, as well as corruption, which in many countries has reached right up to the government. People think of themselves and the maximum gratification of their desires." Sociologist Robert Wuthnow, of Princeton University, found through in-depth polling that Americans today are more focused on money than they were a generation ago. According to the study, "many Americans fear the yearning for money has overpowered other values like people's respect for others, honesty at work and participation in their communities." Greed in society has further increased because many business executives have granted themselves huge wage increases and lucrative retirement benefits while urging their employees to be moderate in their wage demands. "The problem with the pursuit of profit among business leaders is that their attitudes are infectious and that they lower the moral threshold among people in general," observes Kjell Ove Nilsson, associate professor of ethics and theological director at the Christian Council of Sweden. "Of course, this has a devastating effect on morals-in society as well as on the personal level." However true that greed governs the business industries today, Reichheld still believes that with ample practice and shifting of priorities, loyalty could still be a possible existing aspect in the business world today. According to Reichheld, there are necessary steps to follow with regards to the priority shifting process that has to be considered by business owners if they are wanting loyalty form their people and their consumers as well. The following is the list of the principles included in the 'six bedrock' strategies that Reichheld refers to his book as an effective way of being able to shift one's point of view on profit: Preach what you practice This refers to the ability of the administrators to educate their employees well. This education does not only include the necessary matters of concern in business industry they are joined with but this is also designed to teach everyone in the company with regards to what is really happening in and out of the organization. This process builds up trust as the company unfolds the supposed 'company secrets' to their valuable force, the employees. By doing so, they are able to satisfy the need of their employees to have the feeling of self-worth, meaning they are able to understand that they play a big part in the company and that they are well appreciated by the organization they chose to work for. As trust between the employees and the administrators are established, the more loyalty comes into the picture and succeeds the quest for being established. Play to win-win Consumers play the greatest part in reaching the goal of gaining profit for the company. The 'win-win' principle refers to the fact that even though companies see the consumers as 'money providers', they should also see the worth of their consumers when it comes to receiving fine service and products from them . This means that both party wins in each transaction that the company and their consumers get into. The consumers should realize the fact that what they have paid for have been worthy enough because of what they received from the company. Hence, knowing this, they are able to establish fine relationship with the company and loyalty is established as well. Be Picky In business, one of the most important activities being done is decision making. Being picky simply refers to the ability of the management of a business organization in 'choosing' which services or features of products specifically meets the needs of their core stakeholders. This part of decision making though must be viewed as an equalizer between the employees and the consumers of the company. Being picky involves the ability of the management or the administration to chose what is best for both their employees and their consumers. This would inspire the employees serve even better and the consumers appreciate the products and services more frequent. Keep It Simple Everything must be clear, appealing yet understandable. Whatever the company considers with regards to the changes that they ought to take, everything must be attractive or appealing enough for both the employees and the consumers to accept. Being simple and clear though is the main reason why certain processes could be called 'appealing' to others. It must cater to the general public which means it should be able to give both the needs of the employees of the company as well as the consumers' expectations in an equal manner. Reward Right Results Once the aim or the purpose of the strategies are met, it helps a lot if the management would be able to come up with reward policies especially for the employees who are working hard for them. This could be in a form of an award, recognition or monetary rewards. However, it would be, it is designed to help the employees realize their worth or their importance to the company. Listen Hard-Talk Straight Although there is a sense of authority, it should always be remembered by administrators that there is a need to listen. There is a need to remain open minded for other people's suggestions. This goes back to the first principle of letting other's feel that they are of worth to the company. Applying these six principles mainly helps the business owners to identify their needed adjustment with regards to their shifting of priorities. It is indeed important that the business administrators are able to distinguish the exact aspect in which they should improve themselves to be able to receive fine results. According to Reichheld, "Companies with faithful employees, customers and investors share one key attribute. That is the application of the 'six bedrock principles' listed above. Yes, these principles have been proven effective by the people who opted to apply it in their own business activities. After knowing the necessary principles of success leading to gaining loyalty from all sectors involved in a business organization, Reichheld further elaborates his subject by concentrating on the main reason why loyalty is needed. As he says, there are two main reasons why loyalty is necessary and how it is beneficial especially for business institutions. The two reasons are as follows: The primary mission of loyalty is to create value for clients (Reichheld, 32) This mainly points out the responsibility of each business organization towards their clients. Since their clients give them the chance to gain profit, they are supposed to do the best they could to give their clients the worth of their expenses. By doing so, they are showing importance to the clients and are also gaining the approval of their customers thus establishing loyalty. The most precious asset of any company is its employees dedicated to making productive contributions to client value creation (Reichheld, 33) Being able to gain the loyalty of the employees is also a key factor to being a strongly established organization. Once the employees are faithful and loyal to the organization they work for, they are willing to offer the best performance they could give for their companies as those companies too are able to satisfy their wants and are able to provide them with what they need. The two principles of loyalty sets up the foundation for the implication of the six bedrock principles of marketing. Being able to recognize the importance of each sector making up the success system of any business is indeed a necessary step for business owners to take if they are serious enough in gaining the pleasing approval of both their consumers and their employees and in the end gain profit for the organization as well. 'Loyalty may indicate a continuing, reliable faithfulness and allegiance, secure against wavering or temptation.' 'Loyalty implies faithfulness to one's pledged word or continued allegiance to the institution or the principles to which one feels himself morally bound; the term suggests not only adherence but resistance to being lured and persuaded away from that adherence. True, the loyalty of one may impress and influence others, but it is exhibited, not for that purpose, but because of one's allegiance. Nor must one person's loyalty be the controlling factor to force others to the same conclusion. This is the reason why in business ventures, it is indeed reasonable to say that loyalty may not be that easy to gain, however, once it is already received it is much worthwhile of keeping. The certainty though of one's loyalty towards a company is not that easy to keep. There are necessary steps to take to be able to hold on to a consumer or an employee's loyalty and keep the fine relationship get going. Here are some of the outlined guidelines of the book of Reichheld with regards to this matter: Make customer value, not profit, the goal. Loyal customers are more profitable than new customers are. Break up the potential customer base into segments and find out which ones are more likely to be loyal. Target these customers. Find and keep the right employees. Getting the right customers will bring you a profit. Invest that profit in loyal employees who will continue to increase value to your customers. Companies with the highest employee loyalty consistently have the highest customer loyalty. Find investors with long-term perspective. Learn from defections. If customers or employees are leaving the company, find out why. Take actions to correct problems. Learn from mistakes. (Based From: Reichheld, 41-45) Taking these five major guidelines to keeping one's loyalty towards a business organization shall help well in the growth of the organization basing from its acceptability to the society or to the market it opts to serve. The reports of several companies who were able to recognize the importance of the factors, which were listed in Reichheld's book, is supported by actual results. These are as follows: DELIGHTED CUSTOMERS COME BACK FOR MORE Proactively provide information 32% Assistance during life event1 4% Consistently good service 32% Service beyond expectations 12% Inform of new opportunity 30% Personal relationship over a period of time 26% Friendly staff interaction 25% No unpleasant surprises 22% (source: Reichheld, 174) In this diagram shown in Reichheld's book, it is quite obvious how consumers are able to react with the principles that were suggested by the said author. The ability of the companies to heighten their profit through the application of the trust and respect principles determines the capability of the suggestions of Reichheld to drive in success towards business companies. As for example, in Florida, the construction industry which primarily involves people from the engineering, architecture and laboring industries certainly depend upon the customer satisfaction and later on the loyalty of the clients that they serve. With the tough competition that the said industry has been going through, it could be noted that this particular character or capability of the organization is the primary measurement of their assured existence within the industry. Conclusion Inflated cost of coffee has not caused a hurried switch to other drinks. In fact, one third of the world's population still belongs to the coffee drinkers. For instance, every year the Belgians drink 149 liters (39 gallons) of coffee, compared with only six liters (1.6 gallons) of tea. The average American drinks 10 cups of coffee to one of tea. In the Western world, only the British break the general rule by annually consuming six liters of coffee to 261 (69 gallons) of tea. Brazil holds the title as the world's largest producer and exporter of coffee. In the first four months of 1977, receipts for exports of this "brown gold" reached the staggering total of $1,000,000,000 for 4.5 million bags, an all-time record. In this regard, it could be helpful to understand that coffee is still a worldwide choice of drink. This is the reason why many would still consider Starbucks as an effective company in the coffee industry. However, this does not mean that the advertising and marketing ways of the said company should continuously become innovative with regards to the market it caters to. Hence, it is still necessary for any company to have effective marketing approach at all times. Yes, Starbucks has already found the right process to attract possible consumers and successfully affect the market they want to target around the world, but it could not be denied that improvement to the system of assuring the loyalty of the clients could still be implied by the administration of the business in an aim of assuring that the organization would be able to exist even beyond the major economic issues being dealt with by the world today. References: Frederick F. Reichheld. (2001). The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value. Harvard Business School Press; New Ed edition. Derek R. Allen. (2000). Analysis of Customer Satisfaction Data. Amer Society for Quality. Derek R. Allen. (2002). Linking Customer and Employee Satisfaction to the Bottom Line. ASQ Quality Press. Michael D. Johnson. (2000). Improving Customer Satisfaction, Loyalty, and Profit : An Integrated Measurement and Management System. Jossey-Bass. Read More