Starbucks: Delivering Customer Service
Executive Summary
Coffee has been associated with the pivotal role of bringing people together through providing meeting places for intellectuals across all walks of life. Starbucks is one of the leading beverage enterprises across America. The new coffee era comes with significant demand for coffee lattes, cappuccinos, frappuccino, and espresso macchiato, and Starbucks has continuously proven its ability to meet this demand. Specialty coffee has become a significant trend all across the globe, with different coffee shops around the world coming up with innovative ways to meet the current market needs. Starbucks is undisputedly the most extensive specialty coffee bar has grown from a small corporation into a market giant. The growth could be attributed to the continuous domination of the market, insinuation into the culture, and creation of a brand that is synonymous with aspects of loyalty, longevity, and integrity. Understanding the growth of this corporation as an international giant is essential as a determinant of the strategic approaches taken to attain the overall success.
Case summary
Starbucks is guided by its mission “to inspire and nurture the human spirit-one cup and one neighborhood at a time,” which has led to its success as a leading specialty coffee brand since it was founded in 1971. Its popularity seems to continuously grow across the globe, which could be attributed to the delivery of customer service and the quality of products produced. Excellent customer service has always been associated with the success of different brands’ fulfillment, even in the employees. However, problems that hinder this growth are bound to occur, and this analysis will identify them and provide relevant recommendations as to the solution.
Issue Statement
There has been an increased outcry from Starbucks ‘ customers who have continuously stressed their lack of satisfaction with the services offered by the corporation. However, various structural changes could be recommended to improve the situation.
Situational analysis
Several problems could be attributed to poor customer satisfaction. However, the vast market of coffee is still promising, where with a few adjustments, the company’s profits are bound to increase.
SWOT Analysis
Several problems within a company are bound to bring down the profitability of the company if not rectified. The SWOT analysis of Starbucks will give a detailed analysis of the strengths, weaknesses, opportunities, and threats the company may be facing or may face in their operations from the external business environment.
Strengths
Starbuck’s delivering customer services has several strengths that have enabled the company to maintain its position as the leading coffee specialty shop. These strengths include internal forces capitalized on by the company.
Starbucks has a robust financial position Starbucks delivering Customer Service has had for the past five consecutive years (Statistic Brain, 2014). The company has also enjoyed accumulated profits transferred into reserves that could be used to finance future projects. Starbucks delivering customer service also has a large asset base that provides better solutions to some of its challenges, such as in production. The workforce within the Starbucks delivering customer service is also diversified with people from all walks of life that help the company expand in its ideas and methodologies for operation. All the staff are qualified and accredited professionals that have also been trained to handle the large customer base. Starbucks has also been able to make returns in its capital expenditure that have translated into positive returns despite the costs incurred on various projects. Finally, the company has automated multiple stages in its products that have created a system of efficiency and reduced the costs of production (Moon & Queich, 2003). Resources are utilized much more efficiently and created consistency in the quality of their products. Automation has also provided the ability to scale up or scale down operations depending on the demand in the market, thus minimizing any chances of losses being incurred.
Weaknesses
Starbucks has been able to differentiate itself as a premium coffee producer, although one major problem arises from this. Customers have complained continuously about the high prices of the coffee, which could result in the loss of the market, especially when setting up shops in developing countries. This can also lower its chances of attracting new customers as they may opt to go for cheaper alternatives. The company’s drink menu is also a weakness where the inclusion of more personalized drinks will increase the waiting time resulting in more dissatisfied customers and put more pressure on the employees (Moon & Queich, 2003). Another problem is the continuous concentration of coffee shops, thus clustering the existing market geographically. Increasing shops in the same area are described as self-cannibalism where out of the aggressive expansion, the area concentration is increased along with competition, thus decreasing its long-term growth. Over the years, Starbucks has also been accused continuously of focusing too much on growth and expansion while neglecting the overall satisfaction of the customers.
Opportunities
Various opportunities are available for the giant coffee house. The first one is expansion into emerging countries where Starbucks has already made significant progress in many countries, thus increasing their growth potential in both emerging and developing markets. Starbucks also has a leading advantage over its competitors through the use of mobile applications to create ease in the delivery system for customers. Lastly, Starbucks has the potential to innovate new products that are much more attractive to younger customers. The corporation could also consider venturing into new products in its menus, such as non-coffee products (Ferdman & Yanofsky, 2014). The menu expansion will not only attract more young people but also diversify the customers; it has thus increased their growing sales and customer satisfaction.
Threats
Despite being the leader of the current specialty coffee market, Starbucks is still faced with the threat of rival competition from both large and small coffee shops that have differentiated themselves using different propositions. There is also a spike in the coffee bean prices, which will eventually alter the cost of production by the corporation (Ferdman & Yanofsky, 2014). This will not only increase the value of production but also push away some of the existing customers.
Analysis of Alternatives
Starbucks could invest in an extended delivery system for its customers. This distribution technique enables the corporation to reach its many customers through the vast number of outlets situated in almost every state (Moon & Queich, 2003). The corporation will equally develop a reliable distribution network that ensures all the products are made available to customers promptly. The company’s products should also be made relatively cheaper due to the cost structure that has been implemented. The corporation’s customer service low structure enables it to produces at a lower cost and sell at equally lower prices, which are affordable to all of its customers. The dealer community partnered up with the corporation’s delivering customer service also gives it an advantage. This community not only supplies products to Starbucks but also focuses on the promotion of the company’s products and training (Moon & Queich, 2003).
Recommendations
The biggest problem with the delivery customer service has to be the incapability to meet the demands of the two customer groups. A potential solution to this can be through redistribution of labor and training personal on how to do the same. Reallocation of labor can be done through the creation of an express lane and customer service for the regular lane. The express lane will feature the most popular drinks according to customer survey results, while the proper lane will feature the other beverages. Employees should also be trained to handle both lanes, and thus rotation of shifts should be encouraged.
After the introduction of the express lane, relevant marketing strategies should be implemented to create awareness of the new service. This can be done through traditional advertising or the use of social media that has proved over time to have a higher reach than billboards or even mainstream media. A drink limit of the express menu should also be set where violations of this will attract a penalty on the customer. This is just a precautionary option to ensure the order is maintained at all times by the customers. Finally, the progress of the new delivery system should be monitored to determine its effectiveness in meeting the customers’ demands. Starbucks could also venture into new markets by partnering up with third parties that are already established like the joint venture with Pepsi-Cola, a $400 million of the franchise “capturing 90% of the ready-to-drink coffee category” (Moon & Queich, 2003) to maximize their profits and diversify their customers.
Conclusion
In conclusion, the delivery system of services to customers is always dependent on employee welfare, which will translate into their overall attitude. The creation of good working conditions will allow employees to perform to their maximum potential and thus meet the needs of the customers. Therefore, for Starbuck’s delivery of customer service to be effective, the welfare of the employees has to be taken into account first before the other recommendations are implemented.
References
Ferdman, R. A., & Yanofsky, D. (2014, 4 4). What people order at Starbucks around the United States. Retrieved from QUARTZ: http://qz.com/195631/what-peopleorder-at-starbucks-around-the-united-states/
Moon, Y., & Queich, J. (2003). Starbucks: Delivering Customer Service
Statistic Brain. (2014, July 12). Starbucks company statistics. Retrieved April 19, 2020, from http://www.statisticbrain.com/starbucks-company-statistics/