In the context of the contemporary business environment, one of the major challenges for companies is a necessity to adapt to changes predetermined by the digital era. It is also important to point out that the effects of increasingly technological modes of life pervade various aspects of corporate management, including the growing influence of electronic commerce and social enterprise. In such a context, Starbucks appears to be one of the companies able to use changes in the digital age to its advantage.
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How is Starbucks changing to a digital and social enterprise? What are the drivers for this change?
The rapid decline in revenues experienced by Starbucks in 2007 was one of the major drivers for the company to introduce changes compliant with modernizations and digitalization of the business environment (Turban et al. 4). It is also important to consider the implications of a decreasing number of customers and revenues for Starbucks’ place in a market that was becoming more competitive (Gallaugher and Ransbotham 197).
In the danger zone of a massive economic slowdown, the company’s executives decided to change Starbucks in order to appeal to new target customers. It was imperative for the company to understand the importance of interacting with customers through various media, as well as adapting the methods of payments and channels for marketing.
Alongside traditional means of enhancing customer appeal, Starbucks became innovational in terms of introducing electronic commerce into their daily practice. As a result, the company used the opportunities of digital technologies to its advantage.
Firstly, it became one of the pioneers in using computerized technologies to sustain its business and even to improve its presence in the marketplace. Secondly, the newly created Digital Venture Group played a significant role in the technical aspects of the implementation of Starbucks’ E-commerce initiatives. It initiated Starbucks’ involvement in “social media, mobile and other technologies to change customer relationships, operations, and the business model has helped Starbucks re-engage with customers and boosted performance” (Fitzgerald et al. 3).
Overall, due to turning into a digital and social enterprise, Starbucks boosted its appeal to customers and enhanced the company’s performance on various levels.
In what ways does Starbucks increase its brand recognition with its E-commerce initiatives?
In terms of level, at which different companies can be engaged with emerging technology on a daily basis and apply that technology to enhance their performance, Starbucks was among the first firms to have a certain vision about E-commerce and social media. At the time, the chief executive of the Digital Venture was Adam Brotman, under whose care most of Starbucks’ digital and social initiatives were designed, including “web, mobile, social media, digital marketing, Starbucks Card and loyalty, e-commerce, Wi-Fi, and Starbucks Digital Network” (Van Grove par. 2).
One of the first projects implemented by the company in the sphere of E-commerce was Starbucks online store. With the growing popularity of online shopping and exclusive offerings that cannot be found in regular supermarkets, Starbucks ‘ online store offered its customers various brand merchandise and Starbucks equipment, along with coffee and tea. The customer interest in more exquisite coffee became a core of Starbucks appeal, and the online store designed and then improved with the consideration for users’ convenience.
Another important initiative is Starbucks eGift cards and loyalty programs. Customized cards that can be bought online and sent as a present became a success among the customers, especially considering the variety of options that a recipient of the card can do with it, as well as payment alternatives. Starbucks eGift card and loyalty program became an analog of digital currency, allowing people to transfer their gifts or bonuses in various ways.
Overall, Starbucks was among the first companies to introduce a considerable number of different digital payment options, including mobile payment. Early on in the development of systems of digital payments through smartphones, the company implemented a simplistic “2-D barcode scanning system, built into its iPhone and Android apps” (Van Grove par. 6). In such a way, Starbucks ‘ mobile applications became not only a part of social engagement with the customers but also a means to conduct digital transactions.
Overall, the company managed to use digital innovations for different purposes. On the one hand, E-commerce approaches helped Starbucks to reclaim its target market and find new means of promoting and selling its products. On the other hand, using various social networks and becoming a social enterprise resulted in Starbucks engaging with its customers, receiving their feedback, and productively exploiting the results of discussions at Starbucks community platform mystarbucksidea.com (Turban et al. 5).
Is the E-commerce system bringing Starbucks closer to its customers? Is it changing consumer behavior?
The popularity of Starbucks is unprecedentedly big in terms of customer interest. Today, the company is a cultural symbol rather than merely a popular brand. It mainly happened due to the fact that Starbucks was trying various emerging technologies and joining social networks together with its customers.
Starbucks implemented the E-commerce system as a part of its innovation strategies around the time when consumer behavior started to change. Online shopping provided consumers with a number of opportunities, which they could not imagine before, and people started to use those options on a regular basis. Naturally, with a new mode of shopping, the methods of payment, advertising, engagement with customers, started to change as well. Starbucks indulged in the process of change in consumer behavior by not preserving conservative means of customer service (Wong par. 4).
However, it still cannot be said categorically that the company launched the change itself. The digital era and emerging technologies required adjustments from Starbucks in order for it to stay compatible in a new business environment. For that reason, Starbucks proceeded with a number of initiatives to popularize its E-commerce services and digital payment methods, which helped the company to relate to a bigger number of customers.
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One of the first initiatives directed at engaging with the customers on the level of social networks and digital media was the idea to tender free Wi-Fi in Starbucks, which “along with a digital landing page with a variety of digital media choices, including free content from publications” (Fitzgerald et al. 3). In such a way, Starbucks expanded the area of its services by offering its customers free entertainment and understanding their needs to have an Internet connection wherever they are.
Moreover, Starbucks’ presence on various social media, including Linkedin, Facebook, Twitter, Instagram, Youtube, Pinterest, and Flickr before many other companies ensures its reputation of a brand that relates to the customers and engages them in conversation. In addition, it stays consistent in its social outreach because its activity is not limited to merely advertising (York 35).
Overall, Starbucks used E-commerce and social enterprise approaches not only for increasing its revenues but also for re-engaging with its customers. The digital era and emerging technologies required adjustments from Starbucks in order for it to stay compatible in a new business environment.
Fitzgerald, Michael, Nina Kruschwitz, Didier Bonnet, and Michael Welch. “Embracing Digital Technology: A New Strategic Imperative.” MIT Sloan Management Review 55.2 (2014): 1-11.
Gallaugher, John, and Sam Ransbotham. “Social Media and Customer Dialog Management at Starbucks.” MIS Quarterly Executive 9.4 (2010): 197-212. Print.
Turban, Efraim, David King, Jae Kyu Lee, Ting-Peng Liang, and Deborrah Turban. Electronic Commerce: A Managerial and Social Networks Perspective. New York, New York: Springer, 2015. Print.
Van Grove, James. “How Starbucks Is Turning Itself into a Tech Company.” Venture Beat. 2012. Web.
Wong, Elaine. ” Starbucks’ Social Outreach Stirs the Pot.” Adweek. 2009. Web.
York, Emily. “Starbucks Gets Its Business Brewing Again with Social Media.” Advertising Age 81.8 (2010): 34-35. Print.