Starbucks Corporation is a major American coffeehouse chain and coffee company with 28218 operational unit branches worldwide. The given company positions itself as “second wave coffee” providers due to the unique coffee qualities and taste. Starbucks is highly automated with numerous coffee machines, which produce the drink safely and efficiently.
The company is heavily focused on being customer-oriented and making changes in operational procedures. Although it is a large corporation with a significant number of stores, Starbucks is adaptable in creating the best customer experience. It offers a wide variety of product choices to fully satisfy customer’s preferences. The company illustrates the importance of providing a variety of alternatives and adjusting for societal changes (Berger, 2018). Retailers can learn a valuable lesson from Starbucks, such recognizing recent shifts in customer trend and targeting the correct market segment.
Starbucks is an appealing brand for a specific set of people, who are mainly representatives of the younger generation. However, recent marketing approaches of Starbucks using TV advertisement shows that the company is attempting to widen its segment (Berman & Evans, 2013). The television marketing methods are more attractive for older generations, who lack a strong desire for coffee consumption (Berger, 2018). Nevertheless, it can cause a significant increase in numbers of market segments obtained by Starbucks.
Applying the concept of the consumer decision process to Starbucks benefits the company’s goal. Firstly, the large proportion of coffee consumers are highly inclined towards purchasing “second wave coffee” products; therefore, Starbucks is suited for bigger market segments and it (Kang & Namkung, 2017). Secondly, Starbucks applies effective marketing strategies, which is mainly aimed at younger generations. Thirdly, the customer is fully satisfied with the variety of choices offered at the coffeehouse, which is an important factor in retaining even the most demanding coffee consumers. All these factors result in steering the consumer decision process towards Starbucks’ profitability.
The major brand coffeehouse chain stores are mostly operated through owning two different types of store: company-owned and franchised ones. Starbucks regularly collects royalties on its franchised units, because it allows the franchised store to use its logo and brand (Berman & Evans, 2013). The biggest benefit a franchised store is the lack of operational costs, because the franchise holder is accountable for running it. However, these legal intricacies and details are irrelevant for customers mainly due to the absence of a significant service difference among the mentioned types (Berger, 2018). An average consumer will not notice a distinction between franchised and company-owned store. Starbuck needs to keep track of customer preference changes, because the targeted market segment is interconnected by social networks (Berman & Evans, 2013). Being able to predict the upcoming trends will allow Starbucks to effectively navigate through demand.
Starbucks’ food service is another additional method of meeting the needs of a customer. The company sells food products through both own stores and other food stores. Although it allows Starbucks to expand the reach for clientele, they are market competitors (Kang & Namkung, 2017). The seller’s weaker reputation might have a sufficient effect on Starbucks, also it can be highly challenging to control the representation of its product fully.
In conclusion, it is recommended to shift the operational focus from company-owned stores to franchisees. Although the company-owned stores create higher revenue, the gross profit is mostly the same with franchised ones (Berman & Evans, 2013). It illustrates that increasing the number of franchise stores might be cost-effective in the long run. Moreover, packaged coffee and food service need more development.
References
Berger, A. A. (2018). The Starbucks Coffee Shop Logo. In: Perspectives on Everyday Life. Palgrave Pivot, 87-90.
Berman, B., & Evans, J. R. (2013). Retail Management: A Strategic Approach. London, England: Pearson.
Kang, J. W., & Namkung, Y. (2017). The effect of corporate social responsibility on brand equity and the moderating role of ethical consumerism: The case of Starbucks. Journal of Hospitality & Tourism Research, 42(7), 1130-1151.