Case Study: Starbucks

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Case One:
Even with the “No. 1 Best Coffee” Award from Zagat’s Survey of National Chain Restaurants as well as numerous other awards and recognition under their belt, Starbucks remains vulnerable to the ever-changing, ever-demanding needs of their customers (Starbucks Company Recognition). In order to succeed in the service industry, companies must provide impeccable customer service in addition to rewarding their customers through programs and promotional strategies. Currently, Starbucks has reward programs and promotional strategies in place, but they have failed to construct them in a way that fairly and appropriately benefits their customers. In addition, Starbucks’ reward programs are generally unknown by most people and are not advertised enough so that people actually know they can receive those rewards and benefits. As a whole, Starbucks needs to cater to its loyal, and more importantly, profitable customers in a more suitable way. Therefore, Starbucks should implement more advertisements of their reward programs, minimize the requirements for receiving benefits, and maximize the incentives and promotional offerings. By doing so, they will surely please their customers, create more loyal or repeat customers, and ultimately increase profit.

Starbucks did not earn the “No. 1 Best Coffee” Award overnight. It took decades for them to get there. In 1971, Starbucks opened its first store in Seattle’s historic Pike Place Market (Our Heritage). The name, which was inspired by the first mate in Herman Melville’s Moby Dick, hinted to the romance of the high seas and the seafaring tradition of the early coffee traders. The logo is also inspired by the sea—featuring a twin-tailed siren from Greek mythology (Starbucks Company Profile). From just a small store in Pike Place Market, Starbucks attracted Howard Shultz with their offerings of some of the world’s finest fresh-roasted whole bean coffees. Shultz would soon become chairman, president, and executive officer, but not before joining the company in 1981 or exploring Italian coffee bars two years later in 1983 (Our Heritage). Deeply inspired by the romance of the coffee experience while in Italy, Shultz left Starbucks for a short period of time to start his own coffeehouse. However, he returned in 1987 to purchase Starbucks with the help of local investors (Our Heritage). Starbucks states within their company background posted online that their goal was to remain a different kind of company that celebrated coffee and its rich tradition and bring a feeling of connection throughout the cities and towns they inhabited. Appropriately coinciding with those goals, Starbucks’ mission is to “inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” (Our Heritage). And now, with more than 17,000 stores in over 55 countries, “Starbucks is the premiere roaster and retailer of specialty coffee in the world” (Our Heritage). They have sought to bring both their heritage and an exceptional experience to life through their coffee, which many can testify they have succeeded in doing so.

Even though Starbucks has prospered in making a significant mark within the coffee business, there remain areas where changes or reforms need to be made. One area that is lacking and therefore causing frustration among customers and an overall decline in profit is the Starbucks Card program. This promotional program, designed to reward loyal customers through rewards like “free select syrups and milk options, free refills on brewed or iced coffee or tea during same store visit, a free tall (12 oz.) beverage with one pound of whole bean coffee purchase, special exclusive offers and coupons, and, with Gold Member status, one free drink after the purchase of fifteen drinks”, remains unknown among many Starbucks customers (Card FAQs). This is due to Starbucks’ lack in advertising not only the benefits of the registered Starbucks Card, but...
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