Services Marketing Paper Starbucks - Essay Example

Stardust’s Nilsson statement works to create not only a sense of community but enroll the Importance of coffee ND its ability to establish this network. It states, “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Mission Statement). In order to accomplish their mission statement, and ultimately their goal, they work by evaluating their services marketing mix. Cataracts’ consumers need access to high quality coffee. The use of their marketing mix alms to satisfy this need: Their store locations often saturate an area to make access convenient.

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They serve a high quality product, and perception is reinforced by their brand equity. They are able to hare a premium price, compared to convenience based coffee providers, because of their product and brand quality. Their promotion offers incentives for new customers to try the product and has retention programs for current customers through loyalty rewards. They have a process that allows them to compete with convenience based sellers, implemented by better trained and happier employees than competitors and appeal to customers as a “third place” by maintaining welcoming and clean serviceable.

For the above reasons much of the audit Justifies appropriate strategies Cataracts Is errantly Implementing which has led to their success. “Cataracts holds around 33% of the market share for coffee in the U. S…. (Their) main target market is men and women between the ages of 25-40, which accounts for almost half (49%) of its total business” (Cataracts… World’s Largest Coffeehouse). The above quote identifies Cataracts market segment as men and women 25-40. The need of this market is access to a high quality coffee beverages.

Cataracts meets that need by providing convenient access to efficient service in a welcoming environment. Cataracts continues to grow annually thanks to understanding their target market’s deeds. With quality coffee in mind, Cataracts has created a variety of drinks that satisfy most coffee drinkers’ desires. Understanding the target market is important for Cataracts because they are then able to create specific services for the demographics they are trying to reach. Customers satisfy their coffee cravings through a large variety of quality brews from Cataracts.

Although there is a low level of involvement, the satisfaction is high. The majority of risk revolves around a customer choosing a product that’s taste is not pleasing. Most customers buy for themselves and assume the decider, purchaser, ND user buying roles. They may, however, be influenced by other customers around them and different preferences. Understanding why customers choose Cataracts coffee over competitors involves evaluating personal, psychological, coloratura, and situational factors.

As stated earlier, the bulk of Cataracts customers are both men and women are aged 25 to 40 and have professional careers (Cataracts… World’s Largest Coffeehouse). Having professional careers decreases the amount of price sensitivity customers have and the quality product enhances brand loyalty. With the establishment of Cataracts as a hip/cool” service provider, customers are motivated by this persona perception that drinking Cataracts coffee creates. This motivation can also be perceived as peer pressure to fit in within the professional community.

Purchase is also influenced by the surrounding of the physical store locations, which will be further explained in the “Place” section of this paper. Cataracts places multiple locations within close proximity of each other and are generally close to high volume traffic areas. This increases the presence of Cataracts within the community. Although there is low involvement with a coffee purchase, understanding the “how’ is important. Customers who value the quality of coffee will spend time determining and seeking value from service providers.

This distinction in value/quality of coffee can determine the difference between customers attending Cataracts or “quick- serve” establishments. While the coffee provider choice is a quick decision, it is up to the customer to determine the value they receive by drinking Cataracts. Cataracts’ has many competitors, including Dunking’ Donuts, convenience stores and Dunking Donuts and the convenience stores offer quick service but not the same brand quality like that of Cataracts. Cataracts meets their markets’ need better cause they offer a higher quality brew and reinforce that with their serviceable and brand.

In addition to the higher quality, Cataracts in turn charges a higher price than Dunking Donuts’ and other non-premium channels, such as convenience stores or home brewing. The pricing strategy of Cataracts however is in line with the product category and target market. A lower price could danger the perceived quality of their product, as price is an indicator of quality. Thus, Cataracts target market does differ in the need for a higher quality product and allows them to compete successfully with a higher price. Positioning Having a cup of coffee at Startups, unlike competitors, is an experience.

The experience involves enjoying a quality brewed coffee, specialized to your preferences, while lounging in a relaxed atmosphere. This experience is what Cataracts takes pride in and uses to differentiate itself from their competition. In the positioning of Cataracts, they consider the frame of reference and the point of difference. The frame of reference refers to the product category in which the company wants the target market to think of the product. For Cataracts, this is providing access to coffee beverages that match the target market’s desire for quality.

The point of difference for Cataracts is not only the quality of coffee, but the ease of access and pleasant environment in which customers wait and consume the product. The quality is consistent throughout the variety of products. Cataracts is successful in creating a strong market presence by adapting their marketing mix, below, to this positioning. Product: Cataracts Coffee The company started out as a premium coffee roaster and has remained true to its roots. Cataracts grinds and brews coffee on demand, as well as, discarding any coffee that has been brewed for longer than thirty minutes (Growth, Mime).

With laity in mind, Cataracts chooses to brew darker blends of coffee over light due to the pronounced flavor that dark roasted coffee retains. The consistency of flavor is easier to maintain with darker roasts because they have more distinct flavor than lighter roasts. There are 3 variations of roasted coffee: Blonde – Subtle and mellow Medium – Smooth and balanced Dark – Bold and robust lemonade and very berry hibiscus. The coffees come in seasonal blends as well and are purchased from growers the world over.

Coffee is featured from such countries as Jamaica, Indonesia , Ethiopia, and Brazil to name a few (Coffee Menu). With coffee as the focal point of their business, Cataracts should continue to provide quality coffee that satisfies customers’ beverage needs. Place: Cataracts Store Placement Strategy Cataracts opened its first shop in Seattle in 1971 and stayed relatively small (under 100 stores) for approximately 20 years. Since then Cataracts has come to be the largest chain of coffee shops in the world, with more than 18,000 stores worldwide (Stations, Liz).

That being said, ever wonder why there are so many Cataracts stores in one area? There are many instances where one Cataracts is located only a few blocks away from another store. Schultz explained that the close proximity was to reduce the lines and waiting time for customers (Cataracts Cataracts Articles – Other Expert). Typically businesses, in saturating the market, attempt to spread out their locations to avoid cannibalizing sales. However, Cataracts’ strategy is the opposite. Schulz decided that the Cataracts strategy would be to blanket an area completely. Cataracts Cataracts Articles – Other Expert). Cataracts takes a strategic approach when choosing store locations, considering many factors, including community demand, traffic patterns, parking, demographics, location of competitors and the action of its own stores. Cataracts strategy is focused heavily on increasing the foot traffic in one specific part of town. Not only does this cut down on the company’s delivery and management times, but also shortens the waiting lines for customers at each individual store, and increases overall traffic. Cataracts Cataracts Articles – Other Expert) In summary, the unique Cataracts strategy concludes that multiple stores will better serve customer needs. Clustering its stores in one area helps Cataracts achieve market saturation (Mince, Bradley Seth). (Photo displays Cataracts Store locations in one square mile; 10 total within one square mile, Google Maps search for “Cataracts Near Back Bay Boston”). Promotion Cataracts does not use aggressive advertising in order to win customers or boost sales. They use sales promotion, which is less expensive and more controllable.

Cataracts has placed different types of sales promotion across the country and in other nations to motivate customers to purchase more, especially in times of economic hardships where people are budget conscious. Cataracts uses a variety of sales promotion. For example, Cataracts, at times, has offered their breakfast sandwiches for $2 when purchasing a regular cup of coffee during the week. Customers in Seattle, Miami or Chicago who have bought something in the morning at Cataracts were able to buy any cold drink for $2 after 2 pm (Cataracts: Chi. 8 Sales Promotion and Personal Selling). Sampling is another form of promotion that Cataracts uses. Cataracts gives away Coupons are also used by Cataracts in the form of “Happy Hour” when a specific drink is offered for half of its original price and “buy one and get one free” specials. Both of these are promotion tactics to attract new business and support connections with existing customers. Cataracts designed “My Cataracts Rewards” cards for their loyal customers in order o reward them for their Cataracts purchases.

When a customer purchases a Cataracts item, whether in corporate stores or in grocery stores, that carry their products, points are earned. When enough points are collected, they can be converted for products in the store. The relationship between the service provider and the customer, no matter the age, is the main focus of Cataracts. They use this strategy to create a strong customer base. Cataracts relates to their older customers through traditional types of marketing such as TV promotions, but also stays in touch with the ever growing popularity of social media.

By keeping up with social media be it Faceable, Twitter, etc. , Cataracts is able to attract younger customers and build their customer base. Through promotion of both demographical ages, Cataracts successfully retains and attracts new customers. Price Cataracts is committed to serving customers quality coffee. Their prices not only reflect the quality they serve but the changing quality costs. Cataracts purchases green coffee beans – beans that have yet to be roasted – on the “C” coffee commodity price.

The coffee market is subject to, Just as other markets are, supply and demand costs. Supply and price can be affected by multiple factors in the producing countries, including weather, natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels and political economic conditions” (Cataracts Corporation Fiscal 2013 Annual Report). These factors impact the price of coffee the end-customers pay. Cataracts formats their prices in order to influence customers to buy the medium (grandee) and large (vent’) sizes which have a higher profit margin.

For example, a tall, small, iced vanilla latte is $3. 65, the grandee is $4. 65, and the event is $4. 5. There is a more substantial difference in price between the tall and grandee than there is between the grandee and vent’. This is an effective pricing strategy and persuades customers to purchase either of the two latter sizes, in turn, increasing profits for Cataracts. Cataracts makes a point to bring the customers’ attention to the quality of coffee they offer. This is a differentiating factor between quick-service companies such as Dunking’ Donuts.

Cataracts believes that their customers, “choose among specialty coffee retailers primarily on the basis of product quality, service and convenience, as ell as price” (Cataracts Corporation Fiscal 2013 Annual Report). Their target market looks for quality coffee and is attracted by the physical evidence that they maintain the typical quick-service coffee alternatives. While Startups prices may be higher than quick-service establishments, they offer discounts to attract customers who believe their product is out of their price range. Cataracts offers multiple discounts for customers participate in.

Their new program, My Cataracts Rewards, mentioned in the “Promotion” section entices customers to buy more to get to a reward of a free item. They also offer free drinks on the customers’ birthday when they sign up for promotional emails. Both tactics are a new and common feature for food service establishments. Therefore the pricing strategies of Cataracts have allowed them to continue to have increasing profits annually. People Cataracts front-line employees are essential to their service. The brand, the customer experience and customer perceptions are all provided to the customer through the front-line staff.

They take the order, make and provide the product and even maintain the serviceable for all customer encounters. Management does not interact with the customer outside of a store manager. Cataracts invests in its employees in a few unique ways. Cataracts: Offers part-time employees a full range of benefits Has 18 different formal and informal recognition programs Invests heavily in training compared to competitors This combination of training, rewards and benefits aims to enable employees to serve customers effectively and encourages great service because of high employee satisfaction. First, the benefit plans.

Cataracts has a high usage of part time employees that are customer facing. To ensure their employees are satisfied (which is a key to customer distraction) they offer: health, dental, life insurance, retirement plans and even product discounts (Cataracts). Cataracts needs employees that will provide high service to satisfy the target market that views Cataracts coffee as a status symbol and pays a higher premium price compared to low cost alternatives. To compete on a higher price, premium brand and product, service that meets expectations, in line with the price, is necessary to execute their strategy.

Cataracts appears successful at this as they have employee turnover 120% lower than the industry average and an 2% employee satisfaction rate (Cad, Marilyn). These statistics support the belief that their employee benefit plans, though costly, provide a high return. Secondly, Cataracts has rewards systems that encourage employee behaviors and reinforces their training. They have 18 recognition programs that vary from informal social recognition to bonuses for eligible employees which are tied to performance drivers of customer experience success. Lastly, Cataracts invests heavily in training.

All baristas in their first 2-4 weeks encounter training that is designed to be customer focused. All employees are cross- rained not Just on Job functions, but additionally on knowledge of coffee, customer service and retail service to name a few (Training Workers). They understand that the customer experience is influenced by more than Just product, and thus invest in training around communication to enhance employee skills. Additionally, they utilize precise standards for measurements of quality and time that helps to standardize the service quality (Training Workers).

Precise standards, introduced from the beginning of the Job through training, help to mold employee expectations that meet customer expectations. For an organization their size they need to ensure the customer experience and product are as consistent as possible as customers will visit numerous locations even within the same city. Physical Evidence A differentiating factor that aids customers in their decision in choosing an establishment is the physical evidence that a company displays. These include everything from the storefront, the interior environment, and the website. The physical evidence of service includes all the tangible representations of the service such as brochures, letterhead, business cards, reports, signage, equipment, and web ages. Physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organization’s purpose, the intended market segments, and the nature of the service” (Chatham, 26-27). Cataracts has physical evidence in both its exterior and interior that cue the customer to expect quality coffee. The exterior physical evidence consists of the building itself, the signage, and parking lots.

The buildings are esthetically attractive and easily identifiable with the Cataracts green awning and recognizable symbol. The green on the outside of the alluding assure that coffee lovers are in the right spot for their caffeine needs. Shrubberies on the outside of the buildings are kept neat and represent Cataracts as a clean and established company. Attached to some of the buildings are parking lots. While they vary in size, and some buildings include a drive-through option, they provide the option of customers to stay and relax while inside. The interior of all Startups stores consists of the company theme colors, beige, green, and black.

These colors are consistent through all store locations and represent a accompanied uniform approach. Inside, customers experience the ambiance of Cataracts which consists of dim lighting, comfortable cushion seating, technological attractions and soft rock music. The dim lighting signals to customers that this is a place of relaxation and a place where they can unwind before work, during a lunch break, or after work. The lighting invokes a calm setting and is enhanced by the the customer is invited to stay at Cataracts while enjoying their coffee.

Cataracts’ strategic role with regards to serviceable is to become the socializes and, “To encourage this type of socializing, these Cataracts locations have comfortable lounge hairs, tables, and Wi-If setup to encourage customers to interact and to stay longer” (Chatham). By creating this type of setting, Cataracts is hoping that the customer will not only stay to enjoy their coffee but will purchase additional items. The aroma of the store entices coffee lovers to linger. By using green coffee, stores roast coffee onsite and create an aroma that is pleasant and attractive.

Cataracts has an inviting ambiance with comfortable seating as compared to competitors of quick- service establishments that have minimal seating, chairs made of hard materials, bright lights and a rushed atmosphere. Customers that dwell in the store while enjoying their coffee are usually accompanied by laptops or smartened. Cataracts offers customers free wireless internet as a complimentary service. In addition to internet, they are installing wireless charging stations because they understand their customers’ needs for technological charging outlets. Stores will be equipped with ‘Powerboat Spots’ – designated areas on tables and counters where customers can place their compatible device and charge wirelessly’ (National Roll of Wireless Charging, by Durable Powerboat, Begins in Cataracts Stores I Cataracts Newsroom). Cataracts has kept up with changing customer needs by introducing this attraction. Part of creating a relaxing atmosphere is the addition of soft music to lull customers into a peaceful state of mind. “What would the coffeehouse be without great music? Well it wouldn’t be Cataracts, for one thing.

We’re Just as passionate about music as we are about coffee. That’s why we handpick all the tunes you hear in our stores” (Entertainment). This completes the experience of Cataracts for customers that reside in Cataracts for any amount of time. In addition to the physical interior and exterior of Cataracts, there is also a website hat is informative and current. The website is quick to alert customers to new offerings such as drinks, rewards programs, and products. The discernible Cataracts green is evident when site users highlight over specific text.

The site is easy to navigate and applicable for a wide range of customer demographics. Cataracts has thought of the smallest detail to make their physical evidence, and presence, unilateral and forthcoming as an unbeatable strategy. Process / Procedure Cataracts’ process has the following three characteristics: A standardized flow of activities A simple number of steps for employees and customers Low customer involvement to provide service For Cataracts, standardizing the flow of activities is important in delivering reliable and responsive service which generates a high service quality.

This is tied back to their HER policies and employee training which is customer based and modeled on customer expectations and understanding the company standards modeled on customer expectations. For that reason Cataracts standardized activities is the appropriate action for delivering their service. Additionally, there are a limited number of steps for customers and employees. Customers order and pay through one employee interaction and are provided their order through another interaction (at times could be the same employee).

For employees, the steps for processing the order and payment should be relatively unchanged; however, the complexity in producing the order can vary per request. Still, compared to a restaurant, or fuller menu alternatives, the steps are minimal. The serviceable is designed to allow customers to add their own dairy and sugar additions upon receiving their order. This contributes to faster service and a smaller number of activities for employees, all of which contribute to improving expensiveness.

By limiting the number of steps, employees can focus on the customer experience and less on Job duties, as well as, provide timely service in an industry that requires quick order delivery. This again is an appropriate strategy for service design as it allows Cataracts to scale the design more efficiently because there is replication with fewer steps. The strategy focuses on customer interactions with a small number of employees which are well paid, rewarded and trained. All of these factors contribute to making the buying process simple and pleasant for customers. Conclusion

Over all, Cataracts has a successful service marketing plan. Through an understanding of their target market, they are able to promote their products to the consumer with an awareness of superior service and product quality compared to competitors. Their location and physical evidence further entices customers to enjoy the Cataracts experience. Cataracts’ locations saturate high traffic areas in order to increase community awareness. With multiple locations, the store should be kept clean and tidy. This presents a uniform presence to the customer and increases confidence in the product and company.

Understanding the customer not only in their desires but in the process that they must go through to receive service is important for the firm. Cataracts makes this process as simple as possible for the customer and the employee. By doing this, service is delivered faster and increases customer satisfaction. Cataracts has successfully created a service strategy that provides coffee to the customer better than competitors. They are known for their quality and variety in coffee products and have composed themselves in such a way that the customer comes to depend on them for their daily coffee needs. Appendix SOOT Analysts

Characteristics of the business that give it an advantage over others Weaknesses Characteristics that place the business at a disadvantage relative to others Buying green coffee allows them to roast to Cataracts standards More expensive than quick- service establishments Uniformity throughout all communication, I. E. Website, stores, employees which leads to brand recognition Other companies have similar recognition, I. E. Dunking’ Donuts Multiple locations in close proximity to each other My Cataracts Rewards entices customers to continue to purchase to receive reward Other companies are developing similar reward programs

Relaxed environment entices customers to stay which may lead to purchase of more product Higher quality coffee compared to competition Opportunities Elements that the project could exploit to its advantage Threats Elements in the environment that could cause trouble for the business or project Adding charging stations to stores understanding that some customers dwell for long periods of time with electronic devices in tow Competitors that offer similar atmosphere (comfy seating and electronic outlets) but at a cheaper product cost Expanding their market reach to offer alcoholic beverages to their evening customers