Services Marketing Paper Starbucks Essay Example
Services Marketing Paper Starbucks Essay Example

Services Marketing Paper Starbucks Essay Example

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  • Pages: 12 (3168 words)
  • Published: March 25, 2018
  • Type: Research Paper
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The Nilsson statement by Stardust's aims to build a sense of community and highlight the importance of coffee in establishing connections. Their mission is to inspire and nurture the human spirit by focusing on individuals, cups of coffee, and neighborhoods. To accomplish this mission and achieve their goal, they evaluate their services marketing mix. The needs of Cataracts' customers revolve around access to high quality coffee. Their marketing mix is designed to meet this need by strategically saturating store locations for convenience. They offer a premium product supported by strong brand equity, allowing them to charge higher prices compared to other convenience-based coffee providers. Their promotion includes incentives for new customers and loyalty rewards for existing ones. To compete with convenience-based sellers, Cataracts trains and employs happier and better-trained staff, making their service m

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ore appealing as a "third place." These strategies have helped Cataracts gain success, reflected in their 33% market share in the US.Cataracts' main target market is men and women between the ages of 25-40, accounting for 49% of its total business. This market segment's need is access to high-quality coffee beverages. Cataracts meets this need by providing convenient access to efficient service in a welcoming environment. By understanding their target market's needs, Cataracts continues to grow annually. They have created a variety of drinks that satisfy the desires of most coffee drinkers. Understanding the target market allows Cataracts to create specific services for the demographics they are trying to reach. Customers satisfy their coffee cravings with a large variety of quality brews from Cataracts. While the level of involvement is low, customer satisfaction is high. The main risk for customers is choosin

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a product with an unpleasant taste. Most customers buy for themselves and assume the roles of decider, purchaser, and user. However, they can be influenced by other customers and different preferences. To understand why customers choose Cataracts coffee over competitors, it is important to evaluate personal, psychological, cultural, and situational factors.

Cataracts has a customer base consisting of both men and women aged 25 to 40 with professional careers. The quality of the product and the perception that drinking Cataracts coffee is cool and trendy contribute to brand loyalty. The physical store locations, strategically placed in high traffic areas and close to each other, also influence customer purchases. While coffee buying is typically not a highly involved decision, customers who prioritize coffee quality will take the time to find a service provider that meets their standards. This choice between Cataracts and quick-service coffee establishments ultimately comes down to the value the customer receives from choosing Cataracts.

Cataracts faces competition from Dunking Donuts and convenience stores. While these competitors offer quick service, they do not match the same brand quality as Cataracts. Cataracts meets their market's needs by providing a higher quality brew and reinforcing it with their service and brand.

Cataracts charges a higher price than Dunking Donuts and other non-premium channels, such as convenience stores or home brewing. This pricing strategy aligns with the product category and target market. Lowering the price could jeopardize the perceived quality of their product, as price is an indicator of quality. Therefore, Cataracts' target market prioritizes a higher quality product, allowing them to successfully compete with a higher price.

Unlike their competitors, having a cup of coffee at Cataracts is an

experience. This experience involves enjoying a quality brewed coffee, tailored to your preferences, while relaxing in a comfortable atmosphere. Cataracts takes pride in this unique experience and uses it to differentiate themselves from their competition.

In terms of positioning, Cataracts considers 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 associate their product.Cataracts provides access to coffee beverages that meet the target market's desire for quality. The company focuses not only on the quality of coffee, but also on creating a pleasant environment for customers to wait and consume their products. They have been successful in creating a strong market presence by adapting their marketing mix to this positioning. Cataracts Coffee started as a premium coffee roaster and remains true to its roots. They grind and brew coffee on demand and discard any brewed coffee that has been sitting for longer than thirty minutes. Cataracts chooses to brew darker blends of coffee because they have a more pronounced flavor. They offer three variations of roasted coffee: Blonde, Medium, and Dark. In addition to seasonal blends, they source coffee from countries such as Jamaica, Indonesia, Ethiopia, and Brazil.Cataracts is a coffee-based business that aims to meet the beverage needs of its customers. They opened their first store in Seattle in 1971 and remained relatively small for about two decades, with fewer than 100 stores. However, Cataracts has now become the largest chain of coffee shops worldwide, boasting over 18,000 stores globally (Stations, Liz).

Despite this widespread expansion, one may wonder why there are often multiple Cataracts stores in close proximity

to one another. According to Schultz, the placement strategy aims to minimize lines and waiting times for customers (Cataracts Cataracts Articles - Other Expert). This approach deviates from the norm of businesses trying to spread out their locations to avoid sales cannibalization. Instead, Schulz decided that Cataracts' strategy should involve completely saturating an area (Cataracts Cataracts Articles - Other Expert).

When selecting store locations, Cataracts takes a strategic approach by considering various factors such as community demand, traffic patterns, parking availability, demographics, competitor locations, and the actions of its own stores. The primary goal of Cataracts' strategy is to increase foot traffic in specific parts of town heavily.

The implementation of Cataracts' unique strategy not only reduces delivery and management times, but also shortens waiting lines for customers at each store, ultimately increasing overall traffic (Cataracts Cataracts Articles - Other Expert).

Cataracts achieves market saturation by clustering its stores in one area (Mince, Bradley Seth). A photo displaying Cataracts store locations within a one square mile radius shows a total of 10 stores (Google Maps search for "Cataracts Near Back Bay Boston").

Instead of aggressive advertising, Cataracts opts for sales promotion as a cost-effective and controllable method to attract customers and boost sales. They have strategically placed various types of sales promotions across the country and internationally, with the aim of encouraging more purchases, particularly during economic hardships when people are budget-conscious (Cataracts: Chi.8 Sales Promotion and Personal Selling).

One example of their sales promotion strategy is offering breakfast sandwiches for $2 when purchasing a regular cup of coffee during the week. In specific locations such as Seattle, Miami, and Chicago, customers who made a morning purchase at Cataracts

could buy any cold drink for $2 after 2 pm. Cataracts also utilizes sampling as another form of promotion (Cataracts: Chi.8 Sales Promotion and Personal Selling).Cataracts utilizes various promotional tactics to attract and maintain customer connections. They offer coupons, including "Happy Hour" deals where specific drinks are sold at half price, as well as "buy one and get one free" specials. These strategies aim to generate new business and foster relationships with existing customers. Additionally, Cataracts created "My Cataracts Rewards" cards to reward loyal customers by granting them points for purchases made in corporate and grocery stores selling their products. Once enough points are accumulated, customers can exchange them for store products. Cataracts prioritizes the relationship between service providers and customers of all ages, employing traditional marketing techniques like TV promotions to reach out to older customers, while also embracing social media platforms like Facebook and Twitter to attract younger clientele. This approach enables Cataracts to expand its customer base across different demographics. Constantly adapting to social media trends, Cataracts successfully retains its loyal customers while attracting new ones. Committed to delivering quality coffee, Cataracts maintains competitive prices that reflect both the quality they serve and the dynamic nature of production costs.Cataracts Corporation purchases green coffee beans, which are not yet roasted, based on the "C" coffee commodity price. The price of coffee is influenced by various factors such as supply, demand, weather, natural disasters, crop disease, farm inputs and costs, inventory levels, and economic conditions in the producing countries (Cataracts Corporation Fiscal 2013 Annual Report). These factors ultimately affect the price paid by end-customers. Cataracts strategically sets their prices to encourage customers to buy

the medium (grandee) and large (vent') sizes, which have a higher profit margin. For instance, a tall, small, iced vanilla latte costs $3.65, while the grandee is priced at $4.65 and the vent' at $4.5. The price difference between the tall and grandee is greater compared to that between the grandee and vent'. This pricing strategy effectively persuades customers to choose one of the larger sizes, thereby increasing profits for Cataracts. Additionally, Cataracts emphasizes the quality of their coffee as a distinguishing factor from quick-service companies like Dunkin' Donuts.

Cataracts believes that customers primarily choose specialty coffee retailers based on factors such as product quality, service, convenience, and price (Cataracts Corporation Fiscal 2013 Annual Report). Their target market looks for quality coffee and is attracted to the physical evidence that they offer typical quick-service alternatives. Although Cataracts' prices may be higher than those of quick-service establishments, they provide discounts to attract customers who perceive their products as being outside of their price range. Cataracts offers multiple discounts for participating customers.

One of their new programs, My Cataracts Rewards, mentioned in the "Promotion" section, incentivizes customers to make more purchases in order to earn a free item. Additionally, they offer free drinks to customers on their birthdays when they sign up for promotional emails. Both of these tactics are common features among food service establishments. Thus, Cataracts' pricing strategies have allowed them to consistently increase profits annually. The front-line employees at Cataracts play a crucial role in providing the brand, customer experience, and customer perceptions. They take orders, prepare and serve the products, and handle any customer interactions.

Management does not engage with customers except through

store managers.

Cataracts invests in its employees through various unique strategies. Firstly, it offers a comprehensive range of benefits to its part-time employees, such as health, dental, life insurance, retirement plans, and product discounts. This is crucial for ensuring employee satisfaction and ultimately customer satisfaction. As Cataracts coffee is considered a status symbol, providing exceptional service is necessary to meet the expectations of the target market who are willing to pay a higher premium price. Cataracts recognizes the importance of high-quality service to compete successfully in this premium segment.

Additionally, Cataracts has implemented 18 different formal and informal recognition programs to reward and reinforce employee behaviors. This helps to maintain a highly motivated workforce that is committed to providing excellent service. Moreover, Cataracts heavily invests in training its employees, distinguishing itself from competitors. By combining training, rewards, and benefits, Cataracts aims to equip its employees with the necessary skills and knowledge to serve customers effectively.

These strategies have proven successful for Cataracts. The company has achieved an employee turnover rate that is 120% lower than the industry average and an impressive 2% employee satisfaction rate. These statistics demonstrate the positive impact of Cataracts' employee benefit plans, despite their costliness. Overall, Cataracts' approach to investing in its employees has created a satisfied workforce capable of delivering outstanding service.They offer 18 recognition programs ranging from informal social recognition to performance-based bonuses for eligible employees. Cataracts also prioritizes training, ensuring that all baristas receive customer-focused training in their first 2-4 weeks. Employees are cross-trained not only in job functions but also in coffee knowledge, customer service, and retail service. Training is also provided to enhance employee communication skills. The company utilizes

precise standards to measure quality and time, ensuring consistent service quality. These standards are introduced from the beginning of the job through training, aligning employee expectations with customer expectations. As customers may visit multiple locations within the same city, Cataracts recognizes the importance of consistent customer experience and product. Physical evidence, such as storefronts, interior environments, and websites, also plays a role in customers' decision-making process when choosing an establishment.The physical evidence of service, which includes brochures, letterhead, business cards, reports, signage, equipment, and web pages, serves as tangible representations of the service (Chatham, 26-27). This physical evidence allows the firm to send consistent and strong messages regarding its purpose, target market segments, and the nature of the service. Cataracts has physical evidence in both its exterior and interior that signals to customers that they can expect quality coffee. The exterior physical evidence consists of aesthetically attractive buildings with Cataracts' green awning and recognizable symbol. The green color on the outside assures coffee lovers that they are in the right place for their caffeine needs. The shrubberies outside the buildings are well-maintained, reflecting Cataracts as a clean and reputable company. Some buildings have parking lots, offering customers the option to stay and relax inside. The interior of all Cataracts stores follows a consistent color scheme of beige, green, and black, representing a unified approach.The ambiance inside Cataracts is designed to create a relaxing atmosphere for customers. This is achieved through 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 unwinding, whether it be before work, during a lunch break,

or after work. Customers are invited to stay at Cataracts and enjoy their coffee in this calming setting. Cataracts aims to become a social hub, encouraging customers to interact and stay longer. They provide comfortable lounge chairs, tables, and Wi-Fi setup to facilitate this socializing. The goal is for customers not only to enjoy their coffee but also to purchase additional items. The aroma of the store, created by roasting coffee onsite using green coffee, entices coffee lovers to linger. In contrast to quick-service establishments with minimal seating, hard chairs, bright lights, and a rushed atmosphere, Cataracts offers an inviting ambiance with comfortable seating. Customers who choose to spend time in the store while enjoying their coffee are often accompanied by laptops or smartphones. To enhance their experience, Cataracts provides complimentary wireless internet.Cataracts understands their customers' needs for technological charging outlets, so in addition to the internet, they are installing wireless charging stations. These stations, called 'Powerboat Spots', are designated areas on tables and counters where customers can wirelessly charge their compatible devices. This initiative is part of Cataracts' commitment to keeping up with changing customer needs.

To create a relaxing atmosphere, Cataracts also adds 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," says Cataracts' Entertainment division.

These additions, along with the physical interior and exterior of Cataracts stores, complete the experience for customers. Furthermore, Cataracts has an informative and current website that keeps customers

updated on new offerings such as drinks, rewards programs, and products. The website features the distinct Cataracts green color scheme when users highlight specific text. Additionally, the website is designed to be easy to navigate and appeal to a wide range of customer demographics.Cataracts has implemented a meticulous approach to ensure their physical evidence and presence are consistent and effective. Their strategy is unbeatable as it follows a standardized flow of activities, involves a simple number of steps for employees and customers, and requires low customer involvement in the service process. Standardizing the flow of activities is crucial for Cataracts as it enables them to provide reliable and responsive service, leading to high service quality. This is aligned with their customer-based HER policies and employee training, which are designed based on customer expectations and company standards. Consequently, standardizing activities is the most suitable approach for delivering their service. Moreover, both customers and employees have a limited number of steps to follow. Customers interact with one employee for ordering and payment, and another for receiving their order (sometimes the same employee). Employees, on the other hand, have relatively consistent steps for processing orders and payments, although the complexity in order production may vary depending on the request. Nevertheless, compared to restaurants or menus with extensive options, the steps involved are minimal. The serviceable is designed for customers to customize their order with dairy and sugar additions upon receiving it.The inclusion of has made it difficult to understand the text provided. However, a possibleand unified version could be:

Implementing a streamlined approach contributes to quicker service and reduces the workload for employees, ultimately improving efficiency. By

minimizing steps in the process, employees can prioritize customer experience and provide prompt service, which is especially crucial in industries requiring swift order delivery. This strategy allows for the efficient scaling of design as it involves replication with fewer steps. The focus is on customer interactions with a select group of well-paid, rewarded, and trained employees, creating a simple and pleasant buying process.

Overall, Cataracts has a successful service marketing plan that caters to its target market by emphasizing superior service and product quality compared to competitors. The strategic placement of their stores in high traffic locations also helps increase community awareness. Keeping the multiple locations clean and tidy creates a consistent image for customers and instills confidence in both the product and the company.

Understanding the customer's desires and the process they must go through to receive service is crucial for the firm. Cataracts ensures this process is simplified for both the customer and the employee, resulting in faster service delivery and increased customer satisfaction. Cataracts has effectively developed a service strategy that surpasses competitors in providing coffee to customers. They have established a reputation for offering high-quality and diverse coffee products, positioning themselves as the go-to choice for their customers' daily coffee needs.

Appendix SOOT Analysts

Characteristics of the business that give it an advantage over others Weaknesses that place the business at a disadvantage relative to others Buying green coffee allows them to roast to Cataracts standards but is more expensive than quick-service establishments. There is uniformity throughout all communication, i.e. website, stores, and employees, which leads to brand recognition. However, other companies such as Dunkin' Donuts have similar recognition.

There are multiple

locations in close proximity to each other, and the My Cataracts Rewards program entices customers to continue purchasing to receive rewards. However, other companies are developing similar reward programs.

The relaxed environment entices customers to stay, which may lead to the purchase of more products. Additionally, the business offers higher quality coffee compared to its competition.

Opportunities that the business could exploit to its advantage Threats that could cause trouble for the business or project include adding charging stations to stores understanding that some customers dwell for long periods of time with electronic devices in tow. However, there are competitors that offer a similar atmosphere (comfy seating and electronic outlets) but at a cheaper product cost.

Another opportunity is expanding their market reach to offer alcoholic beverages to their evening customers.

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