[Solved] BMAN70172 Retail Marketing Report on Starbucks - University of Manchester

Introduction
Starbucks was founded by Gordon Bowker, Jerry Baldwin, and Zev Siegl, who
opened the first shop in 1971 in Seattle, Washington (Lemus et al., 2015). Currently,
Starbucks operates over 32,000 shops in 80 countries worldwide and is the leading
coffee bean roaster and speciality coffee retailer globally (Starbucks, 2023a).
Starbucks' products are not limited to food and beverages but also include seasonal
mugs and brand derivatives. Not only do they sell high-quality coffee beans but also
handcrafted coffee, tea and other beverages, as well as a variety of high-quality food
products through its shops (Starbucks Corporation, 2022). In addition to the flagship
Starbucks Coffee® brand, the company also sells goods and services under the
following trademarks: Teavana®, Starbucks Reserve® and so on (Starbucks, 2022).
Starbucks' core service is to provide coffee and food with unrivalled hospitality to
their customers (Starbucks, 2023b) who are primarily high-income adults.
Democratic segmentation reveals Starbucks’ target market to include 18-24 year
olds and 25-40 year olds from mid- to high-income households (Haskova, 2015). In
the UK, Starbucks' main competitors are chain-brand coffee shops, such as Pret-a-
Manager, Costa Coffee, Caffe Nero, and so on.
It is vitally important for all successful companies to identify possible future business
risks. With regard to Starbucks specifically, these could revolve around continuing to
meet the evolving needs of their consumers. The willingness of customers to buy
may decline if these needs are unmet and as their lifestyles and drinks preferences
continue to change. For instance, modern consumers are becoming steadily more
health conscious and opting for more nutritious foods and beverages (Liu et al.,
2022). Although Starbucks offers product customisation and calorie counts
(Starbucks, 2020), customers will only make purchases when these customised
drinks meet their requirements.
Ensuring the provision of high-quality products is one issue, but another equally
important one is the retail environment. Coffee shops are not only a place to buy a
drink but also a venue where people can meet to study or work together. If people's
everyday space can be divided into home, office and other spaces (Liu et al., 2021),
Starbucks has created an in-between state of 'not home and not office’ (Mi et al.,

2021), which they refer to as the ‘third space’ for their consumers. The retail
environment provided by Starbucks influences their customers' likeliness to stay and
to purchase more as well as their level of satisfaction. Therefore, it is crucial that
Starbucks stay connected with its consumers’ preferences and are willing to update
and improve its retail environment accordingly.
According to Starbucks' official statistics, they opened 318 shops in the UK in 2022
(Starbucks Corporation, 2022). The service levels offered in each of these offline
stores can differ substantially. Therefore, monitoring individual stores’ standards of
service and improving the quality of customer care wherever necessary is a further
issue that Starbucks may need to address in the future.
This paper will evaluate the retail environment and service provided by the Starbucks
coffee shop located in central Durham and subsequently suggest recommendations
for improvements.
Retail environment evaluation
The stimulus, organism, response (S-O-R) model was originally formulated by
psychologists Mehrabian and Russell (1974, cited in Chen et al., 2022), who
explained the effects of environmental stimuli on consumer emotions and behaviour.
Belk’s (1975) taxonomy classified situational dimensions of the ‘servicescape’ which
are physical surroundings, social surroundings, temporal perspective, task definition,
and antecedent states. The physical surrounding refers to the most obvious features
of a situation (Belk, 1975). For instance, in a physical shop, these features can
include decoration, sounds, lighting and scents (Chen et al., 2022). This section of
the paper will concentrate on evaluating the retail environment of the central Durham
Starbucks based on the two theories mentioned above.
The following observations regarding Starbucks’s retail environment are based on
both first-hand information and secondary information gathered from the internet.

The Durham branch of Starbucks is decorated in warm colours and contains
predominantly wooden furniture complemented by soft and warm lighting, as
demonstrated in the photograph below which was taken in the store. Jang and
Namkung (2009) found that the interior design, layout, colour and lighting of a
restaurant created positive emotions in customers and that these emotions had a
positive impact on customers' behavioural intentions. The combination of warm white
lighting with warm accent lighting (orange) can create a comfortable atmosphere
(Kuijsters et al., 2015) and the use of more saturated LED lights results in a less
stressful, more comfortable environment (Wang et al., 2014). Since the lighting
design utilised in the Durham branch of Starbucks creates a comfortable and lively
environment, according to the theories above, it can be considered to assert a
positive influence on their customers.
Source: https://goo.gl/maps/2KUj7ak7aEKT7Z8a8
Moreover, the ceilings in Starbucks are higher than those commonly found in homes
and offices which may contribute to increased creativity and concentration. Research
at the University of Minnesota found that spaces with higher ceilings promote the
concept of 'freedom', while spaces with lower ceilings promote the concept of
'restriction' (Meyers-Levy and Zhu, 2007). The Starbucks store has been intentionally
designed to engender a sense of ease and comfort in their customers.
Finally, the store’s aroma should be noted since the smell of coffee often emerges as
one of the most pleasant scents (Ayabe-Kanamura, 1998, cited in Spence and

Carvalho, 2020). The review from Rimkute et al. (2016) concluded that scent could
influence customers' perception of the retail environment, their satisfaction level, the
time spent in the shop, impulse purchasing and so on. The scent in Starbucks could
affect customers positively.
However, not all perceptions of the Durham Starbucks store are positive, for
instance, there is no background music, and furthermore, it has been described as
noisy. One online review site (RestaurantGuru.com, 2023) criticised the shop for its
noise levels with one reviewer saying: "very noisy still cos even those students not
working sitting for long time cuddling cup of coffee and talking forever”. Baker et al.
(1992, cited in Jang and Namkung, 2009) argued that music is a positive cue that
stimulates mood and behaviour in the environment. Moreover, Spence and Carvalho
(2020) suggested that auditory factors such as music affect the customer's coffee
experience. The absence of music and the unpleasant noise levels in this store could
affect some customers' perceptions of the retail environment and consequently
negatively impact their consumer experience.
Secondly, the store's layout makes the queuing and waiting areas crowded and
untidy. The space where customers have to wait together to receive their drinks
orders is relatively small and confined when there are no seats available. One
customer commented on the online review site - RestaurantGuru.com (2023) that
"they had a mess of stuff blocking chairs and making the place look untidy ". This
cramped layout will also negatively affect the customers' perception of the store.
To summarise, the physical features of the retail environment offered by the Durham
branch of Starbucks, such as the aroma, the decor, and the lighting, are pleasing to
customers and create a cosy atmosphere that positively influences their response.
However, the noise, layout and no music of the store detract from the ambience and
may negatively affect consumer perceptions.
Recommendations for improving the retail environment
Having evaluated the atmosphere created by the Durham branch of Starbucks, some
recommendations can be drawn regarding changes which would improve the store’s
ambience if implemented. This paper’s first recommendation would be to introduce