Services Marketing Assignment Case Study

Services Marketing
Case Study – Starbucks:
Brewing More Than Just Coffee
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Is Starbucks a product or a service? Justify your answer.
Starbucks cannot be defined as only a product or a service, as the
company focuses around a core product but also displays intangible
service qualities in coherence with said product. Starbucks aims to appeal
to a consumers 5 senses of sight, sound, smell, taste and touch through
their products, service and atmosphere.
To begin with, product is defined as “the core output (either a service or
manufactured good) produced by a firm.” (Lovelock and Jochen Wirtz,
2011). This is generally a tangible object. In relation to Starbucks, their
coffees, food, cups etc. are classified as their products. Originally when
Starbucks was launched in 1971, it began solely as a retail store selling
the most premium coffee brewing equipment, including ‘the high-altitude
Arabic bean’. This was an extremely successful product as it was new and
different being one of the first quality coffee retailers introduced to the
American market. Starbucks continues to provide quality products but has
also incorporated a service aspect to the business to better appeal to
consumers. The tangible aspects of Starbucks’ business are considered to
be the ‘product’.
Additionally, Starbucks delivers quality service to its consumers. (Kotler et
al., 2017)
defines a service as “any act, performance, or experience that one party
can offer to another and that is essentially intangible and does not result
in the ownership of anything, but nonetheless creates value for the
recipient.” Starbucks displays this in their employee to customer
interactions and other intangible aspects of their business. The service
feature of Starbucks was introduced in 1982 when Howard Schultz was
hired as Marketing Director of the company. As more and more people
started acquiring a taste for gourmet coffee, Schultz decided Starbucks’
future was not in selling coffee brewing equipment, rather offering
customers an experience when visiting the stores. This was an evident
success, Starbucks grew from only 17 shops in Seattle to around 6000 in
2002 and now operate in more than 75 markets with over 24,000 stores
(Starbucks, 2019). Services are generally added to compliment a product
and create more value (Balin and Giard, n.d.), which Starbucks have
ultimately done. With over 346,000 employees worldwide (Forbes, 2020),
Starbucks provides an exceptional service through extensive product and
service training of employees.
Moreover, Starbucks improved both their tangible and intangible aspects
of the company through becoming a ‘customer intelligent company’. A
customer intelligent company is a company that “understands the value
of connecting with a customer’s mind as well as their wallet and that to do
the former, you will improve your results in terms of the latter”
(Pennington, 2016). Starbucks have proven to be a very flexible company,
adhering to the market place which they are operating in. Over the years
Starbucks have grown their business by being innovative and introducing