Analyzing B2C: Critical Thinking on Contemporary Business Issues

This report provides a comprehensive analysis of business-to-consumer (B2C) markets, contrasting them with business-to-business (B2B) models and using Starbucks as a primary example. It discusses the advantages and disadvantages of the B2C model, Starbucks's demographic reach, sales volume, and business strategies. The report explores the differences between B2C and B2B firms, highlighting the complexities of purchase decisions in B2B contexts. It examines traditional business models in B2C markets, the impact of Generation Z, and the process of innovation within traditional B2C firms like Starbucks, including issues faced and the adoption of crowd sourcing. The report further discusses the adaptability of traditional B2C firms in the modern marketing environment, implications for organizational structure, and the emergence of new firms working with external groups, concluding with a reflection on the organizational structure of traditional firms.

Running head: CRITICAL THINKING FOR CONTEMPORARY BUSINESS ISSUES
Critical thinking for contemporary business issues
Name of the student
Name of the university
Author Note:

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Executive summary:
This report deals with two business-marketing theories and has identified the differences
between them. The theories are a business-to-business and business-to-consumer theory. The
advantage and the disadvantages of the theory have been pointed out in this case and choose
Starbucks as an example of the business-to-consumer market model. The reasons for
selecting this company has been discussed under the report and the marketing analysis of the
two models are also being prescribed in a detailed way.

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Table of Contents
Introduction................................................................................................................................5
Reason for choosing Starbucks:.............................................................................................5
Starbucks:...............................................................................................................................5
Demographics:.......................................................................................................................6
Sales:......................................................................................................................................6
Volume:..................................................................................................................................7
Definition of B2C Markets.....................................................................................................8
Discussion..................................................................................................................................8
Difference between B2C and B2B firms and Markets...........................................................8
Purchase Decisions are made by a committee in B2B...........................................................9
Business Models of Traditional firms in B2C markets..........................................................9
Generation Z and their Characteristics.................................................................................10
Process by which innovation takes place in traditional B2C product and service firms.....13
Nature of innovation in Starbucks........................................................................................15
Issues faced by the company previously:.............................................................................17
Present issues:......................................................................................................................17
Differences:..........................................................................................................................18
Difference in between open and closed innovation:........................................................18
Difference in between old and new innovation:..............................................................18
Use of Crowd sourcing by different firms...........................................................................19

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Adoptability of the traditional B2C firms in the modern marketing environment..............20
Implications for Organizational Structure............................................................................21
Process by which new firms and Business Models have emerged work with external
groups...................................................................................................................................22
Implications of new firms in Organizational Structure, leadership and innovation process23
Implications for Organizational Structure of traditional firms............................................24
Conclusion................................................................................................................................24
Reference:................................................................................................................................26

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Introduction
Reason for choosing Starbucks:
Starbuck is the best example of B2C firm as it sells its products to the consumers directly.
The company has been incorporated in the year 1971 and since then the company is
professing its business successfully. The company is following the essentials of the B2C
market and offer its product to the consumer in both the ways (online and offline). The main
product portfolio of the company is based on the coffee, espressos, Fontana, sandwich and
other snacks. This report is covering the effectiveness of B2C market and the company is a
perfect example of this aspect. The company is following the brick and mortar model, even in
case of the international market and therefore, it can be treated as traditional B2C firm.
Starbucks:
Starbucks Corporation is originated in USA and head quartered in Seattle,
Washington. The company has been incorporated in 1971 and since then it has been serving
quality products to the customers directly and become very popular coffee destination in the
world (Starbucks Coffee Company 2018). It has been observed that the company has adopted
various policies for developed its base and the efforts has assisted the company to achieve the
place of most desirable coffee shop in the world. The company is very popular for selling the
roasted coffee, fresh cappuccino and espresso. The company has gained revitalized profits in
1980 when the whole country was affected by the economic downturn. The company follows
a matrix organizational structure, which is basically a combination of all the different
structures namely;
1. Functional Structure
2. Geographic based Division

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3. Product based Division
4. Teams
All the different information of Starbucks can be gained from its website and other
related articles (starbucks.com 2018). Starbucks can be linked with the B2C business as
the organisation sells its products directly to the customers. The fact that Starbucks have a
physical store present in most of the countries makes it possible for it to interact with the
customers. This provides opportunity for the company to continue with the business it
provides and helps in maintaining the satisfaction of the customers.
Demographics:
The company is professing its business for decades and it has been observed that the
products of the shop are in demand. The company has able to catch its consumer who
preferred all the flavored coffee and espresso a lot. However, the company has now become
an international company and it has opened several outlets all over the world. The products of
the coffee shop are preferred by every age of person. However, the people from age 20 years
to 30 years are mainly attracted by this. It has also been observed that the elder persons have
also a desire to taste the excellent flavor of the roasted coffee and espresso. People
irrespective of gender come to taste the products of Starbucks.
Sales:
Starbucks is one of the most reputed companies in the world and it is essential that the
company maintain its reputation in the market. The reputation of the company is such that it
provides opportunities for people to interact with the company at a close proximity. The
brand name of the organization helps it to attract people and thereby create an opportunity to
increase its sales. The report has it that the sale of coffee in Starbucks increases at a constant
rate every year (Starbucks Coffee Company 2018). The sales chart for the last 5 years shows

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that since 2013 Starbucks has seen a steady increase in the sales of the company. In 2013, the
sales were $14.8 billion but in 2017, the sales rate increased to $22.38 billion. This shows the
significant growth of the company and the manner in which it is popular with the people.
Figure: Sales of Starbucks (2013-2017)
(Source: Starbucks Coffee Company 2018)
Volume:
The report shows that Starbucks sells a huge number of coffees per day along with
other products such as cookies and cups. The volume of coffee that is sold by Starbucks
average between 2.916 to 2.946 billion cups (Starbucks Coffee Company 2018). This is an
important statistics given the fact that this particular report is based only on the sales of the
coffee in the physical stores. Apart from the physical stores, Starbucks also provide service
online which when put together increases the volume amount to more than 4 billion. Thus,
with a proper target market, promotion and exceptional brand image, Starbucks is one of the
best brands of Beverage Company that exists in the world. The three factors combine to
provide Starbucks with an opportunity to maintain its reputation in the business market.

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Definition of B2C Markets
B2C markets can be defined as the markets where the business organizations sell the
products and provide a wide range of services to the end users or customers. The products
and services provided by the business organizations are done directly without the use of any
medium in between them (Pai et al. 2015). The following types of market have both an online
and offline presence but B2C is generally used to determine the online mode of business
communication. B2C business played a key role in the large-scale development of the
commercial use of internet starting from the 1990’s era. The final customer in the B2C circle
is the consumer with a B2C business (Liu et al. 2017). Retail stores, other business
organizations like coffee shops, housecleaning services and restaurants are examples of B2C
markets. The sales cycle of the B2C markets are shorter than the other markets. For example
a customer looking for a particular product can easily search a website for that product
analyzes the reviews of the product and order it after careful determination (AlSheikh,
Shaalan and Meziane 2017). The purchases are made on an emotional basis and on the basis
of product and the price. The consumers often get confused if the products arrive to them
after a long process of different steps. This report will define the business model of Starbucks
and analyze the decision of the company to make it a B2C firm instead of B2B firm. The
benefit of the company will also be described in the report. The company is providing 30
blends of coffee, handcrafted beverages, brewing equipments, coffee mugs, and fresh foods
like sandwiches, salad, oatmeal and fruit cups.
Discussion
Difference between B2C and B2B firms and Markets
There is always a difference between the B2B and B2C markets as marketing to
business and marketing to consumer requires different approaches. However, both of the

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marketing targets the end users or the customers both of them have very deep differences
(Ghuman and Mann 2017). The B2B market is based more on logic rather than any emotion.
The cost of the sale for a business-to-business market is much more expensive and costly
compared to that of a business to consumer market. The business-to-business transaction
takes into consideration the involvement of more and more people in the business fold
(Iankova et al. 2017). People have a common feeling that the only difference between these
markets is the scale of the products and the size. On the other hand, in case of business-to-
communication system, there are no people working in between the business products and the
customers. All the products are directly sold to the customers. Some of the most common
differences are as follows:
Purchase Decisions are made by a committee in B2B
The purchases in a B2B market are much larger and involve the spending of a lot of
money. These are used by many a persons in the company. Therefore, a larger group decides
on the type of the product to be purchased by the company (Kim and Chun 2018). While in
case of B2C market, lots of money are not invested and as the products are directly sold to
customer, it does not need a larger section to take decision like the B2B firms.
Business Models of Traditional firms in B2C markets
The term B2C or business to consumer is a marketing model that particularly deals
with the company and consumer directly and there is no existence of other businesses in
between them. This is the main difference in between the B2C and the B2B business model.
Under the B2C model, most of the companies are direct deals with the consumers and they
become very popular in 1990. Michael Adrich has propounded the conception of this model
in the year 1979 where he has mentioned professing all the commercial transaction directly to
the consumers. In case of traditional firms, this model has extended the idea of shopping at
malls, eating at restaurants and pay-per-view processes (Liu et al. 2017). Starbucks is a

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perfect example of the B2C market as it offers its brewery to the customers directly. The
company is very popular for its good products and customer service. However, the concept of
the commercial transaction has been changed after the rise of internet system and this B2C
marketing model has introduced a custom of selling goods through the internet. Starbucks has
also changed its market segmentation process and introduced an option to serve the products
to the customers directly through online.
The traditional marketing aspect of B2C model can be termed as ‘Brick and Mortar’
and according to this model, the companies directly communicated with the consumers in the
form of street-side business (Joseph 2015). There were certain advantages in the Brick and
Mortar business schedule and response from the customers were high under this business
schedule. It was believed by the people that face-to-face interactions are more effective
compare to the other kinds of transaction. However, the situation has begun to be changed
after the invasion of the internet and the traditional model of B2C business has found it
difficult to compete with the web businesses like Amazon and Flip kart. It has been noticed
that near about 72% consumers are like to give a trial before buying any product (Ghuman
and Mann 2017). Therefore, Brick and mortar model is ideal for them. Instant gratification
has been made under this traditional business model of B2C. However, the operating cost of
this traditional model is very high and this portion has become one optimist point of web-
based market portals like Amazon.
Generation Z and their Characteristics
Characters like Generation Y, Generation Z, and Net Zen are certain demographic
cohort used to denote certain specific characters. Generation z is the successor of the
generation Y and much comfortable with current technologies and becomes a hard competitor
in respect of older staffs or cohorts (DaSilva and Trkman 2014). Generation Z is based on
mobile communication and it becomes more popular with the youths. By the wave of various

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social media, texting becomes the most effective communication mode of this generation.
The generation that has born from the year of 1995 is specifically known as Generation Z. It
is noteworthy to state that the considering the importance of Generation Z, Starbucks has
introduced an app so that the new generation can place an order or look into the menu option
directly from their mobile phone.
There are certain characteristics observed in Generation Z that can be categorized as
follows:
 The most obvious characteristic of Generation Z is that the followers of this
technology have different consumption habits compared to other generations.
According to an exclusive study made in the year 2015, it has come into the lights
that this generation is changing their taste over the media consumption habit.
 The second characteristics of this generation are that the followers of this
generation are not interested about products, they are interested in the experience
(Turner 2015). It has been found that the expectation level of this generation is
quite depending on various brands and the level of experience is also quite high
compared to the other generations. They are regarded as the most sophisticated
generation of all the times.
 Most of the followers of this generation are tech savvy and they can transform the
daily realities into digital basis (Ozkan and Solmaz 2015).
 They are giving much concentration over the global brands and borderless reality.
 Due to their strong attributive nature towards different kind of technologies,
generation Z are more flexible in the workplaces and they sustained the capacity to
work remotely.
 The traditional marketing skills have not attracted this generation and they are
looking for visual marketing tactics (Levit 2015). The skill set of this particular

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generation relies on the strategic application of the resources and the manner in
which knowledge can be implemented for the purpose of gaining an advantage in
the market. This helps in increasing the opportunities to be employed by reputed
organizations.
 The work life of the customers and the Gen Z people fluctuate based on the amount
of money they are receiving at work. Most of the time it is seen that the Gen Z
prefers to earn money by spending less time and effort in the workplace. This
casual nature is another characteristic that defines the people of this generation.
 The knowledge of the Gen Z people circulates around various types of information
that they receive in the market. This is mainly derived from the excess use of
internet and social media that provides the people with instant updates about the
occurrences in the market.
Thus, it can be said that the Gen Z population of the society form the core customer
base of Starbucks. The skill, knowledge and the work done by these people consist of the
target market of the company. Starbucks needs to identify the Gen Z along with other
customers so that it can overcome certain factors that may hinder the progress of the
company.
For example, the social factors of the company are identified keeping in mind the CSR
activities that are undertaken by it. The Generation Z customers form the core components in
the society and based on the responses provided by these customers in the social media,
Starbucks can manage its business. This can help Starbucks to continue with the social
welfare and the innovative nature of the business that it usually provides. The Gen Z can even
help in maintaining the changes in the organization. The recruitment of the Gen Z people can
help Starbucks to continue with making innovation in the company and rely on the
application of technology.