Case Study: Starbucks - Product vs. Service & Service Marketing

This case study examines Starbucks to determine whether it operates as a product or service company, concluding that it functions as both. The analysis justifies this by exploring the tangible and intangible elements offered to customers, such as coffee and wireless internet. It further applies service marketing principles, emphasizing the importance of the service marketing mix (people, process, physical evidence) to achieve greater success. The study highlights the need for companies to stay current with market trends, using Starbucks' innovations like Starbucks Express and Starbucks cards as examples. Ultimately, the case study underscores how service marketing can foster customer loyalty by consistently delivering evidence of value and superior service.

Starbucks Case Study
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Question one: Is Starbucks a product or a service? Justify your answer
Starbucks is both a service and product company at the same time. The nature of the
business operation that the company runs qualifies it to be both. By being a service it entails
most work being done by its employees for the benefits of the customer. Starbucks is known
around the globe due to the nature of service that people receive. When customer queue to buy
coffee, they are not buying the brand but rather the quality of the service that they receive. This
means that the element of customer care from the way the coffee is brewed to her it is sold to the
customer defines the service that the firm offers. Since the company offers. Thus the services
that the company offers are the ones that connect the consumer to the service brand. The services
that the customer receives like the coffee, Starbucks express and the wireless internet are
services that connect the customer to the brand that the company runs but they do not allow the
customer to own them. Further, services are based on the relationshop that the customer receives
when engaging with the company (Johnston & Clark 2008, p. 12). This can be seen through the
innovations that the company has taken like the Starbucks express, starbucks cards and the
wireless internet. All these are used used to increase customer satisfaction and create a better
relationship.
According to Moeller (2010, p. 361) products are defined by variability. This is because
despte the fact that the coffee and other products that the compay offers are made the same way.
There is no guarnatee that the product will remain the same since the Starbucks coffee itlself has
been evolving and the customer is not sure if the coffee will taste the same forever. This
variability element makes Starbucks a product comoany rather than a service company. On the
other hand, the element of sepratbility allows people to walk with the coffee that they buy from
one location to another and they are not forced to take it from one place. When one buys the
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coffee, the element of ownership applies since the individual can transfer the coffee from one
person to another. Products are owned by the purchaser once an exchange has been made.
When Starbucks produces its coffee, it seeks to fulfilla need or want for the customer.
People line up in the morning at Starbucks shops because they want to satisfy their need to drink
coffee. This means that they are loyal to the brand and can compare the quality that they get with
others. This means that the customer can feel the impact of the product immediately when they
use it (Axelsson 2008, p. 5). When one has a need for coffee and they drink it, they feel the
satisfaction as they sip the coffeee slowly. Therefore, Starbucks falls in the category of both a
service and a product since it offers both tangible and intangible elements to its customers.
Question two: how companies can apply the principles of services marketing (such as levels
of product and service value) to achieve greater success
Edvardsson, et al. (2008, p. 85) states that service marketing is business to customer and
business to business services through a marketing mix to ensure that organizations excel. The
strategy has been changing due to the way marketers are currently approaching the concept and
the role of consumers in achieving service delivery. One way in which service marketing
principles can be used to improve the organization is through proper use of the service marketing
mix. Today, the mix has seven P’s including people, process and physical evidence. Since the
nature of customers has been changing, marketers need to ensure that the people they work with
as a service providers have the relevant knowledge and performance to deliver the required
services (Lovelock, et al. 2011, p. 14). With the advent of information technology, customers can
access information anywhere that allows them to understand the nature of the product that they
receive from the organization. Lastly, Tan & McAloone (2006, P. 3) adds that physical evidence
is a customer testimonial that allows businesses to maintain existing customers and get new
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customers. This is the expectations that customers have over a particular product that they
purchase. This is the strategy that is used to retain customers since when they go to a competitor
and they fail to get the physical evidence then they come back. For example, Starbucks sells only
the finest coffee brewing machine. Then as time went on they added service tangibility by using
brand name, packaging and styling that makes the customers feel comfortable with the brand.
The principle of staying current requires organizations to keep with the trends that exist
in the market. As technology changes, new innovations come up that define the way business has
to be carries out. This is an evolutionary requirement that each organization needs to work on to
ensure that it meets the current trends in the market (Bianchi, 2011, p. 286 (Edvardsson, et al.,
2008)). For example, to catch up with other businesses, Starbucks is offering its customers the
Starbucks express component that allows them to order pre-order and prepay for the beverages
that they want and at the same time the Starbucks cards through the expresso machine to speed
up service delivery and payment.
According to Alipour & Darabi (2011, p. 3)When the four initial P’s are integrated with
people, process and physical environment, then the customer experience becomes the center of
the service marketing strategy that the company adopts. Since service marketing focusses on
ensuring that the customer understands the benefits that they receive from the product. Then the
benefit that service marketing offers the organization is a repeat customer who prefers the
products and service they receive to those of other competitors. Therefore, service marketing has
to ensure that new ways are used to give the customer evidence of the products that they will
receive when engaging with the company. For example, for Starbucks, customers understand that
it is the definition of the finest coffee that they can ever get. What service marketing requires is
to build on the evidence that has existed all the time that the company has been in business.
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References
Alipour, M. & Darabi, E., 2011. The role of service marketing ,ix and its impactt on marketing
audit in engineering and technical service corporations. Global Journal of Mnagaement and
Business Research, 11(6).
Axelsson, K., 2008. Exploring Relationships between Products Characteristics and B2C
Interaction in Electronic Commerce. Journal of Theoretical and Applied Electronic Commerce
Resear, 3(2), pp. 1-17.
Bianchi, C., 2011. Inward internationalization of consumer services: lessons from Australian
firms. Journal of Services Marketing, 25(4), pp. 282-293.
Edvardsson, B., Holmlund, M. & Strandvi, T., 2008. Initiation of business relationships in
service-dominat settings. Industrial Marketing Management, 13(1), pp. 80-97.
Johnston, R. & Clark, G., 2008. Service Operations Management: Improving Service Delivery.
s.l.:Prentice Hall.
Lovelock, C. H., Vandermerwe, S., Lewis, B. & Fernie, S., 2011. Services Marketing. Edinburg
Business School: Heriot-Watt University.
Moeller, S., 2010. Characteristics of services – a new approach uncovers their value. Journal of
Services Marketing , 24(5), pp. 359-368.
Tan, A. & McAloone, T., 2006. Characteristics of strategies in product/service-system
development. Dubrovnik - Croatia, s.n.
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