MG526 Customer Experience: Starbucks Case Study Report, 2019-20

This report provides a comprehensive analysis of Starbucks' customer experience. It begins with an introduction to the concept of customer experience and its importance, followed by a detailed overview of Starbucks Corporation, its market position, and its mission statement. The report delves into the demographics and attitudes of Starbucks customers, examining factors that contribute to brand loyalty and customer satisfaction. It explores various models and theories of customer experience, applying them to the Starbucks context. Furthermore, the report presents a demonstration of customer manifestation audits, offering insights into customer perceptions. Finally, the report concludes with recommendations for Starbucks to improve its customer experience, addressing key areas for enhancement and providing actionable strategies for the company to consider.

Customer Experience
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Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Starbucks Corporation:................................................................................................................3
Customers of Starbucks Corporation:..........................................................................................4
Attitudes of customers of Starbucks Corporation to the brand:..................................................6
Mission statement of Starbucks Corporation:..............................................................................6
Demonstration of audit of manifestation of customers:..............................................................7
Models and Theories of Customer experience:...........................................................................8
Recommendations for Starbucks to improve customer experience:............................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Customer experience refers to the perception of the customer of their experience with any
brand, product or organisation. Customer experience is not just a one-time thing and every
interaction between the business and a customer has an impact on the customer experience.
Starbucks Corporation is one of the biggest coffee house in the whole world and delivers its
users a premium and rich coffee dirnking experience. This project report aims at understanding
the process of customer experience of Starbucks and analysis of theories of customer experience
with an organisational context of Starbucks (Tu and Chang, 2012). The report also aims to
understand the mission and the vision of the organisaiton with respect to improving customer
service. At last, the report aims to provide some suggestions and recommendations to the
manageement of the company on how can they improve the positive aspect of customer
experience for their customers.
TASK
Starbucks Corporation:
Starbucks is an American company which was founded in the year 1971 in Seattle, WA
and is one of the largest and most popular retailer and manufacturer of premium coffee drinks all
around the world. The company has more than 19,500 licensed stores in 62 countries all over the
world. The industry in which Starbucks operates is a rapidly growing industry and has witnessed
major growth in the recent past due to a changing customer preference towards a better lifestyle.
Starbucks is a dominating brand in the industry with a market share of 36.7% which is more than
any of its competitors such as Dunkin’ Donuts, McDonald’s etcetera. Starbucks and dunking
donuts together make up more than 60% of the industry which shows the dominance of these big
players in the market (Susanty and Kenny, 2015). The company has positioned itself as a very
premium brand in the market. The aim of the company is to deliver the best and premium coffee
experience to the customers and the company has strategically planned partnerships with big
corporations to sell Starbucks coffee at workplaces. One of the first company to provide in-store
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internet facility to the consumers is Starbucks which helped the company to build an image of
technologically advanced coffee house where users can have a rich and premium experience.
Starbucks is definitely the most popular and most recognized brand in the coffee industry and
comes at a rank of 91 in the top global brands. This shows the image and brand reputation of the
company associated with a premium and rich experience for the customers. One of the key factor
determining the reputation and goodwill of Starbucks in the industry is the unconventional
strategies for customer experience and all stakeholders’ experience (Sheng, 2012). Starbucks has
a very strong and positive relationship with the farming community which are the suppliers of
the company and the elimination of middlemen has made it possible for the company and the
farmers to be in a fair deal which improves the brand image of the company. Starbucks comes
out as a highly reputable and consumer-centric brand with high ethical and moral business
values.
Customers of Starbucks Corporation:
Starbucks is the leader in the coffee industry with a revenue approximately equal to 26.52
billion U.S. dollars in the year 2019. As per the company reports, around 75 million customers
visit the U.S. stores every month. These large scale operations makes it interesting to look at the
customer demographic of Starbucks and analyse the highest contributing customers. Here is a
graph which shows the customer trends of Starbucks
(Source: Internal Research June 2010)
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There are many conclusions which can be drawn from the above pie-chart which shows the
customer demographic of Starbucks. As per the chart, about 49% of the revenue of Starbucks
each year comes from the age-group of 25-40 years old customers which shows and represents
the target customer segment of youth and millennial generation. About 40% of the revenue
comes from the young adults aged between 18-24 years. Together combined, about 89% of the
revenue of the company is majorly coming from customers aged between 18-40 years of age. It
is also due to the industry in which the company is operating is more encouraging and attracting
to the people who are young and are often looking for such rich and premium experiences.
However, walking into a Starbucks store, one might encounter a large part of the customers to be
people generally aged above 40 years and might conclude that these are the ones who are most
likely to get to Starbucks for a drink but still they only make up about 9% of the revenue of the
company. It is due to the fact that the people aged above 40 years are more likely grab a drink
and enjoy their beverages within the store which gives them an opportunity to socialise. Most
youngsters generally have a drink on the go. Teenagers who are under the age of 18 years only
constitute about 2% percent of the total revenue of the company.
Target market of Starbucks is also referred to as high-income group people. Products which
are being offered by Starbucks are expensive and people with high income are generally more
willing to spend a lot of money on these experiences and premium coffee drinks. Most of the
customers of Starbucks are educated and highly-qualified professionals with an urban sense of
living. Business class got attracted as a major consumer group after Starbucks started offering
free wi-fi in the year 2002 which allowed people to set-up their laptops and devices to attend
online meetings and conferences in a sophisticated environment while enjoying their beverages.
Attitudes of customers of Starbucks Corporation to the brand:
Different group of consumers can have different attitude towards a same brand. A positive
or negative attitude of a consumer towards any brand is a result of different functions. Generally
the customer of Starbucks have a positive and warm attitude towards the brand and exhibit brand
loyalty. Customers of Starbucks have a premium coffee experience and can vouch for the taste
and quality which is being offered by the brand. The reason why customers have such a positive
and encouraging attitude is not only the fact that the drinks and beverages which are being
offered are of best quality but also many other experiences which come along. Starbucks coffee
is not just intended to be consumed by the customers by also used for an external depiction of
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status symbol and defining the character of an individual to those around him. The fact that the
product can be used as a status symbol adds to the experience of the customer. Customers are
generally treated with utmost diligence and care in the stores which makes them feel valued and
creates a positive relation (Schultz, 2012). Most of the customers of Starbucks are brand loyal
more than anything else and are willing to pay even a slightly increased prices for the same
product as long as the quality and the brand image associated with the product is not deteriorated
or degraded. Trust is a major element between the customers of Starbucks and the company.
Trust is what gets the customer to willingly pay a high price with the belief that the product
which is being offered is of best quality. Mostly, consumers have a positive relationship with the
Starbucks corporation.
Mission statement of Starbucks Corporation:
Current mission statement of Starbucks is “To inspire and nurture the human spirit – one
person, one cup and one neighbourhood at a time”. This statement of the company definitely
reflects the emphasis put by the organisation on the most important aspect of its organisation
which are customers (Lee, 2013). This statement can be divided into two parts. The first part of
the mission statement of the company is the “human spirit” which focuses on nurturing and
enlightening the human spirit and contributing to the betterment of the society. Company’s
culture makes it important for warmth and rapport to exist in a complete harmony and
coordination. It shows that the human spirit is important for the organisation and it wishes to
nurture it by conducting its business activity. Meaningful and warm conversations and
relationships are a part of the organisational culture of the company as well as the company
promotes this kind of environment in its stores as well. The second part of the mission statement
is “one person, one cup and one neighbourhood at a time”. This part of the mission statement
depicts the customer service and value created by the organisation. One person refers to the
importance and value of each and every customer of the company as well as the employees. It
shows that the company deals with every customer in utmost diligent and responsible manner
and that each customer is equally important for the organisation. One cup represents that every
cup of coffee which Starbucks makes is special and of the best quality (Wu, 2017). This part of
the mission statement of the company focuses on providing the best quality to its customers and
increasing the customer experience. Every cup of coffee is brewed with the utmost care by the
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company. Ethical sourcing of coffee directly from the farming communities also shows the
efforts made by the company to deliver the best quality. One neighbourhood represents the
ecosystem set by the company for enhancing customer service. It aims to provide its customers a
place between office and home where they can spend quality time. The mission statement and
the values of Starbucks depicts the customer-orientation and the importance which the company
assigns to providing the best possible experience to the customers. The company agrees the
customers to be the most important stakeholders of the organisation.
Demonstration of audit of manifestation of customers:
For understanding the customer experience, Starbucks corporation uses a tool of scorecard
based on American Customer Satisfaction Index which has a scale of 0-100 with 100 being the
highest possible score. It evaluates the products and services in terms of the perceived value by
the customers and provides an insight about the customer experience. Here is a graph depicting
the ASCI scores of Starbucks based on audit ranging from 2006 to 2019.
(Source: American customer satisfaction index scores of Starbucks in the United States
from 2006 to 2019)
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On the basis of this graph, it can be concluded that the company has recently been facing a
downfall in the customer experience score but during the last few years the scores have
constantly increased from 74 in 2015 to 79 in 2019. This shows that the company is making
improvements to deliver the best experience to its customers all over the world.
Models and Theories of Customer experience:
There are many theories and functions which help in expressing customer experience and
satisfaction as an operation of various forces. Two of the most important relevant functions are
utilitarian and value-expression functions. According to the utilitarian function, the effects of
consumption of a product whether good or bad are the ultimate factors which lead to
development of consumer attitude and behaviour. The reason why the consumer of Starbucks
have a warm and positive attitude towards the company is because of the fact that the taste of the
coffee and the quality of the product and the atmosphere of the store operates simultaneously for
stimulation of that feeling within the consumer. The difference between utilitarian theory and
value-expression theory is that the former focuses on the features of the product and then
determines the effect it has on consumers whereas value-expression theory tries to evaluate what
the product actually says and not the real features or the characteristics of the product. In the
context of Starbucks, value-expression theory suggests that a customer of Starbucks doesn’t only
have the intention of drinking the coffee but using it as a symbol of status. The cup of coffee
being offered by Starbucks is not just coffee for the consumers but a tool of status and symbol
which defines the customer and differentiates him from everyone else (Goodman, 2019). Thus,
according to this function, the positive attitude of a customer of Starbucks is more related with
the expression of values. These theories help in determination and understanding of the factors
which makes a consumer believe and perceive the value associated with a product and the brand.
It helps in understanding the process of consumer behaviour and attitude.
Recommendations for Starbucks to improve customer experience:
 The elements which once defined the brand such as design of the store, aroma of coffee
in stores, beautiful sights etcetera are seem to be fading away a little which is causing a
little negative impact on the customer experience (Lin, 2012). The management of the
company is advised to slow down the expansion process a little and focus more on
improving the current situation of the existing stores and provide more provisions which
make the experience of its customers rich and premium.
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 In the current business situations, changes and innovations are taking place at a very
rapid pace and it is very important for every business organization to keep adapting to
these changes and bringing new innovations which add to the customer experience.
Starbucks has been regarded for introducing the concept of ‘latte’ and premium coffee in
the whole America. Many new companies and coffee-houses have brought a lot of
innovations and new products on the menu which are more catchy and instagrammable.
Social status and depiction has been one of the most important characteristic of the
products being offered by the company so it is important for the company to keep making
additions to the products on the menu which are more eye-catchy and innovative along
with great taste and quality.
 Starbucks is the first company in the industry to provide technological advancement in
term of free Wi-Fi for the customers in store. Company has gained a fair lead in this
aspect of technological adaption. However, there have been many changes made in the
past which help any store to increase the customer experience and convince such as debit
card payments, online ordering, e-wallets etcetera. All these changes are very helpful in
delivering a rich coffee experience to the customers. The management of the company is
advised to adapt to these changes quickly and make sure that the company doesn’t miss
out on any major change in technology which is designed with the aim of improving
overall customer experience.
 Starbucks has always considered personalization an important aspect of the overall
customer experience and thus, the management of the company should focus on planning
strategically on how the company can increase the personal experience of the customer
who walks into a Starbucks store by services such as personalized playlists, books and
magazines, personalized surveys designed for suggestions on improvement etcetera. A
team of people should be devoted for scanning this horizon.
These changes and recommendations will help the management of Starbucks Corporation to
increase the customer experience and achieve what they envision, providing a rich and
premium coffee experience to the customers.
CONCLUSION
It can be concluded from the above report that customer experience is a function of many
forces and factors and it is very important for every organisation to deliver a rich customer
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experience in order to gain brand loyalty (Elliott, 2014). A majority of the customers of
Starbucks are between the age segment of 18-40 years constituing to about 90% of the total
revenue. It can be interpreted from the mission statement of the company that starbucks aims to
deliver the best experinece to its customers by focusing on each and every aspect of their
experience. According to utilitarian theory of consumer behaviour, customers of Starbucks have
a positive attitude because of the quality of the coffee and beevrages whereas value-expression
thoery suggests that brand value and status symbol is a more important factor for Starbucks. At
last, it can be concluded that the company has been facing some problems in delivering a good
experience to the customers and some recommendations has been made such as innovation of
products and increasing the personalisation feature in store to improve the customer experience.
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REFERENCES
Books and Journals
Elliott, C., 2014. Consuming caffeine: The discourse of Starbucks and coffee. In Brands (pp.
356-367). Routledge.
Goodman, J., 2019. Strategic customer service: Managing the customer experience to increase
positive word of mouth, build loyalty, and maximize profits. Amacom.
Lee, Y.C., 2013. The strategy of mission statement to build staff working value-A case study of
Starbucks. In 2013 10th International Conference on Service Systems and Service
Management (pp. 487-489). IEEE.
Lin, E.Y., 2012. Starbucks as the third place: Glimpses into Taiwan's consumer culture and
lifestyles. Journal of International Consumer Marketing. 24(1-2). pp.119-128.
Schultz, H., 2012. Pour your heart into it: How Starbucks built a company one cup at a time.
Hachette UK.
Sheng, C.L., 2012. A new approach to utilitarianism: A unified utilitarian theory and its
application to distributive justice (Vol. 5). Springer Science & Business Media.
Susanty, A. and Kenny, E., 2015. The relationship between brand equity, customer satisfaction,
and brand loyalty on coffee shop: Study of Excelso and Starbucks. ASEAN Marketing
Journal. pp.14-27.
Tu, Y.T. and Chang, H.C., 2012. Corporate brand image and customer satisfaction on loyalty:
An empirical study of Starbucks coffee in Taiwan. Journal of Social and Development
Sciences. 3(1). pp.24-32.
Wu, H.C., 2017. What drives experiential loyalty? A case study of Starbucks coffee chain in
Taiwan. British Food Journal.
Online
American customer satisfaction index scores of Starbucks in the United States from 2006 to
2019. 2019. [Online]. Available through<https://www.statista.com/statistics/216719/starbucks--
customer-satisfaction-in-the-us/>
Starbucks Company Description. 2010. [Online]. Available through<
http://www.hoovers.com/company/Starbucks Corporationwiki-1.>
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