The Case Study for Starbucks
Starbucks is one of the companies in the food and drinks catering industry that is continuously growing. It has been established in many countries across different continents that some of the competitors have been unable to venture into. Starbucks is a marketer, retailer, and one of the most renowned roasters in the global coffee industry. It was formed in 1985 with an objective of manufacturing and roasting high-quality coffee and preparing handcrafted tea, coffee, and other beverages (Starbucks Corporation, 2015). However, the company’s aims have gradually changed by adding a variety of products and services for sale, such as different fresh food items, which include snacks and a conducive setting where the consumers can enjoy the tranquility of the atmosphere while enjoying the products. The main objective of the company as per Starbucks Corporation (2015), is to be one of the most respected and distinguished brands in the world. This is aimed to be achieved through opening more stores on the existing market and application of effective marketing tools, especially E-marketing. The company intends to offer new varieties of coffee while satisfying the consumers’ tastes and preferences across all the categories. Starbucks uses little financial allocations in its media advertisements; hence, the corporation focuses on maintaining its position in the market through utilization of real estate. As such, it ensures possession of a competitive advantage through establishing the outlets in proximity where there is a barrier for competitors to enter the market. Through proper governance headed by the chair of the corporation, Howard Schultz, proper decision making is achieved upon bringing the issue to the board of directors and committee. There are different types of committees involved in the governance of Starbucks Corporation activities which include Audit and Compliance Committee and Nominating and Corporate Governance Committee (Board of Directors and Board Committee List, 2017). It is one of the missions of Starbucks to maintain uncompromising principles while growing thus the need for such a well-defined governance team. As such, the Board of Directors have adopted charters, policies and governance principles that ensure a lead in Starbucks governance (Corporate Governance, 2017).
Starbucks is one of the companies that have been using a promotion by means of social media as the main part of the E-marketing activities since the commencement of social commerce and social media. The employment of this marketing strategy has been one of the essential elements in ensuring the significant growth of the company by creating an image of the high quality provider of the services (Meola, 2016). It is evident that Starbucks is one of the companies that has transformed its approach to interaction with its consumers in regards to not only a use of E-marketing but also ensuring trust among customers, which has considerably attributed to its success. Clearly, Starbucks has embraced the digital realm as evidenced by the different social sites that it uses to interact with its target audience. This variety includes Twitter, Pinterest, Youtube, My Starbucks Ideas, and Facebook (Starbucks Coffee Company, 2017). Indeed, the corporation takes a leadership position in E-marketing since it is one of the earliest pioneers of social media utilization in marketing. This paper is going to analyze a way of how Starbucks applies social media in meeting its strategic marketing goals to determine the problems that may be hindering its processes or witnessed in the course of use of E-marketing.
The Statement of Problem
Business Ethics and Compliance program ensures that Starbucks protects its culture and reputation by working under ethical decisions. Frost and Strauss (2014) assert that ethics explain the concerns of the values of professional practices. Ethics are concerned with taking into account the general values and concerns of the society. Starbucks ethics compliance program investigates on issues that are involved with potential conflicts of interests. The major problem pointed by this program is inadequate business ethic and compliance involving employee relations (Business Ethics and Compliance, 2017).
Starbucks does not rely on E-marketing as a way of crossing the gap between the business and the consumers. Instead, it leans on giving the best services to the consumers so that they pass the information on the ambient atmosphere, quality coffee, and the high quality of treatment provided. Therefore, it aims at reaching the marketing goals through the sharing of what is the consumers’ experience in the interaction process with Starbucks; hence, quality assurance is one of the strategic marketing strategy utilized by Starbucks. According to Frost and Strauss (2014), the US marketers have an annual spending of $6.7 billion on the market research. Based on the Council of American Survey Research, the overall expenses on marketing is about $18.9 billion. This shows that information overload is present on the most marketers. Boone and Kurtz (2013) state that a huge budget is necessary to be allocated for the social media conversations and other web analytics. Starbucks has its annual marketing expenses, but less finance is allocated in E- marketing. The marketing reports of the corporation in the fiscal years 2015, 2014, and 2013 amounted to $351.5 million, $315.5 million, and $306.8 million respectively (Starbucks Corporation, 2015). It is important to note that this was the overall marketing budget, which shows a significant small allocation in E-marketing. As such, the highest part of the budget is used in enticing the customers through different aspects including music, Wi-Fi, merchandising, and top notch customers service care (Starbucks Coffee Company, 2017). Therefore, it is evident that the corporation places its stake on the merchandising and physical side of marketing; hence, digital promotion is the secondary marketing tool of Starbucks.
Analysis of the Problem
Although the ethics compliance program of Starbucks emphasizes on reporting any unethical behavior expressed by the Company, there have been complaints from the employees (Business Ethics and Compliance, 2017). Starbucks store managers were reported in 2015 giving tight labor budgets to the employees. The managers also lead to the employees having a difficult working schedule based on the incentivized understaff stores (Peterson, 2015). As such, this displays lack of employer employee ethics which affects the productivity of the employees.
Meola (2016) asserts that Starbucks aims to spend more on improving the use of the mobile app among its target audience. This shows that if the company gradually increases spendings on E-marketing, an improvement can be witnessed in both the sales and the operations of the company. According to the chief digital officer of Starbucks, Officer Adam Brotman, the use of the mobile app, which is one of the strategies employed in E-marketing, has significantly improved on the business plans of the corporation. As such, by the end of 2015, 21% of the transactions in Starbucks occurred through the mobile app (Meola, 2016). It shows that by means of more budget allocations and emphasis on E- marketing, the operations of Starbucks can considerably improve as compared to the fiscal year of 2015 that marked the commencement of the app usage (Starbucks Corporation, 2015). The organization should learn on the use of marketing knowledge management whereby information, data, and knowledge can be shared with the customers, decision makers, and distribution channel members. Hence, the gradually increased investments in digital marketing by a use of the application may considerably enhance the brand awareness and profitability of Starbucks.
As per the evaluation of Starbucks marketing strategy, the company should interact with the consumers more productively. The E-marketing of the corporation does not allow real-time contact with the customers. Boone and Kurtz (2013) argue that a business should utilize a strategy that is beneficial for both the company and the consumers. Therefore, decision making should be based on the consideration of the comments and feedback of the clietns from social sites (Frost & Strauss, 2014). The success of Starbucks’ mobile application during the small period it has been used shows that upon the employment of a well-defined approach in E-marketing, more revenue can be generated. The company faces a problem in Electronic Marketing Information System where it does not appropriately assess the information needs, analyze and gather data, and disseminate the intelligence to the decision makers. To be more strategically positioned in the market, Starbucks should understand the consumers’ requirements through the precise monitoring the social media sites that it uses (Frost & Strauss, 2014). As such, this will eliminate the over relying on buzz marketing of the services and products’ quality. Consequently, the company will be in a position of crossing the gap effectively by expressing the quality and competitive advantage of the services and products through the social media.
Recommendations
Based on Peterson (2015) report, there is a need for Starbucks to maintain ethical relationship with its employees. It is evident that the Company puts more emphasis on its progress that it forgets on ensuring the comfortability of its employees (Peterson, 2015). It is recommendable that the Ethics Compliance Program to overlook on all the activities of Starbucks which include not only customer relations but also employees relationship with the Company.
Starbucks should put more emphasis on the use of social media, such as Facebook, Instagram, and Twitter among others. With the statistics attained including the numbers of gainers, highest number of likes, shares, and comments, the company will be in a position of understanding the preferences and needs of the customers (Meola, 2016). Instead of relying on the physical interaction with the customers, the increased promotion by social media will provide a platform for real-time sharing with the clients who order through the mobile app.
Justification
Through appropriate governance where the needs and preferences of both the customers and employees are satisfied, there can be more progress in the growth of Starbucks. Such problem reported by the baristas involving being overworked beyond their schedule can be avoided (Peterson, 2015). The progress witnessed in the company’s activities through E-marketing and conquering new markets should be similarly witnessed from the workers domain.
Meola (2016) asserts that E-marketers should use the information from the social sites with caution so as to increase the revenue of the company. With the statistics collected from the social media websites, Starbucks will be in a position of gauging other effective digital marketing strategies that may be possible to be used in improving the operations of the company. Through the introduction of other E- marketing strategies, such as mobile messaging including email and SMS, Starbucks can easily have broadest reach and adoption by the consumers (Chua & Banerjee, 2013). As such, messaging apps are gaining popularity; hence, showing an ideal innovative way of engaging with the customers that will contribute to the effectiveness of E- marketing.
The emphasis on the social media sites mentioned above will breathe a new change in the emerging technology adopted by Starbucks. E-marketers should incorporate different mobile tactics in marketing based on the demographics and size of the audience they wish to reach (Frost & Strauss, 2014). Such information can be retrieved based on the analysis of the current audience from the already existing social media sites used by Starbucks, such as Google + (Chua & Banerjee, 2013). Appropriate messages that can entice more customers can be understood and developed through the attention given by customers to different posts in the already existing social media sites.
Conclusion
In essence, Starbucks should use the emerging technology, such as the social media, effectively in achieving a new market base rather than relying on the traditional methods for enticing new customers. Similarly, good governance through complying to the ethics program should serve as a platform for establishing new strategies aimed at progress of Starbucks Corporation. Good relationship between the employer and employees will reciprocate top notch services being rendered to the consumers. Starbucks should be keen on the browser-based ad campaigns where some of the consumers adopt mobile ads blocking apps to avoid the online ads. Therefore, the company should be more creative in generating advertising that will reach the consumers without causing any inconveniences in their mobile activities. More revenue can be generated through the use of E-marketing in understanding the customers’ needs and preferences and operating upon the domain of the clients’ wishes as understood from the statistics collected from the social media sites.
References
Boone, L. E., & Kurtz, D. L. (2013). Contemporary marketing. Boston, MA: Cengage Learning.
Board of Directors and Board Committee List. (2017). Starbucks Coffee Company. Retrieved from https://www.starbucks.com/about-us/company-information/corporate-governance/board-committees-list
Business Ethics and Compliance. (2017). Starbucks Coffee Company. Retrieved from https://www.starbucks.com/about-us/company-information/business-ethics-and-compliance
Chua, A. Y., & Banerjee, S. (2013). Customer knowledge management via social media: the case of Starbucks. Journal of Knowledge Management, 17(2), 237-249.
Corporate Governance. (2017). Starbucks Coffee Company. Retrieved from https://www.starbucks.com/about-us/company-information/corporate-governance
Frost, R., & Strauss, J. (2014). E-marketing (7th ed.). Upper Saddle River, NJ: Pearson Education.
Meola, A. (2016). Starbucks plans to spend even more to improve its mobile app. Business Insider. Retrieved 21 March 2017, from http://www.businessinsider.com/starbucks-mobile-app-proves-successful-marketing-strategy-2016-4?IR=T
Peterson, H. (2015). Starbucks managers are standing in the way of making things better for workers. Business Insider. Retrieved from http://www.businessinsider.com/starbucks-workers-complain-about-managers-2015-9?IR=T
Starbucks Coffee Company. (2017). Starbucks Coffee Company. Retrieved from https://customerservice.starbucks.com/app/contact/ask/
Starbucks Corporation, (2015). Fiscal 2015 Annual Report. Seattle, WA: Starbucks Corporation.
