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SERVICE MARKETING PROJECT REPORT

ON
FLOWER OF SERVICE

Submitted to:
DR RENIN SINGH
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Table of contents

Chapters Page No.

1 Background of the company 3-5

2 Flower of service model 6-7

3 Strategies used by Starbucks 8-9

4 Competitive advantage with regard to 10-11

complementary product

Group Members

Name Enrollment
Rupal patidar 1-20-106
Vijay Pratap Yadav 1-20-149
Trupti Mishra 5-20-028
Harsh Gupta 5-20-006
Suryansh Singh 1-20-139
Neev Patel 1-20-087
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Background of the company

The first Starbucks location opened in 1971. The name is inspired by Moby Dick’s first mate.
This name and the mermaid logo were inspired by the love of the sea, from Starbucks original
location in Seattle Washington in the heart of Pike Place Market. Starting as a single shop
specializing in high quality coffee and brewing products the company grew to be the largest
roaster in Washington with multiple locations until the early 80’s. In 1981, current CEO Howard
Schultz, recognized a great opportunity and began working with the founder Jerry Baldwin.
After a trip to Italy to find new products, Schultz realized an opportunity to bring the café
community environment he found in Italy to the United states and the Starbuck’s brand we
know today began to take form. Selling espresso by the cup was the first test. Schultz left
Baldwin to open his own Italian coffee house Il Giornale which found outrageous success and in
1987 when Starbucks decided to sell the original 6 locations, Schultz raised the money with
investors and purchased the company and fused them with his Italian bistro locations. The
company experienced rapid growth going public in 1992, and growing tenfold by 1997, with
locations around the United
States, Japan and Singapore. Starbucks also began expanding its brand. According to George
Garza in his article The history of Starbucks the following product lines were added:

 Offering Starbucks coffee on United Airlines flights.

 Selling premium teas through Starbucks’ own Tazo Tea Company.
 Using the Internet to offer people the option to purchase Starbucks coffee
online.
 Distributing whole bean and ground coffee to supermarkets.
 Producing premium coffee ice cream with Dreyer’s.
 Selling CDs in Starbucks retail stores.

Starbucks uses minimal advertising and has grown on word of mouth and brand recognition.
According to Garza by 2004 Starbucks had reached 1,344 locations.
(Garza)
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Updated history and Current Status

Today, according to the Starbucks website, they have 16,706 stores (as of Dec. 27, 2009) in 50
countries. In 2009 they made strives socially as they opened the Farmer Support Center in
Kigali, Rwanda and became the world’s largest buyer of Fair Trade Certified coffee.

Their mission statement from the company profile is as follows:

“Our mission is to inspire and nurture the human spirit – one person, one cup, and one
neighborhood at a time.”

Their core competencies can be defined as high quality coffee and products at accessible
locations and affordable prices, provided a community to share in the coffee drinking
experience, and variety of choices. The also value ethics and good business practices and are a
leader being voted one of 2010’s most ethical businesses by Ethisphere magazine for the 4 th year
running. (“Starbucks”)

Starbucks is facing its own struggles however as it saw sales start slipping before other
companies did in the recent recession. According to Melissa Allison in her article Starbucks ha s
a new growth strategy — more revenue with lower costs, Starbucks has closed 900 stores and
eliminated 34,000 jobs. Starbucks new strategy is to refocus on some of the areas that decrease
risk and up front investment. This includes expanding foreign stores, with aid of partnerships
that share risk and costs, selling VIA instant coffee and other products in retail and convenience
stores, and reinvigorating the Seattle’s Best Brand coffee.

A statement from CFO Troy Alstead this March paints this picture:

“We clearly hit a wall and didn’t do very well in the 2007/2008 time period. From here forward,
when we grow Via, Seattle’s Best Coffee and consumer products, there’s less investment for
each dollar of revenue.”

This new strategy has inspired some optimistic feedback. Morningstar investment research firm
has increased estimate of Starbucks shares from $4 a share to $24 after the statement of
revamping the brand.

Maturity
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Starbucks in a mature stage of its lifescycle. It was founded over 20 years ago and it has
experienced rapid growth in the last 2 decades. However within the last few years its growth has
slowed and has even had to close locations. They are now focusing efforts on previous
endeavors and international expansion.

New Value Chain

The above is a new value chain with international development added upstream to allow for
international markets to develop new products that better suit their cultures that could potential
add value to the US market as well such as the Green Tea Latte developed in Japan’s Starbucks.
Added downstream is Online Storefront customization, that would allow you to create a profile
online, order online, create new drinks etc. Also added is a mobile app that could locate
starbucks locations, put in drink orders etc.
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Flower of Service Model of Starbucks

Flower of service is a visual framework for understanding the supplementary service
elements that surround and add value to the core product. Flower of service is introduced by
Christopher Lovelock that distinguishes between facilitating and enhancing supplementary
services

Starbucks manage several channels to keep their customers informed about their products and
services, their main channels are their web page and the application, this channels give
information opening hours. careers, locations, products, corporate responsibility, coffee
products and how to prepare the best coffee.

Supplementary products of Starbucks:

- Tea
- Pastries
- Frappuccino beverages
- Smoothies
- Merchandise (mugs, instant coffee, etc.)

Flower of service
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Information: Starbucks manage several channels to keep their customers informed about
their products and services, their main channels are their web page and the application, this
channels give information opening hours. careers, locations, products, corporate
responsibility, coffee products and how to prepare the best coffee.

Consultation: Starbucks offer training and inspirations to their employees regarding the
service they need to offer, this include coffee knowledge, how the beverages should be
prepared and how is the customer intimacy is needed to fulfill the Starbucks culture.
Order Taking: Starbucks offer a membership card so that customers can accumulate points
after their purchase and receive extra products, they also offer a broad menu with a wide
variety towards food and beverage, their order wait delivery consist in writing your name and
within 5 mint your order will be ready.

Hospitality: Their cafes usually include restrooms, tables and some sofas with magazines
and some coat rackets, they also have some add ones where you can have some sugar,
napckings, and different toppings and they offer security system with cameras in their shops.
Safekeeping: The maintenance of Starbucks is very good, they keep their cafes clean, the
counter is always organizing, there is a self. Cleaning system were usually customers clean
their tables, but if some customer doesn’t clean there is always someone keeping the service
quality.

Exceptions: Starbucks offer in their web site a part for complains and suggestions,
complains usually are made presencialy in their shops, which have a quicker response, they
also provide information about ingredients and food allergies that customers must be aware
Billing/Payment: Starbuck manage their billing process quite standard, the have digital
terminals that connects directly with the financial transaction, invoice are generated after the
payment.

Billing/Payment: Starbuck manage their billing process quite standard, the have digital
terminals that connects directly with the financial transaction, invoice are generated after the
payment.
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Strategies used by Starbucks to compete their competitor

Starbucks wants to achieve maximum recognition. They not only strive to ensure that the
client knows what the company is doing, but also strives for a brilliant image. Through the 4P
analysis we can see clearer on what aspects Starbucks makes its emphases and what makes
Starbucks brand that recognizable.

Product –
Company always emphasizes that all their coffee drinks are made from grains that meet strict
ecological, economic and social quality standards. Starbucks established a strong and
profitable competitive advantage of its product line by broadly differentiating coffee and the
related products. In addition to the existing 30 types of coffee beverages, Starbucks has
expanded its range and now offers cakes, salads, various sandwiches and yoghurts. In order
to reach a larger audience, company began to sell tea drinks, so now not only coffee lovers
can enjoy the Starbucks atmosphere and quality products. Accordingly, the product line
expanded through the introduction of innovative products such as «Frappuchino», «Wild
sweet orange» tea, «Tazo» tea and others. Moreover, Starbucks tries to adopt its product
range to every marker they want to enter.

Moreover, individual approach is an essential component of Starbucks strategy. «Latte for

Arina!» shouts out in a coffee shop. I approach the counter and take a glass of coffee on
which my name is written. It is a trifle, but you feel needed. This famous trifle in many ways
created a cult image of Starbucks as people are attracted by the brand’s personal attitude,
even such simple and unsophisticated.

Price –
Starbucks products price positioning comes out from the following «high quality at a
moderate cost.» Nevertheless, the company’s pricing strategy is to set higher prices for the
product than those of competitors to impart an image of elitism. Starbucks products are more
expensive than competitors because the perception of the company’s products is represented
as high-quality and the best. Starbucks maintains strict quality control of its coffee as well as
customer serving.

Place – in 1994 Starbucks set a new goal for itself: «to approve Starbucks as the world’s
leading supplier of high-quality coffee, preserving its commitment to its uncompromising
principles as it grows and develops.» Starbucks always searches for very well-viewed and
high-traffic areas for new coffee shops locations and rely on the three main factors:
demographic, financial indicators and the potential of the brand. As soon as client sees the
mermaid logo he knows what to expect: soft armchairs, free sockets for use or computer
recharging, wireless Internet access etc. The company realized that people come to its coffee
shops not just for coffee, but for something more – for a special atmosphere. People
communicate with each other, read, learn, and listen to music while they drink coffee.
Knowing this, coffee shops try to make their outlets more or less unique to create this special
atmosphere. Starbucks focuses on a large number of comfortable places for sitting that
disposes people to stay longer than they expected.
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Promotion – Starbucks did not compete for the audience on media channels. Therefore, for
each new market, they usually plan at least one big event to celebrate their appearance and
then transfer the funds to charity. For example, after September 11 at Starbucks coffee houses
in New York, Washington and Pennsylvania for rescuers coffee was brewed for free. This
type of promotion allows Starbucks to strengthen the image of the company as well as inspire
and attract both potential and visiting visitors.
Another important fact of Starbucks’ positioning is that the company protects the
environment. While other suppliers are positioning themselves in a similar way, no one does
it on a scale similar to Starbucks. Buyers and customers pay attention to those companies that
actually help the environment. Starbucks advertising strategies were also one of the key
factors. The company found that advertising on a local scale is much more effective than
nationwide. Most of the company’s advertising materials are distributed in printed form,
since the target market of the company is educated people who read more than the average
person.

Process –
Install self-serve kiosks (figure 1) like many McDonalds are already doing. This could speed
up the people processing of the customers. They should also include the complete product
line of Starbucks and also incorporate an option for the clients to custom-build products
adjusted to their individual likings

Physical Environments –
build the interior of Starbucks stores according to a standardized design. If all stores are more
or less similar in interior appearance, the customer might feel more comfortable because
he/she is acquainted with the place and it feels familiar to him/her. Since the Starbucks stores
are the flagships of the brand, they should also make sure that their stores, including the
restrooms, are always tidy and clean as this additionally increases the customers’ perception
of the quality of the brand.

People –
The positive interaction between the customers and the employees is of crucial importance
for customer satisfaction. In order to further improve this, Starbucks should provide customer
service training for their employees. They could also go one step further and train their
employees to be coffee specialists which would enable them to counsel people about the
different beverage options. By this, they could assist them in choosing the most fitting
product for them.
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Competitive Advantage with regard supplementary products

Starbucks’ competitive advantage is based on its strategy of product differentiation, which

makes the brand stand out from its rivals in 2022. Such strategies include the concept the
Third Place environment, quality products, constant innovation with new menu items, and the
use of technology to connect with customers. As well, Starbucks connects directly with
growers and suppliers to maintain quality control.

Product differentiation is the core of Starbucks' strategy to gain a sustained competitive

advantage. Starbucks offers such differentiation through an excellent customer experience
and quality coffee The “Starbucks Experience” is achieved through its well-designed stores
with good ambiance and well-trained staff.

Supplementary products of Starbucks:

- Tea
- Pastries
- Frappuccino beverages
- Smoothies
- Merchandise (mugs, instant coffee, etc.)

Starbucks Offers Quality Products

Starbucks coffee and drinks have always been premium products, and customers are
generally willing to pay higher prices for quality.

Starbucks only uses the highest quality Arabica coffee beans. As well, the equipment used to
brew coffee is the best quality, such as the Swiss-made Mastrena espresso machines and the
Clover single brew used in Starbucks stores.

In fact, Howard Schultz loved the taste of Clover- brewed coffee so much that Starbucks
acquired the parent company for the brand, and now makes its own Clover coffee brewing
machines.

In addition to the high quality coffee, all the products, including tea, chocolate drinks, fruit
juices, and food items at Starbucks use high quality and ethically sourced ingredients.

Starbucks’ competitive advantage is made up of a number of factors, and using a strategy of

product differentiation, Starbucks is able to create a market for premium products and the
whole Starbucks experience.

Overall, the company’s method helps to explain how Starbucks has achieved its position of
global leadership in the coffee retail market.
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Lower Cost Differentiation

Starbucks
Cost
Leadership Differentiation

VI A

In-Store brewing products/gifts

Cost Focus Focused Differentiation

Generic Competitive strategy, shown is Starbucks as a whole in the differentiation strategy as

they provide a high quality coffee and unique experience in the convenience of a large volume
of locations, which separates them from their competition. VIA, the new instant coffee line is
straddling differentiation and low cost- leadership. While it will be a low cost and convenient
alternative to Starbucks regular coffee, it is still unique from other products in the market. The
in-store gifts and brewing utensils are in the focused differentiation category as they cater to
the coffee lover, and are unique items found only in the Starbucks stores.