Case Study: Gazing At Starbucks?

Case Study: Gazing At Starbucks?

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Case Study: Gazing at Starbucks?

1. In this case study you can read the four reasons why gazing has become an important trend. Why is it important for companies like Starbucks to know the reasons behind this trend?

In the case author states four reasons why gazing became an important trend:
• Fast pace life and time pressure leave no time to cook and leads people to eat on the go
• People spend much more time driving and eating in their cars
• Lack of family life leads to unstructured life of teens affecting their eating habits
• "Small households typically cook fewer meals" In the USA this number increased to 60 percent.
It is important for companies like Starbucks to know the reasons behind this trend because of the following. First of all this trend has an impact on strategic planning. It is crucial to take in to account uncertainties of changing market while assessing external environment (customers, industry, competitors, etc) and internal strength and weaknesses of the company. This trend influences company's formulation of objectives and business strategies.
Secondly, understanding reasons facilitates formulation marketing strategy. More specifically, the company formulates marketing concept and builds brand reputation by understanding customer's needs. For example, after analyzing customers eating behaviors and finding that only "35 percent of Americans eat two or fewer "square" meals daily" Starbucks sell only high quality coffees along with variety of pastries and few sandwiches in the "coffee bars."
Thirdly, taking into account reasons helps develop a customer oriented mission (what are we doing now? and visions (what do we want to achieve in the future?). The company tested four Café Starbucks in Seattle area, where they were serving meals. However, Cafés were soon closed as customers come to Starbucks to gaze rather than eat. Therefore, understanding the reasons behind this trend helped to identify the vision of the organization to stay a "coffee bar" rather than Café Starbucks.
To make best business and marketing decisions is only possible when acquiring all the possible knowledge about the current trends and the reasons behind it.

2. Suppose the marketing manager of Starbucks wants to use the information in this case as input for a strategic marketing plan.
a. Which information in this case should be part of the customer analysis?

Customer analysis includes potential customer's attributes, needs, and perceptions about the company. In the case author distinguished different segments of customers.

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Demographic and socio economic segment include small households which typically cook fewer meals. In the USA this number increased to " 60 percent of all household who have two or fewer family members." Another segment includes new generation, teenagers whose unstructured life style leads to gazing a lot.
Company also tested customer perception about the company. It was found that people come to Starbucks to gaze and not to eat meals. Therefore, Café Starbucks which served meals, were closed.

b. Which information in this case should be part of the competitor analysis?

The case very briefly discusses future behaviors one of the competitors of the Starbucks.
McDonalds plans to test " three-in-one restaurants that will be part restaurant, part coffee shop, part bakery"

c. Which information in this case should be part of the industry analysis?

Microenvironment factors such as social-culture have changed. Eating habits of American society have significantly changed. Today gazing replaces meals. The case provides gazing example such as Diet Coke or Snickers bar can replace the meal. In addition there are numbers which show eating behaviors of 2000 consumers. "Typical consumer eats 4.3 times a day and that many consumers eat 6 times a day."

d. Which information in this case should be part of the internal analysis?

In internal analysis we should compare the result with the objectives set. The information in the case shows that the " chain has 22 million visitors a week in the USA. Die hard customers stop in an average of 18 times a month and an average customer visits 5 times a month." Base on these statement it seems that Starbuck has high customer satisfaction. However, it's not possible to come to definite conclusion as the case doesn't state specific sale numbers or objectives to measure customer satisfaction.

3. An organization can define its business in terms of the products it makes or the technologies it uses, but a business also can be defined in terms of the customer needs served by the company. What is the difference between a product- oriented and need- oriented business definition?

Product-Orientated market consists of companies that bring certain products into the market. An example would be coffee market. Some of the disadvantages are that it relates to supplying side only, and doesn't indicate to whom products are intended or who demands it.
Need-Oriented focuses on the needs of the customer for whom product is made. For example, we are premier supplier of the finest coffee in the world while maintaining our uncompromising principle…" is need oriented.

4. Read the mission statement of Starbucks.
a. Is this mission statement defined in terms of the products or in terms of the customer needs served by Starbucks? Explain your answer.

I believe that this mission statement is defined in terms of customer needs. "Establish Starbucks as the premier purveyor ( supplier) of the finest coffee…" shows that this part of the statement relates to supplier side and briefly describes product. The company keeps their option to supply other products open. For example, Starbucks can supply cappuccino, espresso, coffee latte, or tea.
"…in the world while maintaining our uncompromising principles while we grow" indicates that the company will serve not only national customers but also the international markets.

b. Which would you prefer: a product-oriented mission statement or a mission statement in terms of the customer needs served by Starbucks? Explain your answer.

Personally, I prefer customer oriented mission statement because it describes products as well as the customers. If the company focuses only on the product-oriented mission statement, with the arrival of new invention or products ideas, in our case drinks, competitors may be beat the Starbucks. They will serve the same need of their customer but with different types of drinks.

Reference: Strategic Marketing: An Applied Perspective. Alsem, 2007, McGraw-Hill.
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