Starbucks is a company established in the North America which has been dominant in the coffee sphere. The success factors of Starbucks in the early 1990s were very different from the factors that are today. Some of these factors include; product variety, experimental branding strategy, service innovation, compensation system which was considered to be of great quality, target customers, high quality coffee, and the availability of the customer service which had trained employees, hospitality, product quality, and clean environment.
The Starbucks value proposition was very compelling because it prioritized customer’s satisfaction and proposed the creation of the certain ambience which was based on the community and unity of people. It promoted customer’s intimacy since it was obvious that the positive responses from customers and the increase in the coffee consumption among people on their daily basis influenced the production of the drink, which the customers really liked. The brand that they developed was a service brand which gave a promise to those people who were the potential customers and who could find a place where they could relax and enjoy a very good service (Moon & Quelch, 2006). This proved that the brand image of Starbucks was very effective.
The customer’s satisfaction regarding Starbuck has been declining over the years with the service of the company that is deteriorating. The sources of this decline in the performance is a result of the financial leverage drop, which has the ability to enhance profits, due to the presence of the very stiff competition, which is available in the changing market, and the aggression in the U.S. expansion. According to recent market researches, the company is not meeting all the expectations of the customers’ service as it starts debating on a plan estimated at about $40 million per annum. The set plan is aimed at increasing the speed of its services to customers by boosting the availability of labor in all its stores (Moon & Quelch, 2006).
The loss of the connection between the business growth and the customer’ satisfaction, the change in the customers’ tastes and preferences, and the changes in the market segment shows that the new customers of Starbucks often have a very different perception of the company’s brand meaning which could also explain the reason as to why the customer satisfaction is failing drastically. It is the work of the senior executives of the company to manage all the marketing responsibilities where there was an ineffective data analysis for making decisions in the company. The company faced stiff competition from independent coffee shops which offered a range of foods and beverages such as beer, liquor, and wine, while others offered and delivered high personalized services to their clienteles (Behar & Goldstein, 2007).
Starbucks of today greatly differs from Starbucks of 1992 in a number of ways. This is because levels of difficulties in the production of drinks have significantly risen due to the increase and advancement of new technologies. It has changed a great deal in its distribution channels. However, it was only famous as the coffeehouse back in 1992, but it now has different distribution channels like restaurants, airlines, and grocery and warehouse stores. The company has also changed its product diversity, since it has expanded the variety of its coffee production such as tea and chocolate because of the increasing rates of innovation in the company. The increase in pressure on baristas has also changed in the company since there is the need to serve all its customers with extended hours of service where job complexity has created a tension between the customer focus and product quality (Behar & Goldstein, 2007).
Starbucks has slightly changed its value proposition since the initial value proposition of the company emphasized on customer’s satisfaction above all other aspects in the business which called for good management. This is because the customer’s satisfaction in the company has been seen to be decreasing which shows that the services being offered by the company are decreasing as well showing that the customer is seizing to become the priority of the company (Moon & Quelch, 2006).
The change which I would recommend to Starbucks of today so as to be able to stay profitable and be able to develop a sustainable competitive advantage is that the company should adapt a leadership management strategy. In order for Starbucks to be successful in the competitive market, there is a need to have good innovative leaders who possess profound skills in decision making process of the company. Some executives are solely to be blamed for failures of the businesses and the companies that they manage because they prioritize the profit goal instead of the customer’s satisfaction goal. The customers play a very important role in the existence of the company. Despite the fact that the company’s products may be of great quality, it still needs the customers to purchase its products.
The reason as to why I have recommended the leadership management strategy for the Starbucks is that the executives of business are the leaders of the company and they have to act as role models in the organization. Leaders are the ones who are responsible for all the decision making processes and a good leadership management can lead to very good decisions that are likely to maximize the strengths of the company in realizing the company’s goals. They have to come up with the company’s internal and external analyses which is made up with the strengths, weaknesses, opportunities, and threats of the company, and then come up with good decisions on how they can be able to fortify the strengths of the company for its own benefit in terms of the profit margins that the company gets in maximizing all the opportunities.