Starbucks Problem
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Information Systems
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Apr 3, 2024
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docx
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Uploaded by CaptainMaskFerret26
Case 2 Behavioral Economics and Starbuck’s Cup Problem Introduction
One of the most iconic examples of success in the modern business world is the multinational chain of coffee shops, Starbucks. Starbucks is dealing with a serious environmental issue that has been termed the "Starbucks Cup Problem." The main problem with this is the enormous amount of garbage that Starbucks' single-use cups produce; every year, some 4 billion of these cups wind up as litter or in landfills. The environmental impact of the company's efforts to address this issue has drawn scrutiny. As a result, Starbucks started charging $1 for reusable plastic cups in its cafés and gave patrons who brought their own reusable cups a 10-cent discount. Starbucks faced a serious problem because of this pricing strategy's failure to significantly change consumer attitudes around reusable cups.
The small discount did not encourage customers to utilise the reusable cups,
hence the 10-cent discount plan was unable to significantly alter consumer behaviour. For Starbucks, this is the main problem and obstacle. Starbucks must adjust their strategy to encourage customers to select reusable cups over disposable ones by going deeper into behavioural economics theories like prospect theory and utility maximisation.
Problem Statement
How can Starbucks effectively reduce its reliance on single-use cups and promote the usage of reusable cups to lessen its carbon footprint for the sustainability of the business?
Case Analysis Balance Scorecard Perspective Objective Measures
Target
Initiative
Customer
Boost the use of reusable cups among consumers while maintaining
Provide reward points and
incentives
to consumers
who
Increase the proportio
n of returning consumer
s by 15%
Educating and promoting the use of sustainabl
e cups to reduce
brand loyalty.
switch to reusable cups.
Surveys should be used to get customer feedback.
or higher.
At least 10% more
customer satisfactio
n points should be
achieved.
carbon footprint.
Providing reward points and purchase discount to
customers using reusable cups.
Promoting the use of ceramic cups as Starbucks already sells ceramic cups. Financial
Increase the profit margin and market share.
Minimize Costs Associate
d per cup.
Target new markets to unlock more customer resulting in an increase in the market share.
Implement waste reduction initiatives such as composting and recycling.
An increase in market share by 5%.
Reduce the cost of
cup waste
by 20% in next 6months.
Introducing
in-app delivery system to make faster and seamless delivery of the product.
Launching new products like seasonal beverages,
new coffee blends to attract more customers.
Creating incentives for using reusable cups and make investment
s in infrastructu
re for cup recycling.
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