Starbucks Loyalty Reigns Case Solution[6281]

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Starbucks Loyalty Reigns Case Solution Introduction This case illustrates the importance of an enthusiasm and determination of one of the successful companies in the world named as Starbucks, which broke all the records to become an aggressive growth company in the globe. Such growth was based on the ability to adopt the new technology quickly and increased the customer’s perception to use the products and services for long-term. However, under the historical perspective, it shows that with the leadership of Schultz (chief Executive of Starbucks), the company enhanced its position from a common business entity to one of the most dominated and culturally attracted organizations during the early 1990s(Dignan, 2015). As Schultz said,” Starbucks’ employees are our true ambassador to run the company” and for that, the continuous improvement of skills and motivation to work came from the rewards and recognition provided to them (Benefit-eligible employees). In the start of 20 th century, Starbucks was actively involved in marketing its products and services through social media and digital marketing campaigns. In 2002, it introduced the first active facility of Wi-Fi under which, the customer was able to connect online and benefited the facilities provided by Starbucks. After some time, it held a partnership contract with Apple to provide free access to i- Tunes to the loyal customers as well as attract the new one(Essays, UK;, 2015). The company introduced its first mobile app facility in 2011 and increased its growth continuously until 2015 was the year of absolute success for it due to the fact that its strategic implementation to upgrade the technology led the company to focus more on this driver instead to placing the business outside the digital network. From the historical results, now Starbucks is considering expanding the business further through introducing the other revenue drivers that would be able to increase the business under aggressive growth level. Discussion and Analysis Current Digital Marketing Tools From the historical perspective, it has been identified that the company used various marketing techniques and tools to attract and retain the customers’ loyalty and long-term attachment to use the products and service of Starbucks. These activities consisted of the use of digital marketing criteria and social media, Schultz was existed from the benefits of using the digital marketing techniques due to the fact that it grew the company’s operations and profits in a quick pace(Intelligence, 2016). The main reason of this growth was the ability to retain the customers and communicate continuously through ads in social media. These activities allowed the users and subscribers to place their order by the use of mobile phones and picked the best coffee feature they want. It seems that with the historical record, the company still has Facebook users of around 35 million and 11 million of Tweeter. It also took advantage from its users by offering the “My Starbucks Rewards” to increase the new customers to follow the services. Under this program, the company rewarded the free food and drinks based on the number of purchases a particular customer made. This program would be considered in the future because it showed most of the contribution in the revenues subjected to the use of digital marketing and social media implementation. In addition to this, the company will also introduce “Starbucks Digital Passport”, which would provide the additional services to record the photos and notes in the app. All these uses are directly linked with the mobile app services that a company is performing since 2011(Kotler & Keller). For further elaboration, Mobile order and pay feature is still the main revenue driver of the company in terms of digital marketing technology because it holds almost 20% of the entire company’s earnings. Starbucks is still considering growing this network instead of using the physical marketing tactics because the sales generate from online is more than the sale through direct selling. With this concept, Shultz would be able to recognize the brand as one of the most technologically aggressive as well as he would be able to determine the competitive advantage for the number of selected years in the future. Scott Maw (Chief Financial Officer of Starbucks) proposed that by 2016, they would be able to cut costs by 15% and increase the revenue growth rate by 10%.

However, in order to do that, they would increase the target growth driver (Digital and social media marketing) to cut most of the costs on time because under the criteria of using the mobile order and pay feature, customers would only place an order and delivered through home delivery services instead to going and pick the order of products and services. In that case , they would charge a fee of delivery as well as purchase the product with price more than that with physical existence(Marketing, Digital Spark;, 2016). https://blog.smile.io/loyalty-case-study-starbucks-rewards Marketing & Sales Case Study Analysis and Solution At Fern Fort University, we use Harvard Business Review (HBR) marketing principles and framework to analyze Starbucks' Loyalty Reigns case study. Starbucks' Loyalty Reigns is a Harvard Business Review case study written by Meghan Murrayfor the students of Sales & Marketing. The case study also include other relevant topics and learning material on – Social platforms Strategic Marketing Analysis of Starbucks' Loyalty Reigns case study written by Meghan Murray will comprise following sections –  Starbucks' Loyalty Reigns Case Description  Marketing Definition  Market Potential Analysis of Starbucks' Loyalty Reigns  Market Share Potential Analysis  Segmentation and Segment Attractiveness Analysis  Competition and Competitiveness Analysis of Starbucks' Loyalty Reigns  Customer Value Analysis of Starbucks' Loyalty Reigns case study Starbucks' Loyalty Reigns Marketing Case Description Sales & Marketing Case Study | Authors :: Meghan Murray By July 2015, 20% of Starbucks' payments in the United States came through its mobile app. The company had created a tool to both drive loyalty and grow its customer base. No stranger to innovation, Starbucks was partnering with iTunes as early as 2007, earned its first mobile marketer of the year award by 2010, introduced its mobile app in 2011, and by 2015, 94% of Facebook users were either fans of Starbucks or friends with someone who was. This case explores the company's commitment to mobile and its social media prowess, and considers just what it takes to drive loyalty in a customer base.

Social platforms Marketing Definition According to American Marketing Association – Marketing is a set of activities that a firm undertakes for creating, communicating, delivering, & exchanging offerings that have value for customers, clients, partners, and society at large. Kotler explains - Marketing is a process by which organizations can create value for its potential and current customers and build strong customer relationships in order to capture value in return. Market Potential Analysis of Starbucks' Loyalty Reigns Market potential analysis comprises evaluating the overall market size of the related product that the firm is planning to launch. This will involve defining – Why the target market segment needs the product and how it will provide a solution to full its consumers’ needs. Market potential of Starbucks' Loyalty Reigns products various on factors such as –  Maturity of the market. In mature markets the profitability is often stable but the market potential is less as most of the players have already taken market share based on the segment they are serving. New players have to go for market share strategies in marketing.  Technological competence of the existing players and culture of innovation and development in the industry.  Untapped market sizes and barriers to both enter the market and serving the customers. Often companies can easily see the unfulfilled needs in the markets but they are difficult to serve as there are costly barriers.  Define the core need that your product is serving and list out all the direct and indirect competitors in the market place. This will help not only in positioning of the product but also in defining or creating a segment better.  Uncovering the current and untapped market sizes and barriers to serving the larger market. Analyze the areas that you need to sort out while launching the products to wider market and what are the challenges the firm will face in market place.  Estimate the current stage in product life cycle and its implications for marketing decisions for the product. Market Share Potential Analysis  Understanding the buyer behavior model for Starbucks' Loyalty Reignsindustry.  Identifying the market share drivers relevant to Starbucks' Loyalty Reigns market.  Segment Attractiveness Analysis – Our analysis will work out which are the most attractive segments and which are the one the firm should go ahead and target. We point out in great detail which segments will be most lucrative for the company to enter.  Understanding the different needs and relative value of your offering by segment.

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 Developing segment priorities and positioning the product based on the product need fit developed by the firm. Competition & Competitive Position Analysis  Uncovering customer-based competitive positions for key rivals and firm’s offering. This will not only help in assessing the strengths and weaknesses of the competitors but also help in defining and positioning of the product.  Developing a positioning and launching strategy. It will require not only distribution channel analysis but also promotion mix for the product.  Strategic Marketing Planning — the process of developing and maintaining a strategic fit between the organization’s objectives and capabilities and the ever evolving marketing opportunities for its products. Starbucks' Loyalty Reigns - Customer Value Analysis Capturing customer value is essential to marketing efforts as it results in higher return in the form of both current & future sales, greater market share, and higher profits. By creating superior customer value, the organization can create highly satisfied customers who stay loyal and buy more. This, in turn, means greater long-run returns for the firm.  The crucial role of customer perceived value in acquiring and retaining profitable customers. Product differentiation is often based on building on a value niche that a firm believes that is very important to the customer. This niche contributes to perceived value. If the perceived value is high then customer stay loyal to the product if not then she can switch to the competitor’s product.  Graphically displaying value differences for deeper understanding and better internal communication. This helps is building a narrative that a customer can identify with. The better the insight more are the chances of connecting with the potential customers.  Identifying and selecting actionable value creation options. This can help in increasing the customer lifetime value. Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage. Starbucks Loyalty Reigns Case Study Solution & Analysis In most courses studied at Harvard Business schools, students are provided with a case study. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. Student’s role is to analyze the case and diagnose the situation, identify the problem and then give appropriate recommendations and steps to be taken. To make a detailed case analysis, student should follow these steps:

STEP 1: Reading Up Harvard Case Study Method Guide: Case study method guide is provided to students which determine the aspects of problem needed to be considered while analyzing a case study. It is very important to have a thorough reading and understanding of guidelines provided. However, poor guide reading will lead to misunderstanding of case and failure of analyses. It is recommended to read guidelines before and after reading the case to understand what is asked and how the questions are to be answered. Therefore, in-depth understanding f case guidelines is very important. Harvard Case Study Solutions STEP 2: Reading The Starbucks Loyalty Reigns Harvard Case Study: To have a complete understanding of the case, one should focus on case reading. It is said that case should be read two times. Initially, fast reading without taking notes and underlines should be done. Initial reading is to get a rough idea of what information is provided for the analyses. Then, a very careful reading should be done at second time reading of the case. This time, highlighting the important point and mark the necessary information provided in the case. In addition, the quantitative data in case, and its relations with other quantitative or qualitative variables should be given more importance. Also, manipulating different data and combining with other information available will give a new insight. However, all of the information provided is not reliable and relevant. When having a fast reading, following points should be noted:  Nature of organization  Nature if industry in which organization operates.  External environment that is effecting organization  Problems being faced by management  Identification of communication strategies.  Any relevant strategy that can be added.  Control and out-of-control situations. When reading the case for second time, following points should be considered:  Decisions needed to be made and the responsible Person to make decision.  Objectives of the organization and key players in this case.  The compatibility of objectives. if not, their reconciliations and necessary redefinition.  Sources and constraints of organization from meeting its objectives. After reading the case and guidelines thoroughly, reader should go forward and start the analyses of the case. STEP 3: Doing The Case Analysis Of Starbucks Loyalty Reigns:

To make an appropriate case analyses, firstly, reader should mark the important problems that are happening in the organization. There may be multiple problems that can be faced by any organization. Secondly, after identifying problems in the company, identify the most concerned and important problem that needed to be focused. Firstly, the introduction is written. After having a clear idea of what is defined in the case, we deliver it to the reader. It is better to start the introduction from any historical or social context. The challenging diagnosis for Starbucks Loyalty Reigns and the management of information is needed to be provided. However, introduction should not be longer than 6-7 lines in a paragraph. As the most important objective is to convey the most important message for to the reader. After introduction, problem statement is defined. In the problem statement, the company’s most important problem and constraints to solve these problems should be define clearly. However, the problem should be concisely define in no more than a paragraph. After defining the problems and constraints, analysis of the case study is begin. STEP 4: SWOT Analysis of the Starbucks Loyalty Reigns HBR Case Solution: SWOT analysis helps the business to identify its strengths and weaknesses, as well as understanding of opportunity that can be availed and the threat that the company is facing. SWOT for Starbucks Loyalty Reigns is a powerful tool of analysis as it provide a thought to uncover and exploit the opportunities that can be used to increase and enhance company’s operations. In addition, it also identifies the weaknesses of the organization that will help to be eliminated and manage the threats that would catch the attention of the management. This strategy helps the company to make any strategy that would differentiate the company from competitors, so that the organization can compete successfully in the industry. The strengths and weaknesses are obtained from internal organization. Whereas, the opportunities and threats are generally related from external environment of organization. Moreover, it is also called Internal- External Analysis. STRENGTHS: In the strengths, management should identify the following points exists in the organization:  Advantages of the organization  Activities of the company better than competitors.  Unique resources and low cost resources company have.  Activities and resources market sees as the company’s strength.  Unique selling proposition of the company. WEAKNESSES:  Improvement that could be done.  Activities that can be avoided for Starbucks Loyalty Reigns.  Activities that can be determined as your weakness in the market.  Factors that can reduce the sales.  Competitor’s activities that can be seen as your weakness. OPPORTUNITIES:  Good opportunities that can be spotted.  Interesting trends of industry.

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 Opportunities for Starbucks Loyalty Reigns can be obtained from things such as:  Change in technology and market strategies  Government policy changes that is related to the company’s field  Changes in social patterns and lifestyles.  Local events. THREATS: Following points can be identified as a threat to company:  Company’s facing obstacles.  Activities of competitors.  Product and services quality standards  Threat from changing technologies  Financial/cash flow problems  Weakness that threaten the business. Following points should be considered when applying SWOT to the analysis:  Precise and verifiable phrases should be sued.  Prioritize the points under each head, so that management can identify which step has to be taken first.  Apply the analyses at proposed level. Clear yourself first that on what basis you have to apply SWOT matrix.  Make sure that points identified should carry itself with strategy formulation process.  Use particular terms (like USP, Core Competencies Analyses etc.) to get a comprehensive picture of analyses. STEP 5: PESTEL/ PEST Analysis of Starbucks Loyalty Reigns Case Solution: Pest analyses is a widely used tool to analyze the Political, Economic, Socio-cultural, Technological, Environmental and legal situations which can provide great and new opportunities to the company as well as these factors can also threat the company, to be dangerous in future. Pest analysis is very important and informative. It is used for the purpose of identifying business opportunities and advance threat warning. Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies. To analyze the business objective and its opportunities and threats, following steps should be followed:  Brainstorm and assumption the changes that should be made to organization. Answer the necessary questions that are related to specific needs of organization  Analyze the opportunities that would be happen due to the change.

 Analyze the threats and issues that would be caused due to change.  Perform cost benefit analyses and take the appropriate action. Pest analysis PEST FACTORS: POLITICAL:  Next political elections and changes that will happen in the country due to these elections  Strong and powerful political person, his point of view on business policies and their effect on the organization.  Strength of property rights and law rules. And its ratio with corruption and organized crimes. Changes in these situation and its effects.  Change in Legislation and taxation effects on the company  Trend of regulations and deregulations. Effects of change in business regulations  Timescale of legislative change.  Other political factors likely to change for Starbucks Loyalty Reigns. ECONOMICAL:  Position and current economy trend i.e. growing, stagnant or declining.  Exchange rates fluctuations and its relation with company.  Change in Level of customer’s disposable income and its effect.  Fluctuation in unemployment rate and its effect on hiring of skilled employees  Access to credit and loans. And its effects on company  Effect of globalization on economic environment  Considerations on other economic factors SOCIO-CULTURAL:  Change in population growth rate and age factors, and its impacts on organization.  Effect on organization due to Change in attitudes and generational shifts.  Standards of health, education and social mobility levels. Its changes and effects on company.  Employment patterns, job market trend and attitude towards work according to different age groups. case study solutions  Social attitudes and social trends, change in socio culture an dits effects.  Religious believers and life styles and its effects on organization  Other socio culture factors and its impacts. TECHNOLOGICAL:  Any new technology that company is using  Any new technology in market that could affect the work, organization or industry

 Access of competitors to the new technologies and its impact on their product development/better services.  Research areas of government and education institutes in which the company can make any efforts  Changes in infra-structure and its effects on work flow  Existing technology that can facilitate the company  Other technological factors and their impacts on company and industry These headings and analyses would help the company to consider these factors and make a “big picture” of company’s characteristics. This will help the manager to take the decision and drawing conclusion about the forces that would create a big impact on company and its resources. STEP 6: Porter’s Five Forces/ Strategic Analysis Of The Starbucks Loyalty Reigns Case Study: To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. In this model, five forces have been identified which play an important part in shaping the market and industry. These forces are used to measure competition intensity and profitability of an industry and market. porter’s five forces model These forces refers to micro environment and the company ability to serve its customers and make a profit. These five forces includes three forces from horizontal competition and two forces from vertical competition. The five forces are discussed below:  THREAT OF NEW ENTRANTS:  as the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:  Barriers to entry that includes copy rights and patents.  High capital requirement  Government restricted policies  Switching cost  Access to suppliers and distributions  Customer loyalty to established brands.  THREAT OF SUBSTITUTES:  this describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:

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 Price performance of substitute  Switching costs of buyer  Products substitute available in the market  Reduction of quality  Close substitution are available  DEGREE OF INDUSTRY RIVALRY:  the lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:  Competitive advantage  Continuous innovation  Sustainable position in competitive advantage  Level of advertising  Competitive strategy  BARGAINING POWER OF BUYERS:  it deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:  Bargaining leverage  Switching cost of a buyer  Buyer price sensitivity  Competitive advantage of company’s product  BARGAINING POWER OF SUPPLIERS:  this refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:  Input differentiation  Impact of cost on differentiation  Strength of distribution centers

 Input substitute’s availability. STEP 7: VRIO Analysis of Starbucks Loyalty Reigns: Vrio analysis for Starbucks Loyalty Reigns case study identified the four main attributes which helps the organization to gain a competitive advantages. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Therefore there must be some resources and capabilities in an organization that can facilitate the competitive advantage to company. The four components of VRIO analysis are described below: VALUABLE: the company must have some resources or strategies that can exploit opportunities and defend the company from major threats. If the company holds some value then answer is yes. Resources are also valuable if they provide customer satisfaction and increase customer value. This value may create by increasing differentiation in existing product or decrease its price. Is these conditions are not met, company may lead to competitive disadvantage. Therefore, it is necessary to continually review the Starbucks Loyalty Reigns company’s activities and resources values. RARE: the resources of the Starbucks Loyalty Reigns company that are not used by any other company are known as rare. Rare and valuable resources grant much competitive advantages to the firm. However, when more than one few companies uses the same resources and provide competitive parity are also known as rare resources. Even, the competitive parity is not desired position, but the company should not lose its valuable resources, even they are common. COSTLY TO IMITATE : the resources are costly to imitate, if other organizations cannot imitate it. However, imitation is done in two ways. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Any firm who has valuable and rare resources, and these resources are costly to imitate, have achieved their competitive advantage. However, resources should also be perfectly non sustainable. The reasons that resource imitation is costly are historical conditions, casual ambiguity and social complexity. ORGANIZED TO CAPTURE VALUE : resources, itself, cannot provide advantages to organization until it is organized and exploit to do so. A firm (like Starbucks Loyalty Reigns) must organize its management systems, processes, policies and strategies to fully utilize the resource’s potential to be valuable, rare and costly to imitate. STEP 8: Generating Alternatives For Starbucks Loyalty Reigns Case Solution: After completing the analyses of the company, its opportunities and threats, it is important to generate a solution of the problem and the alternatives a company can apply in order to solve its problems. To generate the alternative of problem, following things must to be kept in mind:  Realistic solution should be identified that can be operated in the company, with all its constraints and opportunities.  as the problem and its solution cannot occur at the same time, it should be described as mutually exclusive  it is not possible for a company to not to take any action, therefore, the alternative of doing nothing is not viable.

 Student should provide more than one decent solution. Providing two undesirable alternatives to make the other one attractive is not acceptable. Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company. STEP 9: Selection Of Alternatives For Starbucks Loyalty Reigns Case Solution: It is very important to select the alternatives and then evaluate the best one as the company have limited choices and constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The criteria’s on which business decisions are to be selected areas under:  Improve profitability  Increase sales, market shares, return on investments  Customer satisfaction  Brand image  Corporate mission, vision and strategy  Resources and capabilities Alternatives should be measures that which alternative will perform better than other one and the valid reasons. In addition, alternatives should be related to the problem statements and issues described in the case study. STEP 10: Evaluation Of Alternatives For Starbucks Loyalty Reigns Case Solution: If the selected alternative is fulfilling the above criteria, the decision should be taken straightforwardly. Best alternative should be selected must be the best when evaluating it on the decision criteria. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints. STEP 11: Recommendations For Starbucks Loyalty Reigns Case Study (Solution): There should be only one recommendation to enhance the company’s operations and its growth or solving its problems. The decision that is being taken should be justified and viable for solving the problems.

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Starbucks Loyalty Reigns Case Solution[6281]

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