Acknowledgement:

We are very thankful to Allah Almighty who has all the powers in the world and who also
give us power to perform the assigned task, which otherwise we can't perform. We are also
very thankful to our parents. We are very thankful to our honorable instructor Ms. Maryam
Tariq for providing us with such an opportunity to explore the practical aspects of the Services
Marketing that refined our theoretical concepts and would help us in the practical field.

Page 1 of 16
Executive Summary:
Starbucks Coffee Company is North America's leading roaster and retailer of specialty coffees.
Headquartered in Seattle, WA, Starbucks has 931 retail stores and 75 major airport locations.
The Company's objective is to establish Starbucks as the most recognized and respected brand
of coffee in the world. To achieve this goal, the Company will continue to rapidly expand its
retail operations, grow its mail order and specialty sales operations, and selectively pursue other
opportunities to leverage and grow the Starbucks brand through the introduction of new
products and the development of new distribution channels.
Employees are one of the most important resources to Starbucks. If the company is to prosper,
the employees must be treated well. All employees are eligible for Starbucks' health care and
benefits package, as well as a starting wage above the minimum. Starbucks' strong commitment
to the environment is guided by an environment committee. The Company endeavors to offer
an environmentally safe product, as it believes that the welfare of people, plant and product are
linked. Starbucks prides itself on being a "good citizen" locally and in the various coffee
producing countries. They make significant contributions to local charities that focus on
children, the environment, the homeless, and AIDS research/support.
Financially, Starbucks has had solid earnings and returns. While still in the fast-growth stage,
the Company has managed to continue healthy operations while generating enough public
funds to finance store expansion. The company is expanding its empire overseas. Japan was
Starbucks' first expansion outside of North America. Starbucks also plans to open coffee bars
in Singapore.
Although Starbucks expects same-store sales, which showed 20% increases in the past five
years, to fall, overseas expansion and joint ventures promise to be major growth areas for
Starbucks. Despite this potential problem, Starbucks remains excited about future growth and
continues to be hopeful about the future.

Introduction:
Every day, we go to work hoping to do two things: share great coffee with our friends and help
make the world a little better. It was true when the first Starbucks opened in 1971, and it’s just
as true today.
Back then, the company was a single store in Seattle’s historic Pike Place Market. From just a
narrow storefront, Starbucks offered some of the world’s finest fresh-roasted whole bean
coffees. The name, inspired by Moby Dick, evoked the romance of the high seas and the
seafaring tradition of the early coffee traders.
In 1981, Howard Schultz (Starbucks chairman and chief executive officer) had first walked
into a Starbucks store. From his first cup of Sumatra, Howard was drawn into Starbucks and
joined a year later.
In 1983, Howard traveled to Italy and became captivated with Italian coffee bars and the
romance of the coffee experience. He had a vision to bring the Italian coffeehouse tradition
back to the United States. A place for conversation and a sense of community. A third place
between work and home. He left Starbucks for a short period of time to start his own Il Giornale

Page 2 of 16
coffee houses and returned in August 1987 to purchase Starbucks with the help of local
investors.
From the beginning, Starbucks set out to be a different kind of company. One that not only
celebrated coffee and the rich tradition, but that also brought a feeling of connection.
We’re not just passionate purveyors of coffee, but everything else that goes with a full and
rewarding coffeehouse experience. We also offer a selection of premium teas, fine pastries and
other delectable treats to please the taste buds. And the music you hear in store is chosen for
its artistry and appeal.
It’s not unusual to see people coming to Starbucks to chat, meet up or even work. We’re a
neighborhood gathering place, a part of the daily routine – and we couldn’t be happier about
it. Get to know us and you’ll see: we are so much more than what we brew.
We make sure everything we do is through the lens of humanity – from our commitment to the
highest quality coffee in the world, to the way we engage with our customers and communities
to do business responsibly.

Vision Statement:
“Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining
our uncompromising principles while we grow.”

Mission Statement:
“Inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.”

Page 3 of 16
Objectives:
“The Company's objective is to establish Starbucks as the most recognized and respected brand
of coffee in the world.”
To achieve this goal, the Company will continue to rapidly expand its retail operations, grow
its mail order and specialty sales operations, and selectively pursue other opportunities to
leverage and grow the Starbucks brand through the introduction of new products and the
development of new distribution channels.
The corporate mission statement defines the company's goals. Starbucks' mission is "to inspire
and nurture the human spirit – one person, one cup and one neighborhood at a time." The
company aims to meet this goal through the development of a culture that embraces acceptance
and is supportive of personal growth.

Our Products:
Starbucks offers a range of exceptional products that customers enjoy in our stores, at home,
and on the go.

Coffee:
More than 30 blends and single-origin premium coffees.

Handcrafted Beverages:
Fresh-brewed coffee, hot and iced espresso beverages, Frappuccino® coffee and non-coffee
blended beverages, Starbucks Refreshers® beverages, smoothies and teas.

Merchandise:
Coffee- and tea-brewing equipment, Verismo® System by Starbucks, mugs and accessories,
packaged goods, books and gifts.

Fresh Food:
Baked pastries, sandwiches, salads, salad and grain bowls, oatmeal, yogurt parfaits and fruit
cups.

Consumer Products:
Coffee and Tea:
Whole bean and ground coffee (Starbucks and Seattle’s Best Coffee brands), Starbucks VIA®
Instant, Starbucks® Coffee K-Cup® pods, Starbucks® and Teavana® Verismo® pods, Tazo®
tea filterbags, and Tazo ® tea latte concentrates.

Ready-to-Drink (RTD):
Starbucks® bottled Frappuccino® coffee drinks, Starbucks Discoveries® chilled cup coffees,
Starbucks Discoveries Iced Café Favorites®, Starbucks Iced Coffee, Starbucks Doubleshot®
espresso drinks, Starbucks Doubleshot® Energy Coffee drinks; Starbucks Refreshers®
beverages, Evolution Fresh™ bottled juices, Tazo® bottled iced and juiced teas.

Page 4 of 16
Brand Portfolio:
Starbucks Coffee, Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, La Boulange, Ethos
Water and Torrefazione Italia Coffee.

Core & Supplementary Services:

Core Services:
A core service is the primary purpose of transaction. “Coffee” is the core service of Starbucks.

Supplementary Services:
A service consists with two products elements to perform its functions “Access to Apple iTunes
music store, Movie, DVD’s, Books” are supplementary services of Starbucks.

Five Forces Transforming Service Economy:

Page 5 of 16
Government Policies:
Starbucks is committed to conducting business ethically, with integrity, and in accordance with
the law.
Part of that commitment includes compliance with rules, regulations, and standards governing
our interaction with the government, including our disclosure and accountability regarding
political contributions and expenditures

Advances in IT:
Starbucks is very well known for use of technology not only for coffee related processes (to
ensure consistency in taste and quality along with cost savings) but to connect to its customers.
Many customers use Starbucks stores as make a shift office or meeting place because of the
free and unlimited Wi-Fi availability.

The company in the year 2008 also launched mystarbucksidea.force.com as a platform where
customers can ask questions, give suggestions and openly express opinions and share
experiences.
The company has implemented some of the suggestions given via this forum. Starbucks also
uses Apple’s I Beacon System wherein customers can order their drink through the Starbucks
phone app and get a notification when they walk in the store.

Page 6 of 16
Globalization:
Global expansion is essential to successful companies. Starbucks was very successful in its
domestic market, the leaders of the company knew they would have to exploit globalization
and expand the company to foreign markets to fully utilize the potential that the company had.
In 2003, Starbucks quickly expanded into foreign markets and began to evolve into the world-
wide company we know today.

Countries began experiencing the “Starbucks Effect,” which is the continuous emergence of
new competitors with superior business models
Rival coffee shops started copying Starbucks’ business practices, name, and even its company
logo. Starbucks had to utilize intellectual property laws to dispel customer confusion between
itself and competitors.

Page 7 of 16
Five Broad Categories Within the Non-Ownership of Service:

Defined space & place rentals:

These services obtain use of a defined portion of a larger space in a building, vehicle or other
area which can be an end in its own right. A table in Starbucks where you can sit and enjoy
coffee.

Labor & Expertise Rentals:

People are hired to perform work that customers either choose not to do for
themselves

Page 8 of 16
Authors:
Starbucks hire authors to write books for their outlets. And these books are only available on
selected Starbucks outlets
 “How Starbucks Saved My Life” (Michael gates gill)
 “SWAY” (amber McRae turner)
 “Let It Snow” (john green)
 “The Book Thief” (Markus Zusak)
 “Weekend Warriors” (fern Michaels)

Music:
Debut albums of some new musicians are actually launched and available only exclusively at
Starbucks outlets.
 “Sonic youth” Hits are for squares
 “Various artist” Bimexicano, Nuestros, Clásicos, Hechos, Rock.
 “Herbie Hancock” possibilities
 “Various artist” sundown music for unwinding.

Access and usage of networks and systems:

Customers rent the right to participate in a specified network. Starbucks provide free internet
access and online music stores to play music.

Four Broad Categories of Service:

People processing:
 Physically enter the service factory.
 Co-operate actively with the service operation.
 When customers buy coffee, ice cream etc. from Starbucks outlets, the customer is
physically entering the outlets and interact with service provider to enjoy coffee or ice
cream.

Possession processing:
 Involvement is limited.
 Production and consumption are separable.
 Office delivery service of Starbucks.

Information processing:
Information is the most intangible form of service output. But may be transformed into tangible
forms viz books, CD’s, Books and DVDs provided in Starbucks outlets.

Page 9 of 16
Seven P’s:
Product:
 30 varieties of whole beam coffee ecofriendly cappuccino, pastries, smoothies, wraps.
 Live coffee Mantra.
 Sodas juices coffee related accessories, equipment’s music CDs novelty items varied
from store to store.
 JV with Pepsi cola for Frappuccino Dreyer for premium ice cream.

Place:
 Located in high traffic, high visibility settings retail settings, office buildings, university
campuses.
 Target individual on go.
 Localization stealth outlets.
 “We want to reach customers where they work, travel, shop and dine” (Starbucks
philosophy).

Price:
 Priced high perceived upscale image.
 Premium pricing strategies.

Promotions:
 Starbucks cards referral system.
 Corporate sales card.
 Delivery to offices without restrictions.
 Philanthropy-contribution to non-profit organization.

Page 10 of 16
People:
 Core ingredients.
 “Happy customers” starts with “Happy staff”
 We are not employees we are partners.
 Employee turnover rate is 70% compared to the fast food industry average of 300%.

Physical evidence:
 Custom made cup of beverage.
 Clean friendly environment, cozy chairs & sofas.
 Alluring pastries menu, tasty show cases, tempting coffee pictures.

Process:
 Legendry services.
 Sequence service reducing queue.
 IOS and Android app for ordering.

Services Characteristics:
Intangibility:
 Services are cannot be touched or hold, they are intangible in nature.
 Wi-Fi and music provided in Starbucks outlets, you can just play & hear your favorite
music.

Inseparability:
In case of services the production, distribution, and consumption takes place simultaneously.
These three functions cannot be separated.

Variability:
 It is impossible to provide similar service every time. You’ll experience some change every
time you buy a particular service from a particular service provider.
 Yesterday you had a coffee at Starbucks. Today, you are again at Starbucks to have a coffee,
but you have got different place to sit today; the person served you coffee is different today;
other people having coffee are also different today. Hence, your experience of having
coffee today is different as compared to yesterday.

Perish-Ability:
 You can store goods, but it is not so in the case of services. Services get perished
immediately.
 The production and consumption of coffee takes place simultaneously.

Participation of Customer:
 Customer is co-producer in production of services.
 For delivery of Starbucks coffee (office delivery) customer involvement is as important as
is of the service provider.

Page 11 of 16
Focus Strategies:
Starbucks follow fully focused strategies because they offered limited range of services to
specific market. And the target market for Starbucks is men and women in the middle to upper
classes who can afford Starbucks higher priced beverages regularly.

The Flower of Service:

Information:
 Menu
 Prices
 Receipts

Consultation:
 Customized advice

Order Taking:
 Online store
 Starbucks app
 Drive through

Hospitality:
 Free Wi-Fi
 Comfortable seats
 Music

Page 12 of 16
Safekeeping:
 Sheltered area.

Expectation:
 Create your own menu.

Billing:
 Invoices for individual transaction.
 Machine display for amount due.

Payment
 Cash
 Credit card

The Russel’s Model:

 Services are lie in pleasant and sleepy quadrant.

 In Starbucks outlets customers receive their order in minimum time.
 Environment is pleasant so customers enjoy their drinks in relaxing mood.

Page 13 of 16
Bitner’s Service Scape Model:

Page 14 of 16
Dimension of Service Quality:
Impact of Ambient Conditions:
Ambient environment is composed of hundreds of design elements and details that must work
together to create desired service environment. Ambient conditions are perceived both
separately and holistically, and include:
 Lighting and color schemes
 Size and shape perceptions
 Sounds such as noise and music
 Temperature
 Scents

Impact of Music:
 Music have a powerful impact on customers.
 Starbucks has long made music a central part of the experience of customers who walk into
each of its 24,000 stores around the world.
 In 1999, Starbucks acquired a Bay Area music store called Hear Music and launched its
own Hear Music-branded coffeehouses and, later, a record label. Throughout the 2000s,
Starbucks stores everywhere sold CDs, launching a label of its own that put out music by
artists as famous as Paul McCartney and as grungy as Sonic Youth.

Page 15 of 16
Impact of Scent:
 The scent can give your brain a boost and increase your energy.
 Scents have distinct characteristics and can be used to solicit emotional, physiological, and
behavioral responses.
 In service settings, research has shown that scents can have significant effect on customer
perceptions, attitudes, and behaviors.
 Starbucks have distinctive smell that is different from other coffee shops.
 They have spent millions of dollars, and decades in research, to know that what's going to
get you to buy more coffee, is the smell of coffee.
 Employees are not allowed to wear perfumes, colognes or any noticeably scented products
(deodorants, lotions, etc.) because coffee beans absorb smells.

Impact of Color:
 Colors can be stimulating, calming, expressive, disturbing, impressionable, cultural,
exuberant, symbolic.
 Color pervades every aspect of our lives, embellishes the ordinary, gives beauty and drama
to everyday objects.
 Colors have a strong impact on people’s feelings.
 Starbucks color scheme is inspired by nature.
 Green color shows nature.

Page 16 of 16