Brand-Promise and Brand-Delivery. A Study of Customer Experience Management at Starbucks in Cluj-Napoca

Master's Thesis 2018 45 Pages

Business economics - Business Management, Corporate Governance


Table of contents

1. Introduction

2. The customer experience management (CEM) framework

3. Determinants of customer experience (CX) : The correlation between brand promise, word of mouth, expectations, and other drivers

4. The customer experience journey

5. The Starbucks experience survey
5.1 The local coffee-shop scene
5.2 Survey results

6. Final thoughts and interpretations
6.1 Opportunities for the future

7. Conclusion

8. References

1. Introduction

Customer experience (CX) has become a buzzword in business management and it can help companies reevaluate and rethink their strategy in order to gain competitive advantage in their market. Organizations are becoming increasingly aware of the need of creating an outstanding and unique customer experience. Leaders have realized that customer satisfaction is no longer enough to ensure customer loyalty and the thriving of a brand in today’s world. In these circumstances, it is no surprise that the topic has been receiving considerable attention over the past years.

The literature on customer experience was at a nascent stage in the 1990s, since then it has grown substantially and many scholars have explored the theme from both theoretical and practical viewpoints. With the emergence of this trend, we believe it is crucial to examine the current market leaders to determine how well they perform in this framework and whether their activities are sustainable in the future. There is currently ample academic research available on this topic and the works of Bernd Schmitt, Laurence Body, Joe Pine and many more, have re- shaped our thinking about management, offering practical approaches too. With this dissertation paper we believe it is relevant to examine closely the local performance of Starbucks Coffee in Cluj-Napoca. The choice is not arbitrary, given that it is one of the most popular coffee-shops in the country, which may be attributed not only to the quality of the products and services, but to the sophistication it is associated with as well.

Starbucks revolutionized the habit of coffee consumption to another level, introducing the coffee-shop experience to the masses. It was manager, Howard Schultz, who recognized the fact that coffee consumption was is an integral part of social life and wanted to recreate the coffee bar experience, to provide a reflection of the Italian gathering places. Joseph Michelli expresses his admiration of the brand and attributes its success to the “inner workings of a company that has taken an ordinary, even mundane, product and transformed into extraordinary business success” (Michelli 2008, p. 1). Schultz claims that they are not in the coffee business serving people, but in the people business servicing coffee, which accentuates the fact that Starbucks puts connecting people first (Behar 2007). Devin Page (2005) suggests that Starbucks could operate well even without selling coffee, as there would be niche that would still come and pay a fee for entering a room where mellow music softly plays in the background. It is not only the quality of its products that drives the Starbucks sensation, but the entire atmosphere surrounding the purchase of coffee: the openness of its store space, interesting menu boards, the shape of its counter, the cleanliness of the floorboards. Unlike its imitators, Starbucks recognizes the art of retailing coffee goes way beyond the product and the total experience matters, each particular element that reflects the "authentic and organic roots of Starbucks" (Michelli 2006, p. 50).

Keller (2003) views Starbucks as a brand powerhouse due to the fact that it amassed a great deal of brand equity. In his opinion, this, on the one hand, can be attributed to the quality of coffee because through vertical integration they are fully involved in the production of coffee from start to finish. On the other hand, the secret to their reputation also lies in the fact that they created core brand values that are attractive for a wide public. By its communication Starbucks claims to offer a rich sensory experience that involves all the senses: the aroma of the beans, the product displays, the music playing in the background, and the cozy feel of furniture. Their main aims and values presented on their official website and leaflets around the coffee-shops are the following:

“To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

Creating a culture of warmth and belonging, where everyone is welcome.

Acting with courage, challenging the status quo and finding new ways to grow our company and each other.

Being present, connecting with transparency, dignity and respect.

Delivering our very best in all we do, holding ourselves accountable for results.

“We are performance driven, through the lens of humanity.”

In light of the above, we consider that Starbucks is a company worth examining through the lens of the customer experience management framework. Therefore, the principal aim of this paper is to analyze the customer experience journey, to evaluate the brand promise versus brand delivery of Starbucks throughout a local survey, in order to determine how well the values presented in the mission statement of the company align with customers' perceptions in Cluj- Napoca, Romania.

2. The customer experience management (CEM) framework

Currently, the topic of experience management and how to create an outstanding customer experience is receiving considerable attention by a growing body of literature. The following definition offers a detailed view over what customer experience means, stating that it “originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction. This experience is strictly personal and implies the customer’s involvement at different levels (rational, emotional, sensorial, physical, and spiritual)” (Gentile, Spiller, and Noci 2007, p. 397). Other definitions of customer experience include that it is “the way clients perceive the totality of the interactions with the company” (Bodine, Manning 2012). Meyer and Shwager (2007) add the idea that customer experience encompasses the products and services that the company proposes and the promises it makes. It is not only about what the clients think when they buy or use a product, but the internal and subjective response customers have after any direct or indirect contact with a company: excitement, happiness, reassurance, nervousness, disillusionment, or frustration.

The concept of customer experience is extremely frequently in use but the definitions may fail to cover its distinctive particularities. One of the confusions that arise is from comparing customer experience with customer service, experiential marketing, or customer relationship management, even though these are very distinct fields of study.

First and foremost, there certainly is a complementary relationship between customer service and customer experience, however good customer service does not necessarily entrain good customer experience. Delivering good customer service is only one step on the road to an enchanting experience and to create a “wow effect” (Body, Tallec 2015, p. 22). Moreover, in his groundbreaking book, renowned consultant and marketing thinker Bernd Schmitt (2010) argues that customer satisfaction is an approach that presents itself as customer focused, yet it is not the case. The objective of this approach is making sure that the customers are satisfied after their purchase or interaction with the company. Therefore, this model, as Schmitt argues, is outcome- oriented, concerned only with the functionality of the product rather than with the experience of the customer. What is absent from the customer satisfaction (CSAT) framework and where it fails is the consideration of all the experiential dimensions of consumption. In contrast, customer experience is process-oriented which highlights a holistic approach and goes far beyond CSAT. It includes much more than simply getting what you want, because it encompasses all the events and activities that were a part of it: the interaction with the personnel, the organization and design of the store, and the emotions one feels while being there.

Another approach that is frequently compared to customer experience management is customer relationship management (CRM), which focuses on building relationships. To this end, companies record data about the customer, mostly regarding monetary transactions and operations. Similarly, there is a major defect in this model too, given that it focuses on information important to the company, however it fails to establish an emotional bond with the customer. This idea was also developed Schmitt (2010), who notes that non-functional needs are neglected and this approach cannot provide a total view of customer experience. The need of a new approach is born and that can only be customer experience management (CEM). This management concept is truly customer focused, process-oriented, and it includes strategically managing a customer’s entire experience with a product or a company: “CEM has a broad view of how a company and its products can be relevant to a customer’s life. CEM connects with the customer at every touchpoint and calls for the integration of different elements of the customer’s experience. It recognizes that customers don’t buy a car just because it operates well and a computer just because it has sufficient storage, memory and plug-ins. A car is also an identity- projecting lifestyle product, and it is as important for a computer to spark the imagination as to store data. CEM is concerned with sales and brand preference, but that is not the whole story. Before and even after the sale, CEM provides value to customers by delivering information, service, and interactions that result in compelling experiences. It thus builds loyalty with customers and adds value to the firm” (Schmitt 2010, p 14). Along similar lines, Meyer and Shwager (2007) add that CRM captures only objective data about a particular customer, such as his or her history of orders, product returns, and inquiries, etc., but not the customer’s subjective thoughts about the company. Furthermore, Verhoef (2008) highlights the idea that CEM differs from CRM by focusing on the current experience of the customer.

As we became more and more aware of the importance of customer experience, a shift could be perceived in our way of evaluating companies and in management strategies. During the nascent stage of CEM, Joseph Pine (1999) remarked that consumers seek experiences and companies must try to find new ways of differentiating themselves by engaging the clients more directly, more profoundly, more sensorially. He modelled the concept of experience and traced the evolution of the economy through the example of the transformation of commodities to goods, then of goods to services.

As per Pine’s model, at the beginning of the economy we sold commodities, such as raw materials. Afterwards, with the industrial revolution, ready-made products have appeared in packages and were given brand. As the demand for packaged was satisfied, the brands differentiated themselves through a single attribute, which was the price. Later, to innovate, manufacturers imagined creating services around products. As the markets became saturated, companies had to start selling experiences, that is to say emotions around the consumption of a product or service, as this was the only way to “escape the commoditization trap” (Pine, Gilmore 1999, p. 6). As a result, in the era of experience economy, Body and Tallec (2015) argue that products or services are just a pretext for selling experiences. Moreover, they develop the idea that the paradigm of the experience integrates the entire experience and does not concentrate solely on the characteristics of the product or service, the benefits that the consumers may have, but everything that allows us to value what takes places during such phases as making a choice, payment, consumption, and even what comes after that. The emotional connection during an experience more pronounced than when it comes to a service. Moreover, they claim that experiences should possess personalized, distinctive, and memorable touch. Due to its individualistic character, an experience is difficult to copy, therefore rivalry is almost impossible to occur. As these experiential designs are difficult to copy, Berry, Carbone, and Haeckel (2002) also draw our attention to the fact that emotional bonds between companies and customers are not easy for competitors to dissolve.

Laurence Body and Christophe Tallec (2015) also point out the evident fact that we are undergoing a conversion from the need of satisfaction to the need of experience. Moreover, the idea that clients give more value to the experience than to a product or service is obvious due to the personal, subjective experiences each of us live. As experiences have now become a new way of differentiation, products and services have to give way to them in this economic paradigm. In today’s world, products and services no longer suffice, because experiences are memorable events that engage each individual in a unique and personal manner. Therefore the term “profitable experiences” has arisen, which denotes that clients are invoiced for the time spent at a given place, while merely selling products and services is regarded as an obsolete practice (Body, Tallec 2015, p. 7-9).

The below customer experience model by Laurence Body and Christophe Tallec (2015, p. 19) shows how customers can perceive interactions with the company:

Abbildung in dieser Leseprobe nicht enthalten

At the base of the pyramid, companies only satisfy a basic need, which happens most of the time and it is not sufficient. Nowadays, consumers consider functional attributes, associated benefits, quality of the products and the image of the brand as a basic requirement. In this phase, the products might be of excellent quality, but what still lacks is a touch that differentiates. Consequently, comparison and choice is based on price from the point of view of the client. On the second tier, the level of fulfillment of service commitments can be measured. Sustainable innovation, ease of use, transparency, and lean processes are all part of it. It is all about satisfying the clients and reducing the number of unsatisfactory outcomes. The top of the pyramid relates to emotions that the companies can evoke. Service excellence can be measured through various norms such as ISO 9001 for the basic level or ISO 10002 for the treatment of complaints. It is not only about satisfying basic needs, but those emotional as well. It should derive feelings of pleasure that are memorable. Unlike the first or second tier, success on this level is harder to replicate, the authors explain. Clients appreciate the humane and subjective dimension of consumption, consequently it is essential to note that the senses and emotions play a crucial role, as that is what will make an experience memorable. Moreover, emotionally engaged clients are more likely to trust the brand and be loyal to it for a longer period of time.

Adding to the above, researchers suggest that customer experience construct is holistic in nature and involves the customer’s cognitive, affective, emotional, social and physical responses to the retailer, which are elicited by elements that the retailer can control (e.g., service interface, retail atmosphere, assortment, price), but also by elements that are outside of the retailer’s control (e.g., influence of others, purpose of shopping) (Verhoef 2008). The topic of experience determinants developed in the subsequent chapters.

3. Determinants of customer experience : The correlation between brand promise, word of mouth, expectations, and other drivers

In this chapter we consider that it is noteworthy to analyze the drivers of customer experience, such as brand promise, expectations, word-of-mouth, and other factors. Moreover, in the last part of this chapter we will analyze the possible solutions for creating an outstanding customer experience.

3.1 Brand perception and expectations

Consistently delivering on promises is a management imperative for brands and it can pose major challenges (Keller 2003). There is a strong correlation between expectations and reality both from the company’s and customer’s point of view that can shape the experience. From both perspectives, as the figure shows, we can distinguish the intended versus delivered experience versus the expected and real experience:

Abbildung in dieser Leseprobe nicht enthalten

Source: Body, Tallec 2015, p. 80

Moreover, a research conducted by Bain & Company (2005) has confirmed that out of 362 firms 80% believe they deliver a superior experience to customers. However, when customers were asked, they claimed that only 8% are really delivering. This stresses the fact that between the customers’ perception of what gets delivered and the expected service there often is gap. In a highly competitive and saturated market, differentiation is not always the result of objective product quality, but to perceived product quality. Exaggerated claims that overestimate the company’s capacity to meet expectations can seriously affect the firm’s credibility, even when their offer is superior to that of the competition. In consequence, the level of expectations resulting from the company’s communications must be high enough to attract business, but realistic enough to be delivered consistently (Babut, Drule, Romonti-Maniu, Souca, Zaharie, 2017). Furthermore, expectations can be modified by market conditions, the competition, and the customer’s personal situation (Verhoef 2008).

As seen in the description of the company, Starbucks has an extremely powerful brand image and reputation. Consequently, the expectations of customer’s might be higher than compared to less known brands. Therefore, it is vital for a company like Starbucks to live up to the expectations that they set in the mission statement and what they communicate through advertising. When setting such expectations, companies must strive hard to live up to them and avoid under-delivery. Goodman (2009) highlights the fact that Starbucks promises a great experience that barely mentions coffee. Their principal aim is creating the same welcoming atmosphere in all its stores by means of design, furnishings, product offerings, and employee- customer interactions. The asset that Starbucks pride themselves with the most is customer experience. Scholars mention as well that Starbucks built its whole empire on the experience in the store (Perepu, 2013). The company has become a global marketing phenomenon that establishes strong brand loyalty and can set high expectations for customers. The wordcloud below that we created helps us visualize this:



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Title: Brand-Promise and Brand-Delivery. A Study of Customer Experience Management at Starbucks in Cluj-Napoca