Page 110 - DMGT522_SERVICES MANAGEMENT

Unit 4: Service Strategies

Notes
Example: In a bank, personnel can inform the customers about the heavy load hours and
request them to come during slack periods.

Take a long-term perspective toward getting rid of the queues

Develop plans for alternative ways to serve your customers. Where appropriate, develop plans
for automating or speeding up the process in some manner. This is not to say you want to
eliminate personal attention; some customers expect this.

Case Study Case: Challenges to Iconic Brands of

Starbucks

t is a widely accepted notion that world is indeed flat. Economic boundaries are being
Idemolished. Companies are no longer constrained to their national markets. Internet
has become a great leveller of field between companies and customers. Price has yet again
taken central stage. And brands are under increasing threats from private labels.
Given such a connected world, how can companies maintain their underlying brand identity
in face of worldwide external shocks such as the current global recession? Should brands
practice consistency or continually adapt?

Before answering those questions, take a look at one of the world’s iconic brands –
Starbucks. Starbucks is almost single handedly responsible for creating the concept of a
third place between home and work where people can relax, enjoy a cup of coffee and
experience the inviting ambience.
Since its founding days in the early 90s, Starbucks has strived to build its brand identity on
offering customers a relaxing and enjoyable experience. In addition, Starbucks has also
built its brand on things that tend to be out of the box, by consistently defying the
conventional wisdom.
When companies were aggressively advertising, Starbucks decided not to advertise. When
cost cutting was the dominant paradigm of the industry, Starbucks chose to emphasize
non-routine procedures to create excitement among the baristas instead of streamlining
procedures to minimise cost. Unlike most other companies, Starbucks made its employees
its partners, by offering them stock options and health insurance.
As against rigorous customer surveys Starbucks chose casual and informal chats with
customers to gather their overall mood. All these clever strategies have enabled Starbucks
to build one of the most iconic brands that has continued to resonate with customers
across the world for more than fifteen years. That was until the economic conditions
started worsening.
Since early 2008, Starbucks has been forced to bite the dust and succumb to the aftermaths
of the recession. Founder Howard Schultz returned as the CEO. Cost cutting and efficiency
was made the guiding strategy. More than 800 Starbucks stores were closed in the US
alone. For the first time Starbucks invested more than US$200 million in advertising. And
for the first time in its history, Starbucks started price campaigns in select stores to lure
customers away from other price competitors such as McDonald’s and Dunkin Donuts.
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