Problem Solving, Creativity and Solution Setting

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UTS Business School

MANAGEMENT DISCIPLINE GROUP

21854 – Problem Solving, Creativity and Solution Setting

ASSIGNMENT COVER

Subject Name: Problem Solving. Creativity and Solution Setting Subject No: 21854______ Tutor: _DR Ece Kaya____________________ Tutorial Day & Time: Friday, 13:30_________

Family Name: Yu________________________ Given Name: Xite________________________ Student No: 13156548____________________________ Phone No (H): __________________________ (W): ___________________________________

Topic: How to save Starbucks brand value crisis______________________________________________________________ __________________________________________________________________________________ Date Submitted: _21/10/2020___________________ Submitted on time? Yes ( √ ) No ( ) If not submitted on time give details of approved extension or attach approval: __________________________________________________________________________________

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☐ √Left-justified text ☐ √Numbered pages, bottom right-hand corner

Referencing – APA referencing format

☐ Number of academic journal articles in reference list: 1___ ☐ Number of other sources in reference list: __5__ ☐ √All direct quotes have page numbers in their in-text reference ☐ √All references in text have been included in the final reference list ☐ √Final reference list is in alphabetical order by author

ORIGINAL AUTHORSHIP STATEMENT:

I have carefully read, understood, and taken account the UTS policy on plagiarism and guidelines for assessment and referencing in the subject outline. I affirm that this assignment is my own work, that it has not been previously submitted for assessment, that all material which is quoted is accurately indicated as such, and that I have acknowledged all sources used fully and accurately according to the requirements. I am fully aware that failure to comply with these requirements is a form of cheating and could result in resubmission, loss of marks, failure and/or disciplinary action. Signature: ___Xite Yu__________________ Date: __21/10/2020_________________

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How to save Starbucks brand value crisis

Introduction:

STARBUCKS Corporation, the world's largest coffee shop chain, is headquartered in

Seattle, Washington. It opened the first coffee shop in Pike Place Market in 1971.

Launched in 1992, it increased, selling coffee and tea drinks and other snack foods.

Besides, The logo is a Green Mermaid pattern. Their core concept is to give

customers a better customer experience, to convey a way of life. Starbucks' target

market is 18 to 24-year-old, who are willing to pay a premium for its high-quality

products and services. Also, its employees' treatment makes it easier for consumers to

have a good impression of Starbucks. Starbucks wants to have a neighborhood

relationship with its customers, become part of people's daily Interactions.

Starbucks, a high-profile coffee giant, was hit so hard in 2007 that it was forced to

close some stores and lay off workers to maintain its brand value. Besides, to better

support the brand value, Starbucks had to reduce the 2009 reserved storefront number.

The company's profits have shrunk dramatically.

This article will investigate and analyze this case to determine the root cause of

Starbucks brand value decline, use creative tools and methods to find three possible

ways. Then, reassess to come up with a final solution that will help Starbucks get out

of its funk.

Problem:

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In 2007, Starbucks grew so fast that its brand value has been destroyed. The company

wants to make its stores unique to connect people and communities because the pace

of expansion undermines its long-standing sustainability strategy. In 2007, Starbucks

was forced to close 600 stores, and by the end of August 2008, its profits were down

28% from the same period in 2007. In 2009 it closed another 300 stores and laid off

more than 6,700 workers. (Husain, 2014)

First, the rapid expansion has gone against the core concept of Starbucks' original

brand value, building relationships with customers, and humanizing its products. And

rapid growth has led to multiple store conflicts in the same area. This could lead to

vicious competition within Starbucks, with store managers rushing to sell at other

stores. And the rapid expansion of Starbucks has led to a decline in product quality;

Starbucks has been relying on the mouth of mouth's primary marketing tool. If the

product does not meet customers, it will lead to customer churn. The quality of

Starbucks service may also lead to customer dissatisfaction because Starbucks prices

are not low. Consumers are unwilling to pay a lot of money for products and services

they are not satisfied with. (Husain, 2014)

And the competition between Starbucks and other brands was so fierce that

McDonald's started building coffee bars to sell coffee exclusively at affordable prices.

This led to the loss of Starbucks customers. Starbucks is losing customers to other

brands, like Duncan's donuts. McDonald's itself has a large consumer group, cheap

coffee, and fast service to consumers more attractive. In addition to coffee, they also

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provide catering services to facilitate coffee to promote consumer spending.

(UKEssays, 2018)

In the supply chain, the supply chain cannot supply every store well because of the

massive increase in the number of stores, so it has to be outsourced to other

companies, which leads to a massive increase in the cost of the supply chain. (James

A. Cooke, 2010)

That makes it more challenging than ever for Starbucks, whose brand premium cannot

be used to lower prices to help the company pull out of its slump. The next step is to

use mind mapping, a creative analysis tool, to develop three different solutions to help

Starbucks get out of its slump. And given the assessment to come up with the best

solution to help Starbucks find out how to preserve its brand value.

首先，这种快速的扩张违背了星巴克最初的品牌价值、与顾客建立关系、产品

人性化的核心理念。而快速增长也导致了同一地区的多家门店冲突。这可能会

导致星巴克内部的恶性竞争，门店经理会抢着在其他门店销售。而星巴克的快

速扩张导致了产品质量的下降;星巴克一直依靠口碑这一主要营销工具。如果产

品不能满足客户的需求，就会导致客户的流失。星巴克的服务质量也可能会因

为星巴克的价格不低而导致顾客的不满。消费者不愿意为他们不满意的产品和

服务花很多钱。(侯赛因,2014)

星巴克和其他品牌之间的竞争如此激烈，以至于麦当劳开始建造咖啡吧，专门

以可承受的价格销售咖啡。这导致了星巴克顾客的流失。星巴克的顾客正在被

邓肯甜甜圈等其他品牌抢走。麦当劳本身就拥有庞大的消费群体，廉价的咖啡

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和快捷的服务对消费者更具吸引力。除了咖啡，他们还提供餐饮服务，方便咖

啡，促进消费支出。(UKEssays, 2018)

在供应链中，由于门店数量的大量增加，供应链无法很好地供应每一个门店，

因此不得不外包给其他公司，导致供应链成本的大量增加。(詹姆斯·库克，

2010)

这对星巴克来说比以往任何时候都更具挑战性，因为它的品牌溢价不能用来降

低价格来帮助公司摆脱低迷。下一步是使用思维导图，一种创造性的分析工

具，来开发三种不同的解决方案来帮助星巴克走出低谷。并给出了评估，以提

出最好的解决方案，以帮助星巴克找到如何保持其品牌价值。

Analytical Tool:

First, this article will use mind mapping, analysis, and problem-solving tools to

analyze and suggest solutions to Starbucks' problems. Mind mapping is a tool that

allows complex data and information to be organized and processed in a way that is

easy to understand. Besides, it depicts the relationship between arbitrary ideas and

information, making it easier for people to discover new ideas and find solutions.

Mind maps help to remember all the generated information and simplify difficult

questions, making them easier to understand. There is also the ability to organize

ideas to help generate unique pictures. Mind mapping is a useful tool for improving

creativity, productivity, and finding solutions to problems. (Hwang, Wu, Huang, &

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Kuo 2012)

Using mind maps allows a faster understanding of the core problem and

encourages creativity, leading to several solutions. See this figure, and it can show

three possible solutions to help Starbucks get out of its hole and maintain its brand

value. The first of the three ways to save Starbucks' brand value is to improve the user

experience and, thus, its reputation. The second is to compete with other coffee

brands in the market to increase market share to win back customers. The third is to

cut costs by making changes in Starbucks' supply chain.

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Possible Solution:

Let's start with the first solution; how word of mouth can help Starbucks reclaim

its brand value. To save Starbucks brand value by word of mouth, the first should be

to improve the customer experience, so Starbucks should conduct staff training for all

employees to upgrade staff skills. These skills will help them improve their coffee

making and customer service in ways that are more in line with Starbucks' core

culture and allow customers to see Starbucks as a community, feel free to work and

socialize at Starbucks, etc... And when employees are trained, it can improve the

customer's experience and help them experience a better coffee taste. And when

customers are satisfied with the service and the quality of the coffee, this group of

customers will become a Starbucks earned media to help Starbucks publicity. The

second point is to improve the environment and decor of Starbucks stores. Because

Starbucks is committed to making its in-store environment a third place, a safe and

welcoming public place for its customers, and turn this place into a human home.

Modern people need an informal public place to communicate, so the in-store

environment must make the customer feel comfortable and adjust the store's layout.

This in-store environment is where Starbucks has the advantage of knowing what

customers want and doing what it can to meet their needs. It's also essential to

improve the customer experience. The third point is to communicate with consumers,

get timely feedback and requirements of consumers. Focusing on relationships with

customers and making them feel valued at Starbucks can strengthen the brand image.

Create a channel for customers to use their creativity to get Starbucks to make

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improvements, enhance relationships with customers on Starbucks products, services,

store layouts, etc... It also helps customers know that Starbucks is listening to them

and strengthens their trust in the brand. This is in line with Starbucks' third-place

customer experience. The fourth is sustainable development for the environment.

Because of the environmental problems, more and more people take part in

environmental protection projects spontaneously. To appeal to this segment of

environmentalists, Starbucks should continue to promote sustainability, such as

recycled cups and straws, and make the most of the natural ingredients in its food.

The second solution is that Starbucks has only one high-end product line.

Therefore, it is necessary to develop a new product line for the low-end market while

maintaining the high-end price to face other competitors. Because Starbucks is

positioned as a moderately luxurious coffee shop for educated and affluent people, it

has been unable to attract more price-sensitive customers. And developing a new low-

end product line could help Starbucks reach more customers and compete in the

marketplace with McDonald's coffee bars and Dunkin' donuts. Because quick, multi-

flavored coffee drinks characterize McDonald's coffee bars and Dunkin' donuts, this

low-end product line should also focus on providing quick access to coffee and

various coffee drinks. Fast-paced consumers are more attracted to fast-paced coffee

bars and multi-flavored coffee drinks because not everyone can walk into a coffee

shop and order a cup of coffee at any time in their lives. And in the competition,

Starbucks has long impressed consumers with the quality of coffee, so when

Starbucks launches this product line, it will attract people who like Starbucks coffee.

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These people are often unable to try Starbucks because of money or time. The new

product line will bring new customers to Starbucks from competing with other brands.

Also, Starbucks can pick a few high-traffic stores from the cut-off, set up expressly to

sell Starbucks coffee drinks, and so on, so that office workers can gulp coffee down.

This eased the Starbucks expanded too quickly because it cannot help companies

address the jobs crisis.

According to James A, a third solution would be to cut Starbucks' overspending

on the supply chain. The Cooke report found that between 2007 and 2008, Starbucks'

spending on the U.S. supply chain grew from $750 million to more than $825 million.

But sales in 2008 were down 10 percent from the same period. That's an extraordinary

number, and it's going to cost Starbucks more than it makes in that period. So,

Starbucks should be in a hurry to re-manage and redistribute its spending in the

supply chain. Starbucks should improve the efficiency of its supply chain and reduce

the cost of shipping all raw materials. Shipping raw materials to U.S. processing

plants, where they are processed and then sent to stores, both improve efficiency in

transportation and helps Starbucks cut costs in its supply chain. And Starbucks should

have unified management of all its logistics systems because it doesn't just transport

coffee beans. It also has other products that belong to Starbucks. And to the

outsourcing of transport, companies have a clear evaluation criterion to standardize

and improve these transport companies' efficiency.

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These are the three solutions that emerge from the mind map, then Starbucks needs an

evaluation of the three solutions. First, Starbucks needs to establish several criteria for

evaluating a solution. In this way, Starbucks can find the best answer from the three

solutions to help Starbucks tide over this dilemma, thus saving Starbucks brand value.

Starbucks should set customer satisfaction as the first measure because its initial

approach was by word of mouth to attract more customers. And consumer satisfaction

is also related to Starbuck's brand image; Starbucks is not only to sell coffee, but it is

also the most important to sell their services. This will allow consumers to enhance

the Starbucks experience significantly, can help Starbucks establish a brand image.

Improving customer satisfaction is an important metric that helps Starbucks measure

its solutions.

The second point is the cost of project execution. Each company wants to reduce the

cost of project execution to get more benefits. Starbucks also needs to reduce the cost

of implementing the program while helping it to achieve its goals in this challenging

situation while at the same time earning more excellent benefits.

The third point is whether Starbucks can use these possible solutions to quickly reach

the goal of saving its brand value and more effectively help it maintain its existing

customer base. For Starbucks, the right answer will be useful in the time it takes to

retain the necessary standards for its current customer base. Help yourself in the short

term and then use your long-term solution to boost your brand value.

The fourth point is whether the solution reflects the unique advantages of Starbucks

products and services. The criteria could help Starbucks identify its strengths against

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many competitors of the same type. It will also help Starbucks recognize its strengths

and expand it to become more attractive to consumers.

According to this MCDM table, the first solution has the highest score and is the best

solution. In Customer satisfaction, the first solution is more likely to help Starbucks

meet customer service and needs than any other solution. The first solution is to

strengthen the relationship between consumers and Starbucks, from the quality of

coffee, in-store service, and in-store layout to strengthen the Starbucks brand

preferences. And in terms of cost, the first solution is not as right as the other

solutions. Still, in the light of Starbucks' current predicament, the charge is not the

first issue Starbucks is considering. How to restore Starbucks' image in the eyes of

consumers is an essential factor. In terms of efficiency, the first solution is to be more

intuitive for consumers to feel and experience Starbucks' changes and progress more

quickly. This is the other solution cannot do. Different solutions can only slowly let

consumers handle. Then from unique features, the first solution is inferior to the

second solution. The second solution is to restart a product line, while the first

solution is to improve and enhance the original. But the first solution is to have

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already the distinctive characteristics of Starbucks. This improvement would allow

the company to compete for customers without disrupting its market and reinforcing

its own identity.

Implementation plan:

The result of this solution is to help Starbucks save its brand value. The answer is to

win back consumers' hearts and minds by improving Starbucks products' service and

quality. Starbucks can break the solution down into four parts. The first is to train

incoming employees to learn professional skill coffee taste better, and communicate

better with customers, gives a good experience at Starbucks. The second is to change

Starbucks stores' layout, and that and store decoration can make consumers feel more

comfortable. It makes consumers spend time stores' design Starbuck layout is more in

line with the company's third place strategy. Consumers have made Starbucks the No.

1 choice for informal public places. The third step is to communicate with customers

more third place quickly, to get customer feedback and ideas, such as involving

customers in store design. Baristas can then use social media to get their customers'

thoughts and ideas to improve the coffee's taste, making it more appealing-store

summers. The fourth step is to protect the environment, replacing straws and cups

with sustainable materials to help consumers see more clearly that Starbucks is doing

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something to protect the environment.

The next step is to use the Gantt chart to show the project's planned schedule to run.

See this Gantt chart, it takes three months to train employees, four months to

design and decorate storefronts, four months to collect customer ideas for

improvement, and six months to adjust environmental projects.

Then, for Risk Management, Starbucks should pay attention to store design and

renovation costs and in line with Starbucks’ sustainable development. And there may

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be a risk that the brand will not recover its brand value. The risk may also be that

consumers are not motivated enough to get useful feedback.

This is a risk that should be taken into account in the project, the most serious of

which is the failure to rescue brand value, which will lead to the project to do nothing.

Regarding the budget aspect, the decoration company and the design drawing useful

review, cannot have the unnecessary expense. And for consumer feedback, Starbucks

has its own brand preferences of consumer groups, this part of the risk is tiny, but

cannot be ignored. The environmental protection aspect should pay more attention to

the green environmental protection material and avoid the risk.

Recommendation:

First, Starbucks can’t just focus on coffee, making skills in its employee

training. It also needs employees to learn how to communicate with customers and

make the customer experience better. Because Starbucks coffee is not just selling

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coffee, but a high-end coffee shop, so that consumers experience a relaxed and free

atmosphere. In addition to strengthening its relationship with consumers, it also needs

to improve its relationship with the community to make Starbucks more human. And

employees are trained to feel a sense of belonging and honor, to be part of the Buck

organization, and to do whatever they can to help Starbucks.

The second point is that Starbucks needs to collect customer feedback and

creativity. Starbucks employees answer customers’ questions on social media,

enabling customers to solve problems and making them more love Starbucks quickly.

And consumers can also give Starbucks their own unique ideas to help it improve.

This gives consumers a sense of belonging. When consumers see their ideas in

Starbucks stores, they have a special affection for the company.

The third is to help customers from the Starbucks store to get a better feeling,

so that Starbucks store decoration can meet customers. This is not limited to furniture,

as well as wall graffiti and so on can arouse consumers' resonance.

The fourth is in line with the current society, to be closer to environmental

issues, Starbucks can use its environmental materials to inform consumers, this is also

a way of publicity. And also to participate in some voluntary environmental activities

to attract consumers, so that consumers really feel that Starbucks in the practice of

supporting environmental protection.

Conclusion:

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This article uses mind mapping to come up with three possible solutions to

Starbucks’ dilemma. The first solution is seen as the best, starting with the consumer

experience and addressing the Starbucks brand value issue. This solution is also in

line with Starbucks’ brand positioning, not only to sell coffee but also to deliver a

service. It will give consumers a deeper understanding of the Starbucks brand. This

article also analyzed the solution implementation process and risk management to

help Starbucks out of trouble and save its brand value. From the risk management,

although the three best solutions, but there are still some big risks, and Starbucks to be

prepared to face these risks.

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Reference: Gwo-Jen Hwang, Chih-Hsiang Wu, Iwen Huang, & Fan-Ray Kuo. (2012). A Mind Map-oriented Mobile Learning Approach to Promoting Creative Thinking Ability of Students in a Business Course. 2012 IEEE Seventh International Conference on Wireless, Mobile and Ubiquitous Technology in Education, 242–248. https://doi.org/10.1109/WMUTE.2012.60 Dollinger, M. (2012, July 30). Starbucks, "The Third Place", and Creating the Ultimate Customer Experience. Retrieved October 19, 2020, from https://www.fastcompany.com/887990/starbucks-third-place-and-creating-ultimate- customer-experience Cooke, J. A. (2020, May 04). From bean to cup: How Starbucks transformed its supply chain. Retrieved October 19, 2020, from https://www.supplychainquarterly.com/articles/438-from-bean-to-cup-how-starbucks- transformed-its-supply-chain Competitor Analysis And Contemporary Trends Starbucks Marketing Essay. (n.d.). Retrieved October 19, 2020, from https://www.ukessays.com/essays/marketing/competitor-analysis-and-contemporary- trends-starbucks-marketing-essay.php Starbucks. (n.d.). Retrieved October 18, 2020, from https://www.britannica.com/topic/Starbucks How Starbucks pulled itself out of the 2008 financial meltdown. (2015, May 04). Retrieved October 19, 2020, from https://www.businesstoday.in/magazine/lbs-case- study/how-starbucks-survived-the-financial-meltdown-of-2008/story/210059.html