Leveraging on innovative mobile payments, social media, and information technology.
Starbucks: Leveraging on innovative mobile payments, social media, and information technology
Starbucks: Leveraging on Innovative Mobile Payments and Social Media
Starbucks Corporation, an American company, is the largest coffee company in the world. It primarily deals in coffee. However, it offers a host of other products such as snacks, beers and wines in the evening, as well as pastries. The company was founded in 1971 and has since grown and expanded to the global presence it commands today. Starbucks is renowned for its aggressive marketing strategies that the company has been engaging itself in to establish its brand globally. In recent times, however, Starbucks has faced major challenges in the form of coffee bean prices plunging. This plunge had a major effect on the prices of coffee with competitors finding a way in to compete with Starbucks by offering lower prices for their coffee. The Starbucks marketing strategy has often relied on lower prices for high-quality coffee to drive out the competition, especially from the smaller players.
Starbucks faces a number of challenges. Though the company’s brand is still the best, competition from other coffee companies, its fast growth in recent years and a, hitherto, dormant marketing strategy, as well as as refusal to do franchising that is a well known cost cutting strategy during rapid expansion and development phases. The company introduced a mobile payment criteria with which customers have been making payments. The mobile payment solution has been instrumental in helping increase sales in recent years though the use of the mobile solutions can be utilized further to increase the sales opportunities and in facilitating the rapid growth plans. This research paper seeks to examine the role social media, new technologies, and mobile payments can play in the rapid growth expansion plans administred, and currently being undertaken by Starbucks Corporation.
How Starbucks Serves Up Its Mobile Strategy
In December 2010, Starbucks launched its first mobile application to enable customers to access and make payments through their mobile phones. Prior to the introduction of the mobile payments platform, Starbucks had revolutionized the “coffee drinking experience” by redefining the shopping environment through the provision of free WiFi, music, more comfortable seating space and the rewards loyalty program. Beside, the focus on the quality of coffee and location of their outlets, Starbucks has also shifted its focus towards improving the customer service and experience by ensuring that their customers are delighted by offering the best.
However, the stiff competition in the coffee shop market from the likes of McDonalds and Dunkin Donuts forced Starbucks to develop innovative mobile technology to create and improve on its competitive advantage. This increased innovation in various value proposition areas such as mobile technology, mobility and the use of social media. In 2009, Starbucks launched its first mobile application in 16 outlets before expanding it throughout the United States. Morabito (2009) observes that the main feature of the mobile application platform was to generate 2D barcodes similar to the ones found in the barcode scanners. This innovation was the first and unique among the coffee shop market because it allowed customers to scan and pay for their goods and service while in the stores. Labeled as “the fastest way to pay” the mobile application has been effective in saving time and convenience in making purchases, thus improving on the customer experience. Furthermore, customers can use the mobile application to check their balances, reload their cards, view transactions and keep track of their stars.
Since the launch of the program in 2010, research statistics indicate that the mobile payments have been largely successful with over six million transactions on a weekly basis, which translates to US $1.5 billion (Morabito, 2009). The most outstanding element of “the fastest way to pay” mobile payment application is the inclusion of the digital tipping options. The dashboard of the mobile application shows the most current reward and loyalty points earned by the customer, which are available for the transaction and can be redeemed for consumption. Most importantly, the mobile application platform has been integrated with other social media such as Twitter and Facebook, where they can display and showcase their reward level and milestones with their families and friends (Lemstra, 2011).
The Starbuck experience has widely been envied and imitated by numerous companies in the retail world. The most fascinating is that customers just need to shake their iPhones, and the payment barcode simply displays itself. Besides, customers can simply use the typing option to tip their barista through their phones (Schultz & Gordon, 2011). Therefore, instead of just following the global technology trends, Starbucks has been in the front line in creating them. These includes, the QR Codes, virtual gift cards and coupon downloads to elevate itself as an industry leader. In addition to other features such as store location, easy mobile payments, and efficient service, Starbucks has become an industry leader in mobile innovation and not just a coffee shop.
In conclusion, it is worth noting that Starbucks was named the “mobile marketer of the year” by the business insider in 2012 and 2013 consecutively, thus increasing its volumes of payments by 73%. The giant coffee shop has been able to integrate positively mobile technology strategies to promote its products and services. Today, the connections have become more powerful while Starbucks has attained a world-class status through its innovative loyalty programs.
Bloom, N., Garicano, L., Sadun, R., & Van Reenen, J. (2014). The distinct effects of information technology and communication technology on firm organization. Management Science, 60(12), 2859-2885.
Davenport, T. H. (2013). Process innovation: reengineering work through information technology. Harvard Business Press.
Drnevich, P. L., & Croson, D. C. (2013). Information technology and business-level strategy: toward an integrated theoretical perspective. Mis Quarterly,37(2), 483-509.
Hanna, R., Rohm, A., & Crittenden, V. L. (2011). We’re all connected: The power of the social media ecosystem. Business horizons, 54(3), 265-273.
Holtshouse, D. K. (2013). Information technology for knowledge management. U. M. Borghoff, & R. Pareschi (Eds.). Springer Science & Business Media.
Kent, W., & Hoberman, S. (2012). Data and reality: a timeless perspective on perceiving and managing information in our imprecise world. Technics publications.
Lemstra, W. (2011). The innovation journey of Wi-Fi: The road to global success. Cambridge: Cambridge University Press.
Morabito, V. (2009). Trends and challenges in digital business innovation. New York: Mc-Graw Hill.
Oliveira, T., & Martins, M. F. (2011). Literature review of information technology adoption models at firm level. The Electronic Journal Information Systems Evaluation, 14(1), 110-121.
Shapiro, C., & Varian, H. R. (2013). Information rules: a strategic guide to the network economy. Harvard Business Press.
Schultz, H., & Gordon, J. (2011). Onward: How Starbucks fought for its life without losing its soul. New York, NY: Rodale.
Somogyi, E. K., & Galliers, R. D. (2012). Information technology in business: from data processing to strategic information systems. Strategic Information Management, 1
Stelzner, M. A. (2011). Social media marketing industry report. Social Media Examiner, 41.
Get a verified expert to help you with any urgent paper!Hire a Writer
from $10 per-page