Retail Services Characteristics

In this paper the most common services characteristics, namely perishability, intangibility, inseparability and heterogeneity will be applied to a well – known retail services brand. In this case the focus shall be on how the aforementioned characteristics apply to Starbucks. In order to better understand the problem the history of the company alongside current corporate objectives will be briefly described. In the following paragraphs the notice will be mainly on the retailer’s ability to cope with the theory’s implications. The first Starbucks coffee shop was opened in 1971 in Seattle.
The name was inspired by Moby Dick and the logo which has now become somehow of a cult figure is a twin-tailed mermaid. However it wasn’t until 1987 when a major breakthrough came and the brand started to receive a world – wide recognition. In August, Howard Schultz backed with the capital from local investors bought the Starbucks. Since then the company grew in an exponential manner which resulted in opening more than 16,000 stores in over 55 countries to this day. Similar as the majority of large enterprises Starbucks also incorporates its own business and social objectives.
The goal is to project the brand image in a consumer and environmental friendly way. Their mission statement is to inspire and nurture the human spirit through their exceptional service and high quality coffee. In a very holistic approach they are aiming to improve every aspect of the business, from the customers and employees to the suppliers and shareholders. Moving on from this brief description of Starbucks the focus will now shift to the retail services characteristics, more precisely on intangibility and its implications. Experts agree that a service is intangible because the customer cannot sense it (Newman and Cullen, 2002).

It is an abstraction which cannot be directly examined before the purchase. In the case of most goods a prospective buyer is able to inspect the quality of the good by relying on his senses, whereas a pure service has to be purchased and consumed to fully verify its quality. The level of services’ tangibility can be seen from tangible goods, which are included and consumed within the service offer, it can also be extracted from the physical environment which surrounds the service or with the tangible evidence of the service performance (Palmer, 2005).
In the case of various food and drink outlets, goods form an important component of a service offer. This also applies to Starbucks and therefore it is possible to place it somewhere in the middle of the tangible to intangible service dominant scale (Shostack, 1977). Starbucks uses scent of fresh coffee to attract customers and make them sense a tangible good which can be purchased at the premises. The physical environment also plays a big part in customer’s perception of service quality.
Starbucks acknowledged this and therefore their outlets are usually very well furnished with comfortable chairs, Wi-Fi and other features which give a customer a sense of quality and comfort. Tangibility can be further provided with the evidence of service production methods. This is certainly the case in Starbucks where you can see the whole process of making a cup of coffee. A lack of physical evidences of services quality can increase the level of uncertainty that a customer faces when choosing between competing services.
However, Starbucks developed a strong brand associated with quality of services provided and the company values therefore creating a positive image in consumers’ perception. From describing how intangibility applies to Starbucks we shall now turn the attention to another service characteristic, namely heterogeneity. Services heterogeneity means that the quality of services depends on who provides them as well as when, where and how they are provided. Products can be standardized and basically the same for every customer.
However, services on the other hand can be delivered in different ways, regarding on customer’s personal requirements. The service must normally be produced in the presence of the customer without the possibility of intervening quality control. Specific problems can occur where staff is involved in providing services on a one-to-one basis. In these cases no easy method of monitoring or control is possible. There are two particular aspects of heterogeneity which are relevant to the services. The first one is the extent to which production standards vary from a norm, both in terms of outcomes and of production processes.
The second one is the extent to which a service can deliberately be varied to meet the specific needs of particular customers (Palmer, 2005). In order to tackle the aforementioned aspects of heterogeneity and also to satisfy customer needs retailers usually standardize the service as much as possible without noticeably affecting the perceived customer value. Many service organizations have reduced variability by adopting equipment-based production methods or by offering already prepared menus or meals. However Starbucks took a slightly different approach here then some fast-food outlets.
They are offering more than 87,000 different drink combinations. With that in mind they cannot simply standardize the whole process of coffee making. Customers want to see consistency and quality in their stores so for that purpose they offer their front-line staff a basic training and they are also using some motivation tools to enhance staff performance. So for instance they refer to their employees as partners and their pay package is called “Your special blend”. The heterogeneity of service output can sometimes pose problems for brand-building in services compared to tangible goods.
However Starbucks cope with these problems quite well through their excellent staff to management relation which results, again in a strong brand personality. From heterogeneity we shall now shift our attention to another characteristic, which is perishability. Perishability applies to services because unlike goods services cannot be stored for later use. So for an example a factory which produces cars and is unable to sell all its output in the current period can carry forward stocks to sell in a subsequent period.
The only significant costs are storage and financing or the possibility of loss through obsolescence. However on the contrary, a producer of a service which is unable to sell all of its output produced in the current period gets no chance to carry it forward for sale in a subsequent period. A great example of perishability is an airline company. For instance if the plane departs at twelve o’clock and the airline company didn’t sell all the available seats, then it is impossible to sell the rest since the plane is already in the air. Another problem which defines perishability is the demand pattern through time.
Demand fluctuates because of many reasons however most common reasons for inconsistency of demand occur during the day, week and season. A typical example of seasonal fluctuation of demand is tourism. During the summer the demand for holidays is often off-peak and hotels by the sea are required to bring in extra work-force. On the other hand the demand in winter is significantly lower and some hotels are therefore unused. Inability to store services and short-term supply inelasticity are leading causes for perishability of services.
As mentioned before problems occur when demand pattern is irregular. It can also happen where there is requirement for “just-in-time” production of service or if demand is not managed effectively (Palmer, 2005). Services providers are trying to even the demand with the use of pricing and promotion or with locating places where demand is more or less even during the day, such as it is in city centres or busy airports. Problems with storing the services have now also been reduced with recent advancement of technology (Newman and Cullen, 2002).
For instance Starbucks uses RFID technology to track perishable food delivered to its cafes thus ensuring freshness of products. Starbucks is usually located there where demand is relatively constant, such as shopping centres and airports and they are also using a lot of promotions ensuring a steady demand through the day. Even their menu is adapted to different seasons of the year. It does not consist only of hot drinks but they also offer other trendy beverages such as smoothies and a variety of bottled drinks which are suitable for hot summer days.
Now we shall take a look at the last of four services characteristics. Inseparability of services should be the main topic through the following paragraphs. Inseparability means that the service is produced and consumed at the same time. Both, buyer and seller must be present for the exchange to occur (Newman and Cullen, 2002). The service provider is at the same time also a marketer and promotes both the service and the company. Interaction is of extreme importance in services and therefore the key to success is competent personnel.
Inseparability of services leads to customers being co-producers and often being co-consumers of the service with other consumers. They are also usually required to travel to the service provider. This results in management to attempt to separate production and consumption. They are also trying to manage the consumer to producer interaction and improve the service delivery system. Starbucks is a typical example of services inseparability. They are offering a wide range of beverages and customers can choose their own mix.
That means that customers are contributing in the production process of a cup of coffee. As mentioned before Starbucks normally furnish their stores in a very comfortable way which means that a lot of customers are consuming the product there, which results in being a co-consumer. Starbucks stores are often located in city centres and this means that customers have to travel there to receive the service. Maybe in the future Starbuck will offer delivering their products to customers home, but this could possibly take away the charm of visiting a Starbucks coffee shop.
However, they are already improving their service system with the opening of drive thru stores. In conclusion it is possible to say that all four services characteristics can be applied to Starbucks. However, some are more visible than others. Starbucks developed an extremely strong brand image and a loyal global population of consumers. This has established them as one of the biggest brands in the world. Through excellent quality of their products, care for the environment and bringing back the sense of community they have already become a household name.
They are coping very well with all the services characteristic implications and are always striving for perfection. They are a prime example of the so called “cultural capitalism” and are setting an example for many companies. References: Adrian Palmer, 2005. Principles of services marketing, 4th edition. Berkshire: McGraw-Hill Education Andrew J Newman and Peter Cullen, 2002. Retailing: environment & operations. London: Cengage Learning Starbucks, 2011. Our heritage [online] Available at: http://www. starbucks. com/about-us/our-heritage [Accessed 16 April 2012 ]. RSA animate, 2010.
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