1.

0 Introduction

This report aims to compare the similarities of the two chosen companies, Starbucks and
Caffe Bene through the analysis of STP (Segmentation, Targeting and Positioning), flower of
service and servicescape. Starbucks is an America based coffee store that drew inspiration
from Italian coffee bars to create a unique and unmatchable coffee experience. It is their goal
to make Starbucks the ‘Third Place’, a place where people can relax, socialize and work
between home and office. On the other hand, Caffe Bene is a brand established in Korea in
2008 which was also inspired by the coffee bars in Italy. Their concept is to provide to various
group of people with high quality coffee and healthy desserts in a comfortable atmosphere.

2.0 Thesis Statement

This report will be focusing on the comparison between Starbucks and Caffe Bene. Although
both companies are multi-national in the world today, it would be interesting to see how much
do these two coffee industry giants have in common, especially when both of these two
companies drew inspiration from Italy coffee bars but with one being established in America
and another in Korea.

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3.0 Background of Caffe Bene

Caffe Bene is Coffee brand from Korea. The first branch was launched in 2008 May in
Cheon-Ho Dong in Korea. Inspired by outdoor cafes in Italia, the brand name of Caffe Bene
was made with the combination of the Italian word ‘Caffe’ and ‘Bene’. Thus, Caffe Bene is
directly translated as a good cafe. Furthermore, Caffe Bene’s concept of freedom and comfort
is originated from Europe. Rather than just having a coffee, Caffe Bene pursues the high
concept consisting of offering coffee and various desserts as well as Europe styled interior
design and brand story. That is, the high concept of Caffe Bene encourages various people,
such as studying people, designers and painters, to get inspired in Caffe Bene. Its vision is to
become Asia’s best café providing fresh and healthy desserts as well as the highest quality of
coffee with a comfortable atmosphere. Furthermore, first branch was launched at Pyramid
shopping mall in Malaysia in 2014 (The Star Online, 2014). Currently, Caffe Bene runs four
branches in Sunway, Mont Kiara, Penang and Malacca in Malaysia.

4.0 STP Analysis

4.1 Segmentation

Majority of customers who are visiting the Caffe Bene are ranged from age of 20’s to 30’s.
Their preferences can be divided into 3 types such as taste, atmosphere and utilization of
space.

As for first type of customers,they have a relatively better knowledge of coffee, put
emphasis on the taste of coffee and are finicky about it. They put more stress on the quality of
coffee rather than the price. Also, they spend relatively shorter time on staying at the coffee
shop since the purpose they are visiting is just to have a cup of coffee.

Secondly, customers are pursuing the atmosphere at the shop. They are normally sensitive
to brand recognition as well as they are mainly visiting the shop in order to have a chat with
friends or have a meeting.

Third, customers pursuing the utilization of space tend to spend longer time at the shop.
Accordingly, they prefer to have a dessert other than the coffee and beverage.

4.2 Targeting
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 Caffe Bene is targeting the customers from age of 20’s to 30’s who are visiting frequently.
Since the Korean dramas and K-pop are getting more popular in Malaysia (Jang, & Paik,
2012), Caffe Bene is targeting the students who are friendly with Korea as well as targeting
working people who want to have conversation with colleagues outside the company and
have a rest, having a coffee. Since most of customers CaffeBene is targeting are coming to not
only have a coffee but also study or work, Caffe Bene is spreading its branches in the
shopping mall and place near to companies.

4.3 Positioning

CaffeBene’s unique positioning is ‘Europe styled multi-dessert Cafe’(Caffe Bene, 2017).

This positioning consists of significant differentiating elements. Caffe Bene puts emphasis on
Europe style element since Cafe is in fact originated from Europe. This is differentiating
Caffe Bene from other competitors because Caffe Bene is pursuing to provide a better place to
rest in contrast to taking away coffee. Another important element is a differentiation of menu.
In fact, existing coffee brands serve muffin and bagel other than coffee. On the other hand,
Caffe Bene offers not only coffee but also waffle, honey bread, gelato ice cream and Bing-su.
Besides of offering various menu, Caffe Bene focuses on utilization of space including
Europe style of interior decoration, arrangement of tables, shape of table and convenient
facilities in order to target the customers who are looking for the space for either studying or
working, spending relatively longer time.

5.0 Flower of Service

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 Flower of service consists of core product and supplementary service. Core product that
Caffe Bene is providing is multi-desserts such as coffee, waffle, bread, ice cream and Bing-su.
Supplementary services to support the core product are divided into facilitating and enhancing
services (Wirtz, Chew, & Lovelock, 2013)(Refer to Appendix 1).

5.1 Information

Since internet usage rate is increasing, Caffe bene is actually providing information mainly
through web-site. Web-site provides locations of branches, menu and operating hours.
Furthermore, menu list is provided at the back of counter so that customers can easily take a
look at what is offering such as various types of coffee, desserts and Bing-su.When product
ordered is hot, warning signs are written in the paper cups (Refer to Appendix 2) and the
staffs announce to customers that the product is hot. Well-provided information encourages
customers

5.2 Consultation

Consultation frequently happens in Caffe bene. Customers who might come to Caffe bene
for the first time may ask staffs for the recommendation for the dessert or coffee. Also,
customers who prefer to have a sweet coffee might ask the staffs what kinds of syrups Caffe
bene is providing. Through the consultation provided by the staffs, customers can have
customized advice so that they can enjoy the desserts and coffees with their own taste. In
effect, this increases satisfaction of customers since customers can enjoy and pursue the
service with their own taste.

5.3 Order taking

Order taking takes place when customers enter the Café Bene and are ready to order the
product. In fact, order taking here is considerably simple. Customers place an order at the
counter directly to the staffs of Caffe Bene. To be specific in Caffe Bene, it is usual that 4 to 5
employees are working and providing service in every shift and one of them is only receiving
orders and keying in order information into the billing device and the rest of them is
preceding the order placed in order to be more efficient. This efficient way to take orders from
customers also improves customer’s satisfaction because customers can get the products fast.

5.4 Hospitality

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 Caffe Bene’s greeting is “Welcome to Caffe Bene” with smile and cheerful voice. Since
Caffe Bene’s positioning is to provide a Europe styled convenient place to take a rest with
multi desserts, Caffe Bene puts emphasis on making customers feel comfortable in the shop.
Also, Caffe Bene is providing considerably comfortable tables and chairs for the purpose of
rest. Once an order is placed, customers are given the UFO plate (Refer to Appendix 3)
which is going to light up and vibrate as soon as food or beverage is ready to serve. Also, free
Wi-Fi is provided after purchasing the products. This hospitality at Caffe Bene is very
effective since customers have fun with UFO plate and searching internet while waiting for
the products as well as during their stay at the store.

5.5 Safekeeping

Safekeeping is one of the most important factors that customers mainly concern about. To
reduce safekeeping issues in the shop, Caffe Bene is running enough CCTVs to monitor the
whole environment in case customers miss belongings in the store. Also, every store has lost
and found box. Thus, every lost item found at the shop is stored in the box until retuning it
back to the owner.It is best safekeeping that Caffe Bene can provide with customers. Other
than this, customers are encouraged to take care of their belongings.

5.6 Exceptions

People do mistake and learn from mistakes. If customers received a different coffee or
dessert that they did not order, they can complain it to any staff at the store. According to the
observation, employees are trained to receive the complaints and serve new products that
customers initially ordered by asking for understanding. Normally, procedures for handling
complaints at Caffe Bene are well established to respond promptly and effectively in order to
minimize the complaints from customers but maximize customers’ satisfaction.

5.7 Billing

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Caffe Bene is busy after the lunch time and even busier around dinner time. The store is full
of people and many others line up to place an order. In this situation, accurate and fast billing
is significant especially during busier period of time to satisfy customers. In fact, employees
touch the screen to key in the orders placed into a system and the system will automatically
produce the receipt relatively fast. Caffe Bene (Caffe Bene, 2017) is also confident of their
system’s accuracy.

5.8 Payment

Payments should be easy and simple for customers to pay. Most of transactions are done
with cash, debit card or credit card. Other than traditional payments, customers can purchase
discounted and promoted deal from the website such as Group on and make payment with
promotion barcode (Refer to Appendix 4). As smart phone is improving, customers can also
just scan the phone to the reader for the payment (Refer to Appendix 5).

6.0 Servicescape
As shown in the Figure, Concept of service environment in Caffe Bene is to utilize the
space because the Caffe Bene founder, Kim, has established the brand story which is “More
than Coffee at Freedom Depot” (Refer to Appendix 6) in order to finally give a cozy and
pleasant atmosphere to customers.As Caffe Bene targeting various people who would like to
spend relatively longer period of time on either studying, working or resting, it provides
European ambiance through the interior decorating and providing outdoor seats (Refer to
Appendix 7). Furthermore, Caffe Bene provides various books and newspapers as well as
comfortable seats with customers for having a rest and getting inspired by the store (Refer to
Appendix 8). Offering a comfortable atmosphere and various reading materials to customers
differentiates Caffe Bene from competitors because more customers are attracted due
toenough place to study or work and comfortable seat to have a rest with harmony of the cozy
atmosphere.

7.0 Starbucks Background

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The Starbucks Corporation was founded in Seattle in 1971 by three entrepreneurs namely
Jerry Baldwin, Gordon Bowker and Zev Siegl. With their shared passion for fine coffee and a
vision to educate the consumers about it, they started their first store in Seattle selling whole
bean coffee. Over the years, Starbucks began its slow expansion until 1987 when Howard
Schultz took it over and gave Starbucks a new vision. Howard Schultz was the director of
retail operations and marketing of Starbucks. His vision for Starbucks developed when he
took a business trip to Milan in Italy. He noticed that every espresso bars he encountered, as
he walked down the streets in Italy, had a different style, characteristic and ambiance. He then
realized that this factor that makes a coffee bar different from others is what Starbucks is
lacking of. Therefore, his plan was to recreate the Italian coffee bar experience in America.
Furthermore, Howard Schultz did not just want to replicate the coffee bars in Italy, but also
enhancing it to provide an unmatchable coffee bar experience by purchasing only the best
quality coffee beans (Starbucks.com, 2017). In today’s world, it is safe to say that Starbucks
has become the leading specialist in coffee industry.

8.0 Starbucks STP (Segmentation, Targeting and Positioning) Analysis

Segmenting, targeting and positioning is a part of marketing strategy that is conducted to

obtain detailed information and understanding of the marketplace which then contributes to
strategic decision making and targeting the appropriate consumer groups (Dibb and Simkin,
1996). Starbucks has adopted a Differentiation Strategy which differentiates Starbucks from
its competitors by offering better product or service with a premium price which also achieves
competitive advantage.

8.1 Segmentation

Kotler and Armstrong (2006) defines market segmentation as a process of dividing a market
into distinct groups or segments with different characteristics, needs or behaviors that may
require product/service customization or separate marketing programs. Demographic,
geographic, psychographic and behavioral characteristics are the four major variables an
organization requires in segmenting a market.

Demographically, Starbucks offers a variety of coffees due to the countless number of

individuals that enjoys coffee regardless of age, gender and race. By having wide range
offerings, Starbucks is more likely to meet most consumers’ wants and target a larger market.
Furthermore, due to the fact that coffee lovers can be seen anywhere regardless of age, gender
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and race, Starbucks exists in various counties with the aim of extending their market reach.
Although coffee lovers are universal, statistics have shown that the majority of Starbucks’
consumers are business people that work at the office and are willing to pay a little extra for a
cup of quality coffee and better environment (Starbucks.com, 2017).

8.2 Targeting

After indentifying the market segments, a company can then decide to enter one or many
segments and which consumer groups to target (Dibb and Simkin, 1996). The decision of
which target segments to select is done by evaluating segments attractiveness and profitability
(Jobber, 1995). In the case of Starbucks, their aim is to produce premium quality coffee with a
high pricing strategy. Starbucks targets office workers who has middle to high incomes and is
willing to pay extra for premium product or service. Furthermore, Schultz (Starbucks.com,
2017) plans to make Starbucks the ‘Third Place’, a place where people could gather, interact
and relax other than home and office. To meet the high expectations, strict quality control is
essential not just towards their core product, coffee, but also the details of the store
environment and layout.

8.3 Positioning

After deciding which market segments to enter, the company should decide on what position
it wants to occupy in their chosen target market. A product or service’s position is defined by
its important attributes such as quality and price to distinguish and gain relative competitive
advantage over competitors in consumers’ minds (Kotler and Armstrong, 2006). In the case of
Starbucks, they have realized that relationship marketing which retains long term consumer
relationship has become the key to success. Kotler (1986) stated that relationship marketing
aims at delight rather than satisfaction of consumers. This also resonates with Starbucks’
mission statement “to inspire and nurture the human spirit – one person, one cup, and one
neighborhood at a time” (Starbucks.com, 2017).

9.0 Starbucks’ Flower of Service

Flower of service framework can be categorized into two types, the facilitating elements and

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enhancing elements. Facilitating elements are services that are needed for service to function
and deliver. The facilitating elements are Information, Order-Taking, Billing and Payment.
Enhancing elements are services that assist the core product in adding value to the consumers.
The Enhancing elements are Consultation, Hospitality, Safekeeping and Exceptions
(Lovelock, 1992).

9.1 Core Product/Service

In the case of Starbucks, the premium quality coffee they offer to consumers would be their
core product. However, Starbucks also serves a wide range of drinks and food such as tea,
sandwiches, muffins, cookies, bagels and fruits to meet different consumers’ needs and wants.

9.2 Information

Information is needed for consumers to evaluate and make purchase decisions. It also serves
as a role of educating the market and prepares the potential consumers to make purchase
decisions (Lovelock, 1992). Service providers are required by law to display certain
information, for example, warnings, conditions for sale and charges for services. In the case
of Starbucks, they printed a warning label on every hot drink to remind the consumers not to
burn themselves. Furthermore, if the food Starbucks’ serving contains peanuts, a warning
label would also be printed on the packaging to warn those who have food allergy.

9.3 Consultation

Consultation requires communication between the consumers and the service provider. It can
either be done through virtual channels such as telephone or face to face. Consultation helps
the consumers to have a better understanding of the service and clarifies any doubts and
confusions. For example, Starbucks staff often asks the consumers whether they want cream
on top of their drink when purchasing a cup of iced coffee. Depending on the consumer’s
tastes and likes, it is the consumer’s decision to say yes or no to adjust the service to his or her
preference.

9.4 Order-taking

Order-taking is the first step in transaction. Starbucks uses the traditional way of queuing for
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order-taking. When a customer places an order, details of the order would be keyed into the
Starbucks system as well as written on the cup that will be served to that particular customer.
One of Starbucks’ signatures is that they will get the customer’s name and write it onto their
cup. When the drink is ready for collection, the staff will then call out the customer’s name to
notify him/her.

9.5 Hospitality

Due to the target market Starbucks is aiming, they pay great attention to the details of their
hospitality. Consumers who comes into Starbucks, if not for take-away, tend to stay for a
considerably long period of time. Hence, hospitality becomes an important part of Starbucks’
service offerings. Starbuck’s overall decoration provides a warm and cozy feeling to the
consumers. They also provide free Wi-Fi service for consumers to stay updated to their work
progress or simply for entertainment.

9.6 Safe Keeping

In terms of safe-keeping, apart from advising the consumers to be aware of their hot drinks,
Starbucks also takes strict quality control to ensure that everything they serve is fresh and
healthy. However, customers are encouraged to take care of their own belongs during their
stay in the store.

9.7 Exceptions

Starbucks customers are able to customize their own drinks, such as adding extra foam,
choosing different types of milk, less sugar or even ‘create your own’ menu options. This is to
provide the consumers an unmatchable experience compared to other coffee bars and
allowing coffee lovers to drink their coffee the way they wanted.

9.8 Billing

Billing is important for both service providers and consumers. Consumers expect
completeness and accuracy in bills prepared by the company. In Starbucks, after the casher
have keyed in the order into the system, the machines will provide a bill that states the total
amount that is due.

9.9 Payment

Payment methods in Starbucks take various forms. It can be done through cash payment,
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credit card or a Starbucks Card. Starbucks Card works as a pre-paid card that consumers top-
up with cash or online transfer for later purchase purpose. To encourage consumers to adapt to
the Starbucks Card system, Starbucks provides reward system that depending on the amount
of total top-ups; it will give back points that can be used to redeem other goods. All these
payment methods are to provide consumers an easy and convenient payment process.

10.0 Starbucks Servicescape

Schultz (2011) stated that he wanted to create a comfortable, inviting and compelling
servicescape that is full of sensory pleasures designed to make Starbucks consumers feel
relaxed and linger. Everything in Starbucks such as the cozy sofa (appendix 9), coffee table
arrangements, friendly staff attitude, aromas of coffee beans, Italian-like drinks’ name,
soothing music and clean equipments are all factors contributing to Schultz’s idea of making
Starbucks the ‘Third Place’ and enhance consumers’ experience. Furthermore, the implication
of adding free Wi-Fi effectively prevented consumers from leaving the store right after
purchase. A drive-through service is also provided by Starbucks for any customers that are in
a hurry but still wants a cup of quality coffee.

11.0 Comparison Section (Starbucks vs Caffe Bene)

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 Seemingly, Starbucks and Caffe Bene are basically providing very similar or same
offerings such as the high quality of coffee and desserts. Regarding service of flower, most of
elements are similar. For example, they put more emphasis on the hospitality due to
customer’s satisfactions. They give similar consultation to customers. Furthermore, their
billing and payment are almost same. Besides, their targeting is to giving their own style of a
cozy and pleasant atmosphere. However, even if it is the servicesacpe that both Starbucks and
Caffe Bene are pursuing similarly; there is a subtle but significant difference in between. It is
the utilization of space that makes difference between them. To be more specific, Starbucks is
more likely to provide the comfortable environment with customers. However, according to
observation and experience, most of tables are considerably small and low for studying or
using laptop (Refer to Appendix 9). On the other hand, Caffe Bene is more likely to provide
the utilized space with customers. In contrast to Starbucks (Refer to Appendix 8), tables are
high and big enough for customers to be able to study or use laptop relatively easier.

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