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Starbucks’ mission has always been to “inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” (Shultz, 2011). Given its mission, Starbucks sees itself as an integral part of each community in which it is located. It is not surprising that Corporate Social Responsibility (CSR), which is the notion that a corporation should enhance society and be accountable for its actions that affect society (D’Amato, Henderson, & Florence, 2009), would play an important role in the Starbucks business model. Starbucks currently has programs that are focused on ethical sourcing of coffee beans, recycling, energy efficiency, water conservation, green building, climate change, and community outreach (Schultz, 2011). In all of these cases, Starbucks has made notable progress toward stated goals (Aston, 2012); however, while impressive progress has been made, one of the challenges that Starbucks has struggled to address is the volume of waste generated by paper beverage cups.
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STARBUCKS- A CUP EVOLUTION 1
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2 STARBUCKS- A CUP EVOLUTION
TABLE OF CONTENTS
INTRODUCTION 3
OPPORTUNITIES FOR IMPROVEMENT 4
PART I: PROPOSED PLAN 6
PART II: STAKEHOLDERS ANALYSIS 10
EMPLOYEES 11CUSTOMER SAFETY AND PRODUCT QUALITY 13CUSTOMER SATISFACTION 14ENVIRONMENT AND COMMUNITY 15SHAREHOLDERS’ BENEFITS 17
UNRESOLVED ISSUES 18
CONCLUSION AND RECOMMENDATIONS 19
BIBLIOGRAPHY 21
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Starbucks - A Cup Evolution
Introduction
While it’s clear that Starbucks Coffee Company did not invent coffee, Starbucks did
invent a new coffee drinking experience when it reshaped a simple cup of coffee into a luxury
product (Clark, 2007). Gone are the days when regular or decaf are the only choices in coffee.
Starbucks has successfully produced a personalized luxury coffee experience that has created a
coffee-drinking phenomenon worldwide. Today, Starbucks is a public icon in the coffee world;
and its success and visibility invite scrutiny, which has resulted in greater expectations from the
public for Starbucks to become more socially and globally responsible (Fellner, 2008). While
progress has been made on the ethical sourcing of its coffee beans, Starbucks still has large
strides to make towards becoming a greener company. One of the obstacles Starbucks must
address is the volume of waste generated by the paper beverage cups, a dilemma currently
weighing down the company’s reputation as a socially responsible business. We believe that
Starbucks can lessen its negative future impact on company stakeholders and the environment if
the company supplements its usage of paper cups with the usage of reusable cups.
Starbucks’ mission has always been to “inspire and nurture the human spirit – one
person, one cup, and one neighborhood at a time” (Shultz, 2011). Given its mission, Starbucks
sees itself as an integral part of each community in which it is located. It is not surprising that
Corporate Social Responsibility (CSR), which is the notion that a corporation should enhance
society and be accountable for its actions that affect society (D’Amato, Henderson, & Florence,
2009), would play an important role in the Starbucks business model. Starbucks currently has
programs that are focused on ethical sourcing of coffee beans, recycling, energy efficiency, water
conservation, green building, climate change, and community outreach (Schultz, 2011). In all of
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4 STARBUCKS- A CUP EVOLUTION
these cases, Starbucks has made notable progress toward stated goals (Aston, 2012); however,
while impressive progress has been made, one of the challenges that Starbucks has struggled to
address is the volume of waste generated by paper beverage cups.
Opportunities for Improvement:
Currently, Starbucks’ paper cups cannot be recycled because there is no available
infrastructure to recycle a paper cup that also contains plastic. The cost and complexity of
removing the plastic lining from the paper cup is simply too high for most recycling plants to
undertake (Lariviere, 2010). Unfortunately for Starbucks, a plastic lining is a necessary evil
because it prevents the hot liquid from seeping into the seams of the paper (Aston, 2012).
Because the paper cups cannot be recycled, customers have no other option than to throw them
into the trash, amounting to an estimated three billion paper Starbucks cups disposed of in
landfills each year worldwide (Kamenetz, 2010). When paper cups amass in landfills, the
environmental impacts are substantial. Paper cups and plastic lids can take hundreds of years to
decompose and during the decomposition process, the plastic lining in the cups can emit
environmentally harmful greenhouse gases such as methane, carbon dioxide, and other
carcinogenic chemicals (Bouchard, 2010). The production of Starbucks’ paper cups has also
contributed to the deforestation of the planet – with over three billion paper cups being made for
Starbucks consumers each year, over one million trees are being harvested in the process
(Spitzer, 2009). Deforestation has negative consequences impacting Starbucks’ stakeholders but
the most dramatic effect is a detriment to the environment, specifically the loss of habitat for
millions of animal species (Lugo, Parrotta, & Brown, 1993).
Recently, Starbucks has attempted to address the environmental impacts of its paper cups
by holding multiple “Cup Summits”; a colloquium of Starbucks assembled scientists and
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industry leaders positioned to develop recycling solutions (Kuruvilla, Norton, & Gee, 2012). One
dilemma discussed, was the absence of recycling facilities capable of breaking down Starbucks’
used paper cups. As a result, Starbucks hatched a pilot project, now being developed in Chicago,
requiring a chain of stores to facilitate the recycling of Starbucks’ plastic lined paper cups. The
recycled cups will be shipped to a manufacturing facility in the state of Wisconsin, where the
cups will be broken down and turned into napkins to be used in Starbucks stores
(www.starbucks.com). Starbucks’ efforts to recycle its paper cup waste are commendable;
however, we believe this is not the best solution to the problem. To start with, the recycling
process can be extremely expensive, as it requires Starbucks to absorb the cost for the
transportation of waste cups from various Starbucks stores to the recycling facility. If expanded,
reproducing the recycling facilities funded by Starbucks on a world-scale will be very difficult to
implement with the varying laws and regulations in each country. Additionally, the recycling
process has negative environmental impacts; for example, toxic chemicals are released into the
environment after they are used to remove colored dye from paper (Sharma, 2010).
Starbucks acknowledges its responsibility to address and resolve the negative impacts
that paper cups have, on not only the environment, but also on Starbucks stakeholders. Howard
Shultz, Starbucks’ Chairman and CEO, recognizes that “no business can do well for its
shareholders without first doing well by all the people its business touches” (Shultz, 2011). The
key stakeholders impacted by measures to reduce the waste, amassed by Starbucks’ paper cups,
include: Starbucks shareholders, employees, customers, product suppliers and manufacturers,
and society, as affected by the environment.
Shultz has requested that JANSaS Consulting Company analyze the issue of excessive
waste, generated by disposable paper cups, with respect to various stakeholder interests and help
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Starbucks identify creative solutions. In Part I of this report, we propose a solution that will
significantly reduce waste and reliance on non-renewable resources while at the same time
increase revenues for different lines of business, enhance loyalty, build on an already strong
reputation and ultimately increase bottom line performance. In Part II, this report will address the
benefits of our recommended solutions to company stakeholders and to the environment as these
impacts pertain to the guiding principles outlined in the Starbucks mission statement. In Part III,
our report will discuss unresolved issues that may affect company’s stakeholders.
Part I: Creating a Cup Evolution
JANSaS Consulting Company proposes to re-introduce a reusable to-go cup program at
Starbucks. This program will be called the StarCup Loyalty Program. A JANSaS Consulting
Company investigator interviewed Starbucks customers and employees to gauge opinions
regarding a re-usable cup program. Shift manager, John, at the Piedmont, California Starbucks
location, explained that numerous measures have been attempted by Starbucks to reduce waste
associated with paper cups. He recounted that about six to seven years ago, Starbucks tried to
encourage reusable to-go cups but the idea “didn’t take” with customers. In a separate email
interview, a former Starbucks employee explained that Starbucks implemented its “Get Mugged”
campaign in Noe Valley, California, in which the current ten-cent discount for bringing a
reusable cup was increased to 35 cents. A ten-percent rise in the use of reusable cups was noted
for a few days; however, the increase in reusable cups was short-lived and the Starbucks stores in
the Noe Valley area returned to the original ten-cent discount (J. Hulbert, personal
communication, October 10, 2012). Further, an anonymous customer at the Piedmont Starbucks
validated John’s statements by explaining, “if Starbucks expects me to hold onto and return a
dirty cup to be used again, I would want a price cut.” A price cut is exactly what Starbucks
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customers received through the “Get Mugged” campaign and yet that price cut alone was not
enough to transform consumer behavior.
Based on our interviews and review of past programs, it is clear that shifting consumer
behavior needs to be the key focus of the program. In our plan, we highlight four key strategies
that will shift behavior away from paper cup usage to that of reusable cups. We propose
embedding the StarCups into the existing loyalty program, building off of a current Starbucks
strength. We recommend charging customers more for using paper cups, while at the same time,
providing a free upgrade for those who adopt the StarCup Loyalty Program. We also propose
leveraging social media applications to engage consumers at a grassroots level. If implemented
successfully, the plan will result in greater customer loyalty, more highly engaged and satisfied
employees, improved revenues in the form of additional lines of business, increased social
marketing conversion rates, positive brand image associations, and increased customer retention.
The plan will also likely garner support and dedication from environmental groups who will laud
the reduced paper waste. Finally, this plan has the potential to create an entirely new marketplace
for innovative, reusable cups to address unique customer needs. With these strategies, our firm
believes a large number of consumers will make the change from using paper cups to using the
StarCup.
Strategy #1: Embed the StarCup into the existing loyalty program
Starbucks can change consumer behavior by linking customer loyalty programs to the use
of reusable cups. Starbucks already has a robust loyalty program and frequent customers use the
loyalty cards extensively. However, we assert that Starbucks should take that program one step
further in order to increase the customer base using reusable cups by linking the existing loyalty
program directly to customer wants beyond an occasional free coffee. We recommend that
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Starbucks introduce a new feature of its loyalty program that we call the StarCup Loyalty
Program. Starbucks already sells reusable cups. All Starbucks needs to do is print a Quick
Response (QR) code, a specialized barcode, on each cup and associate that cup with a customer,
via an online customer account. Upon purchase of a StarCup customers will receive their next
three beverage purchases for free, provided they continue to use their StarCup. Customers will
also receive every tenth beverage, ordered with the StarCup, for free. When the customer makes
a purchase, the QR code on the cup is scanned and the customer receives credit for using the
StarCup. The customer’s credit card is debited at purchase, should the customer wish to link the
StarCup to a debit account. Not only does this process streamline the transaction but additionally
customers will accumulate loyalty points, in addition to free beverages, to be redeemed for
discounted retail or food and beverage purchases.
Strategy #2 - Charge the Customer
Instead of just providing a discount for using a StarCup or other reusable cup, we suggest
charging customers an additional amount for using a paper cup. Author and contributing editor at
Fortune magazine, Marc Gunther, writes that research done in behavior economics highlights,
“people tend to work harder to avoid losses [the 10-cent charge for a paper cup] than they do to
pursue gains [the 10-cent discount for bringing in a mug]” (Gunther, 2012). Proof of this theory
can be seen in Dublin, Ireland, in 2002, where Irish stores reduced the use of plastic bags by 90
percent after a fee equivalent to 10-cents per bag was added (Ritch, Brennan, & MacLeod,
2009). Simply, by charging more for using a paper cup instead of providing a discount for the
reusable cup, Starbucks would likely experience a notable change in behavior. That said,
JANSaS Consulting Company does not believe that this step, on its own, would be enough to
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change consumer behavior and it is vital that it is paired with the incentives noted in the other
parts of our plan.
Strategy #3: Upgrade the Coffee Purchase for Free
We believe that one of the best ways to incentivize customers to switch from using paper
cups to using reusable cups is to give the customers something that they will instantly benefit
from. If you allow the customers to upgrade for free when using a reusable cup, customers will
experience instant gratification. Upgrading the customer’s cup one size, e.g. Short to Tall, Tall to
Grande, and Grande to Venti, the cost of the additional coffee being used is minimal. According
to the Seattle Times, Starbucks paid, on average, $1.43 for a pound of coffee (Allison, 2008).
With prices this low for coffee, the cost of the size upgrade will easily be offset by the savings of
not having to produce a paper cup (paper cup - $.08, sleeves - $.05, and cup lid $.07)(Williams,
2011).
Strategy #4: Socialize it
The fourth and final strategy is for Starbucks to leverage its already strong, industry-
leading presence in social media by simply enabling customers to link their purchases at
Starbucks with social media sites, such as Facebook. Customers can elect to share with their
friends every time a purchase is made using the StarCup. Recent research on effective use of
social networking sites suggests that that the ‘pull’ approach is much more successful than the
‘push’ approach (Diffley, Kearns, Bennett, & Kawalek, 2011). Instead of telling customers they
should be environmentally friendly and use reusable cups or telling customers about Starbucks
environmental initiatives, Starbucks should enable customers to easily broadcast the use of their
StarCup. Leveraging social media will empower customers to proudly share their decision to use
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a reusable cup, while providing free marketing, which will help identify the brand as being
environmentally friendly. Furthermore, social media are disproportionally used by younger
customers (Brenner, 2012). Linking purchases to social media sites will increase the likelihood
of customers becoming loyal to the Starbucks brand at an earlier age.
Part II: Stakeholder Impacts
To successfully implement this plan, it is vital that the plan firmly fits Starbucks’ strategy,
mission, and values. To that end, further detail on the implementation of the plan will be
discussed in the context of the six guiding principles of the Starbucks mission statement (Fellner,
2008).
Six Guiding Principles – Starbucks:1. To provide a great work environment and treat others with respect and
dignity.2. To embrace diversity as an essential component in the way we do
business.3. To apply the highest standards of excellence to the purchasing, roasting
and fresh delivery of our coffee.4. To develop enthusiastically satisfied customers all of the time.5. Contribute positively to our communities and our environment.6. To recognize that profitability is essential to our future success.
As noted previously, there are various key stakeholders that will be impacted by the
implementation of the StarCup Loyalty Program. JANSaS Consulting Company understands the
stakeholder interests to be as follows: 1) Starbucks employees have an interest in maintaining
reasonable expectations of themselves by employers at work and in being fulfilled by their
employment with Starbucks; 2) Starbucks customers have an interest in receiving the high
quality product they have come to expect from Starbucks; 3) Starbucks suppliers and
manufacturers have an interest in maintaining their contracts with Starbucks; 4) Starbucks
shareholders have an interest in the short and long-term profitability of the company; 5) all of
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humanity and the biosphere, of which we are apart, have an interest in reducing the burden of
commerce on the planet. The impacts of the StarCup Loyalty Program on each of the key
stakeholders are outlined as aligned to the Starbucks’ mission.
Guiding Principles One and Two: Employee Satisfaction
“To provide a great work environment and treat others with respect and dignity. To
embrace diversity as an essential component in the way we do business.”
The first two guiding principles of the Starbucks mission statement focus on the
employee’s experience at Starbucks. For the StarCup Loyalty Program to be successful, it is vital
that employees are brought into it. We recommend that the StarCup Loyalty Program be paired
with an employee incentives program designed to help Starbucks employees achieve personal
goals while working at Starbucks. As previously noted, a JANSaS Investigator corresponded via
email with a former Starbucks employee, Julie Hurlbert, revealing a past Starbucks reusable cup
program, “Get Mugged”, which failed largely due to the lack of employee incentive to
continually promote the program (J. Hulbert, personal communication, October 10, 2012).
Hurlbert explained that Starbucks baristas already have a lot that they are required to say at the
register and must attempt to upsell one item to every customer. Hulbert states, “Telling
customers about for-here ware or the cup discount falls off the radar” (J. Hulbert, personal
communication, October 10, 2012). However, through the StarCup Loyalty Program, promoting
a reusable cup program is no longer an additional thing to remember. The StarCup Loyalty
Program provides an opportunity for baristas to promote and sell the StarCup as their required
upsell.
At JANSaS Consulting, we think that Hulbert had the right idea by trying to change
consumer behaviors and encouraging employees to promote the effort. However, Hulbert’s
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program did not exhibit the proper follow-through, which can be easily created by incentivizing
the baristas responsible for promotions. The StarCup Loyalty Program will be initiated along
with barista incentive programs specifically designed to fit the needs of individual employees.
The basic model of the incentives program involves a program in which a barista is required to
sell a set number of StarCups within a specified time. If the goal is met, the employee receives a
reward for hitting the sales mark. The length of the program is designed to extend the promotion
of the StarCup at the counter, in an effort to strengthen the lasting impact that the program will
have on consumers. The idea being that a customer who declines to purchase a StarCup initially
may purchase a StarCup a month or so later when the customer sees others in the community
taking advantage of the program.
At Starbucks, efficiency is key. At peak hours of the day, lines can be long, and if there is
anything that will inhibit the flow of customers receiving coffee, fewer purchases will be made.
It is important to note that in most cases the StarCup Loyalty Program will not extend the
interaction time at the register, and if used optimally by a consumer, the StarCup will expedite
checkout. The StarCup has space for the barista to write the customers order on the side of the
cup, in washable marker, so no extra time is expended trying to find another method of
conveying the order to the barista. As addressed earlier, the StarCup barcode can be linked to an
online account that can be preloaded with money. Therefore, if used properly, a customer simply
needs to hand over their StarCup, dictate their order, and walk away while receipts are posted to
their online account, further reducing paper waste. These timesavings can eliminate time
fumbling for payment tender at the register and will also help increase line efficiency and help
increase sales during busy times of the day.
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The incentives program linked to the StarCup Loyalty Program is an opportunity to
motivate baristas toward promoting reusable cup usage without requiring additional work. The
StarCup Loyalty Program, in turn, will help Starbucks create a great working environment by
taking into account the diverse needs of its employees and incorporating business success with
employees’ personal success.
Guiding Principle Three: Customer Safety and Product Quality
“To apply the highest standards of excellence to the purchasing, roasting, and fresh
delivery of our coffee.”
Starbucks ensures the highest standards in acquisition of the best, ethically sourced coffee
beans, which are roasted to perfection. The StarCup Loyalty Program will have no impact on
these already polished business practices; however, Starbucks’ ability to deliver the freshest
coffee may be questioned by some based on the sanitation implications of implementing a
reusable cup program. Starbucks guidelines already inhibit employees from touching the lids of
reusable cups; a guideline aimed to avoid the cross contamination of virgin cups with germs
from a reusable cup (J. Hulbert, personal communication, October 10, 2012). Customers will be
encouraged to return with a clean StarCup, but in the event that a dirty cup is presented to the
barista, the employee currently has facilities to empty and rinse a soiled cup (J. Hulbert, personal
communication, October 10, 2012). The StarCup Loyalty Program will be implemented under
current health safety guidelines but will include provisions by which an employee may choose
whether or not to rinse and refill a soiled StarCup based on the time availability to clean an
individual cup and based on the potential for cross-contamination from an extremely dirty or
moldy cup. In the event that a barista refuses to refill a soiled StarCup, the patron will receive a
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regular paper cup at the original price, as the paper cup fee targets consumers opting out of the
StarCup Loyalty Program. Therefore, the increased use of reusable cups at Starbucks, based on
the success of the StarCup Loyalty Program, will not increase the risk of cross-contamination at
Starbucks, maintaining the quality of the coffee and the safety of Starbucks patrons.
Guiding Principle Four: Customer Satisfaction
“To develop enthusiastically satisfied customers all of the time.”
The StarCup Loyalty Program, while designed to reduce waste associated with paper
cups, is specifically targeted toward engaging its customers for the long-term through financial
incentives. Foremost, the StarCup Loyalty Program provides considerable price cuts to
customers who choose to be earth conscious. With the upfront purchase of one of many StarCup
choices, consumers will have access to an online account linked directly to their StarCup QR
code, preloaded with three free drinks. Customers on-the-go can preload their StarCup account,
which will enable a quick turnaround time at the register when they uses the StarCup. As stated
in Part I, each beverage purchase made with the StarCup, after the initial complementary
beverages, will be registered and applied toward a free tenth beverage with additional StarPoints
accrued in the customer’s account to be applied toward the discounted purchase of retail items.
Beyond the financial incentives, the StarCup Loyalty Program provides customers an
avenue for social activism through popular social media. When StarCup purchases are made,
customers must activate their QR code-linked account via the Internet, at which time, customers
will be invited to link their account to the Facebook social media platform. Subsequently, when a
Facebook-linked StarCup is scanned at the register; an automatic post will be made on the user’s
Facebook wall stating that this person used his/her StarCup at Starbucks. The post will be linked
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to the Starbucks website, which will explain the StarCup Loyalty Program. In this way, just
drinking coffee doubles as environmental activism.
Guiding Principle Five: Environmental Impact
“To contribute positively to our communities and our environment.”
The StarCup Loyalty Program has the potential through its links to social media to
promote environmental awareness issues to a wide range of individuals on the Internet. Based on
the ubiquitous distribution and frequent patronization of Starbucks, there is a good chance that
many of the listed friends on the average Facebook users’ page will purchase a beverage at
Starbucks everyday. If just one of these friends happens to use a StarCup linked to Facebook, a
message about the Starbucks brand with a positive association with waste reduction is delivered
to hundreds, if not thousands, of people who are much more likely to listen to a friend rather than
a corporation.
By encouraging large numbers of consumers to adopt the StarCup Loyalty Program,
Starbucks will significantly reduce paper waste. The initial implementation of the ten-cent
discount, provided to customers for bringing a reusable cup, resulted in the reduction of paper
cup waste by 674,000 pounds in the United States and Canada (J. Hulbert, personal
communication, October 10, 2012). The expected success of the StarCup Loyalty Program
should result in numbers exponentially higher than past programs. The process to manufacture a
paper cup requires harvesting and converting trees into wood chips, which are mashed with
water into pulp. The pulp is pressed while dried to make paper, which is bleached, coated in
polystyrene to retain heat inside the cup, and finally printed with a Starbucks logo (Alliance for
Environmental Innovation, 2000). According to a study from the Environmental Defense Fund,
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the manufacturing and shipping of a single sixteen-ounce paper cup with a sleeve results in the
emissions of 0.25 pounds of carbon dioxide, the disappearance 0.93ft2 of natural habitat, and the
loss of 0.6 pounds of plant and animal life (Alliance for Environmental Innovation, 2000).
Further, Starbucks paper cups go into landfills, which release methane, a greenhouse gas with 23
times the heat-trapping power of carbon dioxide (Alliance for Environmental Innovation, 2000).
Reusable cups are composed of various materials: plastic, ceramic, glass, aluminum,
steel, etc. The use of a reusable cup at Starbucks has resulted in a significant reduction of
landfill-fated waste. However, the energy to produce a reusable cup is significantly larger than
the energy required to produce a paper cup: a factor of seventy separates the amount of energy
required to produce a ceramic cup versus a paper cup (Hocking, 1994). For the use of a reusable
cup to benefit the environment a ceramic cup must be used 39 times, a plastic cup must be used
17 times, and a glass bottle must be used 16 times before energy savings accrue (Hocking, 1994).
Given that a reusable cup may be used approximately 1,000 times or more the environmental
benefits of using reusable cups in terms of reduced energy use, air and water pollution, and solid
waste can be tremendous (Alliance for Environmental Innovation, 2000). A Starbucks Company
and Alliance for Environmental Innovation Research group, formed in 2000, gathered the
following statistics related to the environmental benefits of using reusable serve ware in place of
paper goods. In reference to the effect that the production and the continued use of ceramic cups
have on water pollution and usage, air pollution, and solid waste it was noted that ceramic cups
cut water usage by 64 percent, reduced the amount of air particulates by 86 percent and
greenhouse gases by 29 percent, and reduced solid waste by 86 percent by weight (Alliance for
Environmental Innovation, 2000). Functionally, Starbucks already produces and sells the
StarCup, minus the specific QR barcode; thus, the initiation of the StarCup Loyalty Program will
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not negatively impact the environment. When the program ramps up and more StarCups need to
be manufactured to keep up with demand, the statistics show that the production and the
continued use of the reusable cup is better for the environment than that of disposable paper
cups.
Guiding Principle Six: Shareholder Benefits
“To recognize that profitability is essential to our future success.”
Although the costs of adopting the StarCup Loyalty Program for Starbucks may appear
high, we expect the costs associated with that program to be nominal. Additionally, the increased
customer loyalty resulting from the program will offset any upfront expenditures, including: 1)
the cost to add QR codes to currently manufactured travel cups; 2) the minimal cost of free
beverages and upgrades; 3) the costs associated with the employee incentives program; and 4)
the general cost associated with advertising a new product line. However, the fundamental
strategy of the StarCup Loyalty Program to alter consumer behavior has the potential to
significantly benefit Starbucks’ bottom line through increased loyalty, improved brand
recognition, and free marketing on social networking sites. Additionally, even if a customer
purchases a StarCup, at the average retail price of $12.95 per cup, and never brings it back,
Starbucks still makes that initial sale and never has to give away any complementary beverages.
In the worst-case scenario the StarCups do not sell, but due to the minimal program startup costs
we think the benefits outweigh the risks.
It is important to also note that Starbucks will make an increased profit from the fee
imposed on paper cups purchased by the customers opting out of the StarCup Loyalty Program.
While this increase in prices to customers refusing the StarCup could initially incite anger, we
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expect that the price increase will function similarly to the plastic bag programs described
earlier. Should management or the Board have concerns about being viewed as greedy or “green-
washing”, Starbucks could donate the revenue from these price increases to an environmental
organization or promise to use the proceeds to further pursue green options within Starbucks (P.
Melhus, personal communication, September 13, 2012).
The company and its shareholders will benefit from the greater long-term profits
promised through the StarCup Loyalty Program. When the StarCup Loyalty Program is
successful, Starbucks has the ability to exponentially increase the amount of data collected about
consumer behaviors. That data can then be used to inform the best marketing decisions, the most
efficient product purchasing, and accurately targeted advertising. All of these outcomes from
increased consumer intelligence will enable Starbucks to operate more efficiently and return
greater value to shareholders.
Part III: Unresolved issues
While we have discussed the benefit of this program for many of the current stakeholders
such as consumers, employees, shareholders and the environment, we have not discussed the
impact on current paper cup manufacturers. It is our view that the transition would be gradual,
enabling many paper cup manufacturers to adjust their business models and potentially come up
with creative reusable StarCup solutions. There will be some vendors who are unable to adjust to
Starbucks changed purchasing habits. Business with Starbucks’ current suppliers and
manufacturers of reusable cups will remain the same. QR codes will need to be printed on the
already manufactured reusable cups but the QR codes can be printed post-manufacturing.
A possible unintended consequence of this StarCup Loyalty Program and specifically
linking it to social networking sites is that it could be perceived as marketing an addictive
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substance to under age consumers. Because Starbucks loses some degree of control over the
marketing of its products when social networking sites are utilized, it is possible that Starbucks
could encounter some bad press.
It will also be important to longitudinally analyze whether the implementation of the
StarCup Loyalty Program will continue to be the best Starbucks effort to reduce its negative
environmental impact after taking into account future more environmentally friendly paper cups.
A Starbucks representative explained that, “to accurately measure the true environmental impacts
of any of our packaging requires an evaluation of the entire lifecycle”, which includes raw
material extraction, manufacturing energy and resources, customer use and the eventual disposal
at the “cups’ end of life” (J. Hulbert, personal communication, October 10, 2012). If the
environmental impact of producing a StarCup does not offset the negative impact of disposing of
future more environmentally friendly cups a year, then Starbucks may want to reconsider the
StarCup Loyalty Program.
Part IV: Conclusions and Recommendations
Starbucks has a strong reputation for being socially responsible. However, even after
years of attention, Starbucks continues to be a significant contributor of paper waste. The
StarCup Loyalty Program resolves the issue of paper cup waste by establishing the habitual use
of the StarCup. JANSaS Consulting Company proposes that StarCup Loyalty Program strategies
include linking the use of reusable cups to the current loyalty program and to social networking
sites, providing free products, and imposing a fee on those who use paper cups. The StarCup
Loyalty Program will change consumer behavior resulting in the reduction of paper cup use over
time. The program will also increase employee engagement, create new lines of business,
provide better consumer intelligence, solidify customer loyalty, enhance company reputation,
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and benefit the environment. The program achieves all of these aims with minimal cost and risk
to the organization. Nearly all Starbucks’ stakeholders will ultimately benefit from the
implementation of this program and it directly aligns with Starbucks’ six guiding principles. To
quote former Interface Incorporated CEO and pioneer of sustainable business practices, Ray
Anderson, Starbucks will move much further down the road of “doing well by doing good” if it
adopts the StarCup Loyalty Program (Achbar & Abbot, 2003).
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References
Achbar, M. (Producer), & Abbot, J. (Director). (2003) The Corporation [Motion Picture]. Canada: Zeitgeist Films.
Alliance for Environmental Innovation. (2000). Report of the Starbucks Coffee Company/ Alliance for Environmental Innovation Joint Task Force [Project Report]. Retrieved from http://business.edf.org/sites/business.edf.org/files/starbucks-report-april2000.pdf
Allison, M. (2008, May 14). Starbucks paid more for coffee in 2007 [Web log]. Retrieved from http://seattletimes.com/html/businesstechnology/2004413737_retailreportdigecoffee15.html
Aston, A. (2012) Starbucks’ green scorecard: A few full cups, two half empty [Web blog]. Retrieved from http://www.adamaston.com/?p=882
Bouchard, M. (2010, May 17). Moving Away from Disposable Paper Cups [Web log]. Retrieved from http://www.fourgreensteps.com/infozone/sustainability/moving-away-from-disposable-paper-cups
Brenner, J. (2012, November 13). Pew Internet: Social Networking (full detail) [Web log]. Retrieved from http://www.pewinternet.org/Commentary/2012/March/Pew-Internet-Social-Networking-full-detail.aspx
Clark, T. (2007). Starbucked: a double tall tale of caffeine, commerce, and culture.New York: Little, Brown.
D'Amato, A., Henderson, S., & Florence, S. (2009). Introduction. Corporate Social Responsibility & Sustainable Business: A Guide To Their Leadership Tasks & Functions, 1-2. Recieved from http://0web.ebscohost.com.opac.sfsu.edu/ehost/pdfviewer/pdfviewer?sid=819964f5-15d2-4313-8b61-a178bb387b86%40sessionmgr110&vid=4&hid=111
Diffley, S., Kearns, J., Bennett, W., & Kawalek, P. (2011). Consumer Behaviour in Social Networking Sites: Implications for Marketers. Irish Journal of Management, 30, 47.
Fellner, K. (2008). Wrestling with Starbucks: conscience, capital, cappuccino.New Brunswick, N.J.: Rutgers University Press.
Gunther, M. (2012, May 18). Behavioral Economics at Starbucks [Web log]. Retrieved from http://www.marcgunther.com/behavioral-economics-at-starbucks/#more-11398
Hocking, M.B. (1994). Reusable and Disposable Cups: An Energy-Based Evaluation. Environmental Management Vol. 18, No. 6, pp. 894. Retrieved from http://www.springerlink.com/content/c275588280002wp8/fulltext.pdf?MUD=MP
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Kamenetz, A. (2010, October 20). The Stabucks Cup Dilemma [Web log]. Retrieved from http://operationsroom.wordpress.com/2010/11/16/why-cant-you-recycle-a-starbucks-cup/
Kuruvilla, B., Norton, S., & Gee, M. (2012). Greening the Supply Chain- Trends in Corporate America. International Journal of Business and Management Studies, 4, 1-10.
Lariviere, M. (2012, November 16). Why can’t you recycle a Starbucks cup? [Web log]. Retrieved from http://operationsroom.wordpress.com/2010/11/16/why-cant-you-recycle-a-starbucks-cup/
Lugo, A., Parrotta, J., & Brown, S. (1993). Loss in Species Caused by Tropical Deforestation and Their Recovery through Management. AMBIO, 22, 106-109.
Ritch, E., Brennan, C., & MacLeod, C. (2009). Plastic bag politics: modifying consumer behaviour for sustainable development. International Journal of Consumer Studies, 33, 168-174.
Schultz, H. (2011). Onward: how Starbucks fought for its life without losing its soul. New York: Rodale Press.
Sharma, P. (2010, February 6). Pollution Control in Recycling Industry [Web log]. Retrieved from http://saferenvironment.wordpress.com/2010/02/06/pollution-control-in-recycling-industry-is-most-essential/
Spitzer, N. (2009, July 30). Paper Cups No More [Web log]. Retrieved from http://www.sheknows.com/living/articles/810025/the-impact-of-disposable-coffee-cups-on-the-environment
Williams, K. (2011, May 19). Does it cost Starbucks more for the cup their coffee goes in, or the actual coffee itself? [Web log]. Retrieved from http://www.quora.com
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