Starbucks Reusable Cup Proposal


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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 Reusable Cup Proposal

  1. 1. STARBUCKS- A CUP EVOLUTION 1BU784 – Group 2 – Group Project 1
  3. 3. STARBUCKS- A CUP EVOLUTION 3 Starbucks - A Cup EvolutionIntroduction While it’s clear that Starbucks Coffee Company did not invent coffee, Starbucks didinvent a new coffee drinking experience when it reshaped a simple cup of coffee into a luxuryproduct (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 acoffee-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 thepublic for Starbucks to become more socially and globally responsible (Fellner, 2008). Whileprogress has been made on the ethical sourcing of its coffee beans, Starbucks still has largestrides to make towards becoming a greener company. One of the obstacles Starbucks mustaddress is the volume of waste generated by the paper beverage cups, a dilemma currentlyweighing down the company’s reputation as a socially responsible business. We believe thatStarbucks can lessen its negative future impact on company stakeholders and the environment ifthe 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 – oneperson, one cup, and one neighborhood at a time” (Shultz, 2011). Given its mission, Starbuckssees itself as an integral part of each community in which it is located. It is not surprising thatCorporate Social Responsibility (CSR), which is the notion that a corporation should enhancesociety 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 hasprograms that are focused on ethical sourcing of coffee beans, recycling, energy efficiency, waterconservation, green building, climate change, and community outreach (Schultz, 2011). In all of BU784 – Group 2 – Group Project 3
  4. 4. 4 STARBUCKS- A CUP EVOLUTIONthese 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 toaddress is the volume of waste generated by paper beverage cups.Opportunities for Improvement: Currently, Starbucks’ paper cups cannot be recycled because there is no availableinfrastructure to recycle a paper cup that also contains plastic. The cost and complexity ofremoving the plastic lining from the paper cup is simply too high for most recycling plants toundertake (Lariviere, 2010). Unfortunately for Starbucks, a plastic lining is a necessary evilbecause 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 theminto the trash, amounting to an estimated three billion paper Starbucks cups disposed of inlandfills each year worldwide (Kamenetz, 2010). When paper cups amass in landfills, theenvironmental impacts are substantial. Paper cups and plastic lids can take hundreds of years todecompose and during the decomposition process, the plastic lining in the cups can emitenvironmentally harmful greenhouse gases such as methane, carbon dioxide, and othercarcinogenic chemicals (Bouchard, 2010). The production of Starbucks’ paper cups has alsocontributed to the deforestation of the planet – with over three billion paper cups being made forStarbucks consumers each year, over one million trees are being harvested in the process(Spitzer, 2009). Deforestation has negative consequences impacting Starbucks’ stakeholders butthe most dramatic effect is a detriment to the environment, specifically the loss of habitat formillions of animal species (Lugo, Parrotta, & Brown, 1993). Recently, Starbucks has attempted to address the environmental impacts of its paper cupsby holding multiple “Cup Summits”; a colloquium of Starbucks assembled scientists and BU784 – Group 2 – Group Project 4
  5. 5. STARBUCKS- A CUP EVOLUTION 5industry leaders positioned to develop recycling solutions (Kuruvilla, Norton, & Gee, 2012). Onedilemma 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. Therecycled cups will be shipped to a manufacturing facility in the state of Wisconsin, where thecups will be broken down and turned into napkins to be used in Starbucks stores( 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 recyclingprocess can be extremely expensive, as it requires Starbucks to absorb the cost for thetransportation 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 toimplement with the varying laws and regulations in each country. Additionally, the recyclingprocess has negative environmental impacts; for example, toxic chemicals are released into theenvironment after they are used to remove colored dye from paper (Sharma, 2010). Starbucks acknowledges its responsibility to address and resolve the negative impactsthat paper cups have, on not only the environment, but also on Starbucks stakeholders. HowardShultz, Starbucks’ Chairman and CEO, recognizes that “no business can do well for itsshareholders without first doing well by all the people its business touches” (Shultz, 2011). Thekey 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 excessivewaste, generated by disposable paper cups, with respect to various stakeholder interests and help BU784 – Group 2 – Group Project 5
  6. 6. 6 STARBUCKS- A CUP EVOLUTIONStarbucks identify creative solutions. In Part I of this report, we propose a solution that willsignificantly reduce waste and reliance on non-renewable resources while at the same timeincrease revenues for different lines of business, enhance loyalty, build on an already strongreputation and ultimately increase bottom line performance. In Part II, this report will address thebenefits of our recommended solutions to company stakeholders and to the environment as theseimpacts 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 atStarbucks. This program will be called the StarCup Loyalty Program. A JANSaS ConsultingCompany investigator interviewed Starbucks customers and employees to gauge opinionsregarding a re-usable cup program. Shift manager, John, at the Piedmont, California Starbuckslocation, explained that numerous measures have been attempted by Starbucks to reduce wasteassociated with paper cups. He recounted that about six to seven years ago, Starbucks tried toencourage reusable to-go cups but the idea “didn’t take” with customers. In a separate emailinterview, 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 areusable cup was increased to 35 cents. A ten-percent rise in the use of reusable cups was notedfor a few days; however, the increase in reusable cups was short-lived and the Starbucks stores inthe Noe Valley area returned to the original ten-cent discount (J. Hulbert, personalcommunication, October 10, 2012). Further, an anonymous customer at the Piedmont Starbucksvalidated John’s statements by explaining, “if Starbucks expects me to hold onto and return adirty cup to be used again, I would want a price cut.” A price cut is exactly what Starbucks BU784 – Group 2 – Group Project 6
  7. 7. STARBUCKS- A CUP EVOLUTION 7customers received through the “Get Mugged” campaign and yet that price cut alone was notenough to transform consumer behavior. Based on our interviews and review of past programs, it is clear that shifting consumerbehavior needs to be the key focus of the program. In our plan, we highlight four key strategiesthat will shift behavior away from paper cup usage to that of reusable cups. We proposeembedding the StarCups into the existing loyalty program, building off of a current Starbucksstrength. 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 proposeleveraging social media applications to engage consumers at a grassroots level. If implementedsuccessfully, the plan will result in greater customer loyalty, more highly engaged and satisfiedemployees, improved revenues in the form of additional lines of business, increased socialmarketing conversion rates, positive brand image associations, and increased customer retention.The plan will also likely garner support and dedication from environmental groups who will laudthe reduced paper waste. Finally, this plan has the potential to create an entirely new marketplacefor innovative, reusable cups to address unique customer needs. With these strategies, our firmbelieves a large number of consumers will make the change from using paper cups to using theStarCup.Strategy #1: Embed the StarCup into the existing loyalty program Starbucks can change consumer behavior by linking customer loyalty programs to the useof reusable cups. Starbucks already has a robust loyalty program and frequent customers use theloyalty cards extensively. However, we assert that Starbucks should take that program one stepfurther in order to increase the customer base using reusable cups by linking the existing loyaltyprogram directly to customer wants beyond an occasional free coffee. We recommend that BU784 – Group 2 – Group Project 7
  8. 8. 8 STARBUCKS- A CUP EVOLUTIONStarbucks introduce a new feature of its loyalty program that we call the StarCup LoyaltyProgram. Starbucks already sells reusable cups. All Starbucks needs to do is print a QuickResponse (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 nextthree beverage purchases for free, provided they continue to use their StarCup. Customers willalso receive every tenth beverage, ordered with the StarCup, for free. When the customer makesa purchase, the QR code on the cup is scanned and the customer receives credit for using theStarCup. The customer’s credit card is debited at purchase, should the customer wish to link theStarCup to a debit account. Not only does this process streamline the transaction but additionallycustomers will accumulate loyalty points, in addition to free beverages, to be redeemed fordiscounted 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 suggestcharging customers an additional amount for using a paper cup. Author and contributing editor atFortune 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 topursue gains [the 10-cent discount for bringing in a mug]” (Gunther, 2012). Proof of this theorycan be seen in Dublin, Ireland, in 2002, where Irish stores reduced the use of plastic bags by 90percent 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 thereusable 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 tochange consumer behavior and it is vital that it is paired with the incentives noted in the other BU784 – Group 2 – Group Project 8
  9. 9. STARBUCKS- A CUP EVOLUTION 9parts 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 papercups to using reusable cups is to give the customers something that they will instantly benefitfrom. If you allow the customers to upgrade for free when using a reusable cup, customers willexperience instant gratification. Upgrading the customer’s cup one size, e.g. Short to Tall, Tall toGrande, and Grande to Venti, the cost of the additional coffee being used is minimal. Accordingto 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 ofnot 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 atStarbucks with social media sites, such as Facebook. Customers can elect to share with theirfriends every time a purchase is made using the StarCup. Recent research on effective use ofsocial 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 theyshould be environmentally friendly and use reusable cups or telling customers about Starbucksenvironmental initiatives, Starbucks should enable customers to easily broadcast the use of theirStarCup. Leveraging social media will empower customers to proudly share their decision to usea reusable cup, while providing free marketing, which will help identify the brand as being BU784 – Group 2 – Group Project 9
  10. 10. 1 STARBUCKS- A CUP EVOLUTION0environmentally friendly. Furthermore, social media are disproportionally used by youngercustomers (Brenner, 2012). Linking purchases to social media sites will increase the likelihoodof 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 bediscussed 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 theimplementation of the StarCup Loyalty Program. JANSaS Consulting Company understands thestakeholder interests to be as follows: 1) Starbucks employees have an interest in maintainingreasonable expectations of themselves by employers at work and in being fulfilled by theiremployment with Starbucks; 2) Starbucks customers have an interest in receiving the highquality product they have come to expect from Starbucks; 3) Starbucks suppliers andmanufacturers have an interest in maintaining their contracts with Starbucks; 4) Starbucksshareholders have an interest in the short and long-term profitability of the company; 5) all ofhumanity and the biosphere, of which we are apart, have an interest in reducing the burden of BU784 – Group 2 – Group Project 10
  11. 11. STARBUCKS- A CUP EVOLUTION 1 1commerce on the planet. The impacts of the StarCup Loyalty Program on each of the keystakeholders 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. Toembrace diversity as an essential component in the way we do business.” The first two guiding principles of the Starbucks mission statement focus on theemployee’s experience at Starbucks. For the StarCup Loyalty Program to be successful, it is vitalthat employees are brought into it. We recommend that the StarCup Loyalty Program be pairedwith an employee incentives program designed to help Starbucks employees achieve personalgoals while working at Starbucks. As previously noted, a JANSaS Investigator corresponded viaemail with a former Starbucks employee, Julie Hurlbert, revealing a past Starbucks reusable cupprogram, “Get Mugged”, which failed largely due to the lack of employee incentive tocontinually 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 theregister and must attempt to upsell one item to every customer. Hulbert states, “Tellingcustomers about for-here ware or the cup discount falls off the radar” (J. Hulbert, personalcommunication, October 10, 2012). However, through the StarCup Loyalty Program, promotinga reusable cup program is no longer an additional thing to remember. The StarCup LoyaltyProgram provides an opportunity for baristas to promote and sell the StarCup as their requiredupsell. At JANSaS Consulting, we think that Hulbert had the right idea by trying to changeconsumer behaviors and encouraging employees to promote the effort. However, Hulbert’sprogram did not exhibit the proper follow-through, which can be easily created by incentivizing BU784 – Group 2 – Group Project 11
  12. 12. 1 STARBUCKS- A CUP EVOLUTION2the baristas responsible for promotions. The StarCup Loyalty Program will be initiated alongwith 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 tosell a set number of StarCups within a specified time. If the goal is met, the employee receives areward for hitting the sales mark. The length of the program is designed to extend the promotionof the StarCup at the counter, in an effort to strengthen the lasting impact that the program willhave on consumers. The idea being that a customer who declines to purchase a StarCup initiallymay purchase a StarCup a month or so later when the customer sees others in the communitytaking advantage of the program. At Starbucks, efficiency is key. At peak hours of the day, lines can be long, and if there isanything 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 theinteraction time at the register, and if used optimally by a consumer, the StarCup will expeditecheckout. The StarCup has space for the barista to write the customers order on the side of thecup, in washable marker, so no extra time is expended trying to find another method ofconveying the order to the barista. As addressed earlier, the StarCup barcode can be linked to anonline account that can be preloaded with money. Therefore, if used properly, a customer simplyneeds to hand over their StarCup, dictate their order, and walk away while receipts are posted totheir online account, further reducing paper waste. These timesavings can eliminate timefumbling for payment tender at the register and will also help increase line efficiency and helpincrease sales during busy times of the day. The incentives program linked to the StarCup Loyalty Program is an opportunity tomotivate baristas toward promoting reusable cup usage without requiring additional work. The BU784 – Group 2 – Group Project 12
  13. 13. STARBUCKS- A CUP EVOLUTION 1 3StarCup Loyalty Program, in turn, will help Starbucks create a great working environment bytaking into account the diverse needs of its employees and incorporating business success withemployees’ personal success.Guiding Principle Three: Customer Safety and Product Quality“To apply the highest standards of excellence to the purchasing, roasting, and freshdelivery of our coffee.” Starbucks ensures the highest standards in acquisition of the best, ethically sourced coffeebeans, which are roasted to perfection. The StarCup Loyalty Program will have no impact onthese already polished business practices; however, Starbucks’ ability to deliver the freshestcoffee may be questioned by some based on the sanitation implications of implementing areusable cup program. Starbucks guidelines already inhibit employees from touching the lids ofreusable cups; a guideline aimed to avoid the cross contamination of virgin cups with germsfrom a reusable cup (J. Hulbert, personal communication, October 10, 2012). Customers will beencouraged to return with a clean StarCup, but in the event that a dirty cup is presented to thebarista, the employee currently has facilities to empty and rinse a soiled cup (J. Hulbert, personalcommunication, October 10, 2012). The StarCup Loyalty Program will be implemented undercurrent health safety guidelines but will include provisions by which an employee may choosewhether or not to rinse and refill a soiled StarCup based on the time availability to clean anindividual cup and based on the potential for cross-contamination from an extremely dirty ormoldy cup. In the event that a barista refuses to refill a soiled StarCup, the patron will receive aregular paper cup at the original price, as the paper cup fee targets consumers opting out of theStarCup Loyalty Program. Therefore, the increased use of reusable cups at Starbucks, based on BU784 – Group 2 – Group Project 13
  14. 14. 1 STARBUCKS- A CUP EVOLUTION4the success of the StarCup Loyalty Program, will not increase the risk of cross-contamination atStarbucks, 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 papercups, is specifically targeted toward engaging its customers for the long-term through financialincentives. Foremost, the StarCup Loyalty Program provides considerable price cuts tocustomers who choose to be earth conscious. With the upfront purchase of one of many StarCupchoices, consumers will have access to an online account linked directly to their StarCup QRcode, 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 statedin Part I, each beverage purchase made with the StarCup, after the initial complementarybeverages, will be registered and applied toward a free tenth beverage with additional StarPointsaccrued 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 anavenue 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, customerswill be invited to link their account to the Facebook social media platform. Subsequently, when aFacebook-linked StarCup is scanned at the register; an automatic post will be made on the user’sFacebook wall stating that this person used his/her StarCup at Starbucks. The post will be linkedto the Starbucks website, which will explain the StarCup Loyalty Program. In this way, justdrinking coffee doubles as environmental activism. BU784 – Group 2 – Group Project 14
  15. 15. STARBUCKS- A CUP EVOLUTION 1 5Guiding 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 topromote environmental awareness issues to a wide range of individuals on the Internet. Based onthe ubiquitous distribution and frequent patronization of Starbucks, there is a good chance thatmany of the listed friends on the average Facebook users’ page will purchase a beverage atStarbucks everyday. If just one of these friends happens to use a StarCup linked to Facebook, amessage about the Starbucks brand with a positive association with waste reduction is deliveredto hundreds, if not thousands, of people who are much more likely to listen to a friend rather thana 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-centdiscount, provided to customers for bringing a reusable cup, resulted in the reduction of papercup waste by 674,000 pounds in the United States and Canada (J. Hulbert, personalcommunication, October 10, 2012). The expected success of the StarCup Loyalty Programshould result in numbers exponentially higher than past programs. The process to manufacture apaper cup requires harvesting and converting trees into wood chips, which are mashed withwater into pulp. The pulp is pressed while dried to make paper, which is bleached, coated inpolystyrene to retain heat inside the cup, and finally printed with a Starbucks logo (Alliance forEnvironmental Innovation, 2000). According to a study from the Environmental Defense Fund,the manufacturing and shipping of a single sixteen-ounce paper cup with a sleeve results in theemissions of 0.25 pounds of carbon dioxide, the disappearance 0.93ft 2 of natural habitat, and the BU784 – Group 2 – Group Project 15
  16. 16. 1 STARBUCKS- A CUP EVOLUTION6loss 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 23times 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 oflandfill-fated waste. However, the energy to produce a reusable cup is significantly larger thanthe energy required to produce a paper cup: a factor of seventy separates the amount of energyrequired to produce a ceramic cup versus a paper cup (Hocking, 1994). For the use of a reusablecup to benefit the environment a ceramic cup must be used 39 times, a plastic cup must be used17 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 environmentalbenefits of using reusable cups in terms of reduced energy use, air and water pollution, and solidwaste can be tremendous (Alliance for Environmental Innovation, 2000). A Starbucks Companyand Alliance for Environmental Innovation Research group, formed in 2000, gathered thefollowing statistics related to the environmental benefits of using reusable serve ware in place ofpaper goods. In reference to the effect that the production and the continued use of ceramic cupshave on water pollution and usage, air pollution, and solid waste it was noted that ceramic cupscut water usage by 64 percent, reduced the amount of air particulates by 86 percent andgreenhouse gases by 29 percent, and reduced solid waste by 86 percent by weight (Alliance forEnvironmental Innovation, 2000). Functionally, Starbucks already produces and sells theStarCup, minus the specific QR barcode; thus, the initiation of the StarCup Loyalty Program willnot negatively impact the environment. When the program ramps up and more StarCups need tobe manufactured to keep up with demand, the statistics show that the production and the BU784 – Group 2 – Group Project 16
  17. 17. STARBUCKS- A CUP EVOLUTION 1 7continued use of the reusable cup is better for the environment than that of disposable papercups.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 appearhigh, we expect the costs associated with that program to be nominal. Additionally, the increasedcustomer 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 freebeverages 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 fundamentalstrategy of the StarCup Loyalty Program to alter consumer behavior has the potential tosignificantly benefit Starbucks’ bottom line through increased loyalty, improved brandrecognition, and free marketing on social networking sites. Additionally, even if a customerpurchases 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 costswe think the benefits outweigh the risks. It is important to also note that Starbucks will make an increased profit from the feeimposed 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, weexpect that the price increase will function similarly to the plastic bag programs describedearlier. Should management or the Board have concerns about being viewed as greedy or “green- BU784 – Group 2 – Group Project 17
  18. 18. 1 STARBUCKS- A CUP EVOLUTION8washing”, Starbucks could donate the revenue from these price increases to an environmentalorganization 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 profitspromised through the StarCup Loyalty Program. When the StarCup Loyalty Program issuccessful, Starbucks has the ability to exponentially increase the amount of data collected aboutconsumer behaviors. That data can then be used to inform the best marketing decisions, the mostefficient product purchasing, and accurately targeted advertising. All of these outcomes fromincreased consumer intelligence will enable Starbucks to operate more efficiently and returngreater value to shareholders.Part III: Unresolved issues While we have discussed the benefit of this program for many of the current stakeholderssuch as consumers, employees, shareholders and the environment, we have not discussed theimpact 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 upwith creative reusable StarCup solutions. There will be some vendors who are unable to adjust toStarbucks changed purchasing habits. Business with Starbucks’ current suppliers andmanufacturers of reusable cups will remain the same. QR codes will need to be printed on thealready manufactured reusable cups but the QR codes can be printed post-manufacturing. A possible unintended consequence of this StarCup Loyalty Program and specificallylinking it to social networking sites is that it could be perceived as marketing an addictivesubstance to under age consumers. Because Starbucks loses some degree of control over themarketing of its products when social networking sites are utilized, it is possible that Starbucks BU784 – Group 2 – Group Project 18
  19. 19. STARBUCKS- A CUP EVOLUTION 1 9could encounter some bad press. It will also be important to longitudinally analyze whether the implementation of theStarCup Loyalty Program will continue to be the best Starbucks effort to reduce its negativeenvironmental impact after taking into account future more environmentally friendly paper cups.A Starbucks representative explained that, “to accurately measure the true environmental impactsof any of our packaging requires an evaluation of the entire lifecycle”, which includes rawmaterial extraction, manufacturing energy and resources, customer use and the eventual disposalat the “cups’ end of life” (J. Hulbert, personal communication, October 10, 2012). If theenvironmental impact of producing a StarCup does not offset the negative impact of disposing offuture more environmentally friendly cups a year, then Starbucks may want to reconsider theStarCup Loyalty Program.Part IV: Conclusions and Recommendations Starbucks has a strong reputation for being socially responsible. However, even afteryears of attention, Starbucks continues to be a significant contributor of paper waste. TheStarCup Loyalty Program resolves the issue of paper cup waste by establishing the habitual useof the StarCup. JANSaS Consulting Company proposes that StarCup Loyalty Program strategiesinclude linking the use of reusable cups to the current loyalty program and to social networkingsites, providing free products, and imposing a fee on those who use paper cups. The StarCupLoyalty Program will change consumer behavior resulting in the reduction of paper cup use overtime. The program will also increase employee engagement, create new lines of business,provide better consumer intelligence, solidify customer loyalty, enhance company reputation,and benefit the environment. The program achieves all of these aims with minimal cost and riskto the organization. Nearly all Starbucks’ stakeholders will ultimately benefit from the BU784 – Group 2 – Group Project 19
  20. 20. 2 STARBUCKS- A CUP EVOLUTION0implementation of this program and it directly aligns with Starbucks’ six guiding principles. Toquote former Interface Incorporated CEO and pioneer of sustainable business practices, RayAnderson, Starbucks will move much further down the road of “doing well by doing good” if itadopts the StarCup Loyalty Program (Achbar & Abbot, 2003). ReferencesAchbar, M. (Producer), & Abbot, J. (Director). (2003) The Corporation [Motion Picture]. Canada: Zeitgeist Films. BU784 – Group 2 – Group Project 20
  21. 21. STARBUCKS- A CUP EVOLUTION 2 1Alliance for Environmental Innovation. (2000). Report of the Starbucks Coffee Company/ Alliance for Environmental Innovation Joint Task Force [Project Report]. Retrieved from, M. (2008, May 14). Starbucks paid more for coffee in 2007 [Web log]. Retrieved from ffee15.htmlAston, A. (2012) Starbucks’ green scorecard: A few full cups, two half empty [Web blog]. Retrieved from, M. (2010, May 17). Moving Away from Disposable Paper Cups [Web log]. Retrieved from away-from-disposable-paper-cupsBrenner, J. (2012, November 13). Pew Internet: Social Networking (full detail) [Web log]. Retrieved from Networking-full-detail.aspxClark, T. (2007). Starbucked: a double tall tale of caffeine, commerce, and culture. New York: Little, Brown.DAmato, A., Henderson, S., & Florence, S. (2009). Introduction. Corporate Social Responsibility & Sustainable Business: A Guide To Their Leadership Tasks & Functions, 1-2. Recieved from sid=819964f5-15d2-4313-8b61-a178bb387b86%40sessionmgr110&vid=4&hid=111Diffley, 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, M.B. (1994). Reusable and Disposable Cups: An Energy-Based Evaluation. Environmental Management Vol. 18, No. 6, pp. 894. Retrieved from, A. (2010, October 20). The Stabucks Cup Dilemma [Web log]. Retrieved from BU784 – Group 2 – Group Project 21
  22. 22. 2 STARBUCKS- A CUP EVOLUTION2 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 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 recycling-industry-is-most-essential/Spitzer, N. (2009, July 30). Paper Cups No More [Web log]. Retrieved from coffee-cups-on-the-environmentWilliams, 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 BU784 – Group 2 – Group Project 22