Marketing at Streat - Final Essay PDF

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Marketing at STREAT

Hutchison, A. (n.d.)

Tutor’s name: Kristel Proctor and Itir Binay Student ID: 30588111

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Introduction Marketing is a vital component in a business’s life in order to build a long-term relationship with their customers. Customer value is how the customer perceives a product based on the benefits they receive compared to the sacrifices they have to make and therefore also a significant component for the organisations to consider looking at. In order to enhance the marketing processes and effects, customer value is analysed and used. This essay will explore ideas in relation to STREAT Café, a social enterprise based in Melbourne. The importance of Marketing Marketing is a concept that touches everyone, yet, its definition is always debated on and constantly changing. (Kotler, Shaw, FitzRoy, & Chandler, 1983; Gamble, Gilmore, McCartan-Quinn, & Durkan, 2011). Many people have a misconception about marketing; they believe the central aim is selling and promotion of a product when it is only one of the least important parts of the whole process (Kotler et al., 1983). In the earlier years of marketing, the focus was largely upon production and propaganda of the product until around the 1960’s (Shaw & Jones, 2005) and the concept of marketing has since, evolved. Organisations went from just focusing on profit and functionality of the business to placing great emphasis on being more people-orientated (Gamble et al., 2011) and the management of “customer impinging resources, policies and activities” with an aim to satisfy the target customers’ needs and wants (Kotler, 1967, p.12, as cited in Gamble et al. 2011) through an exchange process (Kotler et al. 1983). Kotler et al. (1983) describes the process of exchange as obtaining an object by giving something in return and believes that it is the idea underlying marketing. For example, STREAT Café provide their customers with “consistently high quality” & “multi-award winning” coffee, food and beverages in return for money and gratitude (STREAT, 2017, pg. 4). Marketing in the context of marketing-management philosophy, assumes that understanding the customers’ needs and wants and adjusting the organisation to satisfy the consumers more effectively and efficiently than the competitors is the key for organisations to thrive in their goals. (Kotler et al., 1983). STREAT Café provides their customer with a

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variety of comfortable seating options from desk chairs, outdoor seating to even hammocks. Their café is a kid and pet-friendly environment welcoming all customers. STREAT also has a wide range of food and beverages for their customers to choose from depending on their liking (“STREAT”, 2015). However, there is more to just satisfying a customer’s demand that the marketing concept sidesteps. The social marketing concept believes that the organisation should determine and satisfy the needs, wants and interest of their target market as wells as enhance the consumers’ and society’s wellbeing more effectively and efficiently than the competitors. STREAT Café adapts this concept by not only satisfying the demands of their customers but also focusing on the long-run benefits the of the society and the individuals within it. STREAT Café is a non-profit social enterprise, devoted to help young homeless and disadvantaged people by investing 100% of the profits earned to fund their mission. They also constantly try to support the society in the long-run by minimising waste and using bio-degradable materials where possible e.g. the cups they serve coffee with; buying produce from local shops and other social enterprises like Thank You when possible. STREAT Cafés constant contribution and enthusiasm to provide individuals and society with benefits in the long-run demonstrates that they understand the social marketing concept’s significance in order to “attract and hold customers” (Kotler et al., 1983, pg. 19). The Concept of Customer Value Zeithaml (1998) describes customer value as a “tradeoff of give and get components” (pg.14). In this context, the “get” is the benefits the consumer receives and “give” is the costs or sacrifices the consumer must make in order to receive the benefits. The benefit components of value include the main intrinsic attributes (e.g. physical characteristics of the product), extrinsic attributes (not physically part of the actual product e.g. brand name), perceived quality (intangible, overall feeling of the brand and excellence of the product) and other higher-level abstractions like convenience and appreciation (Zeithaml, 1998). Smith and Colgate’s (2007) framework condenses this into four main types of value; three focusing on the benefit aspect of value and one highlighting the cost, or the investment

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involved. The four types of value are functional/ instrumental value, experimental/ hedonic value, symbolic/ expressive value and cost/ sacrifice value. Functional/ instrumental value refers to what extent the product (good or service) is useful and performs the anticipated functions. STREAT Café provides their customers with quality coffee and a variety of food and beverages to choose from. The customers would expect seating to be provided at the café and easiness in ordering the food that is prepared hygienically and is delivered to them as soon as possible. By fulfilling these expectations, STREAT Café has not only satisfied the basic customer demands but also providing a functional value to their product. Experimental/ hedonic value refers to what extent does the product create expected experiences, feelings and emotions for the customer. The beautiful garden and the aesthetics of the STREAT Café and the amazing coffee art by the baristas appeal to the customers sensory aspect of value. Fulfilling the emotional side of value, the food and drinks sold at the café extinguish the hunger and thirst and satisfies their customers cravings. STREAT also enables their customers to socialise at their café when they bring along friends and family to sit down and enjoy the food and drinks. While at the café, many customers are informed about the homelessness and disadvantages amongst the youth today. The customers also have opportunity to learn where the money they’ve spent has gone and how they’ve helped the youth by contributing towards the fundraiser. The café also has a minute counter indicating training time produced for the youth the café is working to create a better life for. (“STREAT”, 2015) Symbolic/ expressive value refers to what degree do the customers attach psychological meaning to the product. Because STREAT Café is a social enterprise, people can express their charitable personality by eating there and feel good that they have contributed towards the greater good. They may also be perceived as a kind-hearted person by their friends and family, further eliciting a sense of goodness within themselves. Cost/ sacrifice value is concerned with the things the customers have to give up in order to reap the benefits of the product. STREAT Café’s main aim is to fundraise for a cause and

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therefore the prices are higher than other cafés that provide cheaper options. Even if STREAT Café has a variety of seating, the seats are limited (Teo, 2016) and therefore, may require some people to wait to be seated. Perception of customer value differs from person to person, depends on the circumstances the customer is in and therefore, it is more individualistic. (Woodruff, 1997; Zeithaml, 1998; Smith & Colgate, 2007). Perception of value can also change within an individual overtime and consequently, only a selection of Smith & Colgate’s customer value elements may be received by each customer compared to others in relation to their experience at STREAT Café. Link between marketing and customer value According to Woodruff (1997), customer value is the central concept in marketing. Zeithaml (1998) claims that in the customer’s perspective, customer value is basically what the customer ‘gets’ in return for what they ‘give’ or pay. Kotler et. al (1983) state that marketing is a human activity mainly aiming to satisfy the needs and wants of their target market through an exchange process which involves giving an object for something in return. STREAT Café provides their customers with comfort, food and beverages in return for the right payment of the product bought. The marketing philosophy exclaims, for an organisation to achieve its goals, they need to determine and satisfy the needs and wants of their target customers in a more effective and efficient manner than the competitors (Kotler et al., 1983) and to do that, they must deliver superior customer value to their consumers compared to the competitors in order to have a competitive advantage over them (Woodruff, 1997). The STREAT Café satisfies their customers needs and wants by maximizing the choices on their menu also including special dietary requirements like Gluten Free, Vegan and Vegetarian (STREAT, 2019) so they can fit the preferences of all their customers. Furthermore, they are easily able to outdo their competitors as they are the “only not for profit coffee roaster in Australia” (“STREAT”, 2015) and by also being kid and pet-friendly which isn’t very common in many cafés. Even if the cost involved in purchasing products from STREAT may be high, it is outweighed by the benefits provided by the STREAT Café. Therefore, by satisfying their customers better than their competitors

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through good customer value delivery, they are able to enhance their marketing process though customer value. Conclusion The concept of marketing is critical in a business’s life as it’s main focus is to determine and satisfy the needs, wants and demands of a consumer in order to gain attract potential customers and keep the existing ones. To help an organisation determine how to satisfy the demands of a target market, they must carefully analyse what the customer values are. Customer value is the benefits compared to the costs received from a product. the benefits must always outweigh the costs in order for the organisation to entice and retain customers of a business. Therefore, marketing and customer value are highly interrelated and dependent on each other.

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References Gamble, J., Gilmore, A., McCartan-Quinn, D. & Durkan, P. (2011). The Marketing concept in the 21st century: A review of how Marketing has been defined since the 1960s. The Marketing Review, 11(3), 227-248 Hutchison, A. [Digital Image]. (n.d.) Retrieved from https://assemblepapers.com.au/2017/06/02/streat-goodness-in-every-drop/ Kotler, P., Shaw, R., FitzRoy, P. & Chandler, P. (1983). Marketing in Australia. Sydney: Prentice-Hall. Chapter 1, 3-27. Shaw, E.H., & Jones, D.G.B. (2005). A history of schools of marketing thought. Marketing Theory, 5(3), 239-281. Smith, J.B. & Colgate, M. (2007). Customer value creation: A practical framework, Journal of Marketing Theory and Practice, 15(1), 7-23 Streat. (2015). Cafes. Retrieved from https://www.streat.com.au/cafes Streat. (2015). Planet. Retrieved from https://www.streat.com.au/about/planet Streat. (2017). The Goods of Streat [PDF file]. Retrieved from https://www.streat.com.au/sites/default/files/the_goods_of_streat_v16_0.pdf Streat, (2019). Streat Summer Menu 2019 [PDF file]. Retrieved from https://www.streat.com.au/sites/default/files/str_menu_summer_2019_0067.pdf Teo, E. (2016, October 25). Coffee for a Cause [Review of STREAT Café] Retrieved from https://www.tripadvisor.com.au/Restaurant_Review-g255100-d5287697-ReviewsStreat_Melbourne_Central-Melbourne_Victoria.html Woodruff, Robert (1997), “Customer Value: The Next Source for Competitive Advantage,” Journal of the Academy of Marketing Science, 25 (2), 139–153 Zeithaml. V.A. (1998), “Consumer Perceptions of Price, Quality, and Value: A Means–End Model and Synthesis of Evidence,” Journal of Marketing, 52 (July), 2–22. .

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