Group Case Study, Case Two
Instructions
The Starbucks case study is a great example of how social media plays a role in how we communicate and the consequences of real life playing out for millions to see around the world. This leaves little room for mistakes and requires quick action by those responsible. Unlike J&J, the situation at Starbucks unfolded as we watched on our computers, tablets and phones. The video is there for us to watch over and over again and draw conclusions based on what we think we see.
After reading Chapter Five, the supplemental articles, listening to the interviews, and watching the videos, respond to the following in a two page paper. The paper should be double spaced, one inch margins, and should include a title page and reference page (not included in the two pages).
Things to cover in the paper:
Discuss the six components of business communication. (1) Discuss the purpose for communication. (2) Who was the audience that received the communication? (3) What was the message sent? (4) Who ultimately communicated the message to the audience? (5) What feedback did the company receive? and (6) What was the response to the feedback?
Discuss the role society and business plays in the fact that two black men were asked to leave while we know of at least one woman (not a person of color) who also did not order but was not asked to leave the restaurant. How can business leaders change this reaction?
All Starbucks’ employees received diversity training following this incident. What are some potential benefits or outcomes from this training that you would hope to see applied in the consumer marketplace?
Include a summary of your overall thoughts of the case.
CH7 – Case Study Three
Instructions
Once you have reviewed the material and read Chapter Seven in your book, address the following questions.
What happened that presented a need/purpose of the communication?
Who was determined to be the audience to receive the message?
What was the ultimate message?
Who was the sender of the message? Was this the appropriate person?
What feedback was received from the audience?
What kind of response was given to this feedback?
What would you do differently?
How does this case illustrate ways in which businesses need to communicate to consumers before, during, and after product changes?
What did Coca-Cola not hear from their customer base prior to changing the product?
Chapter 5 reading
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Chapter 5 | Diversity Case Study
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The beauty of the world lies in the diversity of its people.Unknown
After reading this chapter, you will be able to
1. Analyze the components of business communication
2. Identify communication barriers
3. Discuss the importance of diversity in both the workplace and consumer markets
Sitting in a coffee shop waiting for friends, having a cup of coffee, or waiting for everyone to arrive has become mainstream in our communities. Many of these shops encourage individuals to linger by providing tables, outlets, and free Wi-Fi. For most of us, this lingering lasts long after our cup of coffee is emptied.
Coffee shops have seen tremendous growth. They are experiencing an annual growth rate of 7%. That represents the fastest growing segment of the food service industry.1 According to a 2021 study by the National Coffee Association, 64% of Americans report that they consume coffee every day with the average American drinking 3.1 cups per day.2 So, it is obvious why coffee shops are so successful. They offer a more relaxed atmosphere than a restaurant for meeting clients and friends, which has led to coffee shops becoming an ingrained part of our community. We make friends that we see regularly as we both sit down for our daily cup of Joe, and this becomes our community.3
Image © SDI Productions / E+
Cafes have long offered more than simply a cup of coffee and a pastry. Many offer live music and a social alternative to the local bar. The intentional environmental vibe established by coffee shop owners would lead one to believe that coffee shops are open and welcoming and friendly places to be, and this is what we would hope. Unfortunately, like many other businesses, the welcoming feeling is only applied to everyone when the employees embrace a diverse customer base. In a world where police receive calls regarding the audacity of a black family to BBQ in a public park, and the filming of the treatment of minority populations by authority figures, we are now able to see, through these videos, that the welcome mat looks differently depending on your label.
This case involves Starbucks; one of the most successful coffee shops in America. From the first store opening in 1971 in the Pike Place Market in Seattle to the now more than 22,000 locations across the globe, Starbucks has become a household name. Throughout the growth, Starbucks has been proud of its diverse customer base. The company website boasts “Embracing diversity fosters empowerment and encourages innovation.”4 However, in 2018, Starbucks would become the center of a national debate on diversity and inclusion.
The incident that sparked the controversy happened on a spring day when two black men entered a Starbucks in Philadelphia, Pennsylvania, to wait for a business associate. The men had not purchased anything while they were waiting. It is important to note that there is nothing to indicate you must purchase products to be inside the Starbucks. While waiting, the men were approached by a store manager asking them to leave. The men explained they were waiting on an associate to arrive. Since the men did not leave, the manager phoned the police. When the police arrived, the men were arrested.
Image © artisteer/iStock/Getty Images
Another customer recorded the incident on her cell phone including the arrest of the two gentlemen and posted the recording to social media. The video went viral being viewed more than 11 million times. Ironically, the woman who recorded the video was also seated in the café without making a purchase while waiting for friends. The arrest sparked nationwide outrage and was followed by a number of protests and sit-ins at the Philadelphia Starbucks.
Meanwhile, police spokespersons stated that the officers in the situation did nothing wrong. They were called by the manager reporting the two were trespassing. Police statements indicate the officers were professional and handled the situation as best they could.5 However, protests continued and four days later a formal statement was issued by the CEO of Starbucks, Kevin Johnson. The statement was meant to serve as an apology to the men arrested and to the community, and the manager of the store was fired.
In the statement, Johnson states “The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks
Mission
and Values. Creating an environment that is both safe and welcoming for everyone is paramount for every store. Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”6 In addition, Starbucks announced it would close 8,000 stores nationwide and hold a day of unconscious bias training for all staff. A month after the arrests, Starbucks initiated a formal policy stating that anyone can use Starbucks and its facilities without making a purchase. The policy also provides clear processes for what a store manager can do when a customer becomes disruptive.
The CEO indicated that Starbucks would lose up to $12M during the one-day closure of 8,000 stores for training (reports indicate Starbucks boasts annual revenue of more than $22B).7 However, Starbucks (including the Philadelphia store) did not see a decline in revenue following the arrests.8
Outrage after Two Black Men Arrested at Philadelphia Starbucks
Starbucks CEO Speaks out after Black Men Arrested
Men Arrested at Starbucks Speak Out
Ex-Manager Sues Starbucks for Firing After Arrest of 2 Black Men at Philadelphia Store
One Year Later: A Timeline of Controversy and Progress Since the Starbucks Arrest Seen ‘Round the World
The 2 Black Men Arrested at Starbucks are Focused on Positive Future
Remember that business communication is not a linear process. It is circular. So, let’s review the components of the business communication process.
· Purpose—What is the need that has required communication?
· Audience—Who is the organization attempting to communicate to regarding the purpose?
· Message—What is the message the organization needs to send?
· Message Delivery—Who is to send the message and how will the message be sent?
· Feedback—What do you anticipate as the feedback the organization will receive? What is the actual feedback?
· Response—How will the organization respond to the anticipated and actual feedback received from the audience?
Remember, there are many barriers to effective communication, both verbal and nonverbal. When communicating to a large audience, it is important to consider which barriers could interfere with your message being received and interpreted appropriately.
1. Verbal Barriers—Consider the verbal barriers that will need to be addressed when sending the message. Limit the use of jargon, slang, acronyms, sarcasm, and be sure to build trust. Also, recognize language differences and address the audience in a language/manner that is familiar and can be clearly understood.
2. Nonverbal Barriers—Consider bias, emotion, and other noise that can prevent the audience from hearing the message clearly. Attempt to remove or significantly limit the potential nonverbal barriers.
· 1Reynolds, Michelle. “Coffee Shop Sales and Growth.” Small Business Chronicle.
https://smallbusiness.chron.com/coffee-shop-sales-growth-67281.html
. Accessed 1 Sept. 2020.
· 2Nikolovska, Hristina. “33 Coffee Statistics to Wake Us Up.”
https://disturbmenot.co/coffee-statistics/
. Accessed 3 Sept. 2020.
· 3Ramjattan, Brittany. “The History of Coffee Houses and Café Culture.” Black Rifle Coffee Company
https://coffeeordie.com/coffee-house-cafe-culture/
. Accessed 1 Sept. 2020.
· 4
https://www.starbucks.com/responsibility/community/diversity-and-inclusion
· 5Gathright, Jenny, and Sullivan, Emily. “Starbucks, Police and Mayor Respond to Controversial Arrest of Two Black Men in Philly.” National Public Radio. 14 Apr. 2018,
https://www.npr.org/sections/thetwo-way/2018/04/14/602556973/starbucks-police-and-mayor-weigh-in-on-controversial-arrest-of-2-black-men-in-ph
Accessed 1 Sept. 2020.
· 6CNN Staff. “Starbucks CEO Calls Arrest of Two Black Men at Philadelphia Store ‘reprehensible’.” CNN, 15 Apr. 2018,
https://www.cnn.com/2018/04/15/us/starbucks-statement-philadelphia-arrest/index.html
. Accessed 3 Sept. 2020.
· 7Calfas, Jennifer. “Here’s How Much Money Starbucks Could Lose Today After Closing all US Stores for Racial Bias Training.” Money, 29 May 2018,
https://money.com/starbucks-closing-may-29-cost/
. Accessed 5 Sept. 2020.
· 8Whitten, Sarah. “Starbucks CEO Says Philadelphia Arrest Protests Have Not Hurt Sales in April.” CNBC, 27 Apr. 2018,
https://www.cnbc.com/2018/04/27/starbucks-ceo-says-philadelphia-arrests-did-not-hurt-sales-in-march.html
. Accessed 5 Sept. 2020.
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Chapter 7 reading
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Listening is an art that requires attention over talent, spirit over ego, others over self.Dean Jackson
LEARNING OBJECTIVES
After reading this chapter, you will be able to
1. Identify the components of business communication
2. Recognize communication barriers
3. Discuss the importance of active listening for effective business communication
CASE STUDY
In 1985, executives at Coca-Cola made the determination that consumers were unhappy with the traditional Coca-Cola products and decided to remove Coke, as consumers know it, from the market and replace it with New Coke. This was a widespread decision that covered all US markets and some international markets. To make sure that the consumers realized this was not the same old Coke that was losing the Pepsi Challenge, marketing was intentional in drawing the eye to the fact that this was “New” Coke.1 You can see an image of the “New Coke” can and get more information about the history of New Coke by checking out
New Coke – A Complete Disaster?
.
Image © dimbar76 / Shutterstock.com
New Coke won taste tests over the traditional flavor of Coke and Pepsi. More times than not, consumers participating in the taste test chose New Coke! So, that makes the fact that within a few days of New Coke being introduced, consumers were expressing the fact that they were not happy! Why? Aren’t the consumers the ones who told Coca-Cola that New Coke tastes better? It apparently didn’t matter, and Coca-Cola took a hit on brand image and market loyalty. For many, Coke is more than a drink. It is an icon that lives in our minds and impacts our lives—childhood memories, first dates, summer days, transitions to adulthood, and adult loyalty.2 All of the emotional reasons that people are brand loyal came into play, and people were angry. New Coke lasted 80 days on the market before the company brought back the traditional flavor labeled as “Coke Classic.”3
Born in 1886, Coca-Cola enjoyed unchallenged success even through the Great Depression. During World War II, the company made the decision to provide US soldiers with Coca-Cola regardless of where they were in the world. This laid the groundwork for an international demand for the product.4 It wasn’t until 1978 that this expansion took off, as Coca-Cola was the only cold packaged beverage in the People’s Republic of China, and in 1990 the product began to expand globally reaching East Germany and India.5
Back in the United States, the marketing of Coke became identified with catchy jingles and images of people enjoying coke while doing fun activities. A great example of this is the use of the image of Santa Claus, which has been associated with the company since the 1920s.6 Another example can be seen in the commercial featuring a group of people gathered together singing “I’d like to buy the world a coke” that you can watch at
I’d Like to Buy the World a Coke Commercial – 1971
.
Throughout its marketing history, Coke has been associated with emotions of joy and happiness. The taglines used included the following:
· Pure as Sunlight
· Ice Cold Sunshine
· It’s the Real Thing
· Have a Coke and a Smile
· Can’t Beat the Feeling
· Open Happiness
· Taste the Feeling7
Couple these titles with jingles like “I’d like to buy the world a coke” and the introduction of polar bears watching the “Northern Lights”8 (
1993 Coca Cola Northern Lights commercial
), and you are watching branding that build loyalty.
However, brand loyalty must be something that flows both ways. A company enjoying a great deal of brand loyalty must be aware of customers’ needs, but also aware of the customers’ emotional attachment to a product.9 This is where things start to unravel. While short lived, the fact that Coke was blind to the emotional attachment of its own product was obvious to many in the disastrous introduction of New Coke.
Pepsi was officially branded in 1898 in North Carolina. Pepsi positioned itself as the only product of its kind made with all natural products.10 Advertisements began promoting Pepsi as an alternative to Coke and the first jingle (
Pepsi-Cola: A Nickel Drink
) touts twice as much for only a nickel. Campaigns and taglines continued to position Pepsi as the alternative to Coke, but without the same emotional attachment as those used by Coca-Cola. The following are a few of those taglines:
· Twice as Much for a Nickel
· Say Pepsi, Please
· Now It’s Pepsi for Those Who Think Young
· Come Alive, You’re the Pepsi Generation
· The Choice is Yours
· Change the Script
· Generation Next
· Where There’s Pepsi, There’s Music
· Live for Now11
· Change the Game
Image © Shyripa Alexandr / Shutterstock.com
These taglines were clearly positioning the company with a younger market. This was clear through the choice of celebrity endorsements Pepsi used in commercials and branding. Commercials included videos by Michael Jackson (
“Choice of a New Generation” – pepsi vs. Coke Wars
), Michael J. Fox (
DIET PEPSI Commercial with Michael J Fox Full Length Version
), Britney Spears (
Britney Spears – Pepsi Now and Then Commercial [HD Master]
), and Beyoncé (
Beyoncé Pepsi Commercial
) to name a few. This was something that Coke was late to join, most recently using singer/songwriter Taylor Swift (
Taylor Swift Diet Coke – Commercial
). Interestingly, Pepsi’s target consumers are individuals between the age of 55 and 64.12
Along with the taglines designed to attract a younger market, Pepsi began the Pepsi Challenge in 1975. The Pepsi Challenge offered consumers a blind taste test that compared the taste of Coke to the taste of Pepsi. Over and over, consumers chose the taste of Pepsi. Using this information, Pepsi designed commercials, using real consumers taking the Pepsi Challenge (
Pepsi Challenge 1983 Commercial
). The challenge became so popular that it was named the “Cola Wars.”13 Pepsi’s findings indicated that more than 50% of those who took the challenge preferred Pepsi over the taste of Coke.14 During the time the Pepsi Challenge was running, Pepsi was able to gain 6% of the soda market share.15 Taking full advantage, Pepsi ran commercials that almost mocked the change in the formula of Coke;
Pepsi Commercial – Why Did Coke Change? (1985)
.
Image © Zety Akhzar / Shutterstock.com
Image © pr_camera / Shutterstock.com
Pepsi was successful in reducing the market share gap, and between 1980 and 1984, Coke’s market share fell from 24.3% to 21.8%.16 However, Coke was able to maintain its market edge due to agreements with fast-food chains such as McDonald’s, hotels, and so on.17 You can see a breakdown of the top 39 restaurant chains at
See which major US restaurants serve Coke vs. Pepsi
.
Based on the results of the Pepsi Challenge, executives at Coca-Cola made a bold, yet short-sighted, decision: change the formula to taste more like Pepsi. The roll out of “New Coke” took place on April 23, 1985, with much fanfare. The response was not expected. Loyal Coke drinkers rebelled. The traditional recipe was hoarded, fans booed advertisements and sponsorships. In Seattle, some even took to dumping New Coke into the sewers as a protest.18
The company was flooded with calls from unhappy consumers. Employees saw calls to the headquarters increase from approximately 400 per day to over 1,500. Protest groups were formed and songs were even written about the loss of the traditional Coke recipe. Consumers took to the streets in Atlanta and protested raising signs demanding the original Coke be brought back.19 Overwhelmed with the response, Coca-Cola announced they would, indeed, bring the original back, but they would also keep the New Coke. The branding became “Coca-Cola Classic” and “Coke II,” which lasted until the demise of New Coke in 2002.
While Coca-Cola lost millions that were put into the research and development of New Coke, the marketing of the product and handling all of the negative response, the free advertisement the company received in exchange, was three times what they lost. The lesson learned is that the product is more than a soda, it is part of people’s lives. Listening to consumer needs and emotional connections is extremely important before making such extreme decisions in product changes.20 The emotional connection should not have been a surprise as the marketing was always emotionally driven. In the end, the CEO of Pepsi-Cola USA, Roger Enrico probably summed it up best: “I think by the end of their nightmare, they figured out who they really are. Caretakers. They can’t change the taste of their flagship brand. They can’t change its imagery. All they can do is defend the heritage they nearly abandoned in 1985.”18
REVIEW THE COMPONENTS OF BUSINESS COMMUNICATION
Remember that business communication is not a linear process. It is circular. So, let’s review the components of the business communication process.
· Purpose: Recognize the purpose or need for communication. Identify the reason communication is required.
· Audience: Define the audience to receive the communication. Why is this the group that needs information?
· Message: Construct the communication message. Does the message address the need? Who (individual or group) should write the message?
· Source: Confirm who is sending the message. This may be different than the author.
· Feedback: Accept the feedback from audience.
· Response: Provide an appropriate response by asking additional questions to ensure the audience clearly understands the message.
WATCH AND READ TO FIND OUT MORE
The mistake that almost destroyed Coke
Why New Coke was a Failure
New Coke Ad (1985)
New Coke 1985
Michael Jackson Pepsi Generation
Michael Jackson – Pepsi Commercial 1987 HD
Michael Jackson is burned filming Pepsi commercial in 1984
REVIEW POTENTIAL BARRIERS TO EFFECTIVE COMMUNICATION
Remember, there are many barriers to effective communication, both verbal and nonverbal. When communicating to a large audience, it is important to consider which barriers could interfere with your message being received and interpreted appropriately. These barriers are not limited to the primary audience, but you should also consider what barriers can occur when secondary audiences are introduced.
1. Verbal Barriers—Consider the verbal barriers that will need to be addressed when sending the message. Limit the use of jargon, slang, acronyms, sarcasm, and be sure to build trust. Also, recognize language differences and address the audience in a language/manner that is familiar and can be clearly understood.
2. Nonverbal Barriers—Consider bias, emotion, and other noise that can prevent the audience from hearing the message clearly. Attempt to remove or significantly limit the potential nonverbal barriers.
Take some time to “think about” the components of communication. In the case of “New Coke,” consider the following:
a. What happened that presented a need/purpose of the communication?
b. Who was determined to be the audience to receive the message?
c. What was the ultimate message?
d. Who was the sender of the message? Was this the appropriate person?
e. What feedback was received from the audience?
f. What kind of response was given to this feedback?
g. What would you do differently?
h. How does this case illustrate ways in which businesses need to communicate to consumers before, during, and after product changes?
· “The Pepsi Challenge—How Pepsi Won the Battle but Lost the Challenge.” Juicebox Interactive.
https://juiceboxinteractive.com/blog/how-pepsi-won-the-battle-but-lost-the-challenge/
· Hargie, Owen. Skilled Interpersonal Communication: Research, Theory and Practice. 5th ed., Routledge/Taylor & Francis Group, 2011.
· Klein, Christopher. “Why Coca-Cola’s New Coke Flopped.” The History Channel, 13 Mar. 2020,
https://www.history.com/news/why-coca-cola-new-coke-flopped
· Levy, Aaron. “Why Listening Drives Motivation.” Forbes Coaches Council, 14 Feb. 2019,
https://www.forbes.com/sites/forbescoachescouncil/2019/02/14/why-listening-drives-motivation/#1c8b2895274a
· Matta, Christy. “How to Reduce Conflict and Misunderstanding: Be a Better Listener.” Dialectical Behavior Therapy Understood.” Psych Central, 31 Aug. 2011,
https://blogs.psychcentral.com/dbt/2011/08/how-to-reduce-conflict-and-misunderstanding-be-a-better-listener/
REFERENCES
· 1“The Story of One of the Most Memorable Marketing Blunders Ever.” The Coca-Cola Company.
https://www.coca-colacompany.com/news/the-story-of-one-of-the-most-memorable-marketing-blunders-ever
· 2Greulich, Tim and Jennifer Buchmanan. “Driving Brand Loyalty with Emotion.” Deloitte Digital, 23 May 2019,
https://www.deloittedigital.com/us/en/blog-list/2019/driving-brand-loyalty-with-emotion.html
· 3Henderson, Nell. “Coca-Cola Apologizes to Real Thing’s Fans.” The Washington Post,
https://www.washingtonpost.com/archive/business/1985/07/12/coca-cola-apologizes-to-real-things-fans/f9cc8765-eba3-4dcc-8bb0-5b7d7e43d2f4/
12 Jul. 1985.
· 4“The History of Coca-Cola.” IG Bank,
https://www.ig.com/en-ch/shares/markets-shares/coca-cola-co-KO-US/history-of-coca-cola
. Accessed Sept. 2019.
· 5The Editors of Encyclopedia Britannica. “The Coca-Cola Company.” Encyclopedia Britannica.
https://www.britannica.com/topic/The-Coca-Cola-Company
· 6Yafai, Nabil “History of Coca-Cola.” InterExchange, 8 Mar. 2016,
https://www.interexchange.org/articles/career-training-usa/2016/03/08/history-coca-cola/
· 7“History of Coca-Cola Advertising Slogans.” The Coca-Cola Company,
https://www.coca-colacompany.com/news/history-of-coca-cola-advertising-slogans
· 8Staff Writer. “1993: Coca-Cola Introduces its Iconic Polar Bears to the World with 1993 ‘Northern Lights’ Commercial.” The Drum, 31 Mar. 2016.
https://www.thedrum.com/news/2016/04/06/marketing-moment-10-coca-cola-introduces-its-iconic-polar-bears-world-1993-northern
· 9Muggen, Ruth, Schoormanshendrik, P. L., and Schifferstein, N. J. “Chapter 17: Product Attachment: Strategies to Stimulate the Emotional Bonding to Products.” Product Experience. Elsevier, 2008.
https://doi.org/10.1016/B978-008045089-6.50020-4
· 10ESRI. “A History of Pepsi.”
https://www.arcgis.com/apps/MapJournal/index.html? appid=393c4d6883e54e76a0cd5e8ab5df46fe
· 11“Pepsi Slogan and Logos throughout the Years.” G&M Distributors, 11 Dec. 2012,
https://gmdist.com/blog/pepsi-slogans-and-logos-throughout-the-years
· 12“Pepsi Demographics.” Numerator.
https://snapshot.numerator.com/brand/pepsi
· 13Bhasin, Kim. “Coke vs. Pepsi: The Amazing Story Behind the Cola Wars.” Business Insider, 2 Nov. 2011,
https://www.businessinsider.com/soda-wars-coca-cola-pepsi-history-infographic-2011-11
· 14Green, Dominic and Wei, William. “We Recreated the Pepsi Challenge to See What People Really Like.” Business Insider, 3 May 2013,
https://www.businessinsider.com/pepsi-challenge-business-insider-2013-5#:~:text=The%20%22Pepsi%20Challenge%22%20was%20a,tasters%20prefer%20Pepsi%20over%20Coke
· 15“CS-115 Cola Wars 1975 Pepsi Challenge.” Scientific Strategy. 19 Apr. 2019,
https://scientificstrategy.com/cs-115/#:~:text=The%20Pepsi%20 Challenge%20asked%20Customers,about%2047%25%20of%20the%20time.&text=The%20final%20results%20from%20the,6%25%20Market%20Share%20against%20Coke
· 16Ali, Z. “They Changed my Coke” How Pepsi Repositioned Coke During the Cola Wars. Marketing Management, Cluster B (blog entry). 18 Aug. 2016.
“They changed My COKE” How Pepsi Re-Positioned Coke during the Cola wars
· 17“How McDonald’s became the Leader in the Fast Food Industry.” Profitworks.
https://profitworks.ca/blog/541-how-mcdonalds-became-the-leader-fast-food-industry-marketing-strategy
· 18Fogarty, K, Fid Backhouse, Roland Matthews, et al. “New Coke.” Encyclopedia Britannica, 13 Aug. 2018,
https://www.britannica.com/topic/New-Coke
· 19“The Story of One of the Most Memorable Marketing Blunders Ever.” The Coca-Cola Company, https://www.coca-colacompany.com/news/the-story-of-one-of-the-most-memorable-marketing-blunders-ever
· 20Conley, Randy. “Four Ways to Build Better Trust through Listening.” Leading with Trust, 11 Nov. 2011,
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