Read the case study below and answer ALL the questions that follow.

The Third Place: Creating and Managing Customer Value in the Coffee Shop Industry. Howard Schultz joined Starbucks when it had just four coffee shops. Then he went on a trip to Italy and came back to the US with an idea that would change coffee-drinking behaviour and stimulate the development of a multi-billion-dollar industry. Schultz wanted to give Americans the Italian coffee experience but realized he needed to adapt the product and service offer to suit the needs of his customers, as they would not want the strong, bitter espresso coffee drunk by Italians . So, he invented a version of coffee to entice young adults away from sugary drinks like Coke and sought to change their beverage-drinking behaviour. He added milk and sugary syrups to strong black coffee, so his customers could get their caffeine kick in a different way. Schultz encouraged people to drink frothy cappuccinos and milky latts, and their response was overwhelming: they queued in hundreds outside the companys coffee shops in Seattle. Adapting the product was only part of Schultzs strategy; he also realized the importance to customers of creating a unique environment in which to experience their coffee drinking. With this in mind, Schultz conceived the third place a place between work and home, a place to meet friends. Starbucks coffee shops were designed to provide a warm and convivial atmosphere to appeal to customers, a principle that has remained important to the company throughout its development into a global mega-brand. The third place idea was so successful it became a model used by many of the worlds successful coffee shop brands, such as Costa Coffee and Caff Nero. Each Starbucks store is designed to be as unique as possible, even though the company operates more than 22,000 stores globally. But, as well as the look and feel, distinct zones within many stores aim to provide different customer experiences. For example, seating by windows that allow customers to watch passers-by are aimed at those sipping macchiatos; stylish bars that allow customers to stand while they drink frothy espressos aim to create an experience reminiscent of traditional coffee houses in Italy; communal tables, for groups of customers or individuals, provide space to drink, eat, socialize, read, or work on a laptop; while softer seating areas offer more intimate coffee-drinking experiences. During and after the Covid-19 pandemic, Starbucks commitment to the third-place concept grew, realizing as it did the value of providing customers with safe and convenient service experiences. Another initiative added during this period was the drive-through, giving customers a contactless way to order via mobile app, enabling them to grab and go, as well as voice ordering with Apples Siri, further streamlining the ordering process. At the heart of Starbucks success is a set of core principles that focus on value creation, the development of relational capital and the capture of customer value. Relationships with customers, employees, suppliers, and alliance partners are considered so valuable they form a central part of the companys activities. For customers, it is important to understand the service operation from the perspective of the person the service exists for, so Starbucks works with its customers to get ideas on how to improve its service. For example, the My Starbucks Idea website (now retired) invited customers to submit ideas and suggestions. Many new product ideas and service improvements have been introduced by following up on customer ideas for example, buy 10 get one free, reduced-fat cinnamon swirl coffee cake, Evolution Fresh (fruit and veg) smoothies and Teavana premium loose-leaf tea. 2 At the Tryer Center, Starbucks innovation lab, new designs are tested, and many product and service innovations and recipes have resulted. This centre allowed operational and design teams to respond quickly during the pandemic, as new store layouts and processes were developed, tested, and launched in-store very quickly. For employees, learning is an important part of the value-creation process at Starbucks. For example, Starbucks and the Schultz Family Foundation work with disengaged young adults to help them find employment; they also provide job training programmes and life skills coaching to support young people throughout their lives, not only at work. Mutual benefits are generated: for the company, happier and more satisfied employees mean genuine good service experiences for Starbucks customers, and for the individual, there is a sense of purpose and belonging. For suppliers and alliance partners, supplier development and knowledge-sharing for strategic development is vital to the companys ongoing success. Starbucks works with its suppliers and farmers to ensure its coffee beans are grown sustainably, for example by adhering to the Coffee and Farmer Equity (C.A.F.E.) Practices; this not only provides high-quality beans but also ensures the livelihoods of the farmers and their families. (Source: Jobber, D. and Ellis-Chadwick, F. (2023). Principles and Practice of Marketing. Tenth Edition. United Kingdom: McGraw-Hill Education)

Question 2 (10 Marks) Consumer satisfaction is based on a products apparent performance in conveying value comparative to a buyers anticipation. Support this statement with FIVE (5) examples from The Third Place: Creating and Managing Customer Value in the Coffee Shop Industry case study above.