Contents

Title.......................................................................................................................................................1

Executive Summary...............................................................................................................................1

Introduction...........................................................................................................................................1

Aim........................................................................................................................................................4

Objective...............................................................................................................................................4

Research Question.................................................................................................................................5

Literature Review..................................................................................................................................5

Service Quality............................................................................................................................5

Dimensions of Service Quality....................................................................................................6

Customer Satisfaction..................................................................................................................6

Service Quality determines the Satisfaction of Customers..........................................................7

Research Methodology..........................................................................................................................8

Data Collection methodology......................................................................................................9

Quantitative Data.........................................................................................................................9

Survey.........................................................................................................................................9

Sampling.....................................................................................................................................9

Judgmental Sampling..................................................................................................................9

Limitations of Judgmental Sampling...........................................................................................9

Data Analysis Tools............................................................................................................................10

Results.......................................................................................................................................10

Descriptive Statistics.................................................................................................................10

Reliability Analysis...................................................................................................................11

Inferential Statistics...................................................................................................................13

Discussion...........................................................................................................................................14

Conclusion...........................................................................................................................................15

Recommendations...............................................................................................................................17

References...........................................................................................................................................17
Title

“Service Quality of Starbucks in Clarke Quay Outlet in Singapore”

Executive Summary
This paper is an empirical study on three Starbucks coffee outlet at Clarke Quay in Singapore.
This study deals with determining the customer perception towards the grade and level of service
of Starbucks as well as how it is impacting the satisfaction levels of customer. Indepth study of
literature for review was done focussing mainly about the quality of service dimensions and
satisfaction levels of customer. The main aim of this research is to know about the perception of
Starbuck clients towards its quality of service and the extent to which it keeps them satisfied.
However, research question is that, whether Starbucks at Clarke Quay in Singapore provide a good
quality service to its customers and keeps them satisfied.

Furthermore, research methodology of primary data has been followed up for this study, whereas,
for data collection methodology, survey and questionnaire of 220 customers has been conducted
in order to get in depth findings and information on current situation. To analyse the data,
Descriptive statistics and inferential statistics was conducted to know the effect regarding service
quality aspects about Starbucks upon its satisfaction levels of customer.

However, data shows that Starbucks coffee shop at Clarke Quay in Singapore is mainly impacted
by the Facility Effectiveness, Assurance, Staff Reliability & Tangibility Service quality
dimensions.

The hypotheses are:

H1: Tangibility has material effect upon satisfaction levels of customer

H2: Reliability has material effect upon satisfaction levels of customer
H3: Responsiveness has material effect upon satisfaction levels of customer
H4: Assurance has material effect upon satisfaction levels of customer
H5: Empathy has material effect upon satisfaction levels of customer
H6: Facility Effectiveness will show material effect upon satisfaction levels of customer

Chapter 1 : Introduction

1.1 Justification for the research.

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Coffee cafe is such type of business which is commercially administered food and beverage
serving patron eatables served in casual environment for relative price of type of food. In 1971,
Jerry Baldwin, Zev Siegel and Gordon Bowler initiated Starbucks cooperation at USA. Singapore
is the third place when considering the country at international level, outside of North America
where Starbucks was introduced and was readily accepted by customers

Customer is satisfied by meeting his expectations and this provides the basis for analyzing high
quality of service, customer loyalty and also low quality of service if performance is below the
expectations of customer.

1.2 Company History

Initially Starbucks outlet mainly sells the rich quality coffee beans and equipments. In 1971, with
only 6 outlets it sold coffee beans. Later in 1987, the chairman Howard Schultz came up with
Starbucks by financing and made the U.S. version of Starbucks in accordance to Italian coffee
shops. Today Starbucks has 6,000 stores in 30 countries. The growth rate is at 6 per day. Reasons
for this rapid growth are market positioning, good products and services and marketing strategy.

Operations of Starbucks at Singapore and a completely licensed Hong Kong based entity Maxim’s
Caterers LTD and an operator chief of restaurants of several brands of business in Asian
continent. Initial Starbucks outlet commenced on 14th December the first Canon in 1996 in the
strategically located Liat towers, along the length of the famous strip of Orchard street shopping
in the country.

In the cafe, Starbucks offers more than the best coffee in all parts of the world. The people are
friendly; the music is good and is known as a place which is comfortable and a place where
meetings could be held. The design as well as environment of the outlets are specially constructed
in a way to be welcoming & the cafe provides their customers the personal space that they require.
With sofas, chairs, tables, benches and tables of meetings hall implies that there is something for
everyone. Those who seek the calm and bit break are able to relax and getaway in a flexible chair
and lost in a book, and if some want a to meet close besties can be buckled upon sofa with a cup
of coffe as you feel it's your house.

People are familiar about the unremarkable success of this commercial by Schultz is undividable
from its unique concepts of culture ( employee corporate and, people-oriented) is seen here.
Starbucks values its employees to the highest level. Inorder to survive in long term and achieve
success, market position a good relationship of mutual trust has to be maintained with employees
and customers and Starbucks believe in this concept very strong.

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They are retailing their not only just coffe but also coffee buying experience in their coffee house
it's about the warm and comfortable environment as well as interior designing with a touch of art,
aesthetic and humanities. Starbucks never leaves a chance it takes care of everything from coffee
bags napkins to catalogue and the success is mainly because of its approach used.

According to Han et al. (2018), says that brand positioning will play a huge role in customer
loyalty not brand image many researchers proved it.(Adinegara & Turker, 2016). For instance,
according to the finding of Saulina & Syah (2018).Moreover, the entity found that there is
reduction in customer loyalty as they changed their customer profile customer decreased their
number of visiting from 18 to 5 in a month. The management team worked hard together inorder
to meet customer expectations and increase the business. They minimised their service time to 3
min or less with the view to recover their strength.

Recent adjustments in Starbucks to accommodate varied lifestyle of not so traditional Starbucks

customer. They are

a. Increase presence in non urban locations

b. Increase number of drive- thru locations

c. Increased presence of licensed products.

e. Starbucks at home.- Starbucks coffee is available at local grocery store

f. Starbucks for business.

Every. Outlet has customer comment card which helps the management to keep in touch with
customers wants and "The Starbucks experience", suggestions of new products etc. Starbucks
promise is that they provide coffee that the customer wants to taste. They even provide sample
before they purchase it. Their main advantage is the ability to successfully leverage their
cornerstone product differentiation techniques by providing a high quality products mix of rich
quality drinks and eatables. Starbucks built its brand value by providing unique Starbucks
experience to each customer this helped them to build customer loyalty. And their approach
towards customers and employees framed a trusted relationship between them which will help
them to survive in long term and development of business operation into international markets.
Aim and objective
The aim and objective of the study is to ascertain the quality of service of Starbucks outlet at
Clarke Quay in Singapore.

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1.3 Research Question

Does Starbucks at Clarke Quay in Singapore serve high quality service to it's clients?

Chapter 2 :

Literature review

2.1 Service quality:

The basis for evaluation of service quality whether high or low is customer expectations. (Teas,
1993). Services are those activities which are beneficial to customers offered for sale to fulfill the
needs and should not be tied to the sale of goods or services, but there is no need to transfer of
ownership of the object.

Quality of service: criteria of best quality of service.

Source: Gronroos, C. (1988): Review of Business Vol. 9 No 3, p12

From the above image suggested by Gronroos (1988) states quality evaluated in to aspects:
Technical quality and Functional quality. The functional quality aspect associated with the
service process, delivery and performance. In technical aspect the quality of service assessed on
what customer actually received.

Gronroos suggested 6 criteria for assessing the quality of service

1. Professionalism and skills

2. Attitudes and behaviour

3. Accessibility and flexibility

4. Reliability and trust

5. Recovery

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6. Reputation and credibility.

Example: If we go to resturant for dinner we not only evaluate the food, taste of food but also how
the services are provided i.e., friendliness of the waiter and speed in providing the service.

2.2 Dimensions of Service Quality:

According to Parasuraman (1985), there are five factors of quality of service (SERVQUAL). They
are as follows:

 Tangibility: Equipments used by service provider are physical evidence.

 Reliability: Providing service as promised, to be trusted by providing timely mannered
service without flaws.
 Responsiveness: The responsive approach of employees to provide services required by
clients.
 Assurance: The gentle behaviour and knowledge of personal contacts.
 Empathy: In order to ease communication and build good relationship includes personal or
company contact.
2.3 Customer satisfaction:

Customer satisfaction is the main concept to focus. The entity's ability to identify, fulfill and meet
customer requirements well, is the technique for every entity.
According to Kotler & Keller (2009) "Satisfaction is the level of a felt state person resulting from
comparing a producer's perceived performance or outcome in relation to the person's
expectations." There are 3 levels of satisfaction not satisfied, satisfied, very satisfied.

According to Tjiptono (2014) To measure satisfaction levels of customer there are 4 methods
namely:

2.3.1 Complaint and suggestion system

To improve existing shortcomings it is very useful if the customer provides information,
suggestions, opinions and complaints in every customer oriented company provided the customers
with opportunity to express their opinions.
2.3.2) Customer satisfaction survey:
The responses and feedback received through survey from customers provide a sign that company
is paying attention towards them.
By sharing ways this method is used to measure customer satisfaction

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a. Directly reported satisfaction: Every dissatisfied, dissatisfied, negative, satisfied, very satisfied
are the scales used to measure the questions carried out directly.

b. Derived dissatisfaction: The amount of customer expectations and the amount of performance
they feel are the two things on which the questions are asked.

c. Problem Analysis: The problems they face are related to company offer and suggestions to
companies for any improvement to that problem are the two criterias mainly focused here.

d. Importance- performance analysis: The respondents were asked to rank how well the company's
performance in each element or attribute. In this strategy respondents are asked to vote for various
elements.

2.3.3) Ghost shopping:

To convey the strengths and weaknesses of competitor's and company's products this method is
used by getting a ghost shopper as potential customer of competing product.
2.3.4) Lost customer analysis:
In order to understand why the customers stopped buying or switching to other company customer
analysis is done by contacting those customers so to improve policies.

2.4 service quality determines the satisfaction of customers

Quality of service shows materialistic role in influencing the decision of consumer ther is a
relationship between service quality and behavioral intention (En-Ying Lin, 2004). Rizwan &
Xian (2008) shows that quality of service provided in a restaurant would positively impact the
consumer behavioural aspects .Research conducted by Haskova (2015) the company is able to
serve services with higher quality that intern increases customers levels of satisfaction. According
to their research quality of service distinguish between customer expectations and perceptions of
service received. Many research proved that quality of service can influence the buying decisions,
even though, there are some researchers who says there is a indirect relationship between quality
service and buying decisions.

The image of coffee shop business depends mainly upon, the quality of the services and flavour
characteristics of coffee which represents a typical competitive advantage. The research that has
been conducted by Susanty & Kenny (2015) has found that the image of the brand Starbucks
coffee affects a large on the satisfaction and loyalty of customers. The company should focus on

6
meeting the requirements of the consumers to create and improve the satisfaction of the
customers, to create a relationship that lasts long term to take advantage of the mutual. In addition
to this, the satisfaction of customers directly promotes and develops the customer loyalty. Always
preserving appearance & taste of coffee, service quality is important for the creation and
satisfaction of customers. Parasuraman et al (1985) conducted a survey on the dissimilarity among
expectations and actual experience about quality of service experienced to go forward and an
entity works hard to achieve the customer expectations. Apart from this, the quality of the service
shows an impact on the level of customer satisfaction. (Marie, 2019) as well as the satisfaction of
customers increases loyalty (Tuan, 2016). Therefore, Sutawidjaya & Suharyanti (2014), who
carries out the investigations into the business of restaurants in Java West, identified that the
service quality has an impact upon increase on levels of satisfaction of customers. The goal is to
know the service quality and customer satisfaction by the SERVQUAL model for determining
significance as well as the service quality in the Starbucks outlet of Clarke Quay in Singapore
region.

Chapter 3

Methodology

3.1 Research methodology

Methodology applied here is empirical research. Quantitative study proposes and tests
hypotheses relating to service quality of Starbucks outlet at Clarke Quay in Singapore.
3.2 Data collection sources
3.2.1 Initial data:( primary data)
Initial data was optained by respondents using survey method with the help of structured
questionnaire. The scale applied to estimate quality of service about Starbucks was SERVQUAL
which is a 22 factor scale developed to evaluate perception levels of customer in service and retail
businesses.
3.2.2 Secondary Data:
Information from secondary sources like journals, research papers, magazines, would also
be considered for the study.
3.3 quantitative data

7
Computable data refers to the data which can be counted by using numbers associated with [ CITATION
OEC16 \l 18441 ]. The data used in this study will enable us to quantify the service quality dimensions of
Starbucks outlet at Clarke Quay in Singapore. It will help us to understand Tangibility, Reliability,
Responsiveness, Empathy, Assurance & Facility Effectiveness.

3.4 Survey

A structured questionnaire was prepared based on the twenty two factor SERVQUAL scale. This
structured questionnaire was imparted to the customers visiting Starbucks outlet at Clarke Quay in
Singapore.

3 4.1 Sampling

It is the selection only a part from the total population of data.

A. Judgmental Sampling

To survey the customers of Starbucks outlet at Clarke Quay, the sampling technique that was
adopted was Judgmental sampling. Self answerable questionnaire was circulated among 220
customers visited the outlet.

B. Limitations of Judgmental Sampling

There are 2 main limitations of Judgmental sampling:

a. It may not be representative of the whole population
b. It may include the personal bias of the researcher

3.5 Data analysis tools

Data was studied using the SPSS software.

Chapter 4

Results

Descriptive Statistics

Sum of 220 questionnaires considered useful and valid for the study analysis.

Table 1 summarizes the profile of study sample.

From table 1 we noticed that: 114 womenand 106 men customers. Majority in the sample age was
between 20 and 40 years. Out of 20 students respondents, 159 were working adults. 45 per cent of

8
respondents worked in private sector jobs, 26 per cent were government servants. In term of
salary 68 per cent of the respondents had their salaries below 10000 SGD.

Table 1: Sample profile

Variable Frequency Percentage Mean SD

Male 106 49%
Gender --- ---
Female 114 51%
Less than 20 28 12%
20-30 67 31%
Age 31-40 87 39% 2.64 0.97
41-50 30 14%
More than 50 8 4%
Less than
41 18%
secondary
Diploma 33 16% 2.66 0.99
Education Graduation 106 48%
Post-graduation 40 18%
Variable Frequency Percentage Mean SD
Brand 33 16%
Service 98 44%
Why
Coverage 27 13% 2.6 1.00
choosing
Price 64 27%
Starbucks
Others -
Public sector 102 45%
Private sector 57 26%
2.1 1.6
Student 20 11%
Job
Retired 41 18%
Below 5000
75 34%
SGD
5001-10000 74 34%
10001-15000 39 18% 2.2 1.02
Salary
More than
28 14%
15000 SGD
Less than 1 48 20%
1-3 88 40%
Number of 2.27 0.97
4-6 54 25%
years
More than 6 30 15%

4.2 Reliability

Cronbach’s alpha reliability analysis was conducted on the independent variables in order to
determine the reliability of the instrument used. 0.70 is generally the acceptable level for

9
reliability measure for social science studies. Alpha values ranged from 82.3 to 89.7, thus
indicating an acceptable level of reliability (see Table 2).

Table 2: Reliability Analysis

Service Quality Dimensions Cronbach’s

Alpha
Tangibility
1- Use of modern equipment. 82.3
2- Facilities are visually appealing.
3- Professionally dressed staff.
4- Visual appeal of service associated materials.
Reliability
1- Fulfilling the promise of delivery of service.
2- Effective handling of customer service problems. 89.7
3- Services performed the best way first time itself.
4- Timely providence of services.
5- Error-free records handling.
Responsiveness
1- Keeping customers informed as to when services will be
performed. 85.8
2- Providing prompt service to customers.
3- Being helpful to customers.
4- Being ready to respond to customer requests.
Assurance
1- Infuse confidence in customers. 84.7
2- Making customers feel safe in their transactions.
3- Courteous staff.
4- Knowledgeable staff.
Empathy
1- Rendering personal attention to customers.
2- Caring staff. 84.6
3- Staffs who always think of customers’ best interest.
4- Staffs who understand customer needs.
5- Convenient business hours.
Total 86.6

Table 3: Satisfaction means for each quality dimension:

Variable N Mean Standard Deviation

Satisfaction 3.80 0.88
Tangibility 3.60 0.90
Reliability 3.42 1.04
10
Responsiveness 3.49 1.05
Assurance 3.60 1.02
220
Empathy 3.68 0.97
Facility 3.72 1.03
Effectiveness

Table 3 states the mean scores and standard deviation of satisfaction for each factors of quality
service. Average value for the facility effectiveness is 3.72, while for empathy it is 3.68 and for
assurance it is 3.60. These factors shows (facility effectiveness, empathy, assurance) have
received the greater level of customer satisfaction. Furthermore, reliability, responsiveness and
tangibility have the least satisfaction averages.

4.3 Inferential Statistics

Testing of hypotheses service quality received Dimensions as well as satisfaction levels of

customer.

Results of regression reported in Table 4,5,6 shows six factors of service quality received
indicated 74.5% satisfaction level of customer regarding Starbucks outlet at Clarke Quay in
Singapore (F=112.513, p <0.01), hence confirmed the fitness of the model. It is concluded that
facility effectiveness shows the strongest impact on satisfaction levels of customer (β=0.433, p
<0.01), assurance (β=0.307, p <0.01), reliability (β=0.230, p <0.01), followed by tangibility
(β=0.078, p <0.05). However, staff responsiveness and empathy has immaterialistic impact
regarding satisfaction levels of customer.

Table 4: The variation in customer satisfaction

Model R R Square Adjusted R Square Std. Error of the
Estimate
0.875 0.765 0.745 0.382
The F ratio shows significant relation as indicated in the table 5. The other values are also given
below:
Table 5
Model Fit
Model Ss Df Ms F Sig.
1 Regression 98.1 6 15.03 112.513 0.000
Residual 26.5 213 0.129
Total 125.6 219

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Table 6
Testing of hypothesis Results (n=220)

Hypothesis Path β SE p value

H1 Tangible 0.078 0.046 0.049

H2 Reliable 0.230 0.047 0.047

H3 Responsiveness -0.018 0.048 0.769
H4 Assurance 0.307 0.059 0.000**

H5 Empathy 0.054 0.058 0.286

H6 Facility 0.433 0.031 0.000**
Effectiveness→
satisfaction level
of customer

Working notes: TANG=Tangibility/Physical aspects; REL=Reliability; RES=Responsiveness;

ASSUR=Assurance; EMP=Empathy; EFFECT= Facility Effectiveness; CS=Customer Service
Note: p < 0.01 **
4.4 Discussion and analysis of the findings for research aim(s)

It was found that four out of six factors have significant and favorable influence upon the
satisfaction level of customer whereas two items hadinsignificant influence. The factor with
negative impact is staff responsiveness. Responsiveness mainly comprised of updating client with
prompt services, quickly and perfectly solving their requirements.

In this study it was found that facility effectiveness scored the highest beta value which means
that this factor shows most favorable influence upon client service while staff attentiveness scored
least beta value which means this dimension has scope for improvement.

The results from this research is similar as results of other studies on quality of service such as
(Zhang & Prasongsukarn, 2017; Alsitrawi, 2016; Parasuraman et al., 1988). They also agree with
(Paryani, 2011) except for tangibility. Moreover, the results contradict with the results of Tuan,
(2016) where none of the dimensions had any influence upon satisfaction of customer.

4.5 Conclusion.
From the study and discussion of the result. it can be said that the customers of Starbucks coffee
outlet have an average range of customer expectations fulfilment with regards to quality of service
dimensions. From 5 factors of quality service, only three factors which impact the customer

12
satisfaction are Assurance, Staff Reliability and Tangibility. However, staff responsiveness and
empathy showed immaterialistic impact on satisfaction levels of customer.

Empathy and staff response in the case of Starbucks customers are having insignificant values.
This simply denotes that in this region where the study was conducted, the staffs are not giving
attention to their customers and not dealing with the customers in caring fashion. So, it can be
concluded that Starbucks should try to improve the factors to improve customer quality service.

In addition to above, the coffee branch team is advised to increase taste, appearance , tangible
form of beverage, maintain comfortablity, clean and tidy as well as the recording system to be
even more quick to provide information and complaint handling so as to improve satisfied
customers.

Chapter 5

Personal reflection

By the study of Starbucks early history shows that they paid a higher price for rich
quality gourmet coffee beans and to manage supply chain. But also the product
quality and service reliability were of main focus instead of cost reduction. Initially
they need not to concentrate on market value, productivity and profitability, word
of mouth was mere advertisement. They stood out for 3 things: the coffee,
Starbucks experience and it's people. This made Starbucks to enter into
international market but now it is suffering growing pains. Due to economy slow
down which in turn made the customers to cut off their extra expenses, this also
led the competitors such as McDonald's to offer gourmet coffee for less money.
Howard Schultz, CEO understood the need to improve its market share,
productivity and profitability by introducing 3 operational changes. They are it's
new product, pike street light roast coffee; the barustas grind fresh coffee beans to
add aroma, and the espresso machines were replaced by old style machines to low
the cost and allow the customer to see their coffee prepared. Finally, they can find
many ways to improve its operations, and processes by maintaining quality and
reliability of goods and services.

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