Chapter I

Introduction
Firms relationship with their customers, like other social relationship tend to evoke overtime.
Scholars have suggested that marketing exchange relationship between dividers and customers often
have the potential to evolve from strangers to acquaintances to friends and to partners.
In the Philippines, one of the frequently visited tourist places is Baguio, which is considered the
Summer Capital of the Philippines. People from different places come here for its beauty, and climate,
making the coffee industry suited to this place.
In the early industrial stage, producers attempted to increase production. They were focused on
mass production and efficient technology. Companies were product driven because the demand of the
product was high. So, there was no need for customers research marketing was product oriented as
there was more focus on product rather than customer needs. But in the 1980’s, enormous attention
was directed at the area of customer service. Customer service programs have been embraced widely
within the service sectors, notably in financial service. (Payne, 1993, p. 215)
According to Philip Kotler (1996):
To succeed in today’s fiercely competitive market place; companies will have to move from a
product and selling philosophy to a customer-marketing philosophy.
Companies’ effort should be more focused on customer service rather than in presentation of
goods and services. The role of marketing is changing as the company becomes more, a more customer
oriented. There are many benefits of marketing, rather than sales orientation. Customer oriented
marketing is adaptive to change in customer characteristics and needs. Under marketing philosophy,
selling is used for communication and with understanding customers, serves customer dissatisfaction
tend to change in policy, neither a stronger nor difficult sales pitch. Marketing looks for a real difference
in customer taste and develops strategies, since it is a long range oriented and marketing goals reflect
over-all company goals. Finally, marketing views, customer needs in broader than narrow manner.
(Berman, 1996, p. 14)
Customer relations depend upon customer satisfaction. This reflects on a person’s feelings of
pleasure disappoint resulting from company product’s perceived as performance of quality in relation to
his or her expectation. (Kotler, 1997, p. 40)
Providing good customers relation is important because customers are third stakeholder in a
typical enterprise environment. Without customer, enterprise could not exist. All enterprise relies on

1
customer service (Bedelan, 2nd Edition, p. 86) most especially in the coffee industry where customers
want an exceptional customer service which will build good relationship particularly in terms of
customer loyalty.
As there is more competition among coffee industry in Baguio City, the researcher found a
strong need for this study to determine the factor which can contribute to customer loyalty and how
effective these factors are. So, the greater the competition is, the greater is the need of a company to
come up with ways and means on how they can retain their customer and still have their loyalty for the
company.
Background of the Study
The goal of Starbucks is to create brand awareness through the “Starbucks Experience”. This
experience translates well, helping folks start their day with an aromatic cup of coffee, pleasant
customer service, and each person’s finding a niche while enjoying their favorite drink and listening to
music or reading a book. While language and culture may vary, the experience is universal, creating a
positive encounter for consumers who will return again.
Starbucks` current customer retention strategies started when Starbucks created its unique
service experience which is based on a customer-driven marketing strategy, the founder fully
understood the strategic importance of segmenting his target market, differentiating his product and
thus achieving a successful positioning for Starbucks not only in its traditional markets, but globally.
These strategies are meant to protect their current customers from deserting to competitors and to
capture new markets.
Starbucks` unique blend of relaxing ambience and innovative coffee drinks positioned it as a
leader in its category, and made it an all time favorite for millions of devotees= around the world. The
third place theme highlighted that Starbucks surpassed a place for just a cup of coffee, but instead it
gave its customers the comfort of a home, excellent customer service, quality products and the feeling
of being special. (Moon & Queich, 2003, pg. 2) these elements made the Starbucks experience key in
retaining its customers. Starbucks’ overall retention strategy has cleverly covered the 5Ps and these are
the following:
Starbucks’ trademark was the unique features of the coffee-based beverages. These are
innovative drinks have attracted new customers to experience luxury coffee drinks at affordable prices,
in a very cozy environment. Starbucks created a coffee culture educating its customers on the coffee
types, origins, and the roasting process, thus building brand credibility and gaining clients’ trust in the
brand and quality of products provided. (Clark, 2007, pg.201)

2
 Starbucks’ major coffee priority is the consistency of the product taste and quality assurance.
Starbucks’ even as priding itself as the best quality coffee in the world tries to control much of the
supply chain for quality control and product assurance. Starbucks’ reliability and product consistency is
driven by the super-efficient coffee maker machines. (Beverly, 2007, pg.6, 104)
Starbucks’ major coffee priority is the consistency of the product taste and quality assurance.
Starbucks even as priding itself as the best quality coffee in the world tries to control much of the supply
chain for the quality control and product assurance. Starbucks’ reliability and product consistency is
driven by the super efficient coffee maker machines. (Beverly (2007, pg. 6, 104)
Starbucks’ brand name and popularity came through customizing the beverages to the
costumer’s desire through offering flexible drink options such as extra cream, caramel syrup etc. (Clark,
2007, pg. 2014). Starbucks also introduces various and new seasonal products to differentiate
themselves from its competitors and to capture new clients. The new drinks add to the overall
experience of loyal clienteles and this specialization increases its competitive edge over other players in
the market.
Starbucks applied the first rule in opening a store i.e. a successful and strategic location, and for
thousands of its stores worldwide, credit should be given to their sharp foresight in store-sight strategy
to reach its target costumers and eliminating its competitors. Starbucks’ store-sight strategy is to have
high visibility, high traffic and convenient location (stores are located on shopping malls, and populated
business district), so a daily costumer will be delighted to stop everyday at the store for his Latte. The
stores’ high visibility, convenience and accessibility in terms of its location and amenities provided
(comfy furniture, grand amount of seating, clean restroom, etc) attracts attention and increases brand
recognition and reputation, thus diminishing customer defections and increasing the stores’ traffic and
sales. Clark (2007, pg. 113-116).
The unique earthly-colored walls of the each stores, innovate product display and cozy
atmosphere, seasonal themes, promotions etc makes Starbucks a strong brand that allows for brand
recognition and customer retention. In addition, Starbucks promotes the idea of supporting the local
communities by being a good neighbor, and aims to involve its partners in the decision making process.
The image of Starbucks sustaining local coffee farmers and helping in grooming their crops builds the
costumers’ trust in the coffee bean superiority and Starbucks as a socially responsible corporate brand
looking after the long-term benefits of the local community with the aim of growing together and not to
exploit. (www.starbucks.com)

3
 The store’s clean and hygienic image has added very much to the strong image of Starbucks; a
survey states that 83% of the sampled clientele equally important for Starbucks’ overall image. (Beverly,
2007, p. 14)
Starbucks recognized that one of the ways to obtain customer satisfaction is by manipulating
their perception of equity and fairness in gaining maximum return for their money and loyalty. So,
Starbucks introduced the Starbucks Loyalty Card which gives great benefits to its customers; ranging
from syrup and milk options on their drinks free of charge, complimentary coffee refills and free
beverage with whole bean purchases. The Starbucks Card or the Duetto Visa Card (a reloadable prepaid
card/Visa credit card) binds the customer whereby they feel that they are gaining more value for their
money, being treated fairly by Starbucks and feeling appreciated by a better quality service in being a
loyal and a regular client, thus preferring to stay devoted to the brand and gaining further benefits with
their future purchases.
Starbucks began as a single coffeehouse in Seattle, Washington. Today Starbucks is a worldwide
success. It is the world’s largest chain of coffeehouses and can be found in more than 40 countries
worldwide. There are few people in the world today unaware of the Starbucks phenomenon. The
original Starbucks coffee shop was opened in Pike Place Market in 1971. The founders were three
partners: English teacher Jerry Baldwin, history teacher Zev Siegel and writer Gordon Bowker. Their aim
was to sell high quality coffee beans and coffee related equipments.
The original shop then moved to 1912 Pike Place and you can still visit this Starbucks coffee
house to this day. The name Starbucks come from Starbuck, Captain Ahab’s first mate in the novel Moby
Dick.
Keeping with nautical theme, the Starbucks logo depicts a twin tailed siren although the current
logo has been much developed since the original. By 1992, Starbucks had 165 outlets across the United
States and Canada and was floated on the stock exchange. (NASDAQ: SBUX)
The first Starbucks outside of North America was in Tokyo, Japan and was opened in 1996. Since
that time Starbucks has expanded greatly and is now found over 40 countries throughout the world. It is
surely one of the most recognized brands in history.
In 2008 Starbucks announced some major changes to shareholders. Firstly they were to upgrade
their espresso machine system. Secondly, pre-ground beans were to be phased out across America. In
the words of the company themselves, this was to, “bring aroma, romance and theatre” to American
stores.

4
 Other changes include the rolling out of Wi-Fi throughout stores in United Kingdom, stopping
the use of milk from cows injected with RBGH, introducing a loyalty card and expanding areas of their
consumer business by introducing products to be used at home.
However, despite all this innovation, expansion has switched to recession in the current
economic climate and since 2008; Starbucks has announced the closure of some 900 underperforming
stores. Almost 1000 non-retail as well as over 6000 retail jobs have also been lost in a bid to restore
fiscal security to the troubled company.
Starbucks has been making a lot of effort to at least appear more eco-friendly. It is possible to
pick up the used coffee grinds for free for use in your garden. In addition, they have worked hard to
increase recyclability, increase the proportion of their coffee that is fairly sourced and to decrease
energy and water consumption.
Apart of the success of Starbucks, like other businesses not all the time they had their big sales,
there are instances where their sales are decline. Declining sales and executive-level scrutiny on brand
health following reports that the company is straying too far from their true identity. Interestingly, the
most attention is being placed on CRM (customer relationship management) approaches to reward their
most loyal customers and better understand their needs and desires. One of these initiatives is a
standard customer loyalty-rewards program at retail, and another is a new style of website for
customers and employees to share thoughts with the people who run the company.
It appears Starbucks is practicing these concentrated CRM tactics to reclaim their position of
being the customer’s “Third Place” with home and work being number one and two. Third places are
social environments generally revolving around beverages. Starbucks is fulfilling on this mission as
having become a nationally accepted “Third Place” where consumers spend lots of money, time and
collaboration. With their now declining sales, Starbucks recognizes that they must take consumers
interaction and entertainment to a more subtle but effective level without being too obvious.
Theoretical and Conceptual Framework
Customer Relationship Management involves managing detailed information about
individual costumer and carefully managing costumer “touch points” in order to maximize Costumer
loyalty. Creating a superior Costumer value and satisfaction is in the key to building lasting relationship
with costumers. Satisfied customers are more likely to be loyal customers and give the company larger
share of business. (Armstrong & Kotler , 2010, p. 37)
A Costumers touch point is any occasion on which a customer encounters the brand and
product from actual experience to personal or mass communication to casual observation. (Kotler, 2008,

5
p. 173) Customer relationship management requires a Customer centric business philosophy and culture
to support effective marketing, sales, and service processes. (Johnston & Marshall, 2010, p. 98)
Moreover, CRM is managing interactions between the companies, its customer, with the object
of maximizing the lifetime value of the customers for the company, satisfying the customers by being
customer focused. (Kotabe, 2011, p.134) Maximizing customer value means cultivating long term
relationship. Working to retain customer makes good economic sense. Every company will always be
benefiting from a long term relationship with their customers rather than a short term relationship with
costumers. It is very important for companies to be aiming to have a harmonious and long term
relationship with customers rather than depending on mass media message which is just but one-way,
there should be new, and more interactive approaches to help build two-way customer relationship.
Customer empowerment has become a way of life for many companies that have had to adjust
to a shift in the power with their customer relationship. (Kotler & Keller, 2001, p.173) Marketers attempt
to solidify a loyal relationship with their customers. They want customers to be satisfied with their
purchase and buy from the same company again. Loyal customer will buy certain brands at certain
stores and they include no other firms in their evoked set. (Grewal & Levy, 2010, p.161)
Whether or not the costumer will make a repeat purchase and endorse the product to another
will depend on how satisfied he is with the product. This is the utmost importance to marketers and
because the immediate concern is to determine the consumer’s behavior. The consumer’s satisfaction is
a result of comparing expectations about the product against performance as perceived by the
consumer. (Medina, 2008, p. 25) simply stated, if a customer’s expectations of a company’s
performance are met or exceeded, the customer will be satisfied. Conversely, if perceived performance
is less than what the customer expected, then the customer is dissatisfied. (Bowersox, 2010, p.58) if the
customer is not fully satisfied, he is more likely to consider other brands first before making a repeat
purchase of the product he first bought; also, he will not be too enthusiastic in endorsing the product
(Medina, 2008, p. 26)
Customers nowadays are ever-changing. As companies who try to fulfill their needs and wants
we must outrun these changes. Customers are lifeblood of any organization that’s why some companies
invest on customer relationship management on how they address the customer’s requirement
particularly their needs and wants. Through CRM, we also secure the life of our organization.
In our case, we choose Starbucks because we believe that our study is congruent to the
particular area we choose from. We will engage ourselves to conduct surveys and studies on how this
organization implements in their industry the CRM.

6
 CRM also talks about giving value to our customer, how your customers are satisfied out of your
product and service, how to meet the requirement with regards to their needs and wants, how you will
create trust and build customer loyalty to patronize your store (product or service). Although this CRM
look as an expense for some organization, but for some they see this as an investment. The return of
these is high compared to your expense.
Moreover, Starbucks, who is known globally, has employed CRM and it is evidential that they
were able to retain their customers. A lot of consumers patronize this coffee shop thus they were able
to have a large share of market and they were able to still attract more and more customers anywhere
in the world.
Conceptual Paradigm

Independent Variable Dependent Variable

Factors affecting CRM to Level of effectiveness of

retain customer loyalty Customer Relationship
Intervening Variables Management of Starbucks
 Environment Baguio to retain customer
 People
 Demographic loyalty
 Product/Service
 Process Characteristics
 Behavioral
Characteristics

Statement of the Problem

This study aims to know the level of effectiveness of Customer Relationship Management of
Starbucks Baguio to retain customer loyalty.
Specific Statements of the Problem
1. What is the profile of respondents based on demographic characteristics in terms of:
a. Age
b. Gender
c. Income
2. To what extent do the following CRM factors affect customer loyalty in terms of:
a. Environment
b. People

7
 c. Process
d. Product/Service
3. Do responses differ if respondents are grouped according to:
a. Behavioral Characteristics (Frequency of Purchase)

Scope and Limitations

This study was conducted to know the level of effectiveness of the Customer Relationship
Management of Starbucks in Baguio City but all its branches in other locations will be considered since
Customer Relationship Management in Starbucks. This study limits the respondents which covers only
the Customer Service Representatives of Sitel not only to the regular customer of Starbucks but also to
their customers who are not regulars of their establishment. This study will consider every aspect of the
customers’ personal information that would affect their purchase in Starbucks like their demographics
(i.e. frequency of purchase).

Definition of Terms
 Customer Expectation
This is what customers anticipate on your product or service. These are continuously increasing,
customers seeks out products and producers that are best able to satisfy their requirements. For
instance, a product does not need to be rated highest by customers on all dimensions, only on
those they think are important.
 Customer Loyalty
It is the faithfulness of customers to the establishment emotionally loyal consumers are more
valuable in terms of length of relationship with a brand and the level of profitability these
consumers deliver to the business.
 Customer Relationship Management
Being delighted with the product purchased.
 Product Quality
This usually includes features, performance, conformance, assurance and responsiveness.
 Profit and Growth
It is stimulated primarily by customer loyalty.
 Reliability

8
 It refers to the dependability of the service providers and their ability to keep promises to
customers.
 Response Time
Communicate our sense of urgency and concern to our customers and their experience with our
product or service.
 Service Level
Timeless and thoroughness is important to determine whether the customers will return or not.
 Service Quality
It includes delivery time, and knowledge of delivery personnel.
 Value
It is the importance of the stakeholders of the company.

Significance of the Study

Customers are the lifeblood of any organization: small and large businesses today are not only
engaging themselves in earning a high profit. They invest customer relationship management; they build
a positive image on the customer loyalty. Different products and service delivery enhancement,
trainings, innovations are done by companies to make their customers be satisfied out of their offerings.
We as customer in this institution, we actually see the relevance of our study on how to manage
their customer, how to satisfy them and lastly how a lasting relationships can make a business more
become profitable.
Achieving effective CRM require many organizations to adopt new perspective. The modern
CRM approaches will, your relationship with customers should be on going, cooperative and built for a
long term. Organizations that have many transitory relationships without consequently have to spend a
lot of money on finding new customer. The cost of keeping existing customer is a tiny fraction of the
cost of acquiring new customer.
Successful and effective CRM people tend to display the following:
 Positive attitude
 People orientation
 Organization skill
 Customer focus
 Understanding of the link between CRM and profitability

9
There are significant business society benefits which accrue from an effective CRM approach. These
include:
 Reduce cost, because right things are being done( i.e effective and efficient operation)
 Ensuring that the focus of the organization is external.
 Growth in the number of customers
 Maximization of opportunities ( i.e. increase service referral)
 Increase access to a service of market
 Increase access to a service of market
 Highlighting poor operational processes
 Long-term profitability and sustainability, forward thinking organizations, understand
the vital need to maintain strategic focus on CRM and to resource and manage
appropriately.

10
 Chapter 2
DESIGN AND METHODOLOGY

This chapter discusses the Method of Research, Research instrument, Population Universe and
subject of the study and statistical Treatment of Data.

Research Design
The methodology used for this study is descriptive method of research; Gay (1976) defines
descriptive research as a process which includes the collection of the date to answer questions
concerning the study’s subject. Descriptive method is used to gather information about the present
existing condition. The concern of the study is more on describing rather than on judging or interpreting.
The main objective of a descriptive research is verifying formulated hypotheses that refer to the present
situation in order to explain it.
Also, descriptive research is a type of research that is mainly concerned with describing the
nature or condition and the degree in detail of the present situation. This type of research design aims
to obtain an accurate profile of the people. With this research type, it is essential that the researcher
already has a clear view or picture of the subject being researched before the data collection procedure
is carried out. The researcher used this kind of researcher to obtain first hand data from the
respondents so as to formulate rational and sound conclusions and recommendations for the study.
The researchers described the factors affecting loyalty towards the environment, people,
processes and products of Starbucks Baguio. The descriptions methods include description, recording,
analysis and interpretation on the present condition of the establishment.
Their responses and our theoretical/conceptual framework will be our basis in order to come up
with the meaning and interpretation of the effects of demographic and behavioral characteristics and
also the variables which include environment, people, processes and products of Starbucks Baguio.

Population and Locale of the Study

Baguio City is known as the Summer Capital of the Philippines and it is a tourist destination in
the North because of its climate and great ambiance. They see Baguio City as a fertile ground for
investments and businesses.
Starbucks is one of the well-known establishments in the coffee industry which is suited to be
established in the locality. The proponents choose to identify the customer according to demographic

11
characteristic such as income, age and occupation. Behavioral characteristic will also be considered such
as the usage rate.
The researchers also choose the Customer Service Representatives of Sitel who will be the
target respondent of the researchers. The researchers choose this organization to know the perspective
of the Sitel CSRs toward effectiveness of the pre-determined factors of CRM. The researchers use
Slovin’s formula to come-up with the no. of respondents.
n = N/(1 + N·e²)
Where:
n=sample size
N=population size
e = margin of error
Table 1. Sample size
Population Sample
142 105

The sample size that will be used to come up with the analysis is 104.79 and it was rounded off
to 105 since we are referring to population. This implies that 105 questionnaires will be floated for the
Customer Service Representatives of Sitel.

Data Gathering Procedure

For this study to be possible, the researchers decided to use the questionnaire method to gather
data from the subjects.
The researchers use questionnaires to gather the data and they used it to measure the
effectively of Customer Relationship Management as integrated in the management system of
Starbucks. The researchers will be floating questionnaire to the Customer Service Representatives of
Sitel who is the target respondents of the researchers.
From the questionnaire, the researchers incorporated various types of survey questions. The
researchers used the questionnaire method for it is the easiest way of collecting data. Our respondents
are Customer Service Representatives of Sitel and they have 8 labor hours of shift, therefore the
questionnaire would help the researchers weigh questionnaire how their profiles and pre-determined
factors affect customer loyalty.
The questionnaire composed only one page and classified into two parts. In part one of the
questionnaires is the profile information that includes demographic variables namely the respondent’s

12
age, gender, and income; another is behavioral variable which is frequency of purchase. In part two, the
pre-determined factors questionnaire is design to find out how it affects customer relation
management. They were asked to rate based on their perception if it is very effective, moderately
effective, less effective and not effective.
 Very effective- there is a high degree of producing a quality product and service and
performs strong impressions or response.
 Moderately effective- not excessive or extreme, of medium or average quantity or
extent, and of limited or average quality products and services.
 Less Effective- not as great in amount or quantity, it has a lower in importance to
customers in providing them quality products and services.
 Not Effective- there is no degree in having an intended or expected effect.
The questionnaire will measure how customers react to the services rendered and product
offered by Starbucks. After gathering all the data from respondents, it will be tallied, tabulated and
interpreted to be able to determine the level of effectiveness of the Customer Relationship
Management of our target establishment which is the primary goal of the research. Through the
questionnaires, the researchers will know if the consumers are favorable, if they are satisfied or not,
their frequency of visit, and also their profiles.
For the questionnaire to be possible, the researchers addressed an introductory letter (see
appendix) to the officer-in-charge of the Human Resource department of Sitel, Atty. Ma. Yvalonne L.
Quimoyog, assuring them that the questionnaires to be distributed are for academic purposes only and
strict confidentiality will be applied. Upon the permission of the HR, OIC the researchers administered
the questionnaire at the said company.

Treatment of Data
The gathered data from the respondents were tallied, tabulated, and interpreted. Keller &
Warrack (1991) cited that a number of factors determine which statistical technique will be used, but
two of these are especially important, first is the type of data being measured, and second is the
purpose of the statistical inference.
The data gathered was treated and participated by the means of statistical tools. Data will be
treated with the use of the following:
Part 1. Percentage
It is a numerical value that shows two proportions of a sample frequency from the population:

13
The formula:
Percentage (%) = (f x n) x 100
Where in:
f = Frequency
p = Percentage
N= no. of respondents
Part 2. Weighted Mean
The study also utilized the weighted mean average to describe the tabulated data. Weighted mean is the
measure of central tendency used for numerical variables. The weighted mean of each item in the
questionnaire is computed by multiplying each mid value by the corresponding frequency, then
summing the product and dividing by the number of each item. (Frederick 1999) The weighted mean will
be computed to designate their descriptive interpretations which are “very effective”, “moderately
effective”, “less effective” and “not effective” for the factors affecting CRM.
Formula for weighted mean:
x = Sf
N

Where:
x = Weighted mean
f = frequency of responses
N= Total number of responses

A four point scale was used to determine the insight of the respondent’s on the specific items asked for
in the questionnaire:

Table 2. Likert Scale

Arbitrary Value Mean Range Descriptive Equivalent

4 3.26-4.00 Very Effective
3 2.51-3.25 Moderately Effective
2 1.76-2.50 Less Effective
1 1.00-1.75 Not Effective

14
Part 3. Analysis of Variance (ANOVA)
The point of scale was used analysis of variance (ANOVA) was utilized for data with interval scale.
ANOVA was utilized to determine the significant differences of variables at 0.05 level of significance.
Tabulated F was compared with F critical value to find whether significant differences existed or not.
(Keller and Warrack 1991, p. 198)

The formula for ANOVA is as follows:

GT = sum of the totals
N = the total numbers
CF = (GT)2 /N
TSS = (x2 1 + x2 2 + x2 3 … x2 N) – CF/N
RSS = (R2 1 + R2 2 + R2 3 … R2 N) – CF/N
CSS = (C2 1 + C2 2 + C2 3 … C2 N) – CF/N
ERROR SS = TSS – RSS – CSS
Calculating the value of F by formula
F = MSSB/MSSW
Compare the computed F value with the tabular F value

15
 Chapter 3
Presentation, Analysis, and Interpretation

This chapter shows the presentation, interpretation and analysis of data gathered in the study
based on the problem and concepts and theories that were on this research.

Table 3. Gender Profile of the Respondents

The table shows that 71% are females. This female respondent implies a greater proportion in
the population of the Customer Service Representatives of Sitel.
Frequency Percentage
Female 75 71%
Male 30 29%
Total 105 100%

Female respondents have higher initiation to visit Starbucks. These women are affected by their
interpersonal skills because Starbucks can be a place for any occasion most especially social gatherings.

Table 4. The Age Profile of the Respondents

Frequency Percentage
20-25 years old 27 26%
26-30 years old 21 20%
31-35 years old 7 7%
36-40 years old 13 12%
40-45 years old 33 31%
Others 4 4%
Total 105 100%

Majority of the Customer Service Representatives at Sitel belongs to the age bracket, 40-45
years old. The overall population of Customer Service Representatives was considered to be in the
middle age. As stated in the book of Johnston and Mashall (p. 243), older consumers exhibit great
differences from person to person on such things as income, mobility and work status. This implies that
people who belongs to this age bracket has the capability of purchasing the product since they have
attained a higher work status as well as income.

Table 5. Frequency of Purchase

16
 The table shows how frequent the respondents purchase in any Starbucks branch in Baguio.
Sources of Degree of
Sum of Sqares Mean Square Computed f
Variation Freedom
Column means 312.875 3 104.292 10.98
Error 38 4 9.5
Total 350.875 7

The critical value at 5% level of significance, degrees of freedom (3, 4) is 6.59. Since the
computed F (10.98) is greater than the critical value (6.59), the null hypothesis will be rejected. This
implies that there is a significant difference in the frequency of purchase of the respondents at
Starbucks.

Table 6. The Personal Income of the Respondents

This table shows the monthly income bracket to which the respondents belong to.
Frequency Percentage
Php 5,000-7,000 22 21%
Php 7,001-10,000 11 11%
Php 10,001-12,000 13 12%
Php 12,001-15,000 17 16%
Php 15,001 and above 42 40%
Total 105 100%

This table shows that majority of the respondents belong to the income bracket whose salary ranges
from Php 15,000 and above. According to the book of Johnston and Marshall (page 249), marketers use
income as segmenting approach very frequently. Examples lower income sides include the discount
retailers, higher and include the luxury. Interesting though, there is a not necessarily a direct correlation
between income and price preferences. The implication is that, respondents who belong to this income
bracket are the ones who can afford to purchase the product.
Table 7. Customer Relationship Management Factor
(Environment)
Factors Weighted Interpretation
Mean
Environment
a. There is an enough space for customer 3.63 Very Effective
b. Well ventilated café 3.06 Moderately Effective
c. Can easily smell the aroma of the coffee 3.16 Moderately Effective
upon entering the Starbucks café

17
 d. There is a proper lighting in the café 3.49 Very Effective
e. Has relaxing atmosphere 3.22 Moderately Effective
f. Equipped with the best facilities 3. 40 Very Effective

The table shows how environment affects the customer loyalty. Starbucks is very effective in
providing enough space for their customers, and the staffs respond towards this area as very effective
which has 3.63 as its weighted mean. Starbucks must be able to maintain this so that customers will be
continuously satisfied. There were 3.06 in average who answered in the proper ventilation of the café,
thus, it is moderately effective. The management must be able to give little attention to this. Aroma and
smell of the coffee in the café premises is moderately effective and the customer provides 3.16
feedbacks on this. The café have good and proper lighting of the café and it is also very effective based
on their perspective. It is moderately effective, which shows 3.22 in average, where the store provides a
relaxing atmosphere. Starbucks is equipped with the best facilities they have strategic counter and
electronic type of menu and then they have free access on the wireless connection, and 3.40 responded
that it is very effective.

Table 8. Customer Relationship Management Factor

(People)
Factors Weighted Mean Interpretation
People
a. Treats customer well 3.48 Very Effective
b. Staff are friendly and accommodating 3.36 Very Effective
c. Knowledgeable work force 3.46 Very Effective
d. Properly dressed staffs 3.38 Very Effective
e. Capable of handling customer complaints 3.52 Very Effective
f. Has enough employees to serve customers 3.08 Moderately Effective

This table shows that Starbucks is very effective in providing excellent customer service.
Through their personnel, Starbucks key in achieving their good relationship to their customers is the way
Starbucks gives their customers good relationship and excellent accommodation that makes the
Starbucks very effective in that area, thus, the results are 3.36 as the response for treating their
customers well, 3.48 is the response where the company has a knowledgeable workforce to deal with
different types of customers. The company has a dress code that would emphasize or give identity to
the personnel and 3.38 responded to this as very effective. The researchers mentioned earlier that
Starbucks has a knowledgeable workforce; it would also mean that they have the capabilities to handle

18
customer complaints. Also, the company has enough employees to serve their customers and they
deliver the order at the right time according to the result they are just moderately effective and it results
to 3.08.

Table 9. Customer Relationship Management Factor

(Process)
Factors Weighted Mean Interpretation
Process
a. Does not take a long time to serve the orders 2.44 Less Effective
of the customers
b. Has customer service representative to 2.33 Less Effective
acknowledge queries of customers
c. The coffee is fresh and made right after the 2.35 Less Effective
order
d. Quick transaction, any mode of payment will 2.31 Less Effective
do
e. There is always an S.O.P. followed on their 2.36 Less Effective
operation

This table talks about the process of Starbucks as to their operation. The customers does wait
long time to serve their orders that’s why the respondents respond on this as less effective which is 2.44
in average. Starbucks does not have a customer service representative in dealing any queries by the
customers so they have a less effective answer to this area and there are 2.33 respondents who gave a
less effective answer. There is a slow transaction on their mode of payment as the respondents
expected this is one of the benefits but the company failed on that expectation, the company failed in
providing the service as to response there is 2.31 which shows that their mode of payment is less
effective. As to Standard Operating Procedure in their company, respondents answered that they are
less effective in this area, which results to 2.36 responses.

Table 10. Customer Relationship Management Factor

(Product)
Factors Weighted Mean Interpretation
Product 2.31 Less Effective
a. Customize product offerings to satisfy the
wants of customers

19
 b. Availability of the product to be purchased 2.40 Less Effective

c. Has an attractive packaging. Product has a lot 2.42 Less effective

of benefits
d. Offering a wide range of quality products 2.34 Less Effective
e. Products at reasonable price 2.39 Less Effective

The last table talks about the product of Starbucks. The store got 2.31 responses which is less
effective on the customer response towards the customized offering of their product particularly their
coffee. And also they have the product availability to purchase; it has 2.40 responses and this is less
effective. The respondents find that this is not effective also, because one of the added costs of the
offering is the packaging that’s why they see this as less effective, they provide the benefits but the
respondents are not aware towards the product benefits. To increase the number of their customer
they offer a wide range of quality products so that customer cannot switch to the competitor, and they
give a total response of 2.34 which is less effective, this wide range of product is not appealing to the
preference of the respondents. Since Starbucks’ products are not highly affordable and not all can
purchase it, they must to ensure that the high price that is being imposed will give the customer an
extraordinary experience that they will sure that the customer is delighted, a total of 2.39 less effective,
on the reason that the researcher target respondent said to be economic buyer, they spend with the
reasonable price and practical.

Summary of Tables
Factors Weighted Mean Interpretation
Environment
a. There is an enough 3.63 Very Effective
space for customers
b. Well ventilated café 3.06 Moderately Effective
c. Can easily smell the 3.16 Moderately Effective
aroma of the coffee
upon entering the
Starbucks’ café
d. There is a proper 3.49 Very Effective
lightning in the café
e. Has relaxing 3.22 Moderately Effective
atmosphere

20
 f. Equipped with the 3.40 Very Effective
best facilities
People
a. Treats customer 3.48 Very Effective
well
b. Staff are friendly and 3.36 Very Effective
accommodating
c. Knowledgeable 3.46 Very Effective
work force
d. Properly dressed 3.38 Very Effective
staff
e. Capable of handling 3.52 Very effective
customer
complaints
f. Has enough 3.08 Moderately effective
employee to serve
customers
Process
a. Does not take a long 2.44 Less Effective
time to serve the
orders of the
customers
b. Has customer 2.33 Less Effective
service
representative to
acknowledge
queries of
customers
c. The coffee is fresh 2.35 Less Effective
and made right after
the order
d. Quick transaction, 2.31 Less Effective
any mode of
payment will do
e. There is always an 2.36 Less Effective
S.O.P.

21
Product Less Effective
a. Customize product 2.31 Less Effective
offerings to satisfy
the wants of
customers
b. Availability of the 2.40 Less Effective
product to be
purchased
c. Has an attractive 2.42 Less Effective
packaging. Product
has a lot of benefits
d. Offering a wide 2.34 Less Effective
range of quality
products
e. Products at 2.39 Less Effective
reasonable price

22