...STARBUCKS : Delivering Customer service 1. Introduction 2.1 Background to the issue In 2002, market research has shown that Starbucks has a gap in meeting its customer’s expectations in terms of customer satisfaction. On interpretation the marketing research data, Christine Day, Senior Vice President concluded that the speed of service was the main reason for this decline in customer satisfaction. So she proposed to improve the service time such that each order is served within 3 minutes. However, this solution would cost Starbucks 20 additional labor hours per week thereby $40 million per year. Is 20 seconds increase in speed of service really worth $40 million per year? To stay on plan with their aggressive growth strategy, should $40 million be invested in the 4,500 stores focusing on improving the speed of customer service? Will this improvement lead to increased satisfaction that will translate in to an increase in sales and profitability? Does this investment align with the growth strategy of retail expansion and product innovation? Situation Analysis Customers: The demographics of a typical Starbucks customer have changed drastically in the recent years. From Exhibit 8 in Starbucks case document newer customers of Starbucks are younger, less well-educated, low income, less frequent visited to the coffeehouse and had very different perceptions. Competition: Starbucks is clearly ahead of its competitors in terms of size of operations and profitability...
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...Case Study Analysis Raghuvarma Pasupuleti Narasimha Vangari BUSM5463 Dr. Larry A. Walker Northwest University-Kirkland Author Note Raghuvarma Pasupuleti, MBA College of Business Management, Northwest University. This research was written in context with the Operations Management course within the MBA program at Northwest University. Correspondence concerning this article should be addressed to Raghuvarma Pasupuleti, MBA Program, Northwest University Kirkland WA 98033. Contact: r.pasupuleti15@northwestu.edu Team Case Study Analysis Starbucks – Delivering Customer Service Starbucks – one of the fastest developing companies has its objective to be the “most recognized and respected brand in the world “. The company has built its position in the market by envisioning and creating “third place” beside home and work, where people could go to relax and enjoy others, or just be by themselves. Living up to the long term vision of founder Howard Schultz, who inspired the company to make the customer as the center of its success, company has become the giant of the coffee world. This success can be attributed to Schultz commitment who changed the coffee drinking experience in the U.S. With core values towards presenting quality coffee, atmosphere, and the best service, Starbucks has enjoyed...
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...Summary Recent marketing researches have shown that customers are becoming less satisfied with the services offered by Starbucks. People are getting the perception that Starbucks only cares about “making money” and “opening more stores”. To increase overall customer satisfaction, Ms. Day proposes that Starbucks invests $40 million to increase the labor of every Starbucks store. After careful analysis, we recommend that Ms. Day focus the investment on high traffic stores that are in need of improvement in the speed of service. Stores with low customers’ satisfaction scores should also get more focus than those with high satisfaction score. Additionally, part time workers should also be hired specifically for peak hour periods. On top of the $40 million investment, we would recommend that Starbucks hire a chief marketing officer in order to create synergy between the three marketing groups within Starbucks. Corporate should also re-train store managers in order to improve their soft skills. The managers will also be able to communicate the message of “customer first” to other “partners” in the store so that they can work on delivering good brand experience to the customers. Lastly, special promotion such as free cup after certain number of visits will create additional value for the customers. All of the above recommendations are for the sole purpose of addressing the decline in customer satisfaction at Starbucks. Market Analysis The outlook for the U.S. retail coffee market...
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...Starbucks: Delivering Customer Service I. Intro & Background Since 1971, Starbucks enjoyed great success based on its’ explicit core values of delivering high quality coffee, outstanding customer service, and a relaxed atmosphere. In the last 11 years, despite the post-9/11 recession, Starbucks experienced 5% or more store sales growth. The vision of the owner, Howard Schultz, was to create a chain of coffeehouses that would become America’s “third place”, a place for people to go and relax, enjoy others, or spend some quiet time alone. In the United States, Starbucks not only competed against small-scale specialty coffee chains, but also the thousands of independent specialty coffee shops and donut/bagel chains. Starbucks’ overall goal was to establish Starbucks as the “most recognized and respected brand in the world.” II. Problem Statement Recent research conducted for Starbucks reflected declining customer satisfaction, which was directly linked to customer loyalty. To correct this issue, Christine Day suggested a plan to add an additional $40 million annually for an extra 20 hours of labor per every store in an effort to improve speed-of-service and thereby customer satisfaction. III. Analysis The Starbucks customers in 2002 were on average men, age 36, without a college degree, and with an income of about $65,000. This customer drank about 15 cups of coffee/week. The new customer is younger, less educated, has a lower income, and drinks less coffee than the average...
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...SWOT Analysis Many marketers use a tool known as a SWOT analysis to compare and contrast a marketing idea. SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. It proves to be useful for seeing all sides of an argument and aids decision makers in deciding whether to market or sell a product or service or not. Strengths The strengths is creating a delivery service for Starbucks customers are numerous. The most obvious answer is convenience. By having coffee and/or snacks delivered straight to one’s home of office is extremely convenient, and Starbucks believes that customers will gladly pay for this service because it will save them so much time in their daily routine. This leads to another strength, which is additional revenue. Adding a delivery service would predictably boost revenues for Starbucks, because more people would be able to consume Starbucks products if they had the option of having it delivered to them rather than take the time to go and get it on their own. Most importantly in terms of the average person, is adding a delivery service would create a large number of jobs for people. In this economy, any addition of jobs to be filled is a strength, and by adding a delivery service, Starbucks would have to add personnel to its staff. Weaknesses The weaknesses for adding a delivery service to Starbucks are first and foremost few and far between in the eyes of the company. Additional workforce means adding salaries and wages and...
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...Final Strategic Plan: Starbucks Debbie Pryer, MGT578 Strategy Formulation and Implementation University of Phoenix Table of Contents Executive Summary 3 Company Background 4 Vision Statement 4 Recommended Vision Statement 5 Mission Statement 5 Values Statement 7 Environmental Analysis 7 Long Term Objectives 14 Strategic Analysis and Choice 15 Plan Goals and Implementation 18 Financial Projections and Analysis 20 Critical Success Factors 24 Controls and Evaluation 25 Conclusion 26 References 28 Executive Summary Starbucks Coffee Company, Seattle, Washington, is in an enviable position – high growth, few competitors, strong financials, loyal customers, talented management and employees, and brand recognition – so why create a strategic plan? The company faces many threats and opportunities, and if Starbucks wants to continue its success story, a strategic plan will help them continue to achieve stellar results. Starbucks’ vision is to have coffeehouses in every neighborhood around the world, and will continue to grow by finding and delivering the world’s best coffee to the world’s best customers without compromising our world-class principles. An internal analysis shows Starbucks has more strengths than weaknesses, while an external analysis points to several threats and many obvious opportunities. The key is in choosing the right strategies to minimize threats and maximize opportunities. Starbucks should focus on the following three strategies:...
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...STARBUCKS: DELIVERING CUSTOMER SERVICE In 1992 Starbucks vision was to become the “Third Place” (home, work and then Starbucks). The value proposition was based on high quality coffee, high service standards and customer intimacy all offered in a relaxed and comfortable atmosphere. The positioning was meant to appeal to a niche market of highly educated affluent customers predominantly female between the ages of 24-44 years. Starbucks did not have a dedicated marketing strategy, but the function was performed by three separate groups with little coordination. In the words of Chistine Day everybody had to perform marketing as part of their job. This meant that they weren’t strategic in their approach and while they were hugely successful over the next decade, by 2002 there were some widening gaps between Starbucks vision and their market survey results. Christine Day realized they had failed in terms of “customer intimacy”; their customer base had changed, yet they hadn’t realized this. Additionally their service level had fallen, with a concurrent increase in the technical and rigorous demands of the barista’s job. The entry strategy into China similarly positioned Starbucks as an elite and ubiquitous brand. In the east and particularly in China, status is an integral part of the culture. Starbucks positioning would therefore appeal to the burgeoning masses of young well educated and affluent class of Chinese society. This market segment had growing purchasing power and an...
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... Case Analysis Starbucks: Delivering customer service Protagonist The protagonist in this case is, Christine Day, Senior Vice President of administration in North America. Though Starbucks was growing year on year, but she was not feeling comfortable since the market research showed that Starbucks was falling short of meeting customer expectations. Situational Analysis Starbucks is at present the market leader in specialty coffee retail stores with a total of around 6000 stores, majority in the North America. It owned close to one third of America’s coffee bars. Still, Starbucks believed that there was a huge potential in the market in two ways. First, there was a big potential for building more traffic in the existing stores, as the number of coffee drinkers was on the rise. Secondly, Starbucks had a presence in only around 150 of 300 strategic locations, presenting a significant untapped market. The reason for Starbucks success had been the experience provided to a customer in their store, wherein customer service formed the backbone of their value proposition. Going ahead Starbucks wanted to grow aggressively following a two pronged strategy: retail expansion and product innovation. Despite recessionary environment Starbucks had grown steadily, but recently the marketing research report suggested that it was lacking customer service and there was a growing perception that Starbucks is more...
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...Starbucks: Delivering Customer Service Case Study, BEP 430 Marketing 20030059 Dong-ock Kim1, 20030071 Min-geuk Kim2, 20040054 Keehyung Kim3, 20040535 Yohan Jo4, 20076006 Huang Qiuling5, 20076035 Dorjsuren Bayarmaa6 Marketing Team A1 2 3 4 5 6 erst_licht99@hotmail.com1, kmg0702@hanmail.net2, keehyoung@gmail.com3, zukjimote@gmail.com4, sharlin_huangqiuling@hotmail.com5, gordok_88@yahoo.com6 Professor: Wonjoon Kim Date submitted: May 7, 2007 TO: Day, vice president of administration in North America, Starbucks FROM: Dong-ock Kim, Min-geuk Kim, Keehyung Kim, Yohan Jo, Huang, Qiuling, Dorjsuren Bayarmaa RE: Starbucks: Delivering Customer Service DATE: May 7, 2007 Market Analysis Starbucks provides the highest-quality coffee what it believes in the world. It has hundreds of product lines and the sales of beverage take the largest percent. Despite of Starbucks’ overwhelming presence and convenience, customers think there was just a little of image and product differentiation between Starbucks and the smaller coffee chains. However, Starbucks has an uncomplicated distribution strategy, and it tries to make customers get entrance to Starbucks products easier and provide more convenience to customers. Moreover, it has company-operated stores located in hightraffic and high-visibility and non-company retail channels. In addition, Starbucks has four major competitors. Minneapolis-based Caribou Coffee which provides the look and feel of an Alaskan lodge has more than 200 stores...
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...zz Starbucks: Delivering Customer Service 1. Teaching Objectives A. To illustrate the importance of having a tightly-integrated, highly-differentiated value proposition that is carefully aligned with a well-conceptualized target market. B. To explore the managerial challenges that accompany rapid growth and to reinforce the idea that in order to sustain value, a company must constantly reevaluates its value proposition, competitive positioning, and market strategy. C. To illustrate the difficulties associated with customer relationship management in the context of a diverse customer base. D. To highlight the idea that there is no single definition of great service. Instead, different customers may define service in different, often conflicting, ways. E. To illustrate the importance of measuring the correct drivers of customer satisfaction. 2. Discussion Questions A. What factors accounted for the extraordinary success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period? B. Why have Starbucks’customer satisfaction scores declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way? C. How does the Starbucks of 2002 differ from the Starbucks of 1992? D. Describe the ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied...
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...Starbucks: Delivering Customer Service Case Study, BEP 430 Marketing 20030059 Dong-ock Kim1, 20030071 Min-geuk Kim2, 20040054 Keehyung Kim3, 20040535 Yohan Jo4, 20076006 Huang Qiuling5, 20076035 Dorjsuren Bayarmaa6 Marketing Team A1 2 3 4 5 6 erst_licht99@hotmail.com1, kmg0702@hanmail.net2, keehyoung@gmail.com3, zukjimote@gmail.com4, sharlin_huangqiuling@hotmail.com5, gordok_88@yahoo.com6 Professor: Wonjoon Kim Date submitted: May 7, 2007 TO: Day, vice president of administration in North America, Starbucks FROM: Dong-ock Kim, Min-geuk Kim, Keehyung Kim, Yohan Jo, Huang, Qiuling, Dorjsuren Bayarmaa RE: Starbucks: Delivering Customer Service DATE: May 7, 2007 Market Analysis Starbucks provides the highest-quality coffee what it believes in the world. It has hundreds of product lines and the sales of beverage take the largest percent. Despite of Starbucks’ overwhelming presence and convenience, customers think there was just a little of image and product differentiation between Starbucks and the smaller coffee chains. However, Starbucks has an uncomplicated distribution strategy, and it tries to make customers get entrance to Starbucks products easier and provide more convenience to customers. Moreover, it has company-operated stores located in hightraffic and high-visibility and non-company retail channels. In addition, Starbucks has four major competitors. Minneapolis-based Caribou Coffee which provides the look and feel of an Alaskan lodge has more than 200 stores...
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...Analysis of Starbucks Delivering Customer Service At the current moment, Senior VP of Administration Christine Day is contemplating howshe will pitch her plan to improve Starbucks’ customer satisfaction scores. On paper, thecompanies self imposed “snap shot” program of mystery shoppers paints a picture thatthe stores are operating effectively in the areas they feel drive customer satisfaction.However, recent surveys have revealed that the company’s perception of what drivescustomer satisfaction varies from the actual expectations of the customer. According to Starbucks’ 2010 Annual Report, customer satisfaction scores continue toincrease, and at several points within the report it is mentioned that the key drivers for customer satisfaction are superior customer service/speed, along with partner friendlinessand cleanliness. It is worth noting that the two former factors were the top two responsesfor how Starbucks could improve perceived value, while cleanliness was ranked as themost important attribute for customer satisfaction. It can be perceived that an additionalfocus has been placed on these areas since the article was written as CEO HowardSchultz mentioned them all in his letter to investors. In order to convince Smith and Schultz of the proposed $40 million plan to increase eachstores allotted sales, Day must tie customer satisfaction to customer loyalty, and place anemphasis on how this will translate to an increase in sales. In the HBR article “Puttingthe Service-Profit...
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...Summary Starbucks has become the dominant specialty-coffee brand in the world with 11th consecutive year of store sales growth rate of at least 5%. However, research shows that customer satisfaction has been deceasing at the same time. Starbucks considered that satisfaction gap is primarily attributed to service gap. Thus, it plans to invest additional annual $40 million in labor to improve service. Factors of Starbucks’ Success The fundamental reason for Starbucks’ success is its value proposition that creates an experience of drinking coffee. This includes three components: great coffee, excellent service, and unique atmosphere. First, there is an increasing product diversity and innovation in Starbucks. It also has different channels of distribution. The brand became much more accessible. Second, Starbucks employee is the core component of service, and the company believes that employee satisfaction leads to customer satisfaction. Starbucks also trained employees with both “hard skills” and “soft skills”. Starbucks uses a variety of metrics to measure their service performance. Furthermore, Starbucks adopted the aggressive growth strategy with retail expansion, production and service innovation since 2002. The New Tensions for Starbucks * Starbucks faces a competitive market. The main competitors include a variety of regionally concentrated specialty coffee chains, independent specialty coffee shops, and donut and bagel chains. * Lack of strategic marketing...
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...Marketing Plan for Starbucks Coffee BMM 364 Assessment-Part A Written by: Tianyi Wang (WAN12383771) Written for: Leo Billington 2012/10/19 * Table of Contents 1.0 Executive Summary 3 2.0 Introduction 4 3.0 Current External Marketing Situation 4 3.1 External/General Environment analysis and Trends 4 1 Demographic Segment 4 2 Economic Segment 5 3 Political/Legal Segment 6 4 Social-Cultural Segment 6 5 Technological Segment 8 3.2 Detailed Market Analysis and Projected Demand 8 1. Market Size 8 2. Market Growth Rate 9 3.3 Industry Analysis Including Porter’s Five Forces 9 1. Threat of New Entrants 9 2. Bargaining Power of Supplies 10 3. Bargaining Power of Customers 10 4. Power of Substitutes 11 5. Intensity of Rivalry 11 3.4 Competitors Analysis 11 4.0 Current Internal Analysis 12 4.1 SWOT of the Business and the Product/Service 12 1. Strengths 12 2. Weaknesses 13 3. Opportunities 13 4. Threats 14 4.2 Issues and Risk Analysis 14 1. Strategic Risk 15 2. Operational Risk 15 3. Political Risk 15 4. Country Risk 15 5. Technological Risk 16 6 Environmental Risk 16 4.3 Ethical and Corporate Socially Responsible Behavior 16 5.0 Identify a Commercially Viable Market Opportunity 17 5.1 Market Opportunity Including Potential Segments of the Market and Justification 17 5.2 Define the Value Provided 17 5.3 Positioning statement 18 6.0 Marketing Plan Objectives 19 7.0 Conclusion...
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...Executive Summary Starbucks is the leading retailer and roaster for brand specialty coffee in the world. It has over 7,500 stores located worldwide. As Starbucks continues to expand, it will encounter all sorts of new product markets, with new and demanding customers for unique and appealing products. Starbucks has begun by introducing an extension of the Frappuccino line targeted to the non-coffee drinker. Entering this new market, Starbucks faces many challenges from having to compete to retain brand recognition of its primary products, yet increase awareness of its new product line. Our analysis and research of the market have resulted in keys findings as follows: • The new Frappuccino blended beverages, also known as the Summer Drink flavors will help Starbucks reposition itself in the developing non-coffee iced-beverage market; Starbucks will also need to enhance the product perception to maintain the perceived high quality. Customers of this segment are sensitive to taste and quality of food product and nutritional data. • With this new line extension, Starbucks will be facing many new competitors such as Jamba Juice, Orange Julius and other local non-coffee iced-beverage providers. Special care must be implemented to maintain Brand equity for it’s primary product, and not become to diversified the current customers seek alternatives. • Based on our research, we found that the married couples age 25-54 with children to be the primary potential target market...
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