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Starbucks: Delivering Customer Service
Howard Schultz’s idea with Starbucks in the mid 1980’s was to create a chain of coffeehouses with a product differentiation of specialty “live coffee”, service or customer intimacy with an “experience”, and an atmosphere of a “third place” to add to their work and home alternatives. The original stores sold whole beans and premium-priced coffee beverages by the cup and catered primarily to affluent, well educated, white-collar patrons (skewed female) between the ages of 25 and 44. By 2002, there were over 5,000 stores around the globe. The company spent minimal dollars on advertising to promote a brand concept. Enforced exacting coffee standards by controlling the supply chain as much as possible, and maintain control over the operations at the retail level. Starbucks research indicated that customers did perceive many independent coffee houses as a “third place”, but Starbucks was seen more as a convenient, quick, and consistently good coffee provider. This is in contrast to the way Starbucks management viewed the company. Sales were comprised as follows: Product Mix with % sales

Other- 15% Revenue Source

Issue
Recent Market Research shows a decline in Customer Satisfaction at Starbucks. 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?

Mission Statement “live coffee”
The Starbucks Value Proposition:
To create an “experience” around the consumption of coffee, an experience that people would weave into their lives To create an uplifting experience in “Customer intimacy” To create an “ambience”

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