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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? How valuable is a highly satisfied customer to Starbucks? E. Should Starbucks make the $40 million investment in labor in the stores? What is the goal of this investment? Is it possible for a mega-brand to deliver customer intimacy?

3. Content of Analysis A. What explains the Starbucks success story? – How did Schultz manage to get people to pay so much $$$ for a