yisStarbucks Case Analysis:

I. Problem Identification and Decision To Be Made Starbuck’s main decision needing to be made is to determine whether they should allocate $40 million to extra labor in order to better satisfy their customers. Starbuck’s believes that they have created a recession proof product; however, recent marketing research determined that is not the case. Customer satisfaction has been steadily declining and their customer’s perceptions on what determines excellent customer service has changed in recent years. This change in customer perceptions is due in part to the fact that their customer base has shifted to a younger, less educated clientele that hold different attitudes toward Starbucks than the previous customer base.

The lack of marketing organization within Starbucks is surprising. They currently have no chief marketing officer and their marketing department functions as 3 different groups: analytical marketing research group, new product development group, and a promotional development marketing group. This has created a major problem for Starbucks because, as stated in the case, “We tend to be great at measuring things, at collecting market data, but we are not very disciplined when it comes to using this data to drive decision making.” This is a problem because although they have a vast amount of data about their customers, they don’t know how to turn it into money.

One of the most obvious problems that I see with Starbucks is the amount of market left untouched. There are currently eight states, and 150 of the nearly 300 metropolitan areas in America left open for grabs. As competition is on a steep rise, occupying these markets is more vital now than ever before. Dunkin Donuts is one of the biggest competitors to Starbucks. As they gain brand awareness, the market share they hold steadily grows, taking away from the