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 group. Starbucks’s marketing department is functioned as three separate groups, and market- and customer- related trends could sometimes be overlooked. * Starbucks’ brand image had some rough edges. Perceived differentiation between Starbucks and others is less. More than half of respondents thought Starbucks’ brand image as making money and building more stores, and the number is still