...The case discussed here outlines a number of challenges, which the Starbucks Coffee Company is facing as of late 2002. Starbucks was founded with the intention to deliver a superior coffee drinking experience to a predominantly affluent, well-educated white-collar clientele all across America. Starbucks’ value proposition was built upon three pillars: • The coffee itself: Delivering the highest quality coffee possible • Theservice: Delivering outstanding, uplifting service, delighting customers whenever possible • The atmosphere: Providing a “third place” to its patrons, a place where lounging, relaxing and socializing is encouraged The most recent market research at Starbucks had however revealed to management that there was substantial dissatisfaction especially in the area of service. In a survey, ten percent of customers had indicated, that they would wish the service at the coffeehouse were faster and more efficient. Nineteen percent of customers indicated also, that the service could be friendlier and more attentive. The research also pointed towards an even graver issue. In the consumers perception, Starbucks as a brand was not very well aligned with the core values it wanted to communicate, but rather negatively associated with mere monetary intentions. Also, Starbucks offer was not differentiated enough when compared to independent coffeehouses. People perceived it as a convenient, standardized source of good quality coffee. What also became evident when evaluating...
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...Starbucks began several years ago in a small city in Seattle, WA. Since its inception Starbucks quickly acquired several cafes throughout the state of WA and now Starbucks has cafes worldwide. The success of Starbucks lies with the dedication of providing quality products, a unique atmosphere and a commitment of providing top notch customer service. This article describes the importance of customer service and the endless possibilities to make sure that Starbucks is meeting and exceeding their customers’ needs. It also describes how the organization has evolved during the past few decades and so have their customers. This article will focus on how Starbucks loss track of providing quality customer service because of their increasing sales and how they will try to redirect the company to focus on quality customer service which will in turn create large profits in the long run. Case #1: Starbucks Delivering Customer Service 1. What factors accounted for the extraordinary success of Starbucks in the early 1990s? Several factors accounted for the success of Starbucks in its early days. The first factor was their product. Starbucks was one of the first to create a product with such distinction and the product was sold both in the cafes as well as grocery chains. Another factor was the excellent customer service that they provided and finally, the atmosphere. People came to the café to buy coffee however; they were also drawn in by the atmosphere. Starbucks success rest on...
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...“Starbucks: Delivering Customer Service”, Harvard Business School Case (2004) 1. The target customers were the affluent, well educated, white collar patrons (skewed female) between the age of 25 to 44. Their needs and values were to relax from their work and their family, having whole beans and premium priced coffee beverages by the cup that’s to say a coffee of quality. They want to be unique and recognized. 2. The consumption pattern associated with Starbucks patronage during the early 1990 is relaxing away from work and family, enjoying a coffee of quality in this America’s “third place”. The brand image Starbucks cultivates during this period is a provider of high quality coffee, coming from the best coffee making countries (Africa, Central and South America, and Asia Pacific region), a good service close to the customer, and a special atmosphere: inviting environment which attracts people and makes them want to stay long. Starbucks’ key brand promise is having a special experience around the consumption of coffee: “live coffee”. 3. Several factors accounted for the extraordinary success of Starbucks in the early 1990. First, his success is based on his extended distribution strategy: the many stores are present in high traffic and high visibility places and Starbucks sells his coffee through third parties partners, as non-company-operated retail channel, international licensed stores, grocery stores and warehouse club. ...
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...Analysis of Starbucks Delivering Customer Service Problem statement: • 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? 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. • The overall attitude of Starbucks is very low on 25% by new customers whereas the regular customers stood in 44%. • While many factors influenced customer satisfaction, overall service and speed of service were identified as the most influential; a quick glance at Starbucks's recent customer satisfaction (Exhibit 10 and Exhibit 11 in Starbucks case document) reveals that customers did in fact express dissatisfaction with the efficiency and speed of service. • From Exhibit 9 in the...
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...Starbucks – Delivering Customer Service 1) What factors accounted for the extraordinary success of Starbucks in the early 1990s? What brand image did Starbucks develop during this period? A: One of the most important sources for Starbucks success was its brand strategy and the elements that composed it. The brand strategy of Starbucks was best captured by its “live coffee” mantra. This phrase reflected the importance of the company attached to keeping the national coffee culture alive. They wanted to create an “experience” around coffee consumption. The three main components of this brand strategy were: * The coffee itself.- Starbucks was proud of offering what it believed to be the highest-quality coffee in the world. In fact, Starbucks controlled as much of the supply chain as possible. * Service (“customer intimacy”).- This element consists in the intentions of the company to make of the experience and customer attention something memorable, from recognizing the customers and knowing their drinks to drink customization. * Atmosphere.- According to Christine Day, Starbuck’s senior vice president of administration in North America, the ambience is what makes people want to stay. Founder and chairman Howard Schultz says that Starbucks has built something that has “universal appeal”, based on a sense of community and the need of people of gathering and being together. Also, an important driver of the company is product innovation. The company’s...
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...Overview: * Starbucks is a global coffee shop chain and it's headquarter is based in Seattle – U.S. It is considered the largest coffee shop company in the whole world. * It was established by 3 partners (Gerald Baldwin, Gordon Bowker and Ziev Siegl) Seattle – U.S. in 1971. In 1982 Schultz joined the team. Years later, the founders agreed to sell Starbucks to Schultz who took the company public. * The idea behind Starbucks was to make the coffee shop a "third place" beside home and work. * Starbucks operates 16,635 stores in 50 different countries. 11,068 of them are located in U.S. The company's product lines are the following: * Beverages (coffee – juice – tea) * Merchandises (mugs..) * Whole coffee beans * Pastries Starbucks strategy: * providing high quality products * Create profitability * Maximizing market penetration * Offering attractive and comfortable atmosphere The questions: Q1) What factors accounted for the extraordinary success of Starbucks in the early 1990s? The factors accounted for the success of Starbucks in the early 1990’s are: 1. Atmosphere: Starbucks is a coffee shop but the purpose behind it is not just offering coffee, instead providing the customers with a comfortable environment. Customers can relax, enjoy a cup of coffee or whatever Starbucks offers and read the newspaper or simply meet friends. This will result in customers staying more and more inside the coffee shop and makes them...
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...Executive 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...
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...coffee purists. Schultz joined the Starbucks marketing team in 1982. He traveled to Italy and became fascinated with espresso bars and Italian cultures. Later on, when Schultz got the chance of buying Starbucks, he began opening new stores that are designed as his idea of coffee house. By 1992, Starbucks had 140 stores; Schultz then took the company public that year. By 2002, Schultz had established Starbucks as the dominant specialty-coffee brand in North America. Sales grow rapidly and the stores are keeping expanding. Consumers In year 1992, Starbucks 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 age of 25 and 44. This profile had expanded. Since lower priced coffee is never Starbucks’ goal, consumers of Starbucks are middle or high level of income. Most customers favored coffee drinks back then, while coffee and non-coffee-based drinks or beverages are more popular. Customers used to hang out at the coffee house and chatted with the baristas while most of them just get the drink and leave nowadays. Also, customer types have widened: customers choose to online ordering as well. According to the market research, customers tended to use the stores the same way now. There are types of customers, like most frequent customers averaged 18 visits a month and typical customer visited five times. Competition In U.S, Starbucks competed against a variety of small-scale...
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...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 tremendous achievements since its inception. The company has been doing pretty well for the last 11 years with 5% or more store sales increase, even though, the rest of the economy was still staggering from the post-9/11 recession. Problem Statement: In 2002, market research has presented that, Starbucks was failing to meet the customer’s expectations...
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...― 109 ― Toyota and Why It Is So Successful Robert B. Austenfeld, Jr. 1) As of May 2006 GM was still struggling to stay out of bankruptcy. (Received on May 10, 2006) 1. Introduction The purpose of this paper is to describe one of the most successful companies in the world and explain the reasons for that success. Fortune magazine’s February 20, 2006 edition featured this headline on its cover: “The Tragedy of General Motors” and a story of GM’s woes by Carol J. Loomis. Two weeks later, Fortune’s next edition on March 6, 2006 had this headline on its cover: “How Toyota Does It: The Triumph of the Prius.” This stark contrast is typical of the stories circulating in the media these days. At a time when a company that was once admired and for many years held the lofty position of the world biggest automaker appears on the brink of bankruptcy 1) , Toyota is about to overtake it in global sales this year (O’Dell, 2005). Why is Toyota continuing to thrive at a time when other carmakers are struggling to survive? At the outset I would like to acknowledge the main source for much of the information in this paper: The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer by Jeffrey K. Liker (2004). This paper is organized as follows: 1. Introduction 2. The history of Toyota 3. The Toyota Way 4. Summary and conclusionPapers of the Research Society of Commerce and Economics, Vol. XXXXVII No. 1 ...
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...Starbucks: Delivering Customer Service In late 2002, Christine Day, Starbucks’ senior vice president of administration in North America, discovered that the company was not meeting customer expectations and that there was a decline in customer satisfaction. Day attributed the decline in customer satisfaction to a service gap, particularly service speed. Day must decide whether she will proceed with her plan to invest an annual $40 million across its 4,500 company stores. The investment would allow each store an additional 20 hours of labor per week. The objective is to improve service speeds and in turn increase customer satisfaction. We recommend that Starbucks proceed with the investment in labor. Customer service and satisfaction is one of Starbucks’ core competencies. If Day does not address the decline in satisfaction levels, Starbucks can potentially dilute its brand and ultimately lose market share reversing the sales growth achievements attained in the last eleven years. Starbucks’ Success In the last decade, Starbucks had consecutively achieved 5% or higher in comparable store sales growth. This success was due to several factors, primarily to its value proposition. Starbucks’ value proposition consisted of three components: the quality of coffee, the service provided, and store atmosphere. Starbucks prided itself in serving the highest-quality coffee in the industry. To maintain its coffee exacting standards, the company strived to control as much of the...
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...Q1. ANALYSE STARBUCKS USING THE COMPETITIVE FORCE AND VALUE CHAIN MODELS. Before the 2008 economic downturn Starbucks offers a unique experience, high-end speciality coffee and beverages, friendly and knowledgeable servers and customer friendly coffee shops. This was the winning formula for many years and enabled Starbucks to charge premium-prices. During the economic downturn, customers complained that the company had lost its hip, local feel and had become more like a fast food chain. The company also realised that its profits had reduced, and there was a need for major changes. Starbucks had to use different business strategies simultaneously in order to remain at competitive level. First, Starbucks revamped its in-store technology which sought to integrate its business processes with wireless technology and mobile digital platform. Starbucks engaged in the mobile digital platform when the company realized that over a third of its customers were smart phone owners. Knowing this, Starbucks implemented a technology that allows customers to pay using the smart phone application. This application allows regular customers to top up their Starbucks pre-paid cards and use them at any Starbucks branch to pay for their drinks by scanning the bar codes displayed on their phones. Using this application to pay was much faster than the traditional forms of payment. Starbucks also pursued a more aggressive product differentiation strategy by emphasizing on high quality of their drinks...
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...consecutive year seemed to support Schultz’s belief that Starbucks was close to a recession proof product, however market research findings appeared to portray a different picture. According to research findings, Starbucks was not always meeting customers’ expectations in terms of customer satisfaction. Planning to take corrective action in order to improve speed-of-service and thereby increasing customer satisfaction Day and her colleagues were evaluating whether investing an additional $40 million annually in the company’s 4500 stores was a profitable plan. Starbucks’s success is attributed to their successful focus on their brand strategy, which is to create an everyday experience around coffee. This strategy consists of three brand components namely offering high-quality coffee, establishing an intimate relationship with their customers and creating an atmosphere that makes customers feel that they are part of a community. Distribution plays a big role in their success and this statement is supported by the variety of third parties with whom they have built relationships in order to reach the diverse range of consumers, such as retail centres, office buildings (i.e., company-operated stores) and hotels, airlines (non-company-operated channels). Starbucks believes that employee satisfaction leads to customer satisfaction and therefore they empower their employees (i.e., partners) in different ways. As a result Starbucks’ employee satisfaction rate range between 80%-90% and they...
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...Sharma (14PGP062) Choudhari Amit Prakash (14PGP012) Ronit Kumar Jena (14PGP111) Sanjeet Sahu (14PGP112) SO Project Starbucks : Delivering Customer Service | 1. What factors accounted for the extraordinary success of Starbucks during the 1990s? Starbucks success can be determined by the fact that Starbucks enjoyed 11 consecutive years of 5 % or higher comparable sales growth. Starbucks was adding 3 stores each day leading to 5886 stores at the end of FY2002. Sales had increased at the rate of 40% and net income has risen to 50% without investing much in marketing. There are various reasons behind the huge success of Starbucks. Some of them are as follows: * Vision of Starbucks, “third place” helped the company in creating a better relationship between employees and customers. Employees tried to provide experience so that customer feels connected with Starbucks and treat stores as a third place after home or work, a place that mean different things to different people. * Starbucks value proposition was aligned with the need of the targeted customers. Starbucks brand strategy, captured by “live coffee” mantra perfectly reflected national coffee culture. Value proposition had three components, which enhanced overall experience of coffee consumption. * Premium Coffee: Quality of Coffee was the main component of Starbucks success. They believed in offering the highest quality coffee.It sourced coffee from the Africa, Central and South America, and...
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...Starbucks: Delivering Customer value Case Analysis Case facts • 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 between the ages of 25 and 44 • By 2002, there were over 5,000 stores around the globe • The specialty items included strategic alliances with Pepsi Cola to sell alternative beverages, Dreyer’s to develop and distribute a line of premium ice creams, Kraft Foods handled sales of coffee and alternative products to warehouse clubs, and various grocery store chains for their coffee. • Baristas (employees) were encouraged to interact with customers in a friendly and prompt manner, and were paid higher than average wages and benefits. Employees were considered partners and promotions were usually from within the company. • While Starbucks was the largest specialty coffee chain, many other chains competed directly with Starbucks, and many other chains could at any time enter retail specialty coffee sales (e.g. Dunkin Donuts, convenience stores, and many similar retail food stores. • New innovation was based upon partner acceptance. Customers rated the new innovations as being...
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