...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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...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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...“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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...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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...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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...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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...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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...9-504-016 REV: JULY 10, 2006 YOUNGME MOON JOHN QUELCH Starbucks: Delivering Customer Service In late 2002, Christine Day, Starbucks’ senior vice president of administration in North America, sat in the seventh-floor conference room of Starbucks’ Seattle headquarters and reached for her second cup of toffee-nut latte. The handcrafted beverage—a buttery, toffee-nut flavored espresso concoction topped with whipped cream and toffee sprinkles—had become a regular afternoon indulgence for Day ever since its introduction earlier that year. As she waited for her colleagues to join her, Day reflected on the company’s recent performance. While other retailers were still reeling from the post-9/11 recession, Starbucks was enjoying its 11th consecutive year of 5% or higher comparable store sales growth, prompting its founder and chairman, Howard Schultz, to declare: “I think we’ve demonstrated that we are close to a recessionproof product.”1 Day, however, was not feeling nearly as sanguine, in part because Starbucks’ most recent market research had revealed some unexpected findings. “We’ve always taken great pride in our retail service,” said Day, “but according to the data, we’re not always meeting our customers’ expectations in the area of customer satisfaction.” As a result of these concerns, Day and her associates had come up with a plan to invest an additional $40 million annually in the company’s 4,500 stores, which would allow each store to add the equivalent of 20 hours of...
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...Services Marketing Starbucks : Delivering Customer Satisfaction Section B, Group 6 STARBUCKS: DELIVERING CUSTOMER SERVICE 2011048 Rahul Rajiv Sagrolikar 2011158 Lakshmi M 2011177 Umair Khalid Siddiqui 2011157 Kunjal Kiran Kapadia 2011238 Sumeet Raina Services Marketing Starbucks : Delivering Customer Satisfaction Section B, Group 6 What factors accounted for the extraordinary success of Starbuck's in the early 1990's? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period? Starbucks initially used an aggressive generic strategy of focus to take advantage of this small portion of the overall coffee market and eventually transitioned into a strategy of differentiation. The first factor which aided their success was their first mover advantage. Starbucks’ aggressive expansion plan was more ambitious than any other specialty coffee retailer. In the first year of their expansion, fiscal year 1988, Starbucks more than doubled the 11 base stores they operated by opening 15 new stores in the Pacific Northwest. From there, they proceeded to open 20 stores in 1989, 30 stores in 1990, 32 stores in 1991 and 53 stores in 1992, for a total of 150 stores in a five-year period. In order to ensure a reputation for quality and customer service Starbucks, did not adopt franchising, instead maintaining company control of all new stores. Throughout the 1990s the proportion of the workforce who...
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...1. In the beginning, Starbucks is originally a company that sold high quality coffee. However, the factor that can make Starbucks become much popular as today is many services provided along with the products in order to “enhance the quality of everything the customer see, hear, touch, smell or taste”. Nowadays, Starbucks is known as a famous brand for providing beverage with high-quality service for customer. It could be considered as Service as experiences and the price would be charged for the feeling that customers derive from engaging in the service. For example, beside the core value, there are many different experiences that Starbucks bring to their customer, such as: planning to expand the list of its menu by serving hot breakfast, developing Starbucks Card and Starbucks Express as well as high-speed Wireless Internet. In conclusion, Starbucks is much more a service than a product. 2. The first principle of service is Intangibility. It is implied that service cannot be patented easily and can be copied by the competitors. Therefore, companies can study a successful model to apply for themselves. Even the first idea for business model of Starbucks is come after its Marketing Director visits an Italian coffee shop. Of course, it should not be imitated the whole model. There should be adjustment and improvement (about the price also) to make it suitable with your own situation. It means the most important part is differentiating yourself when comparing with other company...
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...STARBUCKS : Delivering Customer service 1. Introduction 2.1 Background to the issue 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? 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? 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. Competition: Starbucks is clearly ahead of its competitors in terms of size of operations and profitability...
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...Starbucks: Delivering Customer Service I. Intro & Background Since 1971, Starbucks enjoyed great success based on its’ explicit core values of delivering high quality coffee, outstanding customer service, and a relaxed atmosphere. In the last 11 years, despite the post-9/11 recession, Starbucks experienced 5% or more store sales growth. The vision of the owner, Howard Schultz, was to create a chain of coffeehouses that would become America’s “third place”, a place for people to go and relax, enjoy others, or spend some quiet time alone. In the United States, Starbucks not only competed against small-scale specialty coffee chains, but also the thousands of independent specialty coffee shops and donut/bagel chains. Starbucks’ overall goal was to establish Starbucks as the “most recognized and respected brand in the world.” II. Problem Statement Recent research conducted for Starbucks reflected declining customer satisfaction, which was directly linked to customer loyalty. To correct this issue, Christine Day suggested a plan to add an additional $40 million annually for an extra 20 hours of labor per every store in an effort to improve speed-of-service and thereby customer satisfaction. III. Analysis The Starbucks customers in 2002 were on average men, age 36, without a college degree, and with an income of about $65,000. This customer drank about 15 cups of coffee/week. The new customer is younger, less educated, has a lower income, and drinks less coffee than the average...
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...STARBUCKS: DELIVERING CUSTOMER SERVICE Brief Introduction • Founded in 1971 by three coffee fanatics- Gerald Baldwin, Gordon Bowker & Ziev Siegl • Schultz joined the marketing team in 1982 • Later, the founders sold the entire business to Schultz • By 2002, it served 20 million unique customers in 5000 stores across the globe • Sales had a CAGR of 40%, while Net Earnings had a CAGR of 50% Key people in the CASE: VP of Administration in North America: Christine Day CEO: Orin Smith (A Harvard MBA who joined 1990) Chairman & Chief Global Strategist: Schultz Problem Statement Starbucks failed to meet customer expectations and deliver satisfaction thereby losing customer loyalty whether to invest the $40 million dollars to enhance the labour in each store? If invested, how it will impact the sales and profitability? Factors responsible for the early success of Starbucks Experiential Branding Strategy consisting of the three major components: • High quality coffee- It monitored roasting process to distribution around the world • Service- Provide intimate and uplifting experience each time • Atmosphere- Friendly environment with universal appeal, encouraged lounging and layouts Other factors that contributed the early success includes: • Attractive Market- Unexploited without strong competitors • Partner Satisfaction- High satisfaction rate(80-90%) & low turnover rate • Company’s Distribution strategy and location of stores- high traffic & high visibility Core Value Proposition...
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