...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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...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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...John Kuechly Marketing 550 Fall 2014 Case 3: Starbucks: Delivering Customer Service 1. What factors accounted for the extraordinary success of Starbucks in the early 1990’s? a. What was so compelling about the Starbucks value proposition? b. What brand image did Starbucks develop during this period? Many factors accounted for the success of Starbucks. Some of these factors include the many locations around a given urban area, the variety of products, and how Schultz set out to create Starbucks as the “third place” for Americans. Due to the high volume of stores in a given area, people are able to stop by for their daily fix of Joe wherever they may be. If a businessman is walking through an airport, he could stop by the CVG location. A soccer mom could be driving down Reed Hartman Highway and get a coffee at the intersection of Cornell and Reed Hartman. Students at either XU or UC could stop by various locations around their respective campuses as well. Besides selling the regular black coffee, Starbucks capitalized on innovating new items each holiday season. Every fall and winter season, Starbucks launched new hot products for customers. This diversification allowed more people to shop at Starbucks if they had a different preference for their coffee. Finally, Schultz’s platform of making Starbucks the “third place” for Americans is what lead to Starbucks’ compelling value proposition. A. Starbucks was keen on keeping alive the coffee bar culture alive...
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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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...STARBUCKS: DELIVERING CUSTOMER SERVICE In 1992 Starbucks vision was to become the “Third Place” (home, work and then Starbucks). The value proposition was based on high quality coffee, high service standards and customer intimacy all offered in a relaxed and comfortable atmosphere. The positioning was meant to appeal to a niche market of highly educated affluent customers predominantly female between the ages of 24-44 years. Starbucks did not have a dedicated marketing strategy, but the function was performed by three separate groups with little coordination. In the words of Chistine Day everybody had to perform marketing as part of their job. This meant that they weren’t strategic in their approach and while they were hugely successful over the next decade, by 2002 there were some widening gaps between Starbucks vision and their market survey results. Christine Day realized they had failed in terms of “customer intimacy”; their customer base had changed, yet they hadn’t realized this. Additionally their service level had fallen, with a concurrent increase in the technical and rigorous demands of the barista’s job. The entry strategy into China similarly positioned Starbucks as an elite and ubiquitous brand. In the east and particularly in China, status is an integral part of the culture. Starbucks positioning would therefore appeal to the burgeoning masses of young well educated and affluent class of Chinese society. This market segment had growing purchasing power and an...
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...Final Strategic Plan: Starbucks Debbie Pryer, MGT578 Strategy Formulation and Implementation University of Phoenix Table of Contents Executive Summary 3 Company Background 4 Vision Statement 4 Recommended Vision Statement 5 Mission Statement 5 Values Statement 7 Environmental Analysis 7 Long Term Objectives 14 Strategic Analysis and Choice 15 Plan Goals and Implementation 18 Financial Projections and Analysis 20 Critical Success Factors 24 Controls and Evaluation 25 Conclusion 26 References 28 Executive Summary Starbucks Coffee Company, Seattle, Washington, is in an enviable position – high growth, few competitors, strong financials, loyal customers, talented management and employees, and brand recognition – so why create a strategic plan? The company faces many threats and opportunities, and if Starbucks wants to continue its success story, a strategic plan will help them continue to achieve stellar results. Starbucks’ vision is to have coffeehouses in every neighborhood around the world, and will continue to grow by finding and delivering the world’s best coffee to the world’s best customers without compromising our world-class principles. An internal analysis shows Starbucks has more strengths than weaknesses, while an external analysis points to several threats and many obvious opportunities. The key is in choosing the right strategies to minimize threats and maximize opportunities. Starbucks should focus on the following three strategies:...
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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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...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 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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...Starbucks Student Name Course Instructor Date Starbucks The Starbucks Corporation has enjoyed phenomenal growth since its early days in 1971 as a quaint coffee shop in Seattle, Washington. The rise of Starbucks can be directly attributed to the following factors; the emphasis placed on product quality, high employee standards, and creating the perfect cup of coffee (Coffee.org, 2013, pg.1). Starbucks has a reputation of caring about the community, environment, and people. “We aim to foster a better future for farmers and a more stable climate for the planet. Doing this helps create a long-term supply of the high-quality beans we’ve been carefully blending, roasting and packing fresh for more than forty years.” (Starbucks, 2013, pg.1). The company has a loyal customer base willing to pay premium prices for Starbucks products. Starbucks has strategically located its stores in the community, which is a competitive advantage. Starbucks is ahead of most competitors when it comes to financial strength and profitability. One of the strongest advantages of Starbucks they have years of experience delivering quality blended, premium coffee to its customers that are met with a warm atmosphere, which results in incomparable customer service. Starbucks products may be more expensive than those offered by the competition, however, their customer service, different brands of coffee and community connections offset. The customers of Starbucks have shared the experience as a community...
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...Association (AMA) defines marketing as the following; “Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” (SmallBusinessBranding, 2008) The above definition of marketing provided by the AMA in 2004 is slightly different than its new, revised definition; “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” (SmallBusinessBranding, 2008) The last, revised definition holds more value to the current definition of marketing due to developments of media and social networking platforms. The wide variety of channels available to consumers and the ways in which information is presented has greatly broadened the concept and view on business marketing. The course text defines marketing as; “Performing activities seeking to accomplish an organizations objectives through the anticipation of customer needs and directing the flow of need satisfying goods and services from producer to client or customer.”(Basic Marketing, page 6, 2009). In terms of organization success, marketing is important in that it creates a basis for delivering and promotions of goods and services within a creative and flexible environment....
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...zz 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...
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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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...Starbucks: Delivering Customer Service Case Study, BEP 430 Marketing 20030059 Dong-ock Kim1, 20030071 Min-geuk Kim2, 20040054 Keehyung Kim3, 20040535 Yohan Jo4, 20076006 Huang Qiuling5, 20076035 Dorjsuren Bayarmaa6 Marketing Team A1 2 3 4 5 6 erst_licht99@hotmail.com1, kmg0702@hanmail.net2, keehyoung@gmail.com3, zukjimote@gmail.com4, sharlin_huangqiuling@hotmail.com5, gordok_88@yahoo.com6 Professor: Wonjoon Kim Date submitted: May 7, 2007 TO: Day, vice president of administration in North America, Starbucks FROM: Dong-ock Kim, Min-geuk Kim, Keehyung Kim, Yohan Jo, Huang, Qiuling, Dorjsuren Bayarmaa RE: Starbucks: Delivering Customer Service DATE: May 7, 2007 Market Analysis Starbucks provides the highest-quality coffee what it believes in the world. It has hundreds of product lines and the sales of beverage take the largest percent. Despite of Starbucks’ overwhelming presence and convenience, customers think there was just a little of image and product differentiation between Starbucks and the smaller coffee chains. However, Starbucks has an uncomplicated distribution strategy, and it tries to make customers get entrance to Starbucks products easier and provide more convenience to customers. Moreover, it has company-operated stores located in hightraffic and high-visibility and non-company retail channels. In addition, Starbucks has four major competitors. Minneapolis-based Caribou Coffee which provides the look and feel of an Alaskan lodge has more than 200 stores...
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