...Case abstract Starbucks was founded in Seattle in1971 as roaster and retailer of whole bean and ground coffee, tea and spices in a single store in Seattle’s Pike Place Market. It was named after the first mate in Herman Melville’s Moby Dick. It was incorporated under the law of the State of Washington in Olympia, Washington, on November 4,1985. It went public on June 26,1992 at a price of $17 per share and closed trading that first day at $21.50 per share. In 2011, Starbucks unveiled an alliance with India’s flagship conglomerate ,Tata Group. This alliance is to raise the profile and use of Indian premium Arabica beans in Starbucks stores elsewhere. Nowadays, Starbucks has become the largest coffee company in the world and its headquarter is located in Seattle, Washington. It has entered into a strategic partnership with the maker of Keurig brewers, Green Mountain Coffee Roasters in order to deliver coffee to the fast-growing single serve coffee market. Since the Starbucks VIA instant coffee are successful and popular among the coffee addicted customers, Starbucks now offer its VIA instant brew in its Chinese stores and other countries. Starbucks is opening more than 100 new stores in 2011 in Brazil, the second largest coffee-consuming country in the world. In early 2011, it has a total 16,635 stores in 50 countries, including 500 stores in Tokyo and 500 in London. Starbucks’s sales also had leap-frogged the company past Burger King and Wendy in early 2011. But , it was...
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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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...What factors accounted for the extra-ordinary success of Starbucks in the early 1990s? 1. by 1992 Starbucks had 140 stores and was competing against small scale coffee 2. Starbucks went public in 1992 which helped them raise 25 million, allowing expansions to continue. 3. Almost no spending in marketing 4. Controlled supply chain – enforcing standard quality 5. Focused on service and the partners 6. Created ambiences with universal appeal 7. Company operated stores, not franchises which usually lack on quality standards 8. Location location and location! 9. Branched and started serving other products ( sodas, pastries, juices etc…) 10. Distributed through other channels – food service, domestic retail, partnerships, online and mail. 11. Taking care of the partners ( health insurance and stock options, promoting from within) Many factors accounted for the extra-ordinary success of Starbucks in the early 1990’s. Starbucks owns nearly one-third of America’s coffee bars, which is more than its next five biggest competitors combined. Almost all of Starbucks’ locations in North America are company-owned stores located in high-traffic, high-visibility settings such as retail centers, office buildings, and university campuses. This made Starbucks a very convenient coffee bar because of the many different locations. Starbucks also worked to add more depth to their product in the coffee shops. In addition to selling whole-bean coffees, these stores sold rich-brewed coffees...
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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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...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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...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 market is extremely positive. Coffee...
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...The strategic capabilities involves to what extent Starbucks is able to use it resources and competences wisely and which capabilities are creating a competitive advantage. First, a model is made to select the resources from the competences and the unique resources and threshold resources. From these the core competences can be created and implemented in the VRIN-model. Resources Competences Treshold capabilities Treshold resources ● Financial resources ● Suppliers ● Stores ● Equipment ● Staff ● Worldwide stores in more than 60 countries Treshold competences ● Always say yes to the customer ● Personal service Capabilities for competitive advantages Unique resources Tangible ● Coffee ● Located world wide ● Technological resources ( Starbucks app) Intangible ● Brand/Trademark ● Atmosphere ● Word to mouth(online) ● Schooling program ● Loyalty program Core competencies ● Most recognized brand in the coffeehouse industry ● Exceptional customer services achieved through employee motivation ● Focus on high product quality ● Customer loyalty ● High CSR image Table *.* Resources, capabilities and competences of Starbucks With the table above, the core competences can be put in the VRIN-model to see if they have a competitive advantage. Resources and capabilities of Starbucks Is it valuable? Is it rare? Is it hard/costly to imitate? Is it non-substitutable? Competitive implication Located World Wide ( stores in 60 countries)...
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...1. Case Problem statement In a recent market research study, Starbucks has found itself to be below expectations with respect to customer satisfaction. To rectify this, Starbucks plans to invest 40 million in increasing manpower of its baristas by 20 man-hours per week per store. 2. Case History In 90s, Starbucks created an exceptional value proposition for its brand, resting upon three resounding pillars namely premium quality coffee, service and atmosphere. The first key element was high-quality coffee. Starbucks sourced its coffees from all over the world and had tight control on its supply-chain activities spanning over growers, roasters and distributors in a bid to deliver both quality and quantity. It also strived towards repeated product innovation, evidenced through examples such as the seasonal introduction of new coffees, strategically partnering with PepsiCo to target the lucrative ‘ready-to-drink’ coffee market, offering innovative product mixes at their stores depending on store size and location to increase walk-ins and many more. The second element was service and Starbucks’ key focus was on customer intimacy which it fulfilled through training its ‘partners’ for developing both hard & soft skills - essential requirements to deliver both efficient customer-service along with an ‘uplifting experience’ for the customer. The third key element was to create an ‘ambience’. Starbucks stores were ‘upscale yet inviting’ and strategically designed to encourage...
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...Starbuck Case Analysis Starbuck Case Analysis Company Statement Starbucks, one of the most successfully coffee companies in the world, has been committed to ethically sourcing and roasting the highest-quality coffee in the world. And Howard Schulte, the CEO of Starbuck, explained Starbuck’s long vision as: an idea which was to create a chain of coffeehouses that would become America’s “third place.” Integrated view, Starbuck’s strategic intent captures the essence of winning. Starbuck want to put “high-quality coffee” into “the third place of customers”. The “product” and the “customer” are the two main essences that lead a company to success. As long as you serving the best product to satisfy and attract customers, you will be the winner in the market. In addition, Starbuck‘s strategic intent not only set the long-term goals for the company to achieve, but also provides consistency to short-term actions. “We need to introduce a new hot beverage this quarter.”, “We need to self-cannibalize the store in West Palm Beach today”: both of the two short-term goals completely meet company’s strategic intent. At last, I think Starbuck’s strategic intent gives its employees a strong goal that is worthy of commitment: we are the employees of Starbuck; we should give the customer’s best coffee and make them like our store as their “third place” to come together. Line of Business Starbuck expanded its stores in many locations which are high-traffic, high- visibility settings...
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...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...
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...Starbucks Delivering Customer Service The 40 million dollar question Case Description Since 1971, Starbucks Coffee Company has been committed to sourcing and roasting the highest quality Arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee across the universe. Through its commitment to excellence they bring a unique experience to coffee drinking. In 2002, Starbucks faced a challenging task when looking at customer research data that suggested – among other things – that the speed of delivery lagged behind industry standards, and the company’s vice president of administration came up with a plan to invest $40 million into adding more staff to all shops across America. Would this be the right thing to do? Suggestions 1. Assuming that Starbucks should increase their labor hours by adding more staff in all existing coffee shops, and by doing this expecting faster speed of service and hence higher returns is not the right assumption. a. Need for geographic breakdown of data: The data we have in the area of customer satisfaction is an aggregate data for the whole of the United States. Management probably would be wise looking at this data in a detailed breakdown per (at least) separate States and Counties. It might be that the customer satisfaction figures are fine in some business units and the investment for labor would not help sales in some shops at all. b. Change in assumptions:...
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...Group 10 MARK247 Case: Starbucks Questions for Discussion 1. What factors accounted or 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? (team 9, 10 & 11) • Factors: It is own value, creating an uplifting experience every time customers walk through the door; located in high traffic, high visibility, retail centre. Innovation e.g. set up an espresso bar in their downtown Seattle shop. Specialty coffee, premium, 50% sales of beans. Relax consumer – intimacy – baristas, knowing customer’s name and drink hard skills & soft skill; atmosphere furnishing, music, aroma. • Value proposition: 1) coffee offering highest quality, lots of control over supply chain; 2) service customer intimacy, loyalty of customers, customizing drink in their way; 3) atmosphere providing an upscale yet inviting environment. • Tight value proposition for well defined market: customer patterns stay for a while (linger/ hangout), rituals: read magazine/ do puzzle, chat; established customers coffee fanatics, 24-44, white collar, well educated, affluent, female; brand perceptions/ image escape: a 3rd place, premium coffee, affordable luxury. • Brand image: sense of community, everywhere – the brand, good coffee on the run, place to meeting and move on, convenience oriented - on the way to work, accessible and consistent...
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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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...Case: Starbucks Questions for Discussion 1. What factors accounted or 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? • Factors: It is own value, creating an uplifting experience every time customers walk through the door; located in high traffic, high visibility, retail centre. Innovation e.g. set up an espresso bar in their downtown Seattle shop. Specialty coffee, premium, 50% sales of beans. Relax consumer – intimacy – baristas, knowing customer’s name and drink hard skills & soft skill; atmosphere furnishing, music, aroma. • Value proposition: 1) coffee offering highest quality, lots of control over supply chain; 2) service customer intimacy, loyalty of customers, customizing drink in their way; 3) atmosphere providing an upscale yet inviting environment. • Tight value proposition for well defined market: customer patterns stay for a while (linger/ hangout), rituals: read magazine/ do puzzle, chat; established customers coffee fanatics, 24-44, white collar, well educated, affluent, female; brand perceptions/ image escape: a 3rd place, premium coffee, affordable luxury. • Brand image: sense of community, everywhere – the brand, good coffee on the run, place to meeting and move on, convenience oriented - on the way to work, accessible and consistent. 2. Why have Starbucks’ customer...
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...factors accounted for the extra-ordinary success of Starbucks in the early 1990s? Many factors accounted for the extra-ordinary success of Starbucks in the early 1990’s. Starbucks owns nearly one-third of America’s coffee bars, which is more than its next five biggest competitors combined. Almost all of Starbucks’ locations in North America are company-owned stores located in high-traffic, high-visibility settings such as retail centers, office buildings, and university campuses. This made Starbucks a very convenient coffee bar because of the many different locations. Starbucks also worked to add more depth to their product in the coffee shops. In addition to selling whole-bean coffees, these stores sold rich-brewed coffees, Italian-style espresso drinks, cold-blended beverages, and premium teas. Product mixes vary depending on the stores size and location; however, most stores offer a variety of pastries, sodas, juices, coffee-related accessories and equipment, CDs, games, and seasonal novelty items. Starbucks also sold products through non-company-operated retail stores such as hotels, airlines, and restaurants. Additionally Starbucks formed joint ventures to distribute a bottled frappuccino thru Pepsi-Cola and an ice cream thru Dreyer’s Grand Ice Cream. This allowed the Starbucks’ brand to be recognized not only in freestanding Starbucks stores, but also throughout other channels as well increasing their brand awareness. Starbucks worked very had to expand the number of retail...
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