INDIVIDUAL REPORT

STARBUCKS: Delivering Customer Service

The case begins with Christian Day, Starbuck’s SVP in North America with
the statement:
“We always have taken pride in our retail service but according to the data, we are not
always meeting our customers’ expectations in the area of customer satisfaction”

Questions:
1. The vital data Ms Day is referring to is the changed in customer behavior and
habits that competitors of Starbucks in the coffee shop industry now offer a
value proposition that poses a threat to Starbucks successful value proposition.

One major reason of Starbucks’ success is a tightly-integrated, highly-

differentiated value proposition that is carefully aligned with a well-conceptualized
target market.

What are the three elements of Starbucks’ original value proposition so

differentiated compared to alternatives for coffee consumers at the time when
Starbucks was introduced.
Explain briefly (few sentences) why they are so compelling to coffee lovers.

2. A consequence of a tightly aligned value proposition was the emergence of a set

of consumption patterns and behavior associated with Starbucks’ target market.
Describe briefly how the consumers indulge themselves by paying a premium
price for a premium coffee “lifestyle” that Starbucks was trying to promote. You
have to describe the consumer behavior as a reflection of the so called
“lifestyle”.

3. (Case setting: 2002) Overtime, the market research team discovered that
Starbucks’ customer base was evolving. The new customers tended to be
younger, less affluent, and less sophisticated than its original customers, and
they undoubtedly brought an entirely different set of expectations to the value
proposition. In many ways, Starbucks is experiencing the “curse of success” –
 its stellar growth has resulted in an expansion of its customer base, to the point
where its customers now include a growing number of people who were not part
of Starbucks’ original target market.

Continuation of question no. 3.

On the market research report on Exhibit 8, it is apparent that the new market
segment has created new tensions at Starbucks because it has brought a
different set of consumption patterns as compared to the original customers.
Review your answer on no. 2. and insights drawn from Exhibit 8
The above brings us back to the issue raised by Christian Day at the beginning of
the case. The question is: “why are we not always meeting our customers’
expectations in the area of customer satisfaction?”

. Note:
 The basis of your discussion should be confined only on the case facts.
You are not allowed to search the internet for additional information.
 Limit your type written report to a maximum of two pages only. One page
is ok if you can do it.
 The format of your report should be in the same order as the number of
the questions. For clarity of presentation, put the number of your answer
corresponding to the question you are answering.