CASE ANALYSIS:

- Company was started in 1971 in Seattle, Washington

- Starbucks is present in more than 55 countries with nearly 17000 stores, and it is in
constant expansion. The first Starbucks location outside North America opened in Tokyo,
Japan, in 1996
- In 2010, Starbucks had over 137,000 employees worldwide.
- Products sold include:
o beverages
o coffee-related retail items
o pastries
o whole coffee beans
- Sales climbed at an annual compound growth rate of 40% and net earnings to 50% since
Starbucks went public.

- Good strategic alliances with Pepsi-Cola and Kraft foods to distribute some of their products

- Lowest employee turnover rates in the industry (just 70% as compared to 300% the average of
the fast food industry)

- Introduced mobile payments and eGifting on our Facebook page.

- Developing a world-class consumer products business that will give us the capability to
build brands and distribute them ourselves into grocery stores.

- Opening 100 to 200 stores annually in the U.S. for quite some time. The growth
internationally will be much greater, especially in Asia

 The Starbucks Value Proposition

- To create an “Experience” around the consumption of coffee, an experience that People would
weave into their lives

- To create an uplifting experience in “Customer intimacy”

- To create an “Ambience” based on human spirit, sense of community, and the need for people to
come together

 Factors accounted for the extraordinary early success

- Experiential branding strategy.

- Reach.

- Product variety.
 - Customer service.

- High quality coffee.

- Starbucks’ transformed coffee consumption from a picking behavior to an experience

with high credence attribute

- Both growth and profitability are dependent on profit margin and sales volume.
Starbucks' clearly recognize this and thus they spend their marketing resources
attempting to focus the attention of consumers

 Why has starbucks CSI score declined?

- Customer satisfaction gap could primarily be attributed to the service gap between
Starbucks
- Scores on key attributes and customer expectation .
- As per above model, Starbucks is measuring customer satisfaction parameters which
really do not fall into CSI measurement category.
- Starbucks is measuring parameters that attribute to product quality rather than service
quality.

SUGGESTIONS:

- Investment is required to increase the speed of service : It would have an impact on

increased customer satisfaction, thereby leading to increase in sales
- Alter the product mix : Determine change depending on store size and location of the
outlet (demographics)
 sample to find out what customers mainly look for
 sample data results would narrow the customization
- Service performance could be measured on the parameters like service, cleanliness,
product quality, speed of service
- Retail Expansion:
o opening new stores in existing market
o opening geographically cluster stores in existing markets
- Additional labor hours, research efforts needed to increase efficiency through set-up and
equipment (e.g. automated espresso machine, specialized work stations)

- Product innovation: It should be the priority of management given that the prices were
stable in recent years
- Service innovation: Company’s stored value cards, such as the Starbucks Card, and gift
certificates are recognized when tendered for payment, or upon redemption
- Proactively conduct an environmental scan to launch new products
 Role of communication:
- Facilitate customer involvement
- Help customers to evaluate service offerings
- Promote the contribution of service personnel

- Fear of tarnishing brand reputation with customers or employees and suppliers can
suppress the desire to pursue ideas that promise to "stretch" the brand.
- Marketers rely on customers to tell them whether a new offering can fit within their
understanding of the brand. Consumers would embrace the idea or not is probably a
matter more of spending and awareness than brand fit.
- New logo:Dropping the ‘Starbucks Coffee’ wordmark, the company attempts to position
itself to market new product line—over the past few years Starbucks has dabbled
in music, ice cream, and even wine.
- Established brand name and high-quality coffee for Starbucks controlled as much supply
chain from various countries as possible.
- They need to continue with the quality of service and standard to retain their loyal
customers.
- They should promote the using social media marketing to create brand awareness and
involve customers in generating new ideas.