‡ Starbucks, the dominant specialty-coffee brand in North America, must respond to recent market research indicating that the company is not meeting customer expectation in terms of service. ‡ To increase customer satisfaction, the company is debating a plan that would increase the amount of labor in its stores and theoretically increase speedof-service. ‡ However, the impact of the plan which would cost almost $40million annually on the company s bottom line is unclear.

PRODUCT ‡ Focuses on product innovation ‡ Customization ‡ Deals in four types of products ‡ Coffee beverages, food items, whole bean coffees, equipment and accessories

PRICING ‡ Value based pricing ‡ Premium price & premium product ‡ Starbuck experience ‡ Purchase of fair trade certified coffee ‡ Purchase of highest grade Arabica coffee PROMOTION ‡ Organizing Grand events ‡ Artworks on mugs and T-shirt ‡ Local ambassadors for promotion .

office buildings and university campuses ‡ Ensured at least one store in high traffic areas ‡ 900 licensed stores ‡ Goals to have 15000 international stores .PEOPLE ‡ Employees were referred to as partners ‡ Lowest employee turnover ‡ Best place to work ‡ Generous policy of giving health insurance PLACE ‡ Started stores in retail sectors.

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PHYSICAL EVIDENCE ‡ Large setup of stores all over the world ‡ Well skilled & well trained employees ‡ Ambience is created on universal appeal ‡ More than 5000 stores around the globe PROCESS ‡ Baristas had to undergo rigorous training ‡ Starts from welcoming the customer to taking their feedback ‡ Simplify the beverage process to increase efficiency .

Time during which customer interact directly with a service. Soft Skill Training ³Just Say Yes´ . High Contact Service ± customer visits service facility and remains throughout process.

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Identify and prioritize each customer episode or contact Decide which responses will delight the customer Strive to provide breakthrough quality on specific MOT by using personal creativity .

T. .mobile wireless internet Service. Service time.A specific encounter between customer and service provider in which the outcome has proved especially satisfying or dissatisfying for one or both parties. Satisfying SVC (stored value cards). Dissatisfying Customer needs evaluated on their own scales not on customer requirements.

3. 2.Starbucks used a very unique program called the customer snapshot which rated the store on four basic criteria : 1. 4. . service cleanliness product quality speed of service Legendary Service.

‡ Specialty. from back of the line to drink in hand .coffee brand ‡ Customer service oriented to deliver the best service ‡ Consumers can have their drink in the shop or take it away. mail order and delivery ‡ The company`s goal was to serve a customer within three minute.

‡ Enhancing service 1) Company also offer snack. 2) Joint venture with Pepsi-Cola to distribute bottled Frappuccino 3) T-Mobile Hot Spot wireless Internet service . sodas . juice and salads.

game and novelty item equipment .‡ Facilitating service 1) 2) 3) Atmosphere Starbucks` Stored Value Card (SVC) Music CD.

Organizations use the business term CS to measure how their products and services meet or surpass customer expectation In a growing competitive market CS has become a key element of business strategy .

Despite high customer snapshot scores Starbucks realized that they were not meeting expectations in terms of customer satisfaction This was attributed to the service gap between Starbucks scores and customer expectations .

well educated.INITIAL ‡ affluent. white collar patrons between age group 25-44 ‡ Educated people CURRENT ‡ Largest segment: 18-24 years old ‡ Young executives ‡ Lifestyle generation ‡ People who prefer customized beverages .

‡ Provider of 'Premium coffee' ‡ Offers a wide range of specialty coffee ‡ Tagged itself as the 3rd place ‡ Has been positioned as 'High on Quality & High on Price' .

‡ Transcendental ‡ Product based ‡ User based ‡ Manufacturing based ‡ Value based .

‡ What factors accounted for Starbucks success in the early 1990s and what was so compelling about its value proposition? ‡ What brand image did Starbucks develop during this period? .

1. Success factors ± 3 min service ± Product mixes ± Wide reach (distribution) ± Accessible and consistent ± No advertising expense ± Positioning ± Public issue ± Target audience .

Value proposition Brand Strategy .atmosphere .Mantra of live coffee .Coffee .service . Components .2.

good coffee on the run .always feel welcomed .3. Brand image .widely available .place to meet and move on .everywhere: the trend .

‡ Why have Starbucks customer satisfaction scores declined? ‡ Has the company service declined Or is it simply measuring satisfaction the wrong way? .

1. Declined customer satisfaction ‡ Customization of drinks ‡ Delay in service ‡ Customer perception ‡ Service gap ‡ Little product differentiation (smaller coffee chains) .

Measurement of satisfaction in wrong way ‡ Customer snapshot ‡ Legendary service ‡ No strategic marketing group ‡ Changed customer base too late to realize .2.

‡ How has Starbucks changed since its early days? .

‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Owns close to 1/3 America s coffee bars Number of coffee shops increased Customer base changed Service innovation Product innovation Corporate Known for specialty / gourmet coffee Lowest employee turnover rates .

‡ How valuable to Starbucks is a highly satisfied customer? ‡ What would it take to ensure that this customer is highly satisfied? .‡ Describe the ideal Starbucks customer from a profitability stand point.

Working class .Ready to experiment .Brand loyal .1.Referrals . Ideal customer .Stored Value Card user .Frequent visits .

ambience .2.speed of service .cleanliness .consistent prices . Ensuring satisfaction .convenience orientation .service .product quality .

‡ Should Starbucks make the $40 million investment in labor in the stores? ‡ What's the goal in this investment? ‡ Is it possible for a mega brand to deliver customer intimacy? .

better and faster service .customer oriented investment .future plan . Goal in the investment .increased customer satisfaction .stronger term relationship .more labor .1.

formation of strategic marketing group .increase in labor force .original value proposition .2. Customer intimacy .

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