m 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.
m To increase customer satisfaction, the company is
debating a plan that would increase the amount of
labor in its stores and theoretically increase speed-
of-service.
m However, the impact of the plan which would cost
almost $40million annually on the company͛s bottom
line is unclear.


m aocuses on product
innovation
m Customization
m Deals in four types of products
m Coffee beverages, food items,
whole bean coffees, equipment
and accessories
 
m ëalue based pricing
m Premium price & premium product
m Starbuck experience
m Purchase of fair trade certified coffee
m Purchase of highest grade Arabica coffee






m ˜rganizing Grand events
m Artworks on mugs and T-shirt
m Local ambassadors for promotion


m Gmployees were referred to as ͞partners͟
m Lowest employee turnover
m Best place to work
m Generous policy of giving health insurance

 
m Started stores in retail sectors, office buildings and
university campuses
m Gnsured at least one store in high traffic areas
m 900 licensed stores
m Goals to have 15000 international stores
 
m Large setup of stores all over the world
m Well skilled & well trained employees
m Ambience is created on universal appeal
m More than 5000 stores around the globe



m Baristas had to undergo rigorous training
m Starts from welcoming the customer to taking their
feedback
m Simplify the beverage process to increase efficiency


 

 




 


 

  

 





  
 

 
 



  
 ½dentify and prioritize
each customer episode
or contact
 Decide which
responses will delight
the customer
 Strive to provide
breakthrough quality
on specific M˜T by
using personal
creativity
 A specific encounter between
customer and service provider in
which the outcome has proved
especially satisfying or
dissatisfying for one or both
parties.
 Satisfying ʹ SëC (stored value
cards), T- mobile wireless
internet Service.
 Dissatisfying ʹ Customer needs
evaluated on their own scales
not on customer requirements,
Service time.
 Starbucks used a very
unique program called
the customer snapshot
which rated the store
on four basic criteria :
1. service
2. cleanliness
3. product quality
4. speed of service
 Legendary Service.
m Specialty- coffee brand

m Customer service oriented to deliver the best service

m Consumers can have their drink in the shop or take it

away, mail order and delivery

m The company`s goal was to serve a customer within

three minute, from back of the line to drink in hand
m Gnhancing service

1) Company also offer snack, sodas , juice and

salads.

2) Joint venture with Pepsi-Cola to distribute bottled

arappuccino

3) T-Mobile Hot Spot wireless ½nternet service

m aacilitating service

1) Atmosphere

2) Starbucks` Stored ëalue Card (SëC)

3) Music CD, game and novelty item equipment

 ˜rganizations use the
business term CS to
measure how their
products and services
meet or surpass
customer expectation
 ½n 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
 
m affluent, well educated, white collar patrons between age
group 25-44
m Gducated people
 
m Largest segment: 18-24 years old
m Young executives
m Lifestyle generation
m People who prefer customized beverages
m Provider of 'Premium coffee'

m ˜ffers a wide range of specialty coffee

m Tagged itself as the 3rd place

m Has been positioned as 'High on Quality &

High on Price'
m Transcendental

m Product based

m User based

m Manufacturing based

m ëalue based
m What factors accounted for Starbucks͛ success
in the early 1990s and what was so compelling
about its value proposition?

m 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
2. ëalue proposition
Brand Strategy - Mantra of ͞live coffee͟.
Components ʹ
- Coffee
- service
- atmosphere
3. Brand image
- good coffee on the run
- everywhere: the trend
- place to meet and move on
- always feel welcomed
- widely available
m Why have Starbucks͛ customer satisfaction
scores declined?

m Has the company service declined ˜r is it

simply measuring satisfaction the wrong way?
1. Declined customer satisfaction
m Customization of drinks
m Delay in service
m Customer perception
m Service gap
m Little product differentiation (smaller coffee
chains)
2. Measurement of satisfaction in wrong way

m Customer snapshot

m Legendary service

m No strategic marketing group

m Changed customer base ʹ too late to realize

m How has Starbucks changed since its early
days?
m ˜wns close to 1/3 America͛s coffee bars
m Number of coffee shops increased
m Customer base changed
m Service innovation
m Product innovation
m Corporate
m Known for specialty / gourmet coffee
m Lowest employee turnover rates
m Describe the ideal Starbucks customer from a
profitability stand point.
m How valuable to Starbucks is a highly satisfied
customer?
m What would it take to ensure that this
customer is highly satisfied?
1. ½deal customer
- arequent visits
- Ready to experiment
- Brand loyal
- Working class
- Stored ëalue Card user
- Referrals
2. Gnsuring satisfaction
- service
- ambience
- consistent prices
- convenience orientation
- cleanliness
- product quality
- speed of service
m Should Starbucks make the $40 million
investment in labor in the stores?

m What's the goal in this investment?

m ½s it possible for a mega brand to deliver

customer intimacy?
1. Goal in the investment
- customer oriented investment
- better and faster service
- more labor
- increased customer satisfaction
- future plan
- stronger term relationship
2. Customer intimacy
- original value proposition
- formation of strategic marketing group
- increase in labor force