Group 6

Vaishnavi bane
Akanksha Patel
Shubham Kumar
Sai ram Charan Kumar
1 QUS
Factor accounted for succuss of star buck
• To set up an expresso bar, inspired by Milan’s coffee culture.
• The aim is to make America’s “third place.”
• They created an experience around the consumption of coffee.
• Employees were called partners. The company offered benefits, which resulted in the company’s partner satisfaction rate
in an 80% -90% range.
• Stable prices and new products were launched regularly. The company also conducted R&D, in-store experiments, and
market tests.
Star buck value proposition
• They offered the highest quality coffee beans sourced from Africa, central and south America, and Asia- Pacific regions.
• The company worked directly with growers.
• The company developed good customer intimacy.
• The ambiance makes customers stay.
• The company’s outlets are located in high traffic and high visibility settings.
• Brand strategy, “live coffee” mantra.
2 QUS
Reason for starbuck customer satisfaction score decline
 The current way of measurement does not capture the correct consumer profile.
 The decline in service level – trained only to please the affluent customers.
 Diluting value proposition
 The rising perception that the primary motive of making money and building more stores.
 Very little image or product differentiation between Starbucks and smaller coffee chains
 The company has hundreds of combinations of coffee, leading to a larger service time and lower customer
satisfaction.
 3 QUS

 A highly satisfied customer visits Starbucks far more often than a merely satisfied customer (7.2 times/month
vs 4.3 times), has a higher tab per visit ($4.42 vs $4.06).
 This translates to an annual spending difference of $381.84 vs. $209.52 . The comparable for an unsatisfied
customer, whose patronage is likely to be relatively short lived, is (3.9 x $3.88 x 12) = $181.56.
 Highly satisfied customers have a customer “lifetime” of 8.3 years, versus only 4.4 years for merely satisfied
customers and a mere 1.1 years for unsatisfied customers.
 The longer a customer remains loyal, the more attractive financially she/he becomes Because long-term
customers may purchase more specialized drinks, require more customized (and therefore more time
consuming) service, and occupy seats in the stores for longer periods, so it may be happened that they may
generate a lower profit margin on each sale.
4 QUS
Star buck 40 million investment calibration
 The primary goal of the proposed $40 million investment is to improve customer satisfaction by increasing
speed of service.
 It will increase in annual operating costs (20hours of extra labor per week per store) that will be incurred each
year—and the total will rise as the number of stores increases—rather than a one-time investment
 Annual value of satisfied to highly satisfied = ($382 – 210) =172
 $40,000,000/$172= 232,558.13
 customers (based on revenues only, not net profits, since excludes direct costs, so actual figures required will
be higher)
 Annual value of unsatisfied to satisfied = ($210 – 182) = $28
 $40,000,000/$28= 1,428,615