STARBUCKS

Research on case of Service

Excellence & Failure

Presented By
Paridhi Maheshwari
Shailendra Pratap
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 Case Study
Case Study

Thanks to waves of Italian and Greek immigrants in the early 1950s,

Australia adopted the art of espresso-drinking-as-a-social-lubricant
much earlier than the United States. While Starbucks introduced
Americans to a European Lite version of coffee shop culture, in
Australia it was a latecomer to a party no one invited it to. Australia
already had a well-established cafe culture based on espresso when
Starbucks arrived. It had to compete with cafes that provided a
similar product of equal or better quality.”
Unlike almost every other country in the developed world, Australia
does not do Starbucks. The international coffee monolith launched
its first Sydney cafe in 2000 before opening a further 84 outlets
across Australia’s eastern coast. Just eight years later, it had stacked
up $143 million in recorded losses and was forced to close 60
stores. 2
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Reasons for Starbucks Failure in Australia
Australia’s Sophisticated Coffee Culture

Australian cafe market is the only

country, with New-Zealand, outside
Italy with 100% espresso-based
markets in the world.
Comparing to the United States
and other countries mostly
dominated by filter style, or brewed
coffee.
It never serves coffee that has
been sitting for longer than 30
minutes.
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 Reasons for Starbucks Failure in Australia
Aggressive Growth Strategy
 Australia has a fantastic and rich coffee culture and companies like
Starbucks really struggle to compete
 Lack of understanding local culture is even more evident in
Starbucks entry into Australia
 The international coffee monolith launched its first Sydney cafe in
2000 before opening a further 84 outlets across Australia’s eastern
coast

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Reasons for Starbucks Failure in Australia
Understanding the Market
 Lack of understanding local culture is even more evident in
Starbucks entry into Australia. 
 The Australians were not impressed by the Starbucks coffee
culture.

 Unfortunately, Starbucks continued to grow their troubled

business until finally disaster struck. 6
 Reasons for Starbucks Failure in Australia
Product Taste and Pricing
 The tastes of Australian are way different than Americans as they experience the
café culture before Starbucks.
 The major thing Starbucks failed to do is to make their product market suitable
and perfect pricing.
 The quality of the coffee and other products are so much standardized and
refined. Also, the design of the coffee is handcrafted by the employees.

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 Reasons for Starbucks Failure in Australia
 The perception of the staff that worked in Starbucks was also often
compared to the workforce of the smaller brands and boutique
coffee shops – the public did not feel they were knowledgeable
enough about what they were selling.

 Not only that, but as Starbucks did not advertise in the mass media
- relying instead on its reputation- It failed to communicate its
brand.

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 Conclusion
Starbucks failed to assess the local culture of Australia.
Unfortunately, Starbucks continued to grow their troubled
business until finally disaster struck. If Starbucks is to succeed
internationally they must realize that convergence is not
applicable in all coffee markets. Starbucks would be wise to
conduct local market surveys and SWOT analysis specific to each
region they are trying to enter. Globalization is an opportunity for
companies like Starbucks to prove to local cultures that they value
their customs, norms, and traditions. If they do this, success will
surely follow.

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 CASE STUDY
STARBUCKS: DELIVERING CUSTOMER SERVICE

Starbucks, the dominant specialty-coffee brand in

North America, must respond to recent market
indicating that the company is not meeting customer
expectations in terms of service. To increase customer
satisfaction, the company is debating a plan that
would increase amount of labor in its stores and
theoretically increase
speed of service.
 STARBUCKS VALUE PROPOSITION
Starbucks’ brand strategy was best captured by its “live coffee” mantra

From a retail
perspective, this meant
creating an
“EXPERIENCE”
3. ATMOSPHERE 3 Components 1. COFFEE

2. SERVICE or
CUSTOMER INTIMACY
 MEASURING SERVICE PERFORMACE
SERVICE CLEANLINESS PRODUCT QUALITY SPREAD OF SERVICE

•Was the store

•Did the register •Was the order How long did the
clean?
partner verbally filled accurately? customers wait?
greet the customer?
•The counters?
•Was the
•Did barista and temperature of
•The tables?
register have eye drink within range?
contact? Say “Thank
•The restrooms?
You”? •Was the beverage
properly presented?
 COMPETITION FACED BY THE
BRAND
CARIBOU COFFEE
PEET’S COFFEE & TEA
DUNKIN DONUTS
INDEPENDENT SPECIALTY COFFEE SHOPS
 STARBUCKS’ BRAND MEANING
• INDEPENDENTS
- Social and inclusive
- Diverse and intellectual
- Artsy and funky
- Liberal and free spirited
- Particularly appealing to
younger coffeehouse
customers
- Somewhat intimidating to
older
• STRABUCKS
- Everywhere – The TREND
- Good coffee on the run
- Place to meet and move on
- Convenience oriented; on
the way to work
- Accessible and consistent
 CUSTOMER BEHAVIOUR
With respect to customer behavior,
regardless of the market – urban v/s rural
established – customers tended to use the
stores the same way

It was also known that, although the

company’s most frequent customers
averaged 18 visits a month, the typical
customer visited just five times a month.
 MEASURING & DRIVING CUSTOMER
SATISFACTION

Despite its high Customer Snapshot scores,

Starbucks was not meeting expectations in
terms of customer satisfaction

When Starbucks had polled its customers

to determine what it could do to make
them feel more like valued customers,
- IMPROVEMENTS TO SERVICE
In particular, speed-of-service
had been mentioned most frequently.
 PROVIDER GAP 3 – NOT DELIVERING TO
SERVICE STANDARDS
Once service designs and standards are in place, the
firm is on its way to deliver high quality services. But this
is not enough.
There must be systems, processes, and people in place
to ensure that service delivery actually matches (or is
even better than)the designs and standards in place.

SERVICE RECOVERY :
Speed up the service
Improving efficiency on services by investing in new
machines
THANK YOU

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