Starbucks: Delivering Customer Services Group 3 and 4
Nov 18, 2014
Starbucks: Delivering Customer Services
Group 3 and 4
Synopsis
Starbucks – dominant specialty brand more than 4500 retail outlets in 2002
Aggressive expansion strategy requires additional 750 retail outlets
Market research shows customer satisfaction is on decline
Brand image to is showing rough edges
Directions to solve
? What factors accounted for SB success in early 90’s
? Why have SB customer satisfaction scores decline
? How does the SB of 2002 differ from 1992
? Describe the ideal SB customer from profitability point of view
? Should SB made the $40m investment in labour
Starbucks success
Megabrand image- without mass advertising
Sales growth 5% for 11 consecutive years
Serving 20m customers in more than 5000 stores
Tightly integrated value proposition perfectly aligned with target market needs
Competitive landscape when SB was introduced
As a result the following consequences evolved:
Starbucks
Dunkin Donuts
Consequences
CONSUMPTIONS PATTERNS
Customers tend to overstay
Ritualistic consumption
Choose SB for leisure with friends or being alone
Chat with baristas
DISTINCT PERCEPTIONS
Best coffee in the market
Upscale and classy
Social reinforcement
Starbucks in 2002
Brand – more accessibleo Introduced drive throughs (50%)o Non company operated retail chains (15%)
Customer base has been changedo Massive store expansiono Non coffee house channelso Non coffee productso Other mechanisms
Increased product diversity▪ Exhibit 5 shows a typical menu board and the price
list of the store Increased pressure on baristas
Customer Behavior by Satisfaction Level
Challenges faced by Starbucks
Highly satisfied customer - $172 and $200 more than unsatisfied
Lifetime value of highly satisfied customer is $2248
$2970 more than satisfied and unsatisfied customer respectively
Based on the above analysis
ESTABLISHED
Want peaceful ambience
Want friendly employees
Want customized beverage
NEW CUSTOMERS
Create a rushed environment
Made the employees grumpy
Put pressure on baristas
83 % of the customers ranked a clean store
being highly important in creating
customer satisfaction.
Customers want friendly and attentive staff Fast and effective service
Same reflected by mystery shoppers
Declined Brand image
Starbucks
Dunkin Donuts
Looking forward
SB lacked a strategic marketing group
New acquisitions due to new customer base
Establish customers less profitable but help in retain a good brand image
Eliminating bottle necks in the stores
Installation of automated machines
Facility remodeling
Product innovation
SVC prepaid cards
Store clustering
Employing more labour
Should SB made the $40m investment in labour??
Investment is needed not only to convert satisfied customers to highly satisfied but is also needed to retain
the present satisfied customers
Conclusion
Thank you