Stratergic Management Case study on Starbucks Ppt

Presented By:Dona SajiStarbucksDelivering Customer Service

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IntroductionCompany started in 1971 in Seattle, Washington

Products sold include:- beverages- pastries- whole coffee beans- coffee-related retail items

Starbucks is the largest coffeehouse company in the world, with 20,891 stores in 62 countries, including 13,279 in the United States.

HISTORY1971- Gerald Baldwin, Gordon Bowker and Zeiv Seigl opened a small coffee shop in Seattle.1989- Howard Schultz joined Starbucks.Idea of creating chain of coffeehousesConcept of third place1992- 140 stores across US.

1992 Decision to make the company public.2002 Starbucks established as dominant speciality-coffee brand.

INDUSTRYSpecialty Eatery IndustryFits within the largest segment of disposable income spending -- food and beveragesSteady growth in this segment in the 1990s. Increase in number of new companiesAs demand for convenience has made eating out a normal routine, the demand for specialty food services has increased in recent years

Channels of DistributionSpeciality Operations 15 % of revenueSales of ground coffees to hotels , airlines etc 27% of revenueDomestic retail store 18 %Internationally licensed stores ,grocery stores etc 55% of revenue.

Starbucks PartnersStarbucks employees are referred to as Partners.Hourly-waged employees were called Baristas.Starbucks had lowest turnover rate.Ensured employee satisfaction.

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

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ThesuccessofStarbucksintheearly1990s canbe attributedto various elements:

Howard Schultzs vision of customer centric company.

Idea of making Starbucks, Americas third place.

Enforced high coffee standards.

Customer satisfaction.

Friendly environment for customers.

Product Variety.

Target audience :Affluent , well-educated white people.

Value PropositionStarbucks stressed on Experiential Branding Strategy3 components attached to this strategy.1. Coffee Experience revolving consumption of coffee. Offered highest quality coffee in the world.Controlled much of the supply chain.Worked directly with growers.

2. ServiceEmphasized on customer intimacy.Provide uplifting experience.Customizing drink.

3.AtmosphereInviting environment.Unique and welcoming ambience.

Brand Image in 1990s Highly standardised coffee.Clean ambience.Convenient coffee bar, as it was spread across various locations.Starbuckss joint ventures. (eg: Coca Cola)-Increased brand awareness and recognition.Innovations and services also paved way to build a strong brand image.

2.Why have Starbuckss customer satisfaction scores declined ? Has the companys service declined or is it simply measuring satisfaction the wrong way ?

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Reasons for decline in customer satisfaction :Growing customer base.Customers felt that Starbucks was more interested in making money and expanding.Unsatisfied customers new customers.New customers have higher expectations .Competitors imitating the services of Starbucks.Retail expansion and product innovation had harmful effects on quality,service and atmosphereLarger target audience

Change in image of the brand.(premium to everyday coffee)Concentrated on increasing the number of retail stores.Lack of customer intimacy.Poor service, as sales increased.Increasing competition.Tension between product quality and customer focus.

Has the companys service declined or is it simply measuring satisfaction the wrong way ?

Overall company service has not declined.Overall, customers are satisfied with cleanliness, quality of coffee etc.Issue- Increase in waiting time.Shift in focus of Starbucks from being customer oriented to store expansion.Decline in customer service

3. How has Starbucks changed since its early days ?

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Increase in the number of stores, throughout the US and internationally.Establishment of small coffee stores.Additional products Food items and new beverages.Focused on product innovation.Shift in customer base of Starbucks.Introduced machines to enhance service.

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

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A loyal customer = profitable investment.A loyal customer visits Starbucks almost 18 times a month.These customers account for 62% of Starbuckss transactions.Customers visiting 1 or 2 times-generate 11% of Starbuckss transactions.Every customer is invaluable to Starbucks.An ideal customer is a highly satisfied customer.

Steps to ensure high satisfaction of the customers :Starbucks should be able to increase the number of visits of the current customers.Satisfaction level of customers is increased.Emphasize on the partners usage of proper soft skills , when interacting with customers.Stores are kept neat always.Bring service time down

Starbucks should ensure that:Satisfaction level of customers is increased.Emphasize on the partners usage of proper soft skills , when interacting with customers.Stores are kept neat always.Bring service time down

How valuable is the customersWithout the 21% of customers, averaging eighteen visits a month, Starbucks would loose 62% of all its transactionshighly satisfied customers have an average ticket price of $4.42Opposite to this the non satisfied customers is only $4.06

5. Should Starbucks make the $40 million investment in labor in the stores ? What is the goal of this investment ? Is it possible for a mega-brand to deliver customer intimacy ?

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Proceed in investing $40 million.Invest to increase serviced efficiency.This prevents customer retention.Introduce set ups and equipments to enhance efficiency . Use secondary market research to identify and alter product differentiation in comparison to smaller chains.

Continue product and service innovation.Invest in increasing labor.It is possible to deliver customer intimacy.Starbucks was already known for its customer intimacy policy.Currently they need to revive it.Eg :SCV (Starbucks store-value card)Service innovation : T-Mobile HotSpot wireless internet service.

THANK YOU!!!

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