Coffee and Starbucks

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1.What factors accounted for the extraordinary success of Starbucks in the early 1990s? What was so compelling about Starbucks value proposition? What brand image did Starbucks develop during this period? According to the case study, the three factors that accounted for the extraordinary success of Starbucks in the early 1990 are as follows: a.The first factor was “the coffee itself “– Starbucks believed that they offered their consumers with the highest quality coffee which was sourced from Africa, Central and South America, and Asia-Pacific regions. Starbucks tactic was to corner the market by controlling as much of the supply chain as possible and also controlling the distribution of retail stores around the world. Starbucks worked with different regions to purchase its coffee. b.The second factor was “service” – this was also known by the company as “customer intimacy”. Starbucks had many loyal and frequent customers which made it easy for the employees to learn how to make the perfect cup of coffee must the way they like it. This provided their customers with a good experience every time they walked into a coffee shop. c.The third factor was atmosphere - Starbucks theory was to provide their customers with a cozy atmosphere inside their coffee shops. Their setup consisted of comfortable fashionable lounge areas which attracted all types of crowds. Starbucks coffee shops were scattered throughout all of North America and quickly started to expand their products by offering their customers more than just whole-bean coffee such as pastries, sandwiches, juices and sodas. Their strategy was to attract customers at grocery stores, where they work, dine and shop. Their image was to get out there and be in the leading each of provide the best tasking whole-bean coffee while catering to their customers.

2.Why have Starbucks’ customers satisfaction scores declined? Has the company’s service declined, or is it simply a measuring satisfaction the wrong way? Starbucks marketing research team discovered that the Starbucks image had some rough edges and observed the following: a.There was very little product differentiation between Starbucks and smaller coffee chains. b.During a survey, the number of respondents mostly felt that Starbucks was more about making money and building new stores than customer satisfaction. Their market research team discovered that Starbucks needed to start communicating their value and values to their customers and not focus so much on their grown plan. Based on a customer frequency analysis, Starbucks realized that their customer satisfaction and loyalty had both decreased. Their survey result with regards to improving customer service was to improve their speed of service.

3.How does the Starbucks of 2002 differ from the Starbucks of 1992? In 1992 Starbucks had already expanded 140 stores Northwest and Chicago areas and was successfully competing with smaller coffee chains such as Gloria Jeans Coffee Bean and Barnie’s Coffee & Tea. During that same year, Starbucks decided to go public despite of the skeptics who thought that paying so much for coffee was ridiculous when they could purchase a copy of coffee for have the price at a local coffee shop. Going public was an excellent decision which helped raise $25 million which allowed Starbuck to continue expanding by opening more stores nation wide. From 1992 to 2002 sales went up 40% since the company had gone public. In 2002 the company was servicing an average of 20 million customers in over 5,000 stores around the world and was opening on average 3 stores a day. Starbucks was so successful that it did not have to spend any money in advertising.

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

Starbucks like any other corporation out there has been...
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