There are numerous factors that paved the way for Starbucks’ success during the early nineties. I believe that one of their strengths was good knowledge of who their potential customers were and how to please them with their profile, assortment and services. One also has to take notice of their clear vision of becoming America’s third place, this tells me that they’ve had an aggressive vision from the start. And of course they’ve matched this with their strategy, from 1992-2002 the company opened about 3500 stores all across America. This gives the company a yearly growth rate of around 350 stores, an impressive number. They also licensed out another 1500 stores. This allowed them to become a household name for the regular American, and the strong brand name was created with all the advantages that comes along with it. They enjoyed plenty of first-mover advantages. All this was financed by boldly taking the company public, despite doubts from most analysts regarding the company concept. And who was the power behind this decision, if not Howard Schulz? Responsible for much of the success, Howard Schulz and his team have proven that their aggressive strategy’s have been key in the success of the company. In other words the management is a big contributor. I’d also like to bring up the human capital of the company, or as the employees are called, the company “partners”. Since the Starbucks concept of creating an experience for the customer goes hand in hand with partner satisfaction, management have been quite generous to their employees. They’ve for instance provided them with health insurance and stock options. For Starbucks it is key to create long lasting relationships with customers (these customers have proven to be very profitable for the company), demanding good relationships between baristas and customers. Keeping a low employee turnover rate both with baristas and managers has definitely contributed to the company’s success.
The live coffee mantra meant, in short, that the company wants to create life surrounding the coffee drinking experience. To create a space outside of the office and the own home where people could drink coffee and enjoy themselves, was something very appealing to consumers, a refuge from the routine of their day. They created value around the consumption of coffee. The main brand image that was created was a premium coffee bean and coffee beverage brand but it’s not the total brand image. They also added attributes of the company to this image such as “customer intimacy”, “great ambience” and “highest quality coffee in the world”. These attributes are all derived from the three main components of the branding strategy: coffee, service and atmosphere. Together this was the brand image of Starbucks created during the period. 2.
The reasons because the customer satisfaction scores are down could, in my view, be linked to the fact that the typical Starbucks customer has changed because the customer base has expanded. Their perceptions of the brand are different and because the company really doesn’t know who the typical customer is at the moment, they can’t cater to them as well as they could before. There are examples of this change for instance in the case of stores in southern California where they now have huge numbers of (sometimes lower educated) Hispanic customers instead of the affluent, well-educated white collar 24-44 aged white men and women (mostly women).
In exhibit 10 we see that on the scale of what attributes the customers find most important in order to be satisfied, that places 3-7 all are based on one staff members performance that single time. What I mean by this is that the performance level of this will vary from customer to customer and because of that you need a bigger base for the survey than the “customer snapshot”. This means that it’s not sufficient in correctly measuring the true customer satisfaction. But seeing as this method,...
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