Starbucks: Delivering Customer Service

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Background Case
P.1  According to their data, Starbucks are not always meeting our customers’ expectations in the area of customer satisfaction. They came up with a plan to invest an additional $40 million annually in the company’s 4,500 stores, which would allow each store to add the equivalent of 20 hours of labor a week. The idea is to improve speed of service and thereby increase customer satisfaction. P.1  Day, Starbucks’ senior vice president of Administration in North America, said, “Do we believe what our customers are telling us about what constitutes ‘excellent’ customer service? And if we deliver it, what will the impact be on our sales and profitability?” COMPANY BACKGROUND

P.2  The shop specialized in selling whole Arabica beans to a niche market of coffee purists. P.2  The idea was to create a chain of coffeehouses that would become America's "third place." At the time, most Americans had two places in their lives-home and work. But I believed that people needed another place, a place where they could go to re1ax and enjoy others, or just be by themselves. I envisioned a place that would be separate from home or work, a place that would mean different things to different people. P.2  The company was now serving 20 million unique customers in well over 5,000 stores around the globe and was opening on average three new stores a day. North American marketing primarily consisted of point-of-sale materials and Iocal-store marketing and was far Iess than the industry average. STARBUCKS VALUE PROPOSITION

P.3  Starbucks' brand strategy was best captured by its "live coffee" mantra, a phrase that reflected the importance the company attached to keeping the national coffee culture alive. From a retail perspective, this meant creating an "experience" around the consumption of coffee, an experience that people could weave into the fabric of their everyday lives. P.3  There were three components to this experiential branding strategy. The first component was the coffee itself. Starbucks prided itself on offering what it believed to be the highest-quality coffee in the world, sourced from the Africa, CentraI and South America, and Asia-Pacific regions. To enforce its exacting coffee standards, Starbucks controlled as much of the supply chain as possible-it worked directly with growers in various countries of origin to purchase green coffee beans, it oversaw the custom-roasting process for the company's various blends and single-origin coffees, and it controlled distribution to retail stores around the world. The second brand component was service, or what the company sometimes referred to as "customer intimacy." "Our goal is to create an uplifting experience every time you walk through our door/' explained Jim Alling, Starbucks' senior vice president of North American retail. "Our most loyal customers visit us as often as 18 times a month, so it could be something as simple as recognizing you and knowing your drink or customizing your drink just the way you like it." The third brand component was atmosphere. "People come for the coffee," explained Day, "but the ambience is what makes them want to stay." For that reason, most Starbucks had seating areas to encourage lounging and layouts that were designed to provide an upscale yet inviting environment for those who wanted to linger. "What we have built has universal appeal," remarked Schultz. "It's based on the human spirit, it's based on a sense of community, the need for people to come together." CHANNELS OF DISTRIBUTION

P.3  Almost all of Starbucks' locations in North America were company-operated stores located in high-traffic, high-visibility settings. P.3  In addition to selling whole-bean coffees, these stores sold rich-brewed coffees, Italian-style espresso drinks, cold-blended beverages, and premium teas. Product mixes tended to vary depending on a store's size and location, but most stores offered a variety of...
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