Starbucks: Delivering Customer Service
Starbucks: Delivering Customer Service
Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.
Case issue: Despite the consecutive sales growth most recent market research had revealed that the company is not meeting customer expectations in terms of customer satisfaction.
Starbucks management came up with a plan to improve speed-of-service by additional $40 million annually investment in 4500 company-operated stores in order to add an equivalent of 20 labor-hours per week in each store and thereby increase customer satisfaction. However, the impact of the plan on the company 's bottom line is unclear.
To solve the issue in a better way, we should first analyze the brand, its positions on the market and market conditions.
Market Analysis
Starbucks’ story of success is the story of how the commodity was transformed into a phenomenon. H.Shultz brought to the market a brave new concept: coffee consumption as a part of life-style. His idea of coffeehouse as “third place” succeeded because of the brand value proposition matched well defined target group given that there was no strong competitors to the brand.
Brand value preposition was to create an "experience" around the consumption of coffee that consumers could weave into the fabric of their everyday lives:
• Coffee itself: company is offering what it believed to be the highest-quality coffee in the world by direct work with growers, custom-roasting process controlling, offering own
Starbucks is dominant coffee brand in North America, which also is well-known worldwide. Established in 1971 as coffee shop oriented to a niche of coffee purists, in late 1980’s it turned to be a constantly growing chain of stores that sold whole-beans and premium-priced coffee to mostly affluent, well-educated customers. In years 1992-2002 company was showing at least 5% annual growth. And by 2002 Starbucks was serving already 20M customers in 5886 stores (both operated and licensed) around the globe, had $3.3 billion net revenues and was opening 3 new stores a day in average.
Case issue: Despite the consecutive sales growth most recent market research had revealed that the company is not meeting customer expectations in terms of customer satisfaction.
Starbucks management came up with a plan to improve speed-of-service by additional $40 million annually investment in 4500 company-operated stores in order to add an equivalent of 20 labor-hours per week in each store and thereby increase customer satisfaction. However, the impact of the plan on the company 's bottom line is unclear.
To solve the issue in a better way, we should first analyze the brand, its positions on the market and market conditions.
Market Analysis
Starbucks’ story of success is the story of how the commodity was transformed into a phenomenon. H.Shultz brought to the market a brave new concept: coffee consumption as a part of life-style. His idea of coffeehouse as “third place” succeeded because of the brand value proposition matched well defined target group given that there was no strong competitors to the brand.
Brand value preposition was to create an "experience" around the consumption of coffee that consumers could weave into the fabric of their everyday lives:
• Coffee itself: company is offering what it believed to be the highest-quality coffee in the world by direct work with growers, custom-roasting process controlling, offering own