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Starbucks Case Study


Enviado por   •  25 de Enero de 2015  •  1.871 Palabras (8 Páginas)  •  249 Visitas

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What factors accounted for the extra-ordinary success of Starbucks in the early 1990s?

Many factors accounted for the extra-ordinary success of Starbucks in the early 1990’s. Starbucks owns nearly one-third of America’s coffee bars, which is more than its next five biggest competitors combined. Almost all of Starbucks’ locations in North America are company-owned stores located in high-traffic, high-visibility settings such as retail centers, office buildings, and university campuses. This made Starbucks a very convenient coffee bar because of the many different locations. Starbucks also worked to add more depth to their product in the coffee shops. 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 vary depending on the stores size and location; however, most stores offer a variety of pastries, sodas, juices, coffee-related accessories and equipment, CDs, games, and seasonal novelty items.

Starbucks also sold products through non-company-operated retail stores such as hotels, airlines, and restaurants. Additionally Starbucks formed joint ventures to distribute a bottled frappuccino thru Pepsi-Cola and an ice cream thru Dreyer’s Grand Ice Cream. This allowed the Starbucks’ brand to be recognized not only in freestanding Starbucks stores, but also throughout other channels as well increasing their brand awareness. Starbucks worked very had to expand the number of retail stores as well as product innovations and service innovations. New products were launched on a regular basis, such as one new hot beverage every holiday season. The store-value card (SVC) was also introduced which led to reduced transaction times. Due to the innovations and brand equity Starbucks had built Starbucks was able to achieve extra-ordinary success.

What was so compelling about the Starbucks value proposition?

The value proposition of Starbucks focused on a brand strategy that was comprised of three components. The brand strategy was best captured by the phrase “live coffee.” This phrase reflected the importance of keeping the national coffee culture alive. From a retail perspective, this meant creating an “experience” that people would want to incorporate into their everyday lives. There were also three components to the branding strategy. The first component was simply the coffee. Starbucks offered the highest-quality coffee in the world and controlled much of the supply chain as possible to help insure that. Starbucks worked directly with growers to purchase green coffee beans, it oversaw the custom-roasting process, and it controlled distribution to retail stores around the world. The second brand component was service, or what was also referred to as “customer intimacy.” This included simple things such as remembering someone’s name or drink order. The third brand component was atmosphere. Starbucks stated that people came for the coffee but stayed for the atmosphere. Therefore it was important to provide a comfortable atmosphere that allowed a sense of community. All of these things combined led to a compelling value proposition.

What brand image did Starbucks develop during this period?

The brand image that Starbucks developed during this period was not necessarily the best. Starbucks was known for being widely available, their gourmet/specialty coffee, and being trendy. Customers also though that the stores were clean and overall satisfied with the Starbucks product. However, the market research team discovered that Starbucks’ brand image was declining. The number of respondents that agreed with the statement, “Starbucks cares primarily about making money,” was up from 53%to 61%. The number of respondents that agreed with the statement, “Starbucks cares primarily about building more stores,” was up from 48% to 55%. Starbucks brand image was becoming more about the growth plans of Starbucks rather than the value they wanted to provide to their customers.

Why have Starbucks’ customer satisfaction scores declined?

Starbucks customer satisfaction scores began to decline despite the fact of Starbucks’ overwhelming presence and convenience. There was very little image or product differentiation between Starbucks and the smaller coffee chains. However, there was a significant differentiation between Starbucks and the independent specialty coffeehouses. The brand image of Starbucks also had some rough edges. More customers were beginning to agree with the fact the Starbucks cared primarily about making money and building more stores. Also, despite the high customer snapshot scores customer satisfaction scores were declining. It was believed that there was a service gap between Starbucks scores on key attributes and customer satisfaction. In polls by customers “improvements to service,” particularly speed of service, was most mentioned for improvement.

Has the company’s service declined or is it simply measuring satisfaction the wrong way?

The overall company service has not necessarily declined. Overall, customers are pleased with the cleanliness, atmosphere, and product quality. However, wait time is steadily increasing. This is the main problem. While some people go to Starbucks for the experience, many people get their coffee and are out the door. Therefore, wait time is exceedingly important. This is where the satisfaction has begun to decline. While wait time is a part of customer satisfaction it is not the only thing that determines customer satisfaction. The satisfaction level of customers also varies with the type of customer. Customers that visit more often, spend more often, and are more loyal tend to be more highly satisfied. Also, Starbucks is measuring much on how people view the company, as trying to expand and make more money, rather than how people view the coffee. Generally customers are satisfied with the coffee. While customer service has declined some, the main issue that should be addressed is the view itself of the Starbucks organization.

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