Name

Yem Socheath

Case
Name

Starbuck Coffee Company

Student
Number
Date

2B4059
Nov-6-2015

Case Analyze and Recommendation

I.

Starbuck Transformation and Innovation with 7 Ps

The retuning of Howard Schultz in 2008 as the CEO of Starbuck recued this
company to success with sustainable growing business. However, before
getting such successes he faced with several disappointed result of his
transformation.
In 2008, Schultz got some ideas of transformation agenda from his friend, who
work in Dell computer company, before he went back to Starbuck. The result
of the first practice of his transformation and reengineering was opposite to his
intention because the revenue and the net income still declined even he tried to
deal with quality, operation, and customer orientation. As the result, on July 29,
2008, 1,000 non-store positions and 550 employees were asked to leave.
Deeper transformation and innovation, Schultz seemed to concentrate on 7 Ps
for service marketing strategy which are Product, Place & Time, Price,
Promotion, Process, Physical Environment and People.
1. Product: In 2009, Schultz decided to launch a new product, Starbuck
VIA Ready Brew in the market. Before launching it, he created a trial for
free testing and checking the quality again and again. The core product of
company is the best quality coffee brand in the world.
2. Place & Time: Schultz hoped that Starbuck VIA would facing with many
competitors in the market such as Nescaf and Kraft; however, he tried to
penetrate the new product in the market though existing stores, especially
American market. There are several penetrate techniques he transformed
and innovated:
a. What: Reduce waiting time and payment (in-store order and
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payment or internet order), advice and educate customers about

products by professional partners (baristas).
b. How: To attract customer to visit the store, new product was
delivered free for testing. Multi payment such online payment
was launched.
c. Where: More than 2000 stores were standard decoration and
located in the convenient location. The majority location was in
USA. Not so long after the initial success, Schultz thought about
the innovation of diversifying the product delivery channels such
internet or social media.
d. When: Specific hours were arranged to each store and also
public holiday because partners who work over 20 hours per
week were encouraged.
3.

Price: Because of strong competitor such as Nescafe and Kraft,

Starbuck VIA is premium quality, thus the price should be competitive
price and affordable for customer and service consummation.

4.

Promotion: No only free testing of new product, later on Starbuck

card, which is established since 2001 but with additional value, was
innovated and transformed by adding the popular gifts and value called
My Starbuck Reward. Moreover, discount and other adding value to
customer were established by integration and innovation of internet and
mobile payment.

5. Process: Innovation and Transformation of Schultz in the successful

time was only basic market but also global market. He has thought
about the process innovation and Transformation. There were three
players he concentrated on, Front Line Employer (FLE), Back Line
Employee (BLE) and operational process.
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a. FLE: Accept in-store order and payment, skillful of making

product using tiny turnover time, and good relationship with
customers.
b. BLE: Skillful of equipment maintaining, delivery, database of
loyalty card (My Starbuck Reward card)
c. Internal Operational: reduce supplied chance and operational
cost by using effective channel.
6. Physical Environment: Beside providing a very careful and satisfied
serving service to its customers, Starbuck also organized as the haven
place for its customers. The decoration and store environment was
designed to satisfy customers and a warm place for gather with friends.
7. People: The first transformation of Schultz was fail because he did not
concern too much on FLE training and management interaction in each
store. After Cliff Burrows, in-store operator improvement, visited across
the country he found some issues happening on partners (employee) and
managers among those stores. The partners had already got plenty
passion, and intentions but they lacked business acumen and tools.
Retraining to the partners and reengineering of internal operation were
considered to start up.
After the innovation and transformation focused on these elements, starting
from 2009 the revenue of Starbuck has grown rapidly. The business of
Starbuck was not only in several countries, but it was broadened to be more
global including in Asia Pacific region such as Vietnam and Thailand.

II.

Recommendations for the future

Regarding 7 Ps mix market strategy, Starbuck seem to be successful in the time

of applying those transformation and innovation. However, there are some
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more issues for Starbuck to face with in the up coming future or long term
business in the international market.
Starbuck should build a strong barrier for new entrains. Depending on the
number of its competitors are increasing, Starbuck should think bout its price
standard, quality control, world wide brand awareness and loyalty program or
promotion such coupons or special gift for repeated customers.
Starbuck should also concern more about technology advancing. The
technology innovation can be the strong effect to long term business
sustainability because it is what the competitor

Questions in the Class (if any)