Starbucks

Case Study

Business Marketing Group 6

Business Marketing Group 6

Josephine

Vrinda

Tiany

Carina

Ting

Faye

Willie

Wen

Ke

Kevin

Introduction

I envisioned a place that would be

separate from home or work, a third
place that would mean dierent things
to dierent people.
Howard Schultz
CEO, Starbucks

The 1st Store - Starbucks at Pike Place Market

The logo has undergone many a change since the birth of Starbucks in 1971

Question 1
Why would Starbucks customer satisfaction fall?

Perceived
Quality

Customer
Complaints

Perceived
Value

Customer
Expectations

Overall
Customer
Satisfaction
(ACSI)

Customer
Loyalty

Dynamic Customer Base

Average Age
36

40

Customers with College Degree +

Average Income
$81,000

$65,000

New Customers

Established Customers

New Customers
(first visited in past year)

Established Customers
(first visited 5+ years ago)

45%

49%

36

40

37%

63%

$65,000

$81,000

15

19

High-quality brand

34%

51%

Brand I Trust

30%

50%

For someone like me

15%

40%

Worth paying more for

8%

32%

Known for specialty coee

44%

60%

Known as the coee expert

31%

45%

Best-tasting coee

20%

31%

Highest-quality coee

26%

41%

Overall opinion of Starbucks

25%

44%

Percent Female
Average Age
Percent with College Degree+
Average Income
Average # cups of coee/week

Attitudes towards Starbucks

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

Various Expectations

Importance Rankings of Key Attributes in Creating Customer Satisfaction

Clean store
83%
Convenient
77%
75%
Treated as a valuable customer
73%
Friendly staff
72%
Coffee taste/flavor
Highest-quality coffee
67%
65%
Fast service
65%
Appropriate prices
60%
Freshest coffee
60%
Best espresso drinks
50%
Pleasant atmosphere/ambience
39%
Knowledgeable staff
37%
Place to relax, meet friends
34%
Best ice-blended drinks
30%
Involved in the community
20%
Highest-quality tea
17%
Highest-quality pastry, desserts
17%
Selection of noncoffee beverages
16%
Selection of whole beans
13%
New, innovative beverages
Selection of merchandise 5%
Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

Raise Level of Expectations

New Customers
(first visited in past year)

Established Customers
(first visited 5+ years ago)

45%

49%

36

40

37%

63%

$65,000

$81,000

15

19

High-quality brand

34%

51%

Brand I Trust

30%

50%

For someone like me

15%

40%

Worth paying more for

8%

32%

Known for specialty coee

44%

60%

Known as the coee expert

31%

45%

Best-tasting coee

20%

31%

Highest-quality coee

26%

41%

Overall opinion of Starbucks

25%

44%

Percent Female
Average Age
Percent with College Degree+
Average Income
Average # cups of coee/week

Attitudes towards Starbucks

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

New Customers
(first visited in past year)

Established Customers
(first visited 5+ years ago)

45%

49%

36

40

37%

63%

$65,000

$81,000

15

19

High-quality brand

34%

51%

Brand I Trust

30%

50%

For someone like me

15%

40%

Worth paying more for

8%

32%

Known for specialty coee

44%

60%

Known as the coee expert

31%

45%

Best-tasting coee

20%

31%

Highest-quality coee

26%

41%

Overall opinion of Starbucks

25%

44%

Percent Female
Average Age
Percent with College Degree+
Average Income
Average # cups of coee/week

Attitudes towards Starbucks

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

New Customers
(first visited in past year)

Established Customers
(first visited 5+ years ago)

45%

49%

36

40

37%

63%

$65,000

$81,000

15

19

High-quality brand

34%

51%

Brand I Trust

30%

50%

For someone like me

15%

40%

Worth paying more for

8%

32%

Known for specialty coee

44%

60%

Known as the coee expert

31%

45%

Best-tasting coee

20%

31%

Highest-quality coee

26%

41%

Overall opinion of Starbucks

25%

44%

Percent Female
Average Age
Percent with College Degree+
Average Income
Average # cups of coee/week

Attitudes towards Starbucks

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

Service

Yes

How could Starbucks make you feel more like a valued customer?
Improvement to Service (Total)

%Responses
34%

Friendlier, more attentive sta

19%

Faster, more ecient service

10%

Personal treatment (remembering my name, remember my order)

4%

More knowledgeable sta

4%

Better service

2%

Oer Better Prices/ Incentive Programs (total)

31%

Free cup after x numbers of visits

19%

Reduce price

11%

Oer promotions, specials

3%

Other (Total)

21%

Better quality/ Variety of products

9%

Improve atmosphere

8%

Community outreach/ Charity

2%

More stores/ convenient locations

2%

Dont Know/ Already Satisfied

28%

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

How could Starbucks make you feel more like a valued customer?
Improvement to Service (Total)

%Responses
34%

Friendlier, more attentive sta

19%

Faster, more ecient service

10%

Personal treatment (remembering my name, remember my order)

4%

More knowledgeable sta

4%

Better service

2%

Oer Better Prices/ Incentive Programs (total)

31%

Free cup after x numbers of visits

19%

Reduce price

11%

Oer promotions, specials

3%

Other (Total)

21%

Better quality/ Variety of products

9%

Improve atmosphere

8%

Community outreach/ Charity

2%

More stores/ convenient locations

2%

Dont Know/ Already Satisfied

28%

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

How could Starbucks make you feel more like a valued customer?
Improvement to Service (Total)

%Responses
34%

Friendlier, more attentive sta

19%

Faster, more ecient service

10%

Personal treatment (remembering my name, remember my order)

4%

More knowledgeable sta

4%

Better service

2%

Oer Better Prices/ Incentive Programs (total)

31%

Free cup after x numbers of visits

19%

Reduce price

11%

Oer promotions, specials

3%

Other (Total)

21%

Better quality/ Variety of products

9%

Improve atmosphere

8%

Community outreach/ Charity

2%

More stores/ convenient locations

2%

Dont Know/ Already Satisfied

28%

Source: Starbucks, 2002. Attitudes toward Starbucks measured according to the percent of customers who agreed with the above statements.

Starbucks Partners

New Customers

Established Customers

New Customers

Established Customers

Corporate

Commoditised

Company-operated Stores

Company-operated Stores

Licensed Stores

Starbucks' Store Growth

FY 1998

FY 1999

FY 2000

FY 2001

FY 2002

1,755

2,217

2,976

3,780

4,574

1,622

2,038

2,446

2,971

3,496

Licensed Store

133

179

530

809

1,078

Total International

131

281

525

929

1,312

Company-Operated

66

97

173

295

384

Licensed Store

65

184

352

634

928

1,886

2,498

3,501

4,709

5,886

Total North America

Company-Operated

Total Stores

Source: Company reports.

aIncludes kiosks located in grocery stores, bookstores, hotels, airports, and so on.

We tend to be great at measuring

things, at collecting market data, but
we are not very disciplined when it
comes to using this data to drive
decision making.
Christine Day
Vice president of administration, North America, Starbucks

The problem was that this evidence was

all over the placeno one was really
looking at the big picture. As a result, it
took awhile before we started to take
notice.
Christine Day
Vice president of administration, North America, Starbucks

Category Group

Market Research Group

Developed
new products
and managed
the menu and
margins

Gathered and analysed

market data requested
by the various business
units

Marketing Group
Developed the
quarterly
promotional
plans

Competition

Easy to Copy

Methodological Issue

Question 2
Should
Should Starbucks
Starbucks Go
go Ahead
head with
with40the
million
$40 Million
dollarsInvestment?
investment

CUSTOMER- NEEDS
FAS T- S ER VICE

H IG H ES T- QUALITY- COF F EE

65%

65%
67%

of&customers&demand&fast&service

COF F EE- TAS TE

72%

F R IEND LY- S TAF F

73%

TR EATED - AS - A- VALUAB LE- CUS TOMER

CLEAN- S TOR E

75%
83%

3&mins

service&within& this&time
creates&"excellent&experience"

Typical Customisation Guru

Staff
The(GURU

Me(waiting(in(line

How About

Divide customers into two groups

Meeting the goal of fast service

Avoid conflicts

Specific training program for employees

(Speed Oriented/Experience Oriented)

Specific training program for employees

(Speed Oriented/Experience Oriented)

The Ultimate Power (Mom)

What%you%are%saying%is
NOTHING but%NONSENSE.

Infrastructure

Infrastructure

Non-preference related factors:

Location

Number of seats, Size of the store,

Other factors including Smoking Area, Toilets and etc.

Preference related factors:

Decoration style

Music/Books/Aroma

Starbucks Theme Stores

Employee Motivation/Welfare
-Customer ordering a coee

Anyone worked for Starbucks before?

Sta: May I take your name

please?

Paul: Yes, the name is Paul.

You have to memorise:

1. Ways to complete various kinds of
coffees
2. Customer's special needs
3. Customer's name
4. Price for each coffee

...two minutes later

Sta: White Mocha for Bald?

Paul: ...You serious?

You will also have to:

1. Smile at each customer
2. Pretend to be happy even if you are
not
3. Calm down the impatient
& Be friendly to the rude

Employee Motivation/Welfare

Dierent responsibilities in dierent shifts

More diversified/challenging job.

Involve employees into decision-making process

More active working environment

Reward system/Welfare

Increase in wages/salaries

Training

Other motivations

Enhance brand loyalty

Brand loyalty contributes to customer satisfaction

Improve membership reward system

Technology as an alternative solution

High wage rate in north America

More auto espresso machine

R&D and promotion of app

To Sum Up

Investment in labour force: hiring, training & satisfying

Investment in infrastructuresmoking area, separate selling

window, etc.

Investment in rewarding system for customers; Brand loyalty

Investment in technology