Starbucks

Written Case Analysis Ð'ÐŽV Starbucks: delivering customer service

1 - Introduction

The StarbucksÐ'ÐŽÐ'¦ case presents three main issues:

Ð'„h Starbucks believes that it is not meeting its customersÐ'ÐŽÐ'¦ expectation;

Ð'„h If Starbucks should believe in what customers are telling to them;

Ð'„h Company have lost its initial brand recognition;

Based on this issues I will present analysis and recommendations for each one, using exclusively data from the case to support my recommendations.

2 Ð'ÐŽV Insights and analysis from Starbucks

Looking at StarbucksÐ'ÐŽÐ'¦ market research, more specifically the customer satisfaction research, it is possible to identify a gap in the relationship between Starbucks and its customers.

Nevertheless, it is important to go more deeply in this analysis and interrelate all information from the case. Because, in doing so, we can figure out some inquiries that will lead to recommendations:

1 Ð'ÐŽV If customer satisfaction is going doing, why in the Exhibit 7, exactly the same items which are pointed out in the Exhibit 10 as key attributes in creating customer satisfaction, have performed well over time? For instance, cleanliness is the first item in Exhibit 10 and, according to Exhibit 7, Starbucks has improved this point over time.

Legendary Service, which is scored positively when a store creates a good enough experience for customers to inspire the customer to return, is according to Exhibit 7 also increasing its percentage of four and five stars, which means, higher quality service for customers.

2 Ð'ÐŽV How reliable is this research? Are the customers really answering what is important for them and about what differentiate Starbucks? What kinds of customer (new or established ones) answered this research?

Considering these questions, and at same time looking at Table 1 and Table 2 (in this paper), it is possible to see that the unsatisfied customers are those ones that has started visiting Starbucks less than two years ago, the Ð'ÐŽÐ'§new customersÐ'ÐŽÐ'Ё. These new customers, according to Exhibit 8, have different perceptions compared with established customers and also spend less money (according to Exhibit 9). Due to these different perceptions, the new customers can not perceive the differentiation of Starbucks, for example: atmosphere, friendly staff, premium coffee, and so on.

Table 1: Exhibit 8 adapted from StarbucksÐ'ÐŽÐ'¦ case

Table 2: Exhibit 9 adapted from StarbucksÐ'ÐŽÐ'¦ case

In Exhibit 10 it can be seen that only 13% for new and innovative beverages are cited as a key contributors to customer satisfaction, but 77% of coffee sales come from beverages.

In order to reinforce these comments, Figure 1 in this report shows also a relationship between customer dissatisfaction and new customers, the fact that established customer (53% of total customers) contribute 85% of Starbucks revenues.

Figure 1: Figure A adapted from StarbucksÐ'ÐŽÐ'¦ case

The purpose of showing these relations is to see the Ð'ÐŽÐ'§big pictureÐ'ÐŽÐ'Ё. The StarbucksÐ'ÐŽÐ'¦ issue that has caused the gap between the stores and the customers. First of all, the problem is not about customer service in the stores, nor cleanliness, nor too feel and unfriendly staff, etc.

Rather, is a lack of identification which customers and target customers, leading to the third issue presented in the introduction: the loss of brand recognition upon which Starbucks had built its reputation in its first years.

Starbucks started to differentiate itself from a small and common coffee store, when Mr. Schultz joined the Starbucks team and thereafter traveled to Italy, and brought from there the culture and the European experience of drinking coffee.

StarbucksÐ'ÐŽÐ'¦ brand strategy and recognition is based on its Ð'ÐŽÐ'§live coffeeÐ'ÐŽÐ'Ё mantra and to keeping the national coffee culture alive, and these factors were represented by three components: (1) coffee itself, (2) high quality customer service and Ð'ÐŽÐ'§customer intimacyÐ'ÐŽÐ'Ё; (3) the special atmosphere existent in each store.

With this strategy and philosophy Starbucks experienced its success. However as the company multiplied its stores without a specific marketing brand strategy, it started to disconnect from its initial value proposition, mentioned in the previous paragraph, and, consequently, Starbucks started to attract new