Rogers Correia Starbucks Case Discussion

8/3/2019 Rogers Correia Starbucks Case Discussion

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Starbucks:

DeliveringCustomer ServiceCase Discussion: March 4

Target Solutions Marketing Group

Taiya Brandon

Kelvin Brown

Shawn Correia

John Kimwele

Dale Hall


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Issue

Recent Market Research shows a decline in CustomerSatisfaction at Starbucks. To stay on plan with theiraggressive growth strategy, should $40 million beinvested in the 4,500 stores focusing on improving thespeed of customer service?

Will this improvement lead to

increased satisfaction that will

translate in to an increase in sales

and profitability?

Does this investment align with the growth strategy

of retail expansion and product innovation?


3/10

Starbucks:

Take Home an Experience

Mission Statement live coffee

The Starbucks Value Proposition

1. To create an experience around theconsumption of coffee, an experience thatpeople would weave into their lives

2. To create an uplifting experience in

Customer intimacy3. To create an ambience based on human

spirit, sense of community, and the need forpeople to come together


4/10

Matters of Concern

Starbucks is suddenly in a position of:

Consistent sales

BUT

Low customer satisfaction Low speed of service

Customized drinks Slows down the service process

Strain on workers

Hand crafted Drinks

Involve Time Slows down the service process

Competition A variety of regionally concentrated small scale

Specialty coffee, bagel and donut chains


5/10

Market Research

Recent Findings of peoples experiences:

Starbucks cares primarily about making money

Up from 54% to 61%

Starbucks cares about building more stores

Up from 48% to 55%

Top 5 Attributes of Starbucks:1. Known for specialty/gourmet coffee (54% strongly agree)

2. Widely available (43% strongly agree)

3. Corporate (42% strongly agree)

4. Trendy (41.5% strongly agree)

5. Always feel welcome at Starbucks (39% strongly agree)


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Starbucks Options

1. Investment of $40 million annually toincrease speed of service

(impact = customer satisfaction, translates to sales)2. Alter the product mix

Determine change depending on store size and location

3. Process of Measuring Service performanceCategories: Service, Cleanliness, Product Quality, Speed

of Service

4. Retail ExpansionNew stores in new markets

Geographically cluster stores in existing markets


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Starbucks Options continued

5. Product innovationPriority of Mgmt given that the prices were stable in

recent years

6. Service InnovationStarbucks store Value Card

7. Effort to identify and demonstrate in very

concrete terms on how to determineMarket Research Data


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Starbucks Forte

11th consecutive year of consistent sales of 5% or greater Company spent close to nothing to achieve this goal

Sales climbed at an annual compound growth rate of 40%

and net earnings to 50% since Starbucks went public

Good strategic alliances with Pepsi-Cola and Kraft foods to

distribute some of their products

Lowest employee turnover rates in the industry

(just 70% as compared to 300% the average of the fast food industry)

Implemented good policies to insure competitive advantage

Just say Yes policy

Measuring service performance

Expect business projections to rise and be steady and

consistent


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Plan of Action

Plan based Starbucks strengths relative to the presented issues

1. Proceed with investing the $40 million annually in the 4,500 stores

to increase service efficiency (impacting customer satisfaction.

Goal ~ customer retention in the competitive coffee house market)

2. While the investment enables additional labor hours, research

efforts to increase efficiency through set-up and equipment (e.g.automated espresso machine, specialized work stations)

3. Use secondary market research data to identify, analyze, and alter

product differentiation strategies, with respect to smaller chains

and Starbucks obliquities

4. Alter the product mix depending on the store size and location ofthe outlet (demographics)

Sample to find out what customers mainly look for

Sample data results would narrow the customization and train baristas

with those special concoctions


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Plan of Action cont.

Plan based Starbucks strengths relative to the presented issues

5. Marketing Research showing that existing markets are far from

saturation

Analyze this particular area with specific concrete terms targeting a

particular objective

6. Continue with Product and Service innovation, proactively conduct

an environmental scan to launch new products

7. Validate Market Research metrics and methods of sampling, data

analysis

Service Performance categories

Does the data translate in to measurable metrics that can impact sales and

profitability?

Rogers Correia Starbucks Case Discussion

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