Timothy Little BAD 345 Case Study 2 Starbucks: Delivering Customer Service The story of Starbucks’ success is simply extraordinary. Indeed, the vision that Howard Schultz had for the small coffee shop back in 1982 has become a cultural phenomenon. In fact, according to Schultz, “The idea was to create a chain of coffeehouses that would become America’s ‘third place.’ At the time, most Americans had two places in their lives-home and work. But I believed that people needed another place, a place where they could go to relax and enjoy others, or just be by themselves. I envisioned a place that would be separate from home or work, a place that would mean different things to different people” (2). Clearly, Schultz’s long-term vision has become a reality. Perhaps the biggest contributor to Starbucks’ success in the early 1990s was the company’s attractive value proposition. Indeed, the company focused on creating an experience around coffee for the consumer. Striving to integrate its “live coffee” mantra into everyday life, Starbucks developed three important components to its branding strategy: coffee (the product itself), service, and atmosphere. The company prided itself on providing what was believed to be the highest-quality coffee in the world, sourced mainly from the African, Central and South American, and Asian-Pacific regions of the world. The second component is customer service, which Starbucks often refers to as customer intimacy. While friendly customer service is always appreciated, customer intimacy focuses
Starbucks: Delivering Customer Service Essay
Recent market research has revealed that Starbucks is not meeting customer expectations in the area of customer satisfaction. Starbucks must come up with a plan to target specific areas of improvement identified in the research to improve sales while keeping the potential impact on bottom line to the minimal.
Key results that stood out from the recent market research conducted showed that Starbucks:
* Was perceived as a corporate giant primarily concerned with growth.
* Attracted a new breed of younger, less well-educated, lower income, less frequently visiting customers.
* Was not meeting customer expectations in terms of customer satisfaction.
Senior Management at Starbucks have the task of analyzing the results of the market research to understand the real reasons behind this fall in customer satisfaction levels and developing a plan to positively impact these statistics and ultimately increase sales and profitability.
The demographics of a typical customer at Starbucks have changed drastically from its early days. Newer customers are younger, less well-educated, earned less, visited the coffeehouse less often and had very different perceptions of the Starbucks brand than those that were regulars who had been customers for a longer time. The historical customer profile of an affluent, white-collar female aged between 25 and 44 had expanded and reflected the market realities of a multicultural population. A typical customer visited Starbucks five times a month. While many factors influenced customer satisfaction, overall service and speed of service were identified as the most influential.
Starbucks was clearly ahead of its competitors in terms of size of operations and profitability. In the US, Starbucks competed against:
* Regional small-scale specialty coffee chains like Caribou Coffee
* Numerous independent specialty coffee shops
* Donut and bagel chains like Dunkin Donuts
Starbucks pursued its overall objective to establish itself as the most recognizable and respected brand in the world by focusing on retail expansion and product innovation. Starbucks believed in creating an experience around the consumption of coffee and to achieve this they developed and operated on an experiential branding strategy. Customer service was an important component of this strategy and tied into customer satisfaction. Part of the DNA of...
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