starbucks delivering customer service case study analysis ppt

Starbucks: Delivering Customer Service Case Discussion: March 4

Jun 30, 2012

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Issue. Recent Market Research shows a decline in Customer Satisfaction at Starbucks. To stay on plan with their aggressive growth strategy, should $40 million be invested in the 4,500 stores focusing on improving the speed of customer service?Will this improvement lead to increased satisfacti

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case: starbucks

Domestic Growth. Main goal is to continuously expand its retail operations and to selectively pursue more opportunities to advance the Starbucks brand throughout the United States.Starbucks ended 2001 with a total of 4,709 retail locations. At the end of 2004 they had a whopping 8,337 locations with a forecast of over 10,000 retail establishments by the close of 2005.US will occupy over 8,000 of the 10,000 locations..

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• 1. STARBUCKS : Delivering Customer Service
• 2. Howard Schultz Founded on 30 March, 1971 HQ in Seattle, Washington, U.S. “Third place” after home & work Marketing budget 3%-6% annually Started with beans and premium priced coffee Added handcrafted Espresso inn 1987 Affluent, educated, white-collar, females, 25-44 years Went Public in 1982 2011 completed 40 glorious years
• 3. 58 Countries
• 4. Products Whole bean coffee Rich brewed coffee Italian style Espresso Cold Blended beverages Premium teas Pastries, soda, juices, sandwiches, salad Accessories, Equipment's, CD’s, Games 3 components of Branding Strategy Highest Quality Coffee Customer Intimacy Atmosphere Retail Centers Office Premises University Campus Distribution Channel’s High-traffic, High-visibility Collaboration Company Joint Venture Pepsi Partnership Dreyer’s Grand Ice cream
• 5. BaristasPartnersEmployee Delivering on Service Training Hard Skills Using cash register Mixing drinks Soft Skills Enthusiastically welcome Eye contact Smile Remember names Conversation  PROBLEMS  Customized drinks  Handmade drinks  Delay due to customization  Strain on Baristas  Tension between quality & delivery  High wage rate in Urban areas  Eliminating non-value-added processes  POSSIBLE SOLUTIONS  Hire more baristas  Installing automated espresso machines  Machine reduced the no. of steps in coffee making and also reduced waste & improved consistency
• 6. Customer Snapshot Monthly status reports Self- reported checklist Service Criteria Basic Service Criteria Service Cleanliness Product Quality Speed of Service Legendary Service
• 7. Type Brand Differentiation Small scale specialty coffee chains Caribou Coffee, Minneapolis Store environment – Feel of Alaskan lodge, fireplace & soft seating Peet’s Coffee & Tea, California Super premium brand, freshest coffee Independent Specialty shops Independent local coffee shops Beer, wine, Satellite television, Internet connected computers, Highly personalized service Retail Coffee Chain Dunkin Donuts Flavored coffee, Dunkaccino, Vanilla Chai
• 8. Product Innovation  12-18 months cycle for new product  Product tested among focus groups, in-store experiments & market tests  Product development depends on “Ergonomic flow” & speed of making it  Partner acceptance is the most important  Most successful product innovation was “Frappuccino” in 1995 Marketing  Lacked Strategic marketing group, no CMO  Marketing department functions in 3 separate groups i.e. Market research group, Category group, Marketing group  Not disciplined in data driven decision making  Contradiction between assumption & market research data
• 9.  Launched Stored Value Card (SVC) in November 2001  Reduced transaction time while using SVC  Cards are used as a gifts  Customer transaction data has been captured through SVC  Launched T-Mobile hotspot wireless internet service in August 2002  Introduced payments using iPhone in January 2012  Highly involved in CSR S E R V I C E INNOVATION
• 10.  Everywhere – the trend  Good coffee on the run  Place to meet and move on “Third place”  Convenience oriented, on the way to work  Accessible and consistent Known for specialty / gourmet coffee (54% SA) Widely available (43% SA) Corporate (42% SA) Always feel welcome at Starbucks (39% SA)  Younger  Hispanic customers  Less well educated  In a lower income bracket  Less frequent to stores  Different perception about Starbucks brand
• 11. What factors accounted for huge success early 1990’s? Starbuck’s Success Quality of Coffee Service Clean environm ent Partner’s Satisfactio n Targeted customer Market
• 12. What is compelling about the value proposition of Starbucks ? STARBUCKS SUCCESS Atmosp here Coffee Quality Service
• 13. Why customer satisfaction declining in recent years ? Increased customer expectation, change in life style Image of Starbucks has been changed to profit making company Increased competition Complexity for Partners on soft skills Starbucks stores competing among themselves, due to retail expansion & availability No reason to pay premium for the same coffee that is available at lower price Retail Expansi on Product Innovatio n Customiz ation Quality + Service + Atmosphere
• 14. Was it in Service level or measuring customer service in wrong manner? Service measuring criteria must be different for new and old customers Complexity for Partners on soft skills, to cater the large customer base Lack of motivation among Partners & Baristas “The Snapshot is not a perfect tool” and poor research methods
• 15. Starbucks 1992 v/s 2002 1992 2002 Become public Become No. 1 coffee brand in US 140 stores in Chicago & Northwest region 4500 stores globally Strategy of retail expansion in new markets Best quality coffee and people can relax Changed its image as corporate & money making organization Upscale, Pseudo- European atmosphere Smaller coffee stores diminished that Atmosphere vale proposition Maximum sales come from sales of whole‐bean coffees 77% of the sales came from beverages Only whole-bean coffee Added new menu, beverages, Started selling equipment's & accessories
• 16. Starbucks 1992 v/s 2002 1992 2002 Less customized, plain simple coffee More customization, Additional training time for Partners Limited choices Variety of combination available Complex process, slower service delivery Change in customer profile “Third Place” Convenient place, can meet with people, coffee on the move, just good coffee “Customers going to the Starbucks” Due to retail expansion “Starbucks going to the customers”
• 17. Still no. 1 Coffee Brand in US, but intense competition now with small & local coffee shops 19555 stores in 58 countries Retail expansion is still continuing, entering in India in 2012 Maximum sales comes from beverages Menu has been revised frequently, new products has been added Emerged as a Corporate meeting place, interviews, business deals, couples preferred place Customer base is getting larger and larger CSR & Social cause is on the priority list STARBUCKS in 2012
• 18. 1 14 213 1270 0 200 400 600 800 1000 1200 1400 1996 2001 2005 2012 No. of Café Coffee Day outlets in India Merchandising Caps T-Shirts Bags Mugs Coffee Filters Coffee Powders Coffee Mints Pens Consumer Profile 37% of the customers are between 20-24 years 27% of the customers are between 25-29 years 60% of the customers are male and 40% are female 52% of customers who visit the cafes are students 18% of the customers visit the cafes daily 44% of the customers visit the cafes weekly Competitors Barista Costa Coffee Gloria Jeans Mocha Channels Bill boards Print media Radio Internet Strategy Cool hang out for college crowd and teenagers “A lot can happen over coffee” Target – commercial and residential clusters in metros, corporate houses, malls & airport Price 20% lower than competitors Positioned for the mass market Targeted middle class, students
• 19. !! Thank You !!