The Starbucks brand has evolved over the last decade and is now facing newer and more complex challenges in the way they do their business, such as:
• Evolving target customer base and their positioning strategy
• Widening gap between brand value proposition and customer perception
• Increasing complexity of product-mix and service delivery
The management is faced with the mandate of taking key business decisions that must address the major internal and external trends that are currently affecting /driving revenues and profits. The company is evaluating its performance in customer service delivery and has noticed that they have not been meeting customer expectations in this area.
PROBLEM STATEMENT:
Starbucks’ most recent market research has revealed that the customer satisfaction level has dipped. Starbucks plans to invest $40 million to increase labor hours which will subsequently result in improved customer satisfaction. This investment will reduce the EPS by 7 cents per share.
• Should Starbucks make this investment?
• Has customer satisfaction been measured using the correct metrics? Will the investment improve customer satisfaction ratings? In other words, will the investment directly address / increase customer satisfaction ratings?
• Are there other alternatives or avenues of investment that can address this issue?
THE IDEAL STARBUCKS CUSTOMER:
An ideal and profitable Starbucks customer typically possesses the below characteristics:
• Belongs to a diverse population group:
Starbucks originally targeted affluent, well-educated, white-collar female patrons, aged between 25 and 44 years. However, a recent study has revealed that newer/first-time customers tended to be younger, less well-educated, and in a lower income bracket than Starbucks’ more established customers.
• Provides Repeat Business:
Market data suggests that a satisfied customer visits the store 4.3 to 7.2 times a month, as compared to an unsatisfied customer