Starbucks' Value Chain and Marketing Metrics
STARBUCKS CASE STUDY
INTRODUCTION
Starbucks was created in 1971 by 3 coffee fanatics in Seattle, and was originally an Arabica beans store. It started expanding to a coffee shop and opened more stores throughout the country in the 1990’s and today, Starbucks owns more than 15,000 stores in 50 countries, and it had become the premier roaster and retailer of specialty coffee in the world. Starbucks’ mission statement is: “To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”
Starbucks also sells coffee beans and coffee products through other retail channels, such as airlines, hotels, restaurants in airports, grocery stores and warehouse clubs. However in this report we are only going to focus on Starbucks coffee Retail shops. The case we are dealing with is about customer satisfaction. Indeed, a market research revealed that the customers’ expectations were not met and the company is deciding whether or not to invest an additional $40 million annually in order to add the equivalent of 20 hours of labour in each store per week.
Starbucks has two segments of customers. First we have the “take out” customers, who buy their coffees and snacks on the way to work or to school, and are going to consume it either in the public transports or at their workplace. Then they have the “drink in” customers, who come to Starbucks in order to enjoy a moment inside the coffee shop, either with friends, family or colleagues, or on their own to enjoy a coffee by themselves.
STARBUCKS’ VALUE CHAIN
The value chain is the combination of the value-adding activities, the primary activities and the support activities, which converts inputs into outputs and offer the customers a level of value that exceeds the cost of these activities. The customer perceived value “depends on the product's ability to satisfy his or her needs or requirements” (Businessdictionary.com). Starbucks’ value chain can be summarized as shown on the diagram below:
INTRODUCTION
Starbucks was created in 1971 by 3 coffee fanatics in Seattle, and was originally an Arabica beans store. It started expanding to a coffee shop and opened more stores throughout the country in the 1990’s and today, Starbucks owns more than 15,000 stores in 50 countries, and it had become the premier roaster and retailer of specialty coffee in the world. Starbucks’ mission statement is: “To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”
Starbucks also sells coffee beans and coffee products through other retail channels, such as airlines, hotels, restaurants in airports, grocery stores and warehouse clubs. However in this report we are only going to focus on Starbucks coffee Retail shops. The case we are dealing with is about customer satisfaction. Indeed, a market research revealed that the customers’ expectations were not met and the company is deciding whether or not to invest an additional $40 million annually in order to add the equivalent of 20 hours of labour in each store per week.
Starbucks has two segments of customers. First we have the “take out” customers, who buy their coffees and snacks on the way to work or to school, and are going to consume it either in the public transports or at their workplace. Then they have the “drink in” customers, who come to Starbucks in order to enjoy a moment inside the coffee shop, either with friends, family or colleagues, or on their own to enjoy a coffee by themselves.
STARBUCKS’ VALUE CHAIN
The value chain is the combination of the value-adding activities, the primary activities and the support activities, which converts inputs into outputs and offer the customers a level of value that exceeds the cost of these activities. The customer perceived value “depends on the product's ability to satisfy his or her needs or requirements” (Businessdictionary.com). Starbucks’ value chain can be summarized as shown on the diagram below: