starbucks case study

Group 10 MARK247 Case: Starbucks
Questions for Discussion

1. What factors accounted or the extraordinary success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period? (team 9, 10 & 11)
Factors: It is own value, creating an uplifting experience every time customers walk through the door; located in high traffic, high visibility, retail centre. Innovation e.g. set up an espresso bar in their downtown Seattle shop. Specialty coffee, premium, 50% sales of beans. Relax consumer – intimacy – baristas, knowing customer’s name and drink  hard skills & soft skill; atmosphere  furnishing, music, aroma.
Value proposition: 1) coffee  offering highest quality, lots of control over supply chain; 2) service  customer intimacy, loyalty of customers, customizing drink in their way; 3) atmosphere providing an upscale yet inviting environment.
Tight value proposition for well defined market: customer patterns  stay for a while (linger/ hangout), rituals: read magazine/ do puzzle, chat; established customers  coffee fanatics, 24-44, white collar, well educated, affluent, female; brand perceptions/ image  escape: a 3rd place, premium coffee, affordable luxury.
Brand image: sense of community, everywhere – the brand, good coffee on the run, place to meeting and move on, convenience oriented - on the way to work, accessible and consistent.
2. Why have Starbucks’ customer satisfaction scores declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way? (team 1, 2 & 3)
Decline: change of customers from affluent, well-educated, white collar female between the age of 24 to 44 to people who are younger, less well educated and in a lower income bracket.
Expectations are higher.
Services declined: more crowded, time needed to serve customers longer, can’t build up friendship.
Measuring