Starbucks Hbs Case Study
Chad Ogle MGMT 620 HBS Case 9
Starbucks: Delivering Customer Service History In 1971, Starbucks started as a small coffee shop which targeted a specialized market of coffee purists. Howard Schultz, who later owned the company and initiated the high growth period, joined Starbucks’ marketing team in 1982. Main concept of Schultz marketing strategy was too make Starbucks “America’s third place” considering home and work the two other places where Americans spend most of their time. In 1992, Schultz acquired Starbucks and made an initial public offering. Despite Wall Street’s doubts about the IPO, $25 million was raised by Starbucks. By 2002, Starbucks had opened over 5,000 stores and average three store openings per day. In 2002 Starbucks experienced its 11th consecutive year of 5% or more sales growth. Despite continued sales growth, market research had shown that in the first two years of the 21st century customer expectations of service were not being met. The company had a mystery shopper program which provided evaluations called “Customer Snapshots”. These were a very important tool in Starbucks’ market research. Christine Day, senior VP of administration in North America, proposed a plan to invest $40 million in the company’s 4500 stores to be used for adding 20 hours of labor for each store. The goal of this investment is to improve customer service. This is based upon the premise that adding hours for employees will allow speed of service to improve. Indirectly this creates some extra time to be used to build rapport with the customer and as an opportunity to strengthen customer intimacy. The Starbucks brand has always been dependent on customer service at its coffeehouses and was a major component of the coffee experience which Starbucks continuously sought to provide and improve.
Value
Starbucks had three components to its brand strategy of creating a unique coffee experience. The first component
Starbucks: Delivering Customer Service History In 1971, Starbucks started as a small coffee shop which targeted a specialized market of coffee purists. Howard Schultz, who later owned the company and initiated the high growth period, joined Starbucks’ marketing team in 1982. Main concept of Schultz marketing strategy was too make Starbucks “America’s third place” considering home and work the two other places where Americans spend most of their time. In 1992, Schultz acquired Starbucks and made an initial public offering. Despite Wall Street’s doubts about the IPO, $25 million was raised by Starbucks. By 2002, Starbucks had opened over 5,000 stores and average three store openings per day. In 2002 Starbucks experienced its 11th consecutive year of 5% or more sales growth. Despite continued sales growth, market research had shown that in the first two years of the 21st century customer expectations of service were not being met. The company had a mystery shopper program which provided evaluations called “Customer Snapshots”. These were a very important tool in Starbucks’ market research. Christine Day, senior VP of administration in North America, proposed a plan to invest $40 million in the company’s 4500 stores to be used for adding 20 hours of labor for each store. The goal of this investment is to improve customer service. This is based upon the premise that adding hours for employees will allow speed of service to improve. Indirectly this creates some extra time to be used to build rapport with the customer and as an opportunity to strengthen customer intimacy. The Starbucks brand has always been dependent on customer service at its coffeehouses and was a major component of the coffee experience which Starbucks continuously sought to provide and improve.
Value
Starbucks had three components to its brand strategy of creating a unique coffee experience. The first component