STARBUCKS:

Delivering Customer
Service
SERVICES MARKETING, SECTION A, GROUP B

D I S H A PA N D E Y ( 2 0 1 3 0 1 5 )
(2013039)
SALONI SOOD (2013043)

M I S H LY E A D A M ( 2 0 1 3 0 2 5 )

S . S U C H I TA

S A M E E R V O LV O I C A R ( 2 0 1 3 0 4 4 )

What factors accounted for

Starbuck's success in the early
1990s and what was so compelling
about its value proposition? What
brand image did Starbucks develop
during this period?
QUESTION 1

FACTORS
Starbucks wanted to become the leading brand for
coffee all around the world
The quality of their products has been recognized
and shared through word of mouth

FACTORS
Experiential branding strategy
Novel concept providing not only best coffee but experiential coffee consumption by providing soothing
ambience

Reach
Stores were located near important public places like downtown and near road junctions to reach out to
customers where they work, shop, travel, dine

Product Variety
Wide variety of beverages with different levels of customization were available

High Quality Coffee

Controlled the supply chain by working with the growers to ensure good quality coffee beans

Transformation of coffee consumption

From a picking behavior to an experience with credence attribute

VALUE PROPOSITION
Create an experience of having coffee for people that would weave into their
lives

Create an uplifting experience for customer through customer intimacy

Create an ambience where having coffee was about human spirit, sense of
community and need for people to come together

BRAND IMAGE
Widely available
Gourmet/Speciality coffee
Trendy
High levels of Customer Service
Correctness
Time delivery
Courtesy
Clean

Why have Starbucks' customer

satisfaction score declined? Has
the company's service declined
or is it simply measuring
satisfaction the wrong way?
QUESTION 2

CUSTOMER SATISFACTION
DECLINE
Prioritization of expansion over customer value
Lost out on customer intimacy the third home

Changing customer base & metrics

From wealthy graduates to younger crowd of lower income
Niche segment dilution

Product Innovation & Customized beverages

Complextity of service increased
Waiting time increased

SERVICE PERFORMANCE
MEASURMENT
Flawed as it doesnt differentiate between the different customer segments.
Measured service performance primarily using a Customer Snapshot with parameters of:

Service
Cleanliness
Product quality
Service speed

Service gap between scores on key attributes and customer satisfaction.

Each segments expectations of each of the attribute values were different
For example, on-the-go customers expected a higher speed of service as compared to the sit-in
customers.

Describe the ideal Starbucks customer

from a profitability standpoint. What
would it take to ensure that this
customer is highly satisfied? How
valuable to Starbucks is a highly
satisfied customer?
QUESTION 3

THE PROFITABLE CUSTOMER

As Starbucks has become ubiquitous, it stands that the ideal way
forward is to cater to high-earning professionals
who value speed and convenience when it comes to coffee
who can visit Starbucks on their way to work to grab a quick cup,
who remain discerning about their taste.

From a profitability point of view, ideal customers are loyalists

visit Starbucks on average 7 times a month
primarily affluent people who have developed a taste for Starbucks
renowned quality.

THE PROFITABLE CUSTOMER

These customers can be satisfied by
Improving service time and providing faster service by employing more partners per store
Invest $ 40 million per year for improving partner services
Concept of loyalty points can be brought out where customers are given free cup of coffee after some
number of visits, redeemed for their loyalty points

Customer
base

No of Starbucks visit per

month

Ticket
size/visit ($)

Average life
time (years)

Customer
value ($)

Highly
satisfied
Satisfied
Unsatisfied

7.2
4.3
3.9

4.42
4.06
3.88

8.3
4.4
1.1

3169.6704
921.7824
199.7424

Thank You