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Starbucks Case
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Starbucks: Delivering Customer Service
Case Study, BEP 430 Marketing
20030059 Dong-ock Kim1, 20030071 Min-geuk Kim2, 20040054 Keehyung Kim3,
20040535 Yohan Jo4, 20076006 Huang Qiuling5, 20076035 Dorjsuren Bayarmaa6
Marketing Team A1 2 3 4 5 6
[email protected], [email protected], [email protected],
[email protected], [email protected], [email protected]
Professor: Wonjoon Kim
Date submitted: May 7, 2007
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TO: Day, vice president of administration in North America, Starbucks
FROM: Dong-ock Kim, Min-geuk Kim, Keehyung Kim, Yohan Jo, Huang, Qiuling,
Dorjsuren Bayarmaa
RE: Starbucks: Delivering Customer Service
DATE: May 7, 2007
Market Analysis
Starbucks provides the highest-quality coffee what it believes in the world. It
has hundreds of product lines and the sales of beverage take the largest percent. Despite
of Starbucks overwhelming presence and convenience, customers think there was just a
little of image and product differentiation between Starbucks and the smaller coffee
chains. However, Starbucks has an uncomplicated distribution strategy, and it tries to
make customers get entrance to Starbucks products easier and provide more
convenience to customers. Moreover, it has company-operated stores located in hightraffic
and high-visibility and non-company retail channels. In addition, Starbucks has
four major competitors. Minneapolis-based Caribou Coffee which provides the look and
feel of an Alaskan lodge has more than 200 stores in nine states. California-based Peets
Coffe&Tea – the freshest coffee is its strategy – has about 70 stores in five states. Others
are Independent specialty coffee shops which offer beer, wine, liquor, satellite television,
and internet-connected computers and, Donut and bagel chains like Dunkin Donuts
offering flavored coffee and non-coffee alternatives.
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For product innovation, new products were launched on a regular basis. For
service innovation, Starbucks has launched Stored-Value Card (SVC) and T-Mobile
HotSpot wireless Internet service. In addition, the expanding strategy was to open stores
in new markets while geographically clustering stores in existing market. Furthermore,
the cost of cannibalization covered by total incremental sales associated with
concentration.
Evaluate Starbucks Plan
It is a good idea to make customers feel like valued customers with faster
service with more labor. As you said, it just makes about 7 penny loss a share. However,
it is a minor loss of share, and there are some problems in the $40 million plan. First of
all, it is too large amount of money to spend for small factor. Secondly, there is another
way to satisfy customers.
Every $40 million per year is quite a huge amount of money. The net income of
Starbucks was $151.4 million in 2001 and $215.1 million last year, so it will have risks
about no growth in net income next year. Moreover, it is unsure if it would be
successful. Starbucks is trying to reduce consumers waiting time continuously.
However, there has no successful reduction. Furthermore, in 2002, waiting time of
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Starbucks was just 3.10 minutes, so we cannot assure every customer will be satisfied
with 3 minutes.
Finally, we suggest another plan which is more efficient. There are 19% of
customers who responded that they would feel like valued customers when they could
get free coffee after every x visits. Through the calculation [Appendix 1], free cup after
every 10 times-visit can make more efficient results. Furthermore, friendlier staff can
make 19% of customer satisfaction, so education of staff can be a better idea.
3Fs Recommendation
We have made 3Fs recommendation for Starbucks: Friendly staffs, Free drink
service, Friendly environment.
For the Friendly staffs, we can use methods of evaluation and education. From
the survey of customers satisfaction, friendlier staff is the most important part that can
make customers feel like valued customers. Therefore, evaluation and education would
be a good solution.
Evaluation can be done by both staffs and customers. There are some standards
like Appendix 2. After evaluation, Starbucks can educate poor partners and award the
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best partners. Because it just needs some papers with pens and money for educators,
customers satisfaction rate would be higher with low cost.
There are two types for free cup service. One of them is a free cup after x
number of visits. In “Valued