Analysis of Starbucks Delivering Customer Service
• In 2002, market research has shown that Starbucks has a gap in meeting its customer’s expectations in terms of customer satisfaction.
• On interpretation the marketing research data, Christine Day, Senior Vice President concluded that the speed of service was the main reason for this decline in customer satisfaction. So she proposed to improve the service time such that each order is served within 3 minutes.
• However, this solution would cost Starbucks 20 additional labor hours per week thereby $40 million per year. Is 20 seconds increase in speed of service really worth $40 million per year?
Situation ...view middle of the document...
Please refer the Appendix Exhibit A.
Competition: Starbucks is clearly ahead of its competitors in terms of size of operations and profitability.
• In the US, its main competitors are small-scale specialty coffee chains like Caribou Coffee, other independent specialty coffee shops and donut and bagel chains like Dunkin Donuts.
• From Exhibit 6 of Starbucks case document we can observe that despite of the fact that there are many specialty coffee shops on the raising, Starbucks still holds a leading edge.
Company: Starbucks pursued its overall objective to establish itself as the most recognizable and respected brand in the world by focusing on retail expansion and product innovation.
• Starbucks had 20 million customers and 5000 stores and still growing.
• From Exhibit 2 and 6 in Starbucks case document it is clear that Starbucks was constantly expanding and growing its market share in the specialty coffee market.
• The Starbucks market share in the specialty coffee market grew by 29.92% between 2000 and 2002 and it’s expected to grow by an additional 61.11% by 2005. Please refer appendix Exhibit B.
• Historically, Starbucks invested minimal on advertising. Starbucks was also an employee friendly organization. Starbucks has approximately 60000 partners/employee, of which most are hourly wage employees called baristas. Employees were highly valued and well taken care of by providing insurance coverage, stock options, and internal promotions.
Context: Starbucks was constantly investing in new product innovation to drive sales and growth. The financial numbers reflect this growth (Exhibit 1 from Starbucks case document). But recent market research showed that customer service, on which Starbucks prided itself, was perceived as unsatisfactory. Customers viewed Starbucks as a corporate giant focused on making money and growing in size. It showed that Starbucks’s strategy of using customer snapshot scores to measure service performance was proving ineffective.
Analysis of Alternatives
Strengths: Some of the key strength are its large market share, well known brand name and generally trusted, reasonably well accepted for having a good quality, Good coffee on the run - associated with speed of service, Accessible and convenient and Consistency. Speed of service is one of the main strength of Starbucks is now found to be declining.
Weaknesses: Starbucks' "Valued Customer" Perceptions Survey is key in helping to determine what areas customers are most disappointed with or where they feel Starbucks need to improve. This survey essentially identifies that gaps that exist between customers’ expectations and what Starbucks delivers. "Importance ranking of key attributes in creating customer satisfaction” survey points to what customers consider most important in creating customer satisfaction. As shown Appendix Exhibit C, Starbucks weaknesses and their importance can be highlighted by finding the gaps between customers’...