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Starbucks Case Essay

1032 words - 5 pages

Case 1: Starbucks

1. Several factors that accounted for the success of Starbucks, the first being its excellent coffee. Starbucks prided itself on its premium, high-quality, coffee; an alternative to normal coffee that was not offered much in the 90s. Its second factor to success is the company’s superior customer service philosophy, which they defined as “customer intimacy” including everything from recognizing a customer and recognizing their drink to customizing a drink to a customer’s preferences. Lastly, the physical environment of the coffeehouses (furniture, décor, lighting, layouts), were used to create an up-scale and inviting ambience that encouraged lounging. These factors of ...view middle of the document...

The new customers were likely less affluent, less sophisticated, and likely younger than their original counterparts in 1992. Another change in the company was an increase in menu complexity. New beverages and items are being launched regularly which allows for more options for the non-coffee drinking customer. This increase of product diversity meant a more mainstream consumer compared to Starbucks’ original serious coffee drinking target customer. These handcrafted beverages made up a large percentage of Starbucks’ sales, with whole beans now only composing 6% of Starbucks’ revenues in 2002. These numerous handcrafted items, though profitable, also puts a pressure on Starbucks’ baristas that were not felt when the menu was more simple in 1992. Mastering the “hard skills” needed to be a barista was now more difficult than ever.

3. The new changes to Starbucks have contributed to a decline in customer satisfaction with the brand. Due to the increase in menu complexity, there was now more strain among the baristas who have an increasingly difficult job of mastering the “hard skills” associated with creating the handcrafted beverages. This also leads to less happy employees. Moreover, through the increase in accessibility, many of Starbucks’ new customers are commuters, introduced to the product through the company’s new non-coffeehouse channels. These new customers are more likely to be rushed; they see Starbucks as part of their routine and enjoy the store for its convenience. According to Exhibit 8, these new customer have a generally lower opinion of Starbucks, with only 8% seeing it as something worth paying more for. This increasingly complex menu in combination with its newly acquired customers gave way to a decline in customer satisfaction, primarily caused between conflicting views from the already established customers and the new customers. Since the two customer groups define “good service” differently, their needs and wants from Starbucks often conflict. It is difficult for the established customer, who wants a peaceful and friendly environment, to enjoy a personalized beverage when new customers crowd the store and create a rushed environment. Conversely, when an established customer orders a complex and...

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