M512 MARKETING STRATEGY
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1. What factors accounted for the success of Starbucks in the early 1990’s? What was so
compelling about the Starbucks value proposition?
The success of Starbucks in the early 1990’s can be attributed to Howard Schultz’s vision of
the Starbucks brand. Schultz inspired of a company which would make the customer the
centre of its success and would change the coffee drinking experience in the U.S. In order to
achieve this, Schultz successfully utilized his human resources by establishing benefits that
would force those resources to create value in the process ...view middle of the document...
These two strategies
enabled Starbucks to deliver on the first component of its value proposition; quality.
c. Service: Partners were trained on both “hard skills” and “soft skills” when hired to
work for a Starbucks retail store. This equal emphasis on the “hard” and “soft” skills
further highlighted Starbucks strategy to make the experience pleasant for the
customer. The “soft skills” were a way to teach the partners on how to connect with
the customer, by establishing eye contact, smiling and greeting them with their
names when the customers were regulars. In addition to that there was also the “Just
Say Yes” policy for which the partners went beyond company rules in order to satisfy
the customers. These again created a friendly environment for customers who felt
special and in combination with the two points mentioned above increased their
d. Partner satisfaction: Schultz’s belief was that if the Starbucks employees were happy,
then this would lead to higher customer satisfaction. For this reason, Starbucks
partners were among the highest paid hourly workers, they enjoyed health benefits
and they had stock options. This resulted in one of the lowest employee turnover
rates in the industry and a consistently high employee satisfaction rate. Furthermore,
the majority of promotions for Starbucks were within its own ranks. Even though
there is no evidence that the satisfaction of partners led to customer satisfaction, it
would be safe to assume that the low employee turnover meant that partners stayed
at their positions for longer time, were more experienced in treating the customer
and could provide a faster service.
e. Specific target audience: Starbucks coffee in the 1990’s was targeted primarily
towards the affluent, well‐educated, white‐collar people. Being able to attract such
an affluent demographic and serving them by providing superior service, helped in
being able to provide the service at a consistent level and keep the customers
f. Attractive market: The concept of Starbucks was new and the notion of turning the
coffee drinking into a social experience was almost unexploited in the U.S. In the
early 1990’s Starbucks did not face fierce competition. The absence of the above
concept helped Starbucks succeed.
Starbucks value proposition is compelling because it places the customer and the service
delivered to the customer above everything else. Even though Starbucks is a retail‐coffee
store, the value proposition is not about the coffee exclusively but about the coffee culture
and the experience of drinking coffee. With its value proposition, Starbucks moves away
from the tangible benefits that the coffee offers, such as taste, stimulation, alertness and
concentrates on the quality of its coffee and the intangible benefits of the experience of
drinking Starbucks coffee. Starbucks value proposition is not about coffee, it is about the
experience of drinking coffee in a Starbucks store integrating the...