Starbucks: Delivering Customer Service

1) At the time of the case, why had Starbucks been so successful?

Committed to quality and customer satisfaction
Accessibility, many stores in many locations
Good distribution and high visibility locations for stores
Low advertising expenditures
Good corporate values, strict coffee standards, good service, quality products
Good atmosphere i.e. seating areas and layouts that encouraged lounging
Diversity of coffee beverages (77% of sales from beverages)
Joint venture with Pepsi Co. to distribute bottled Frappuccino (additional business, 90% market share on ready to drink coffee)
Low employee turnover rates (very low for industry)
Custom product offerings, almost one half of customers customised their drink
Good control of their supply chain

2) Summarize the research presented in the case in terms of the key implications for Starbucks management.

The company had no chief marketing officer and the marketing department function in different groups. As a consequence, senior executives assumed marketing related responsibilities.
Market research was conducted but the results were not acted upon.
Data interpretation for decision making was not very good.
The company needed product differentiation between Starbucks and the smaller coffee shops
Starbuck’s brand image had some rough edges
Customer base was evolving; Starbuck’s newer customers tended to be younger and the customer profile had expanded.
As customer behaviour, customers were using the store in the same way regardless of the market
Not meeting expectations in terms of customer satisfaction; there was evidence of a direct link between customer satisfaction level and customer loyalty.
Speed of service was the most frequently mentioned concern.

What concerns should they have about the results?

The company focused too much on building the brand and introducing new products, and not enough on building the relationship with the customer.
The company lost the connection between customer satisfaction and business growth.

3) Should they make the investment in adding labour to reduce wait times? Make sure to identify the assumptions underlying your recommendation. Use the data in the case and do the analysis to support your recommendation. For Question 3, provide financial calculations to support your recommendation. I recognize that it is early days in the