Starbucks Case

Starbucks: Delivering Customer Service

In 2002, Starbucks is a dominant specialty-coffee company in the world with more than 4,500 stores in North America alone. The company is still on fast retail expansion but the customer satisfaction is declining due to long waiting time. We recommend that the company invest $40 million annually to hire more baristas and thus to improve speed of service. According to the result of break-even analysis, the company can make a profit from the investment if more than 11% of the customers can be turned to a higher level of satisfaction. As the survey shows that 10% of customers feel more like a valued customer if they get faster and more efficient service, we conclude that as long as the company allocates the $40 million properly, it can break-even the investment and at the same time improve brand image.

1. Factors accounted for the extraordinary success of Starbucks in the early 1990s/ Compelling aspects of value proposition/ Brand image during this period

The extraordinary success of Starbucks in the early 1990s can be attributed to Schultz’s inspiration of changing the coffee drinking experience in America and the success in raising public offering for expansion. The value proposition of the company was compelling in three aspects. The first was the experiential branding strategy which featured high-quality coffee, customer intimacy and an upscale yet inviting atmosphere. The second was the broad distribution strategy that helped the company to attract a large base of customers. Third, the company called all employees partners and believed that partner satisfaction led to customer satisfaction. The brand image during 1990s was that Starbucks cared primarily about customer service.

2. Difference between the Starbucks of 2002 and the Starbucks of 1992

First, the number of stores has risen from 140 in 1992 to 5,000 in 2002. Second, the location of stores has expanded from Northwest and Chicago in 1992 to the whole globe...