Starbucks Case Study

Starbucks Case Study

20 years ago, coffee was a boring commodity until Starbucks decided that selling a customer experience that involved premium coffees would be a profitable venture. But order for Starbucks to convince consumers to pay a premium for a commodity, stores had to be warm, friendly and inviting; somewhere consumers would want to linger and hangout. To say they succeeded would be an understatement. But in 2002 after years of explosive growth, Starbucks senior team realized that they had lost focus. Market research data presented by Christine Day (SVP of Administration) showed several disturbing trends:

- Customers began to think that Starbucks was concerned with growth above all else

- The customer base was evolving and the company wasn't adjusting

- In customer surveys, customer satisfaction was being identified as less than "excellent"

- Ironically, they were too many customers. Over worked baristas couldn't provide the necessary customer "intimacy" that frequent long term customers were accustomed to.

For a company like Starbucks that depends on the ambience / environment of it's stores as much as the product itself, this was unacceptable. For Starbucks' continued success, it was imperative that the customers needed to be valued in order for the company to differentiate itself from competitors.

Since the article was written, it seems that Christine Day lost her argument to senior leadership to increase the labor expense to provide more baristas in stores to enhance customer service. Starbucks continued to expand at a breakneck pace despite the lack of customer focus indicated in the marketing data...then the recession hit. In 2008, Howard Schultz the original founder, returned as CEO due to troubling sales figures and decreasing same-store sales. Over 900 unprofitable stores were closed. Mr Schultz laid out a roadmap for a "transformational agenda". His goals were "to fix troubled stores, rekindle an emotional attachment...