Starbucks Case Study

Derek Morford

LFGSM – Marketing

Case Background

Starbucks, the dominant specialty-coffee brand in North America, must respond to recent market research indicating the company is not meeting customer expectations in service. To increase customer satisfaction, the company is considering an investment of $40 million dollars and increase the number of labor hours would increase customer satisfaction. However, it is not certain whether the investment would make the impact needed.

Starbucks prides itself in providing the highest quality of product with exceptional customer service. The goal of making a Starbucks barista coffee experience into the “third-place” between home and work is part of the value proposition. Regardless of this value proposition, customer satisfaction is not living up to their standards. Starbucks is considering adding 20 labor hours per week & store would change the tide in customer perception and service.

Recommendation

Based on the company’s research, it is evident that only 10% of the Starbucks customers have asked for a faster, more efficient service. Even if the $40 million investment is made and customers get a faster service, there is a big risk in losing value in some of the other perceptions. Having more partners in a specified work area might lead to the risk of less friendlier, less attentive staff and might also risk the loss of the personal treatment. It even appears impractical and inefficient to allocate the $40 million investment equally to all of the stores. It would make sense to allocate the money based on size of store, number of customers, location and need for additional labor. There would be no need to invest in a store where all customers are highly satisfied and there would be higher need to invest in a store where there is a high percentage of less satisfied customers.  

Starbucks should only invest the money in labor wherever needed and in what amount needed. A good way to do that would be to do a more...