1. Lida Mae Labial
BSBA/4th year
1. What factors accounted for the extraordinary success of Starbucks in the early 1990s?
What was so compelling about the Starbucks value proposition? What brand image did
Starbucks develop during this period?
Answer: The factors that contributed to Starbucks` success were their experiential branding strategy, their
reach, product variety, customer service and quality. The compelling factor of the value proposition was that
Starbucks was tightly integrated. It met the needs of its target market. In the early 1990s,Starbucks` target
market consisted mainly of coffee connoisseurs. Starbucks was less about the coffee itself and more about the
experience around the consumption of coffee. The brand image it developed during this period was
synonymous with its ‘live coffee’ mantra. It became America’s third place – after home and work. They created
a place other than work and home where people could meet and hang out. They brought the Italian coffee shop
culture to America.
Starbucks’ Value Proposition:
1.To create an “experience” around the consumption of coffee, an experience that people would weave into the
ir lives
2. To create an uplifting experience in “Customer intimacy”
3. To create an “ambience” based on human spirit, sense of community, and the need for
people to come together
To enforce their coffee standards, Starbucks directly dealt with growers in different countries to purchase green
coffee beans, oversaw the custom-roasting process and also controlled distribution to retail stores around the
world.
Starbucks’ Brand Image: Their brand image back then was that of a living room outside your home with
good quality coffee. In a decade, this changed to
Anywhere, everywhere, good coffee on the run captures Starbucks image completely. Their brand image was
essentially consistent with high quality, personalized service rather than that of making a huge profit.
2. Why have Starbucks customer satisfaction scores declined? Has the company's service
declined or is it simply measuring the wrong way?
Customer satisfaction gap could primarily be attributed to a service gap between Starbucks scores on
key attributes and customer expectations.
As per above model, Starbucks is measuring customer satisfaction parameters which really do not fall into
customer
satisfactionmeasurement category. Starbucks is measuring parameters that attribute to product quality rather t
han service quality. Thus, Starbucks is measuring customer satisfaction in wrong way.

2. 3. How has Starbucks changed since its early days?
Change in customer segment Brand has become more accessible and there are more stores worldwide
• Starbucks has expanded from local to international ,operates 5,886 stores
• Starbucks’s products are available at own stores and other retail stores
• Partnership with other brands to boost the brand and service value Change in customer base Service
innovation
• Introduction of stored value card that acts as a swipe able smartcard that provides convenience to customers
• T-Mobile HotSpot wireless internet service that offers high speed access to Internet in 2000 Starbucks stores.
Change in Business Strategy Change in customer preferences
• Main focus on aggressive growth strategy in 2002 compared to broad distribution
• In year 2002,beverages accounted 77% of the revenue compared to 6 % of strategy whole-bean coffee
sales.10 years ago, whole-bean coffee contributed half of their
• Product innovation total revenue
Increase in product diversity Channel of distribution
• Expanded the product from coffee into varieties such as chocolate and tea.
• Starbucks was popular from the conventional coffeehouse only before they foray
• With the product proliferation, there are hundreds of combinations of drinks into other channel of
distribution that we see today like: available. Hotels, airlines, restaurant
• Innovation has brought the company to have different product lines. Grocery stores and warehouse clubs
• Partnership with Dreyer’s Grand Ice Cream ,developed a line of premium ice Online and mail order creams
• Other available product mixes Increase in pressure on baristas
• The complexity of job has increased over time and created tension between product quality and customer
focus
• Need to serve the large customers with long working hours
• Need to manage the customer out of offer menu and service, additional top up ice cream ,more chocolate
taste, etc.

3. 4.Describe the ideal Starbucks customer from a profitability standpoint. What take to ensure
that this customer is highly satisfied? How valuable to Starbucks is a highly satisfied
customer?
In order to ensure that this customer is highly satisfied, Starbucks is fully focus on the key attributes of the
following: • Clean store • Convenient location • Friendly barista • Coffee taste and flavor • High quality coffee •
Appropriate price • Freshest coffee • Speed of service • Service quality .
5. What’s the Should Starbucks make the $40 million investment in labor in the stores? What’s goal of this
investment? It is possible for a mega-brand to deliver customer intimacy?
Yes, Starbucks should invest $40 million in labor in the stores because of the goals of this investment are:
following justification: • Enhance the customer satisfaction by offering a comfortable place to enjoy • This will
result in a relaxed labor- hour controls in the storesto add an additional 20 hours of labor, per week, per store
will allow Starbucks to bring the coffee and as for relaxation service time down to the 3 minute level in all their
stores, regardless of the time • Provide efficient customer service by providing sufficient baristas to serve of
day. This will also allow an increase in the customer satisfaction rate and build a stronger long term relationship
with their customer. high traffic customers • This move will also indirectly motivate the baristas to be more
productive in • Reduce customer waiting time to boost the sales and profit serving the customers effectively by
maintaining the quality of taste and flavor of the drinks, not forgetting the fact that it will increase the speed of
delivery, within 3 minutes. • Move away from seeing labor as an expense to seeing it as a customer oriented
investment. • With more labor hours baristas can spend a little more quality time with their customer and this
will help them to increase the customer intimacy
Starbucks has a tendency to deliver customer intimacy via this investment by • Review the key
attributes of measuring customer satisfaction between its value outlining the strategic action plan as follows:
and market search value to close the gap of analysis that provide effectively situation to improve the products
and services • Use secondary market research data to identify, analyze and structure their strategies so that
additional labor hours can be used effectively and know- • Source the automate machine to simplify and
shorten the process of making how to improve the customer satisfaction coffee • Customize the product mix
based on customer behavior of the each store so • Rewarding customers for free cup after every10 times-visit
can improve that quality of taste and speed drink delivery are manageable as well as customer satisfaction. In
fact this will encourage customer to have more visits utilize the number of baristas effectively • Routine and
regular training for the baristas to improve their service skills, • Continue with product and service innovation by
proactively conducting an friendliness and to build the relationship with customers environmental scan to
ensure successful new products launch. Invite customers to provide feedback on new products. • Implement
CRM to know every customer preferences with their stored-value card (SVC).