- Starbucks is the dominant specialty coffee brand with over 4,500 retail outlets in 2002, but is pursuing aggressive expansion through adding 750 more outlets. However, customer satisfaction scores are declining and the brand image is showing weaknesses. - The document discusses factors that accounted for Starbucks' early success in the 1990s, reasons for the decline in customer satisfaction, how Starbucks has changed from 1992, and recommendations for improving operations and customer satisfaction.

1. Group 3 and 4

2.  Starbucks – dominant specialty brand more than
4500 retail outlets in 2002
 Aggressive expansion strategy requires additional
750 retail outlets
 Market research shows customer satisfaction is on
decline
 Brand image to is showing rough edges

3. ? What factors accounted for SB success in early 90’s
? Why have SB customer satisfaction scores decline
? How does the SB of 2002 differ from 1992
? Describe the ideal SB customer from profitability
point of view
? Should SB made the $40m investment in labour

4.  Megabrand image- without mass advertising
 Sales growth 5% for 11 consecutive years
 Serving 20m customers in more than 5000 stores
 Tightly integrated value proposition perfectly
aligned with target market needs

5. As a result the following consequences evolved:
Starbucks
Dunkin Donuts

6. CONSUMPTIONS PATTERNS
 Customers tend to
overstay
 Ritualistic consumption
 Choose SB for leisure
with friends or being
alone
 Chat with baristas
DISTINCT PERCEPTIONS
 Best coffee in the
market
 Upscale and classy
 Social reinforcement

7.  Brand – more accessible
o Introduced drive throughs (50%)
o Non company operated retail chains (15%)
 Customer base has been changed
o Massive store expansion
o Non coffee house channels
o Non coffee products
o Other mechanisms

9.  Increased product diversity
▪ Exhibit 5 shows a typical menu board and the price list of the
store
 Increased pressure on baristas

11.  Highly satisfied customer - $172 and $200 more
than unsatisfied
 Lifetime value of highly satisfied customer is $2248
 $2970 more than satisfied and unsatisfied customer
respectively

12. ESTABLISHED
 Want peaceful
ambience
 Want friendly
employees
 Want customized
beverage
NEW CUSTOMERS
 Create a rushed
environment
 Made the employees
grumpy
 Put pressure on
baristas

13. 83 % of the customers
ranked a clean store being
highly important in
creating customer
satisfaction.

14.  Customers want friendly and attentive staff
 Fast and effective service
Same reflected by mystery shoppers

15. Starbucks
Dunkin Donuts

16.  SB lacked a strategic marketing group
 New acquisitions due to new customer base
 Establish customers less profitable but help
in retain a good brand image

17.  Installation of automated machines
 Facility remodeling
 Product innovation
 SVC prepaid cards
 Store clustering
 Employing more labour

18. Investment is needed not only to convert
satisfied customers to highly satisfied but is
also needed to retain the present satisfied
customers

19. Conclusion

20. Thank you