STARBUCKS: DELIVERING CUSTOMER EXPERIENCE. This report consists of various analysis frameworks / models used to analyse the customer experience at Starbucks.

1. Case Study Analysis | SP Jain School of Global Management
GROUP – 5 STARBUCKS: DELIVERING CUSTOMER EXPERIENCE
Team Members:
Avinash Singh - GSEP13CMM023
Kautilya Tyagi - GSEP13CMM026
Prajakta Talathi - GSEP13CMM031
Vihaan Chaudhary - GSEP13CMM037

2. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 1
Table of Contents
Starbucks Case Study Summary..............................................................................................................2
Key Issue .................................................................................................................................................2
Objective.................................................................................................................................................2
Strategy...................................................................................................................................................3
Plan .........................................................................................................................................................3
Analysis using Models and Frameworks.................................................................................................5
3 C Analysis .........................................................................................................................................5
Competition ....................................................................................................................................5
Company .........................................................................................................................................5
Customers.......................................................................................................................................7
Value Proposition................................................................................................................................9
Live Coffee Mantra..........................................................................................................................9
Experience Economy...........................................................................................................................9
Value Creation.................................................................................................................................9
3 I’s......................................................................................................................................................9
Triple Bottom Line.............................................................................................................................10
Ecosystem of Interdependence ........................................................................................................10
Employee’s Sense of Ownership.......................................................................................................10
Service Evaluation.............................................................................................................................11
Deepening Relationship....................................................................................................................11
Brand Layers......................................................................................................................................12
Customer Actively Immersed............................................................................................................12
Brand Personality..............................................................................................................................12
Flower of Service...............................................................................................................................13
Self – Penalization.............................................................................................................................13
Customer Pyramid ............................................................................................................................14
Kano’s Model ....................................................................................................................................14
Implementation of Plan ........................................................................................................................15
Assault 5 Senses................................................................................................................................15
Employee Empowerment and Engagement .....................................................................................15
Build Relationship .............................................................................................................................16
Recommendation..................................................................................................................................16

3. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 2
Customer Satisfaction
BottomLine
Starbucks: Delivering Customer Service
Starbucks Case Study Summary
Due to rapid expansion and increasing service time there is a decrease in customer service and
customer satisfaction. This has impacted the bottom line of Starbucks. There are internal conflicts
between Christine Day, Senior Vice President of Administration and Howard Schultz, Orin Smith the
CEO of Starbucks and the CFO where Day wants to focus on customer service and customer
satisfaction and the rest want to focus only on the bottom line.
To enhance customer experience, Day has asked for an additional $ 40 million in order to relax the
labour hour controls in the stores to add an additional 20 hours of labour per week per store.
Key Issue
While focusing on brand and building new products, Starbucks started losing sight of its customer.
The challenge for Day is to prove that Customer Satisfaction is directly proportional to Bottom Line.
Objective
Hence, one needs to either improve Customer Satisfaction to improve the Bottom Line or to improve
the Bottom Line and invest the profits to increase Customer Satisfaction.
Customer Satisfaction
α
Bottom Line
To prove that
Bottom Line α Customer Satisfaction

4. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 3
Strategy
Christine Day needs to present to CEO and CFO of Starbucks, for whom bottom line is the most
important. Hence, she should follow the strategy of Contingency Model of Presentation.
Contingency Model of Presentation is to present your ideas to the audience in the way they want to
listen.
The strategy to be proposed to the management team will be to strengthen bottom line which will
generate enough funds to improve the customer satisfaction. To increase the bottom line:
Let us focus on increasing the revenues:
Plan
Brand Ambassadors get more customers, frequently visit Starbucks and also have larger ticket sizes.
Lifetime Value of Customers
Increase
Ticket
Size
Increase
Frequent
Visits
Increase
Footfall
Satisfied Customers
Brand Advocates
Buzz Customers – Family/ Friends
Footfall
Expenses – Marketing etc
become
create
attracts
increases
reduces
savings invested in creating

5. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 4
In order to increase the lifetime value of the customers, convert every customer into highly satisfied
customers and then into Brand Ambassadors or Advocates:
To create pleasant memorable experience and to reduce or to eliminate pain points the following
can be done:
Reducing or eliminating their pain points
Creating pleasant memorable experience
Building
Emotional
Relationship
Employee
Engagement
Assault all
5 senses

6. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 5
Analysis using Models and Frameworks
In every situation it is always advisable to begin looking internally first, improve these conditions and
then move to external conditions and improve them.
3 C Analysis
Competition
Name Place Stores Key Differentiator
Small Scale Coffee Chains
Caribou Coffee Minneapolis
based
200+ stores in 9
states
Store environment – Alaskan lodge,
knotty pine cabinetry, fireplaces and
soft seating
Peet’s Coffee and Tea California
based
About 70 stores
in 5 states
Freshest coffee in the market – “Roast
to order”, hand roasted beans
Independent Speciality Coffee Shops
Various Shops Different
locations
Different stores
across all states
Different coffee shops different
offerings – wide range of F&B, Satellite
TV, Internet connections, personalised
services
Donut and Bagel Chains
Dunkin Donuts – 3700+ stores in
38 states
Flavoured coffee and non-coffee
beverages; Dunkaccino, Vanilla Chai
Company
Mission
Statement
“to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time”
Guiding Principles
Starbucks describes 6 guiding principles in their mission statement that also communicates the
organization values

7. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 6
Values
Our Coffee
It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest
coffee beans, roasting them with great care, and improving the lives of people who grow them. We care deeply
about all of this; our work is never done
Our Partners
We’re called partners, because it’s not just a job, it’s our passion. Together, we embrace diversity to create a
place where each of us can be ourselves. We always treat each other with respect and dignity. And we hold
each other to that standard.
Our Customers
When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for
a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond
that. It’s really about human connection.
Our Stores
When our customers feel this sense of belonging, our stores become a haven, a break from the worries
outside, a place where you can meet with friends. It’s about enjoyment at the speed of life – sometimes slow
and savored, sometimes faster. Always full of humanity.
Our Neighborhood
Every store is part of a community, and we take our responsibility to be good neighbors seriously. We want to
be invited in wherever we do business. We can be a force for positive action – bringing together our partners,
customers, and the community to contribute every day. Now we see that our responsibility – and our potential
for good – is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.
Our Shareholders
We know that as we deliver in each of these areas, we enjoy the kind of success that rewards our
shareholders. We are fully accountable to get each of these elements right so that Starbucks – and everyone
it touches – can endure and thrive.

8. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 7
SWOT
Below is the internal analysis (Strengths and Weakness) and external analysis (Opportunities and
Threats).
Expansion & Total Stores
Starbucks adopted aggressive growth strategy in order to be the most recognized and respected
brand. It comprised of:
1. Retail Expansion
 Too many stores within
North America reduced the
exclusivity of Starbucks and
hence minimised the wow
factor of the brand.
 Also, it led to one store
cannibalising the other
store within the same
locality
2. Product Innovation
While focusing on product innovation, Starbucks ignored customer satisfaction and
customer experience.
Customers
The idea of Starbucks is to provide customers a “Third Place” after home and work.
STRENGTHS:
1. Large Market Share
2. Good Brand name
3. Trusted Brand
4. Quality , accessibility, convenience and
consistent
WEAKNESS:
1. Gap between customer expectations and 2.
Starbucks delivery
3. Low customer satisfaction not getting
compensated by premium prices
4. Delayed sevice
5. Lack of customerfriendliness and attentiveness
THREATS:
1. Increasing number of competitors
2. Increasing number of substitutes and
alternatives
OPPORTUNITIES:
1. Global market expansion
2. Increasing market size
SWOT
STARBUCKS
North
America
78%
International
22%
Starbucks Stores: Total 5886

9. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 8
Frequency
Customer Loyalty or Retention
Customer Feedback
0%
20%
40%
60%
80%
100%
Total Starbucks
Customer Base
Starbucks
Transactions
42%
11%
37%
27%
21%
62%
Customer Visit Frequency
1-2 times/month 3-7 times per month
More than 8 times/month
0-1 year
27%
1-2 years ago
20%
2-5 years ago
30%
5 years plus
23%
Customer Retention
21% of Customers
perform 62% of
transactions. The more
the customers’ frequent
visits, better is their
transaction and hence
the sales.
Customers of Starbucks
are fairly loyal but some
strategies can be
implemented to further
increase the retention
levels.
Product Quality is not consistent and Average Wait Time is reducing.
Nevertheless, the wait time is still above 3 minutes which is still more
than the preferred expected time by customers.

10. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 9
Value Proposition
Live Coffee Mantra
Experience Economy
Value Creation
3 I’s
Low Medium High
Gratification
Configuration
Recognition
Live Coffee Mantra
Atmosphere
Customer
Intimacy
Quality
Coffee
Experience
Mass Customized Personalized
Price
Quality Coffee – Highest
quality; green coffee beans;
Inconsistent
Customer Intimacy –
Recognizing customers and
knowing or customizing their
drinks; diminishing customer
experience
Atmosphere – People come
for coffee but stay for ambience;
Upscaling and inviting
environment
Starbucks offers more customized
close to personalized coffee. It
provides an excellent experience and
hence can charge a price premium.
Service time more than 3
minutes delays Instant
Gratification. Also, failure to
recognize customers and to
know or customize their drinks
reduces the Instant Recognition.

11. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 10
Triple Bottom Line
Low Medium High
Environmental
Social
Finance
Ecosystem of Interdependence
Employee’s Sense of Ownership
Low Medium High
Engage and Empower
Profit Sharing
Meaning
Environmental – Green coffee
beans; Best eco practices
Social – Employees called as
partners/Baristas; provides health
insurance, stock options; lowest
employee turnover rate
Finance – Starbucks focuses on
profitability
Starbucks highly values its
employees and Starbucks
value chain is highly
interdependent; where
Starbucks largely controls
his suppliers.
Engage & Empower –
Reward, training, feedback,
good selection process etc
Profit Sharing – Provides
health insurance, stock
options
Meaning – Starbucks
Coffeehouses should be the
Third Place

12. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 11
Service Evaluation
Low Medium High
Reliability
Assurance
Appearance
Responsiveness
Empathy
High
Medium
Competitive
High
Competitive
Price
Deepening Relationship
Reliability – Reliable coffee service
Assurance – Quality is inconsistent
lately and delivery speed is slow
Appearance – Ambience experience
is high and assaulting 5 senses should
be optimized
Responsiveness – High
responsiveness at all the Touch
Points/ Point of Sales
Empathy – Failure to recognize
customers and to know or customize
their drinks
Price – According to service
evaluation, service quality has been
decreasing and hence charging a
Price Premium is not justified
Recently customers feel
a loss in relationship
levels. Starbucks is
proactively trying to
repair and is
continuously repairing
its relationship with
customers

13. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 12
Brand Layers
Customer Actively Immersed
Brand Personality
SOCIAL RESPONSIBILITY
SELF EXPRESSION
EMOTIONAL
FUNCTIONAL
• Green coffee
• Best eco-friendly practices
• Starbucks customers are thought to be
elite and high class
• Third place
• Ready to go or in house, good taste
coffee
•Starbucks is perceived to be genuine, kind, thoughtful and responsible
Sincerity
•Starbucks will help boost personality to accomplish things and become
influential and successful
Competence
•Starbucks is perceived to be elegant and unpretentious
Sophistication
Otherwise Actively
Immersed customers
are on the verge of
becoming actively
involved and if nothing
done will soon turn
passive

14. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 13
Flower of Service
Self – Penalization
•Organized menu
•Display boards
•Nutrition chart
Information
Employees become
Advisors
Consultation
•Systematic
process
•Placing the order
by self
Order Taking
Verify order - force
functionality
Repeat Order
•Responsible staff
•Takes good care
of customers
Safekeeping
•Excellent Value
Proposition
•Blend of Quality,
intimacy and
atmosphere
Exception
Accuracy of bills
invoice
Billing
•Card, cash, mobile
payment options
•Over the counter
payment
Payment
Starbucks claims good
quality coffee and it
delivers it well; in case
of failure to deliver,
replaces with a new
coffee

15. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 14
Customer Pyramid
Kano’s Model
•Coffee drinkers pull more footfall by creating a Buz
and either get along new customers or suggest to new
customers
•Consumers once convinced about the
coffee will tend to be loyal
•Even though the switching
cost of coffee is low,
consumers once attached to
coffee products and service
are loyal
Basic features:
1. Coffee
2. Side snacks items
3. Good coffee shop ambience
Performance is not consistent. Mixed
feedback from consumers; Not all users
experience the same effect from the service
Excitement is the aspirational awe effect which the consumer
perceives after availing the service. But because of mixed feedback
for satisfaction, this excitement is getting reduced
CustomerSatisfaction
Product Features

16. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 15
Implementation of Plan
Assault 5 Senses
Low Medium High Remarks
Smell Delicious aroma of coffee
Sight
Extremely palatable
and desirable sight;
Ambience looks
comfortable and cozy
Taste
Excellent quality coffee;
Taste of premium-ness
Touch
Smooth touch; feel of
richness and eliteness
Sound
Put slow music during lesser
queue and faster during
longer queue;
Longer service time -> more
people waiting -> louder
sound of people talking
Employee Empowerment and Engagement
Methods How?
Reward Profit sharing, awards, incentives; Recognition
Feedback Instant, every day and when required; Positive
Autonomy End-to-end control
Training Customer service, soft skills, customer recognition, coffee making
Civil Environment Respect, trust, care
Fair and Transparent Ownership and profit sharing
Selection Interviews and candidate matching Starbucks culture
Platform Obstacle free; open door

17. Starbucks: Delivering Customer Experience 2014
Services Marketing Management – Group Assignment P a g e 16
Build Relationship
Recommendation
Investing into Employee Training and Relationship Building with the customers will help create Loyal
Customers and Brand Ambassadors and create a buzz. This reduces enormous marketing expenses,
increases footfall, retains customers and also increases the ticket size per visit.
Trust, Care, Respect, Empowerment,
Engagement, Meaning to job will create
Employee Advocates
Training for soft skills and recognising the
customers will create satisfied customers
who will become brand ambassadors
Customers
Employee
Advocates
Brand
Advocates