Starbrucks Group - An insight about Starbucks group, history, global presence, value proposition, services, competitors, product innovation, service innovation, success factors, consumer profile

1. STARBUCKS : Delivering Customer Service

2. Howard Schultz
Founded on 30 March, 1971
HQ in Seattle, Washington, U.S.
“Third place” after home & work
Marketing budget 3%-6% annually
Started with beans and premium priced coffee
Added handcrafted Espresso inn 1987
Affluent, educated, white-collar, females, 25-44 years
Went Public in 1982
2011 completed 40 glorious years

3. 58 Countries

4. Products
Whole bean coffee
Rich brewed coffee
Italian style Espresso
Cold Blended beverages
Premium teas
Pastries, soda, juices,
sandwiches, salad
Accessories, Equipment's, CD’s,
Games
3 components of Branding Strategy
Highest Quality Coffee Customer Intimacy Atmosphere
Retail Centers Office Premises University Campus
Distribution Channel’s
High-traffic, High-visibility
Collaboration Company
Joint Venture Pepsi
Partnership Dreyer’s Grand
Ice cream

5. BaristasPartnersEmployee
Delivering on Service
Training
Hard Skills
Using cash
register
Mixing drinks
Soft Skills
Enthusiastically
welcome
Eye contact
Smile
Remember
names
Conversation
 PROBLEMS
 Customized drinks
 Handmade drinks
 Delay due to customization
 Strain on Baristas
 Tension between quality &
delivery
 High wage rate in Urban areas
 Eliminating non-value-added
processes
 POSSIBLE SOLUTIONS
 Hire more baristas
 Installing automated espresso
machines
 Machine reduced the no. of
steps in coffee making and also
reduced waste & improved
consistency

6. Customer
Snapshot
Monthly
status
reports
Self-
reported
checklist
Service
Criteria
Basic Service
Criteria
Service
Cleanliness
Product
Quality
Speed of
Service
Legendary
Service

7. Type Brand Differentiation
Small scale specialty
coffee chains
Caribou Coffee,
Minneapolis
Store environment – Feel of
Alaskan lodge, fireplace & soft
seating
Peet’s Coffee & Tea,
California
Super premium brand, freshest
coffee
Independent Specialty
shops
Independent local coffee
shops
Beer, wine, Satellite television,
Internet connected computers,
Highly personalized service
Retail Coffee Chain Dunkin Donuts Flavored coffee, Dunkaccino,
Vanilla Chai

8. Product Innovation
 12-18 months cycle for new product
 Product tested among focus groups, in-store experiments &
market tests
 Product development depends on “Ergonomic flow” &
speed of making it
 Partner acceptance is the most important
 Most successful product innovation was “Frappuccino” in
1995
Marketing
 Lacked Strategic marketing group, no CMO
 Marketing department functions in 3 separate groups i.e.
Market research group, Category group, Marketing group
 Not disciplined in data driven decision making
 Contradiction between assumption & market research data

9.  Launched Stored Value Card (SVC) in November 2001
 Reduced transaction time while using SVC
 Cards are used as a gifts
 Customer transaction data has been captured through SVC
 Launched T-Mobile hotspot wireless internet service in August 2002
 Introduced payments using iPhone in January 2012
 Highly involved in CSR
S
E
R
V
I
C
E INNOVATION

10.  Everywhere – the trend
 Good coffee on the run
 Place to meet and move on “Third place”
 Convenience oriented, on the way to work
 Accessible and consistent
Known for specialty / gourmet coffee (54% SA)
Widely available (43% SA)
Corporate (42% SA)
Always feel welcome at Starbucks (39% SA)
 Younger
 Hispanic customers
 Less well educated
 In a lower income bracket
 Less frequent to stores
 Different perception about Starbucks brand

11. What factors accounted for huge success early 1990’s?
Starbuck’s
Success
Quality of
Coffee
Service
Clean
environm
ent
Partner’s
Satisfactio
n
Targeted
customer
Market

12. What is compelling about the value proposition
of Starbucks ?
STARBUCKS SUCCESS
Atmosp
here
Coffee
Quality
Service

13. Why customer satisfaction declining in recent years ?
Increased customer expectation, change in life style
Image of Starbucks has been changed
to profit making company
Increased competition
Complexity for Partners
on soft skills
Starbucks stores competing
among themselves, due to retail
expansion & availability
No reason to pay premium for the same coffee
that is available at lower price
Retail
Expansi
on
Product
Innovatio
n
Customiz
ation
Quality +
Service +
Atmosphere

14. Was it in Service level or measuring customer
service in wrong manner?
Service measuring criteria must be different
for new and old customers
Complexity for Partners on soft skills, to cater the
large customer base
Lack of motivation among Partners & Baristas
“The Snapshot is not a perfect tool”
and poor research methods

15. Starbucks 1992 v/s 2002
1992 2002
Become public Become No. 1 coffee brand in US
140 stores in Chicago &
Northwest region
4500 stores globally
Strategy of retail expansion in new
markets
Best quality coffee and
people can relax
Changed its image as corporate &
money making organization
Upscale, Pseudo-
European atmosphere
Smaller coffee stores diminished that
Atmosphere vale proposition
Maximum sales come
from sales of
whole‐bean coffees
77% of the sales came from beverages
Only whole-bean coffee Added new menu, beverages, Started
selling equipment's & accessories

16. Starbucks 1992 v/s 2002
1992 2002
Less customized,
plain simple coffee
More customization,
Additional training time for Partners
Limited choices Variety of combination available
Complex process, slower service delivery
Change in customer profile
“Third Place” Convenient place, can meet with people,
coffee on the move, just good coffee
“Customers going
to the Starbucks”
Due to retail expansion “Starbucks going to
the customers”

17. Still no. 1 Coffee Brand in US, but
intense competition now with small &
local coffee shops
19555 stores in 58 countries
Retail expansion is still continuing,
entering in India in 2012
Maximum sales comes from beverages
Menu has been revised frequently,
new products has been added
Emerged as a Corporate meeting
place, interviews, business deals,
couples preferred place
Customer base is getting larger and
larger
CSR & Social cause is on the priority
list
STARBUCKS in 2012

18. 1 14
213
1270
0
200
400
600
800
1000
1200
1400
1996 2001 2005 2012
No. of Café Coffee Day outlets in
India
Merchandising
Caps
T-Shirts
Bags
Mugs
Coffee Filters
Coffee Powders
Coffee Mints
Pens
Consumer Profile
37% of the customers are between 20-24 years
27% of the customers are between 25-29 years
60% of the customers are male and 40% are female
52% of customers who visit the cafes are students
18% of the customers visit the cafes daily
44% of the customers visit the cafes weekly
Competitors
Barista
Costa Coffee
Gloria Jeans
Mocha
Channels
Bill boards
Print media
Radio
Internet
Strategy
Cool hang out for college crowd and teenagers
“A lot can happen over coffee”
Target – commercial and residential clusters in
metros, corporate houses, malls & airport
Price 20% lower than competitors
Positioned for the mass market
Targeted middle class, students

19. !! Thank You !!