Strategic Management ppt

1. STARBUCKS-DELIVERING CUSTOMER
SERVICE
CASE STUDY
GROUP 5
NEHA GUPTA , MAHIMA MISHRA
ABHISHEK PANDEY , APOORAV SINGH
AKSHIT VARMA , DEBJYOTI MUKHERJE

2. CASE SUMMARY
• Starbucks the leading specialty-coffee brand and coffee store
chain based in the US was founded in1971 by Gerald Baldwin,
Gordon Bowker and Zeiv Seigl.
• The competitors of Starbucks range from small-scale specialty
coffee chains to independent specialty coffee shops, and donut
and bagel chains.
• It achieved a CAGR of 40% in 2002 since its IPO and owned
stores were approx. 5000.
• Starbucks sold the coffee products through retail channels and
operated in areas with traffic and high visibility.
• Starbucks was able to reach its customers where they worked,
travelled, shopped or dined.

3. • It came into Joint-venture partnerships to distribute certain
products eg bottled Frappuccino through Pepsi-Cola.
• Starbucks made the new hired partners undergo two types of
training ie hard skills and soft skills. It also tracked service
performance using mystery shopper program called the
“customer snapshot”.
• It followed aggressive growth strategy & in 2002 the two
biggest drivers of Starbucks growth were retail expansion and
product innovation.
• In 2002 the customer base had significantly changed and the
customer satisfaction was also on decline. Its brand image was
showing some rough edges.

5. Q1-What factors accounted for the
extraordinary success for Starbucks in
the early 1990s? What was so compelling
about Starbucks value proposition? What
brand image did Starbucks develop
during this period?

6. SUCCESS FOR STARBUCKS IN THE EARLY
1990S
• Premium Quality Coffee : They kept a check upon the
roasting process and distribution around the world.
• Employee Satisfaction : The turnover rate was much less
than the industry average turnover rate.
• Customer service : Uplifting experience every time.
• Atmosphere : Creating an experience around coffee.
• Attractive market : Less Competition
• Store locations : Well planned with high customer traffic.

7. VALUE PROPOSITION
•Providing highest quality coffee.
•Creating an uplifting experience for each
customer every time they enter the stores.
•Creating an atmosphere where the customers
want to stay for long.
Brand Image
• Premium quality coffee.
• Third place

8. Q2-HAS COMPANY SERVICE DECLINED,OR
IS IT MEASURING WRONG WAY?
• Overwhelming presence and convenience – Scores Declined
• Little product differentiation between Starbucks vs other coffee
chains.
• Customer satisfaction has declined.
• Focusing primarily on making profits and building stores.
• Customers satisfied with coffee, not long lines.

10. Q3-HOW DOES THE STARBUCKS OF2002
DIFFERENT FROM THAT OF 1992
• Retail Expansion-Store expanded rapidly, from 140 in1992 to
4500 in 2002.
• In 1992, revenue came from sales of whole-coffee beans
whereas in 2002 about 77% sales came from beverages.
• Added new products in menu and accessories.
• Changed demographic profile of customer base.
• 1992-Coffee shop ; 2002- Hangout place

12. Q4-DESCRIBE THE IDEAL STARBUCKS CUSTOMER FROM A
PROFITABLE STANDPOINT. WHAT WOULD IT TAKE TO ENSURE
THAT THIS CUSTOMER IS HIGHLY SATISFIED? HOW VALUABLE IS
A HIGHLY SATISFIED CUSTOMER TO STARBUCKS?
• Initially started with office working females aged
between 24-44, also the rich and well educated yet in
addition they extended to the youths, less educated and
lower brackets of the income groups.
• Broadened the products they offer, improvement of
services, enhanced speed-of-service delivery.
• An exceptionally fulfilled customer base that adds to the
growth of the brand and expanded sales to a targeted of
$20000 per week in every store.

13. Q5-SHOULD STARBUCKS INVEST 40
MILLION
• YES!
• ALLOCATE MONEY ACCORDING TO SIZE OF STORE,NO. OF
CUSTOMERS,LOCATION,ADITIONAL LABOUR.
• APART FROM MONETARY INVESTMENT SHOULD ALSO FOCUS
ON VALUE CREATION PROPORTIONALLY.

14. THANKYOU