Starbucks: Delivering Customer service

Group C
Submitted by: Group C Dhivya Ravikumar (2011PGP011) Pradeeba K S (2011PGP030) Rajesh Kumar (2011PGP035) Udayarka E A S S (2011PGP050)

Starbucks: Delivering customer service

Starbucks Company was started in 1971 in Seattle, United States. In 1982, Howard Schultz joined the Starbucks marketing team, his idea was to create a chain of coffee houses that would become Americas third place, the other two being home and work. As soon as Schultz took over, he immediately began opening new stores. By 1992, the company had 140 stores in the Northwest and Chicago and was successfully competing with stores of competitors. The same year the company went public and raised $ 25 million. By 2002, Starbucks was established as dominant specialty coffee brand in North America. Sales had grown at a CAGR of 40% since the firm went public and the net earnings grew at a CAGR of 50%. The company was serving more than 20 million customers with about 5000 stores across the world. During early 1990s the following factors contributed for the success of the company Location of stores: Stores are located in high traffic, high visibility settings such as retail centers, office buildings and university campuses. The philosophy of the firm is to reach customers where they work, travel, shop and dine. Control over supply chain to a great extent Established and positioned as a need for third place Additional product lines such as pastries, sodas, juices, seasonal novelty items Increased product depth; apart from selling whole bean coffees, other products like cold blended beverages, premium teas and espresso drinks Delivering on service: Emphasis on training of employees; the first type of training focused on hard skills, the second type focused on soft skills. Starbucks empowered partners to provide the best service possible even if it required going beyond company rules. Product and service innovation: Introduction of coffee and non-coffee based line of Frappuccino beverages. In Nov 2001, in the line of non-product innovation Stored-value card (SVC) had been launched Company value proposition: Starbucks believed that it offered the highest quality coffee in the world, Africa, Central and South America, and Asia-Pacific regions. There were three components to their experiential branding strategy.

Coffee (Offering high quality coffee) Service (Helped in creating customer intimacy) Atmosphere (Focus on ambience, seating areas were meant to encourage longing; Layouts were designed to provide an upscale yet a good environment for those who want to linger

Service performance of every store was evaluated using the following partners Service Cleanliness Product quality and Speed of service

Insights from market research Market research reports contradicted some of the fundamental assumptions about brand and customers. There was very little image or product differentiation between Starbucks and other small chain stores. However, there was significant differentiation between Starbucks and independent specialty coffeehouses. Market research shows the evidence of the firms brand image having some rough edges. Market research has shown concerns about whether the firm is clearly communicating value and values to customers, instead of just its growth plans.