Starbucks Answers Each Of The Question Essay

Submitted By rob0766
Words: 1590
Pages: 7

Case Study

Submitted By :-

Submitted To :- Prof. Krupa Mehta




Twenty years after its founding as a small coffee shop in Seattle, Starbucks has become a cultural phenomenon with thousands of coffee houses (referred to as “stores”) across North America and around the world. Recent market research, however, shows that the firm’s service is not meeting customer expectations. Speed of service is a particular problem. Management is considering increasing the amount of labor in each store, at a cost of $40 million company-wide, but the potential impact on revenues—and thus the bottom line--is unclear.

Study Questions

1. What factors accounted for Starbucks’ success in the early 1990s and what was so compelling about its value proposition? What brand image did Starbucks develop during this period?
2. How has Starbucks changed since its early days?
3. Why has Starbucks’ customer satisfaction scores declined? Has the company’s service declined or is it simply measuring satisfaction the wrong way?
4. Describe the ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied? How valuable to Starbucks is a highly satisfied customer?
5. Should Starbucks make the $40 million investment in the stores? What’s the goal of this investment? Is it possible for a megabrand to deliver customer intimacy?


1. What factors accounted for Starbucks’ success in the early 1990s and what was so compelling about its value proposition? What brand image did Starbucks develop during this period?

In the Early 1990 Starbucks immerges as a big brand, known around the world

At this time, the company serves 20 million customers in over 5000 stores worldwide and continues to expand rapidly, on average opening three new stores a day.

But let’s examine changes between 1992 and 2002.

Time of 1992

Marketing experts generally agree that Starbuck’s success was rooted in a timely, well-integrated value proposition (VP) that was Compiled with the needs of the target market.

Value proposition. The initial VP comprised three elements that can be represented on the board as three concentric circles:

Core product (a physical good):

premium coffee, seen by Starbucks as “the highest-quality coffee in the world. Quality is maintained by careful selection and control of as much of the supply chain as possible.
Along with that, additional menu items have been added to complement the array of coffee products offered in the stores

Focus on service (“customer intimacy”),

recognized regular patrons, and customized their orders.
The baristas were more than just order takers and fillers—they came to fulfill a similar role to bartenders in a favorite bar and customers would chat with them.

Attractive atmosphere and physical environment, with comfortable seating areas that encouraged customers to linger

Also, Christine Day’s comment, “People come for the coffee, but the ambience is what makes them want to stay”.

The upscale environment contrasted sharply with the more utilitarian surroundings found among other coffee shops (e.g., Dunkin Donuts).

Target market
People who fond of coffee, well-educated, white collar, aged 25-44, skewed toward female .

They were willing to pay a significant price premium over competing alternatives (e.g. 50 cents in a local coffee shop or donut store).

The customers themselves became part of the environment, helping to define and reinforce Starbuck’s positioning.

Brand perceptions and consumption patterns.

By the early 1990, Starbucks’ early success had created a classy brand image, with a place with a European feel that offered the best coffee in the market.

Customers, who were willing to pay premium prices for the coffee