STARBUCKS CASE STUDY 2002

1. A CASE STUDY BY:
NAKUL

2.  The central issue around which all the problems lying is
that “company services are not meeting customers
expectation”.
 How to differentiate STARBUCKS from competitors?
 Should the company roll out $40 million plan for
reducing the serving time under 3 minutes?
 How to link customer satisfaction to increase in sales &
profitability?

4.  Gap between scores on key attributes and customer expectation.
 Customers perception about brand:
Starbucks cares primarily about making money
Up from 54% to 61%
Starbucks cares about building more stores
Up from 48% to 55%
Changes in the target customer.
 How can service time of 3 minutes can assure customer satisfactions
already service time of 3.10 minutes has been achieved.

5.  Instead of rolling out $40 million for increasing labor
hours company should focus on the following
aspects:
 Right guidance for baristas during first 90 days.
 Promotion campaigns for regular customers.
 To convert satisfied customer into highly satisfied
customer.

6.  Concluding, we would like to add that an investment in
adding more labor to stores might help the company increase
some of its satisfaction levels and maybe even get a good
return out of it, but from the data available in the case it
appears that Starbucks has a lot of other problems that needs
to tackle. They need to re‐evaluate their value proposition,
examine how their expansion strategy has led to the
deterioration of their brand image and find new ways to
satisfy the customer
Few Recommendations
 Launch a program to improve staff’s friendliness and offer a
free coffee after certain visits
 Pilot projects in selected locations
 Loyalty program like Loyalty card
 CRM based application

8.  Risks in rolling out $40 million plan:
 Company profit rises to $33.9 million during FY02
and if company is investing $40 mill there is chance
that next year company will have net profit zero.
 Company is planning to open 525 company operated
and 225 licensed outlet so they need capital.

9.  If the baristas lasted beyond 90 days, there is chance
he will stay for three or more years which in turn can
make regular customers more recognizable by the
staff and friendly approach can be there.
 19% of customer feel if they can get free coffee
(promotions)after particular visits they will feel
“valued customer”.
 Service time can be reduced by using “automated
machines.
 The company should follow ROCE. (asset
management).

10.  As compare to satisfied customer , highly satisfied
customer will visit 67.44 % more per month.
 Can do joint ventures as only 4% market share in
home utilized coffee.
 Advertisement in mass media
 Corporate tie ups as coffee is becoming more official
these days. ( meeting & interviews).
 Can improve the ambience of the outlets turning
them into more greenish and natural as the theme of
STARBUCK logo goes.