starbucks delivering customer service case study

[Solved]Starbucks Delivering Customer Service Case Study Solution: 5 Questions answered

Starbucks Delivering Customer Service case study comes from HBR. A link to the original case can be found here . The case can be analyzed from the perspectives of marketing, sales improvement, and from a strategic investment point of view. The company is contemplating a strategic investment of $40 Mn to bolster its systems and process to cater to the needs of new customers. We can also analyze Starbucks delivering customer service case study from the standpoint of future organizational vision and reinventing a brand

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Starbucks delivering customer service case study summary

In 1971, Gerald Baldwin, Gordan Bowker, and Ziev Siegl established a small shop in Seattle’s market. The company excelled at selling whole Arabica beans to coffee purists, a niche market. In 1982, Schultz joined Starbucks. A few years later, Schultz purchased the company. After he ascended to power, new stores opened. Starbucks delivering customer service Case Study also narrates the story of the owners and their vision for the organization in order to deliver a unique customer value

The organization went public. Both whole-bean coffee and coffee with a higher price tag were sold at the stores. By 1992, Starbucks had 140 stores in the Pacific Northwest and Chicago and was competing favorably with smaller coffee chains such as Gloria Jean’s Coffee Bean and Barnie’s Coffee & Tea. In 2002, Starbucks was the most well-known specialty coffee brand in North America. The company’s annual sales and net income grew at a rate of 40% and 50%, respectively. The company had over 5,000 stores worldwide and over 20 million customers.

It focused primarily on marketing at the point of sale and in local stores. The slogan “live coffee” encapsulated Starbucks’ brand positioning. It demonstrated how vital it was to preserve the national coffee culture , which provided customers with a “ experience” comprised of the coffee, the service, and the atmosphere. They were all baristas and were referred to as “partners. ” They believed that if partners were satisfied, so would customers. Consequently, employee turnover was low. When a partner was hired, he or she was required to complete “hard skills” and “soft skills” training in order to connect with customers more effectively.

Several types of matrices, such as monthly status reports and self-reported checklists, were used to evaluate the performance of the service. In addition, they had a mystery shopper program known as “customer overview The shopper rated four “fundamental services.” The company’s goal was to become “the most recognizable and esteemed brand in the world.” Starbucks vice president Christine Day devised a plan to invest an additional $40 million per year in the company’s 4,500 locations. This equates to an additional 20 hours of work per week. They are unsure whether to believe what customers say about customer service and its impact on sales and profits.

Starbucks Delivering Customer Service case study: What Contributed to the exceptional positioning of Starbucks in the Coffee Segment?

The extraordinary success of Starbucks in the early 1990s can be attributed to Howard Schultz, who added value propositions to the company by enhancing its services and adding quality to them. Schultz believed that coffee drinking creates an experience in the customer’s mind known as “the third place.”

Contributing to Starbucks’ extraordinary success in the 1990s were:

Starbucks works directly with its growers to maintain the superior quality of its coffee beans, and because all of its stores are company-owned, they are able to maintain tight control over its products and services.

Starbucks trains its partners in both hard and soft skills prior to hiring them in order to foster positive relationships with its customers. They instructed their employees on how to interact with customers by smiling, making eye contact, and remembering their names and preferences.

• The Customers : Their ‘Just Say Yes’ policy encourages partners to provide the best service possible, even if it exceeds company regulations, and their three-minute serving time enhanced customer satisfaction.
• Partner satisfaction : Schultz referred to Starbucks’ employees as “Partners,” and the company provides even entry-level employees with health insurance and company stock as a form of incentive. They believe that customer satisfaction depends on the satisfaction of their partners, which is why the company has one of the lowest employee turnover rates in the industry as a result of their promotion strategy of promoting partners within their rank and approximately 70% of the company store manager was an ex-partner.
•  The atmosphere of Starbucks stores : Schultz’s intention is to create a drinking coffee experience, where people drink coffee not only for its taste and quality but also to enjoy the experience. It is a place where people come to relax and enjoy social interaction, which is why they have comfortable seating areas and the layout of their stores is inviting.
• Location of the stores: Starbucks stores are situated in high-traffic areas such as office buildings, shopping centers, and university campuses.

The store’s value proposition is so compelling because they provide high-quality premium coffee and services to their customers as a result of their highly controlled supply chain strategy. In addition, they serve additional menu items such as pastries, soda, and juice, and they regularly launch new products. They are so focused on their services that they are familiar with their customers if they frequent the establishment, and their attributes, ambiance, and seating environment are an added value proposition.

Starbucks Delivering Customer Service case study: What Factors led to the decline of Customer Satisfaction Scores in the Early 1990s?

The customer satisfaction rating for Starbucks has dropped as a result of a gap between the company’s primary attributes and the expectations that customers have for the brand. Paying a premium price for Starbucks did not make a whole lot of sense because the chain does not stand out in terms of either its image or its products when compared to other, smaller coffee shop chains.

Customers started believing that Starbucks had entered a money-making industry and that the company placed a higher priority on shop expansion than on their satisfaction. On many occasions, “service enhancement” and “service speed” were the areas that required the most improvement. Also shown in the presentation is the fact that 11.34 percent of people believe that improvements to the services they receive could make them feel more valued.

• As shown in Exhibit 10, the majority of respondents (83 percent) believe that maintaining a clean environment is an essential component in achieving high levels of customer satisfaction.

• Because seventy-seven percent of customers placed a high premium on convenience, Starbucks made it a point to open multiple locations across the country.

• Seventy-five percent of customers ranked being treated as a valuable customer as extremely important for the generation of customer happiness, and Starbucks partners made certain to remember their customers’ names, welcome them, and inquire about their preferred drink modification preferences, among other things.

Because of this, asserting that the company’s service has worsened in recent years would be an exaggeration, given that consumers continue to give Starbucks high marks in a variety of other categories. However, Starbucks is becoming increasingly concerned about the lengthening wait times.

Because Starbucks is more concerned with the value of its brand, expansion, and profit than with how customers perceive its coffee, the customer snapshot is not an ideal instrument for measuring customer happiness.

Starbucks Delivering Customer Service case study: How did Customer Transform from 1992 to the early 2000s?

The average customer in 2002 was younger than the average customer in 1992, and the average customer in 2002 had less education than the average customer in 1992.

•In 1992, Starbucks’ customers were mostly wealthy people, but by 2002, they also included people with lower incomes.

• The market research team also found that customers used stores, in the same way, no matter where they were or how they were set up.

• In the research, it was also found that the most frequent customers came in an average of 18 times a month, but the average customer only came in five times a month.

• The research team also found out that Starbucks’ customers had changed from wealthy, well-educated, white-collar women between the ages of 24 and 44 to younger customers with less education who wanted more options and took more work to please.

Is it advisable for Starbucks to Invest $40 Mn in its stores and staff? What is the rationale behind the investment and share a mathematical model to justify the investment?

The investment plan called for “relaxing the labor-hour restrictions in the stores” in order to increase the amount of available labor in each store by 20 hours per week at an additional annual cost of $40 million.

Starbucks Delivering Customer Service case study: Breakeven Calculations

Analysis of the Profitability of the Investment Plan Investment per Store = $40,000,000 / 5886 stores = $6795.8 per store

$172 is the revenue difference between customers who are satisfied and customers who are extremely satisfied.

For each location to be profitable, $6795.8 must be divided by 172, which equals forty customers. There are 570 customers who shop at each location on a daily basis.

For the company to become profitable, 40 of its 570 existing customers must be upgraded from satisfied to extremely satisfied. Therefore, Starbucks is recommended to invest $40 million in order to increase service speed and decrease the number of satisfied customers who become dissatisfied.

As there is a direct correlation between satisfied customers and loyal customers, this would result in the consumer base’s long-term commitment.

Starbucks Delivering Customer Service case study: The rationale behind the  investment

The objective of investing $40 million in labor was to maximize customer satisfaction by converting satisfied customers into highly satisfied customers, thereby increasing revenue. This was accomplished by increasing the level of satisfaction of satisfied customers. Exhibit 10 displays the results of the 2002 consumer survey conducted by Starbucks. According to the survey, approximately 65 percent of Starbucks’ customers consider prompt service to be one of the most important factors in determining their level of satisfaction with their Starbucks coffee experience.

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Starbucks: Delivering Customer Service – Case Solution

Starbucks is a major specialty-coffee brand in the North. Recent market research has indicated that the service level of the company is currently not meeting the expectations of customers. Thus, the company is discussing a plan to increase customer satisfaction by increasing the amount of labor in each coffee store and, as a consequence, increasing the speed of service. However, the plan would result in additional costs of $40 million per annum while the impact on the profitability of the company is unclear.

​Youngme Moon; John A. Quelch Harvard Business Review ( 504016-PDF-ENG ) July 31, 2003

Case questions answered:

• What factors accounted for the extraordinary success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? What brand image did the company develop during this period?
• Why has Starbucks’ customer satisfaction score declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?
• How does the Starbucks of 2002 differ from the Starbucks of 1992?
• 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 for the company?
• Should Starbucks make the $40 million investment in labor in the stores? What’s the goal of this investment? Is it profitable for a megabrand to deliver customer intimacy?
• Please summarize the case study “Starbucks – Delivering Customer Service.”
• Please identify the key challenges of the company.

Not the questions you were looking for? Submit your own questions & get answers .

Starbucks: Delivering Customer Service Case Answers

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Company Background – Starbucks: Love Coffee, Love People

Starbucks was founded in 1971. Later, Howard Shultz took over. Its vision and mission are to “Make America’s third place, Establish as the most recognized brand.”

The company specializes in selling whole coffee beans and premium coffee beverages. Its target customers are the affluent, well-educated segment of the market. It has achieved immense success and has spent almost nothing on advertising.

The company’s experiential branding strategy has three components:

This branding strategy is based on the human spirit, a sense of community, and the need for people to come together.

Challenges Faced

One of the core issues the company is facing is that its services are not meeting customer expectations. It is mainly due to changes in target customers, decreasing age and income groups, and customers’ poor perception of the company. Most people reviewed the company as follows:

• Starbucks cares primarily about making money – Up from 53% in 2000 to 61% in 2001
• Starbucks cares primarily about building more stores – Up from 48% to 55%.

There is also the lack of a strategic marketing group – no chief marketing officer, as accepted by Day herself that ‘they were good at collecting market data but not disciplined in using this data.’

The company is challenged on how to link customer satisfaction to an increase in sales and profitability. Should the company roll out a $40 million plan to add 20 hours of labor a week? And how should the company differentiate itself from competitors?

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

• To set up an expresso bar inspired by Milan’s coffee culture.
• The aim is to make it to America’s “third place.”
• They created an experience around the consumption of coffee.
• Employees were called partners. The company offered benefits, which resulted in the company’s partner satisfaction rate in the 80% -90% range.
• Stable prices and new products were launched regularly. The company also conducted R&D, in-store experiments, and market tests.

Compelling reasons for Starbucks’ value proposition and the brand image the company has developed

• They offered the highest quality coffee beans sourced from Africa, Central and South America, and Asia-Pacific regions.
• The company worked directly with growers.
• The company developed good customer intimacy.
• The ambiance makes customers stay.
• The company’s outlets are located in high-traffic and high-visibility settings.
• Brand strategy, “live coffee” mantra.

Q2. Why has Starbucks’ customer satisfaction score declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?

• The current way of measurement does not capture the correct consumer profile.
• The decline in service level – trained only to please the affluent customers.
• Diluting value proposition
• The rising perception is that the primary motive is making money and building more stores.
• Very little image or product differentiation between Starbucks and smaller coffee chains
• The company has hundreds of combinations of coffee, leading to a larger service time and lower customer satisfaction.

Q3. How does the Starbucks of 2002 differ from the Starbucks of 1992?

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Product Description

Publication Date: July 31, 2003

Source: Harvard Business School

The case 'Starbucks: Delivering Customer Service' is accompanied by a Video Short - available only to registered Premium Educators at hbsp.harvard.edu - that can be shown in class or included in a digital coursepack. Instructors should consider the timing of making the video available to students, as it may reveal key case details. Starbucks, the dominant specialty-coffee brand in North America, must respond to recent market research indicating that the company is not meeting customer expectations in terms of service. To increase customer satisfaction, the company is debating a plan that would increase the amount of labor in the stores and theoretically increase speed-of-service. However, the impact of the plan (which would cost $40 million annually) on the company's bottom line is unclear.

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Case Study: Starbucks’ Success Elevating Customer Experience with Customer Journey Mapping

Customers journey mapping to deliver great customers experiences.

Starbucks, the world-renowned coffee company, is known for its exceptional customer experience and innovative offerings. To stay ahead in the competitive coffee industry and maintain its reputation, Starbucks has consistently prioritized understanding its customers and their needs. One key strategy that Starbucks has used to achieve this is customer journey mapping.

Customer Journey Mapping Strategy

Starbucks embarked on a comprehensive customer journey mapping initiative, aiming to identify pain points in its customers’ experiences and develop solutions to address these issues. The company engaged in a cross-functional approach, involving teams from various departments such as marketing, store operations, and product development, to ensure a holistic understanding of the customer journey.

Understanding the Customer Journey

Starbucks conducted extensive research to gain insights into its customers’ interactions with the brand, both online and offline. The company collected data through customer interviews, surveys, and observations, as well as leveraging digital analytics and transactional data. This information was used to create detailed customer journey maps, highlighting key touchpoints, emotional states, and pain points.

Identifying Pain Points and Opportunities

The customer journey maps revealed several areas where Starbucks could improve its customer experience. Some notable pain points included long wait times, inconsistent product quality, and challenges in navigating the rewards program. The company also identified opportunities to enhance the in-store experience, such as incorporating digital technologies and personalizing customer interactions.

Developing a Customer Experience Roadmap

Armed with these insights, Starbucks developed a customer experience roadmap that outlined the strategic initiatives and improvements needed to address the identified pain points and capitalize on opportunities. Some of the successful implementations based on the roadmap include:

• Mobile Order & Pay: To reduce wait times and streamline the ordering process, Starbucks introduced the Mobile Order & Pay feature in its app. This allowed customers to place orders in advance and pick up their drinks without waiting in line, significantly enhancing the overall customer experience.
• Personalized Rewards: Starbucks revamped its rewards program to make it more accessible and user-friendly, tailoring offers and promotions based on customers’ preferences and purchasing habits. This personalized approach encouraged customer loyalty and increased engagement with the brand.
• Consistent Quality Standards: Starbucks invested in employee training and quality control measures to ensure consistent product quality across all locations. This focus on excellence helped reinforce the brand’s reputation for offering high-quality coffee and beverages.
• Digital Integration: Starbucks introduced digital touchpoints in its stores, such as interactive menu boards and mobile payment options, to create a seamless and engaging customer experience. These innovations helped bridge the gap between the online and offline customer journey.

The company’s attention to the entire journey has been a key factor in the development of the premium coffee category.

According to PeopleMetrics, Starbucks has been able to simplify and operationalize Customer Journey Mapping which has helped them unlock the intersection of convenience and connection by introducing enhancements to the customer experience across retail and digital that meet customers wherever they are, expanding the Third Place experience beyond the physical store.

Initiatives that have been uncovered through journey mapping exercises:

Starbucks is investing in its partners, creating personalized experiences for customers, and innovating its digital and retail strategy.

Investing in Partner Success

Starbucks is placing its partners at the core of its Reinvention plan. The company believes that investing in its partner base is key to delivering high-quality customer experiences, uplifting brand affinity and customer loyalty, and increasing value back to partners through wages, benefits, programming, and tools for continued personal growth. In fiscal 2023, Starbucks has identified a number of near-term solutions that will be implemented to ensure a thriving partner experience:

How to Improve Customer Experience

Wage and Recognition Innovation:

Starbucks is helping partners by giving them the hours they need, expanding digital tipping, and incorporating other opportunities to increase overall pay. The company is committed to paying partners competitively and has raised its starting wage in the U.S. to $15 per hour.

New Well-being Benefits:

Starbucks is offering enhanced sick pay, new savings and student loan management benefits, and additional mental health support to its partners.

Personalized Career Mobility:

Starbucks is introducing a new partner app and the development of personalized career paths to enable its partners to achieve their career goals.

Investments in Store Managers:

Starbucks is providing new leadership trainings, reinventing scheduling and decision-making tools, and creating career journey mapping to improve store manager retention and empower them to focus on core functions of the job that increase satisfaction and overall performance of their store partners.

These investments are aimed at empowering Starbucks partners to thrive at work, thrive as individuals, and thrive together. Stores managed by partners with over three years of tenure have 13% greater weekly sales and higher customer satisfaction, making it clear that investing in partner success is a win-win for both partners and the company.

Creating Personalized Experiences for Customers

Starbucks is committed to unlocking the intersection of convenience and connection by introducing enhancements to the customer experience across retail and digital that meet customers wherever they are, expanding the Third Place experience beyond the physical store. The company is investing in purpose-built store concepts, delivering beverage innovation, and expanding effortless digital convenience to create personalized experiences for its customers.

Investing in Purpose-built Store Concepts:

Starbucks is reimagining the store environment by introducing purpose-built store concepts that meet customers wherever and whenever they want and improve the partner experience. The company is investing an incremental $450M in the existing U.S. store base in fiscal year 2023 with continued investment in fiscal 2024 and 2025. Starbucks expects these investments will create efficiencies, unlock capacity for partners, and enable increased throughput to support increasing customer demand.

Digital and Physical Customer Journey Optimization

Delivering Beverage Innovation:

To improve partner and customer experiences, Starbucks has developed the Siren System, a proprietary new equipment innovation designed to meet the growing demand for customization of hot and cold beverages and warm foods. As part of the Siren System, Starbucks has redesigned its cold beverage station, which significantly reduces the time and number of steps to make cold beverages, unlocking productivity gains and ultimately freeing up time for partners to connect with customers.

In addition, Starbucks is developing a new way of extracting cold coffee and espresso with the Cold Pressed Cold Brew system. This new, proprietary technology delivers cold press coffee in a matter of seconds and in fewer than four steps, a step-change improvement when compared to today’s cold brew which is steeped for 20 hours and takes more than 20 steps to make. The Cold Pressed Cold Brew will begin testing in stores in fiscal 2023.

Expanding effortless digital convenience

Starbucks’ Reinvention Plan aims to create a seamless and personalized experience for customers, making it easier for them to get their favorite Starbucks beverage when and where they want. The company has recognized the increasing importance of digital convenience in providing a better customer experience. The COVID-19 pandemic has also highlighted the need for contactless ordering and payment options. Starbucks has responded by investing in and expanding its digital offerings, such as its mobile ordering platform, Starbucks Rewards program, and Starbucks Delivers.

Growing Starbucks Delivers program with DoorDash and UberEats

One of Starbucks’ major initiatives for expanding digital convenience is growing its Starbucks Delivers program. The company has partnered with DoorDash to expand the program to a national scale alongside UberEats in fiscal 2023. This partnership aims to improve delivery efficiency, expand delivery areas, and offer more delivery options to customers. Starbucks Delivers is expected to be available in over 10,000 stores across the United States by the end of 2022.

Increase Customer Satisfaction with a Digital Customer Experience Platform

Starbucks Rewards program with Starbucks Odyssey

Starbucks is also evolving its Starbucks Rewards program with Starbucks Odyssey, a Web3-enabled experience that will bridge the physical and digital customer experience. Starbucks Odyssey aims to unlock a new generation of experiential benefits for customers. Through Starbucks Odyssey, customers will be able to earn and redeem rewards, access exclusive content, and become part of a digital community built on human connection. Starbucks plans to roll out Starbucks Odyssey to all customers in the United States and Canada by the end of 2022.

The CDO TIMES Bottom Line

Starbucks’ successful application of customer journey mapping demonstrates the value of understanding customers’ experiences for customers, partners and employees and using these insights to drive improvements and innovation. By identifying pain points and opportunities in the customer journey, Starbucks was able to develop a customer experience roadmap that addressed these issues and reinforced its position as a leader in the coffee industry.

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• Deep Expertise : CDO TIMES has a team of experts with deep expertise in the field of Digital, Data and AI and its integration into business processes. This knowledge ensures that your organization can leverage digital and AI in the most optimal and innovative ways.
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By employing the expertise of CDO TIMES, organizations can navigate the complexities of digital innovation with greater confidence and foresight, setting themselves up for success in the rapidly evolving digital economy. The future is digital, and with CDO TIMES, you’ll be well-equipped to lead in this new frontier.

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I am Carsten Krause, CDO, founder and the driving force behind The CDO TIMES, a premier digital magazine for C-level executives. With a rich background in AI strategy, digital transformation, and cyber security, I bring unparalleled insights and innovative solutions to the forefront. My expertise in data strategy and executive leadership, combined with a commitment to authenticity and continuous learning, positions me as a thought leader dedicated to empowering organizations and individuals to navigate the complexities of the digital age with confidence and agility. The CDO TIMES publishing, events and consulting team also assesses and transforms organizations with actionable roadmaps delivering top line and bottom line improvements. With CDO TIMES consulting, events and learning solutions you can stay future proof leveraging technology thought leadership and executive leadership insights. Contact us at: [email protected] to get in touch.

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Starbucks: Delivering Customer Service Harvard Case Solution & Analysis

Home >> Harvard Case Study Analysis Solutions >> Starbucks: Delivering Customer Service

Introduction

The paper attempts to provide the internal and external analysis of Starbucks through the implication of SWOT analysis, VRIO analysis, and Porter’s five forces model. The paper also attempts to provide the problem statement of the Starbucks case along with the value proposition of the company. Furthermore, the paper provides alternative suggestions to the problem while describing the pros and cons for each alternative. Lastly, the paper provides recommendations for solving the problem statement of the company.

Problem Statement

While increasing the brand image of the company, Starbucks have been focusing on growing its business by introducing new products. However, in the midst of rapid business expansion and increased retail stores, the company has become weak in satisfying its customers. The connection is lost between satisfying the customers and growing the business. Christine Day, the senior vice president of Starbucks has recommended that the company shall invest an additional $40 million to increase the labor hours per week which can ultimately increase the speed of service, and hence increase in customer satisfaction. Although, the plan met internal resistance, Christine Day has to present final recommendations to the CEO of the company to increase customer satisfaction.

Internal Analysis

SWOT Analysis

Starbucks is a well-established brand and its revenues have been increasing by 5% each year. The company has shown consistency in the quality of its brands which is why a perception is built amongst customers that it is the America’s third place after home and work. The work environment is valued by the company’s employees as Starbucks have the highest employee satisfaction rate by 80% to 90% while having the lowest turnover rate.  Starbucks have over 5,500 global stores and has a strong international presence.

Starbucks has been focusing more on growing its business due to this the company has stopped following its customers. The Company’s strategy has shifted from customer-oriented approach towards growth-oriented approach, which has resulted in the loss of customers and has increased dissatisfaction. The prices of its products were continuously rising due to which customers were switching from Starbucks to other low cost coffee houses after recession. . The company had no chief marketing officer due to which  Starbucks lacked the decision making ability in the marketing department. Moreover, the speed of service which was the core unique selling proposition of the company has declined.

Opportunities

The rising coffee consumption around the world has also increased the demand for Starbucks as it is considered a top brand and therefore it provides an opportunity for the company to expand in different countries. Rapid retail expansion from the company is an opportunity towards fulfilling the demand across the globe.

There, is a rising competition because of the increase of many specialty coffee shop offerings. Also, many specialty coffee producers have been offering coffee for a price better and lower than Starbucks. There is an image developed in the mind of a consumer that Starbucks care about their customers just to earn money. This image of commercialization has badly affected the image of the company because the company whose primarily concern has been customers’ satisfaction, was been turned away for making more money in the name of customer relationship management.

Starbucks Delivering Customer Service Case Solution

VRIO Analysis

The core competitive advantage of Starbucks against its competitors is providing the consistent product quality to its customers. For all these years Starbucks has gained the trust of its customers on the basis of product quality. The core competency of the company has been placed in the third row which illustrates that the particular strength is rare. However, it is not difficult nor costly to imitate. The analysis shows that the particular strength is also substitutable. By combining these factors, it is concluded that the company shall gain temporary competitive advantage and temporary competitive returns. Although, many companies have tried to apply the similar concept and business model as Starbucks , but have failed to deliver an exceptional product quality on regular basis. If the company continue to provide the same quality through many years then its customers would become loyal. Although, this was the reason why Starbucks did not fail in the economic downturn because it had set the approach in the mind of its customers that Starbucks is their third place after home and office..........................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Starbucks, the dominant specialty coffee brand in North America, must respond to recent market research that the company did not meet the expectations of customers in terms of service. To increase customer satisfaction, the company is discussing a plan that would increase the amount of labor in the stores and theoretically increase the speed of service. However, the impact of the plan (which will cost $ 40 million per year) on the company's bottom line is unclear. This event is accompanied by a short video for Premium Teachers to show in class. To view the video, or to show the students, click on the video icon. "Hide Youngme on the Moon, John A. Quelch Source: HBS Premier Case Collection 20 pages. Publication Date: July 31, 2003. Prod. #: 504016-PDF-ENG

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Case Description of Starbucks: Delivering Customer Service Case Study

The case 'Starbucks: Delivering Customer Service' is accompanied by a Video Short - available only to registered Premium Educators at hbsp.harvard.edu - that can be shown in class or included in a digital coursepack. Instructors should consider the timing of making the video available to students, as it may reveal key case details.Starbucks, the dominant specialty-coffee brand in North America, must respond to recent market research indicating that the company is not meeting customer expectations in terms of service. To increase customer satisfaction, the company is debating a plan that would increase the amount of labor in the stores and theoretically increase speed-of-service. However, the impact of the plan (which would cost $40 million annually) on the company's bottom line is unclear.

Case Authors : Youngme Moon, John A. Quelch

Topic : sales & marketing, related areas : customers, financial management, market research, what is the case study method how can you use it to write case solution for starbucks: delivering customer service case study.

Almost all of the case studies contain well defined situations. MBA and EMBA professional can take advantage of these situations to - apply theoretical framework, recommend new processes, and use quantitative methods to suggest course of action. Awareness of the common situations can help MBA & EMBA professionals read the case study more efficiently, discuss it more effectively among the team members, narrow down the options, and write cogently.

Case Study Solution Approaches

Three Step Approach to Starbucks: Delivering Customer Service Case Study Solution

The three step case study solution approach comprises – Conclusions – MBA & EMBA professionals should state their conclusions at the very start. It helps in communicating the points directly and the direction one took. Reasons – At the second stage provide the reasons for the conclusions. Why you choose one course of action over the other. For example why the change effort failed in the case and what can be done to rectify it. Or how the marketing budget can be better spent using social media rather than traditional media. Evidences – Finally you should provide evidences to support your reasons. It has to come from the data provided within the case study rather than data from outside world. Evidences should be both compelling and consistent. In case study method there is ‘no right’ answer, just how effectively you analyzed the situation based on incomplete information and multiple scenarios.

Case Study Solution of Starbucks: Delivering Customer Service

We write Starbucks: Delivering Customer Service case study solution using Harvard Business Review case writing framework & HBR Sales & Marketing learning notes. We try to cover all the bases in the field of Sales & Marketing, Customers, Financial management, Market research and other related areas.

Objectives of using various frameworks in Starbucks: Delivering Customer Service case study solution

By using the above frameworks for Starbucks: Delivering Customer Service case study solutions, you can clearly draw conclusions on the following areas – What are the strength and weaknesses of Starbucks Customer (SWOT Analysis) What are external factors that are impacting the business environment (PESTEL Analysis) Should Starbucks Customer enter new market or launch new product (Opportunities & Threats from SWOT Analysis) What will be the expected profitability of the new products or services (Porter Five Forces Analysis) How it can improve the profitability in a given industry (Porter Value Chain Analysis) What are the resources needed to increase profitability (VRIO Analysis) Finally which business to continue, where to invest further and from which to get out (BCG Growth Share Analysis)

SWOT Analysis of Starbucks: Delivering Customer Service

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are result of Starbucks Customer internal factors, while opportunities and threats arise from developments in external environment in which Starbucks Customer operates. SWOT analysis will help us in not only getting a better insight into Starbucks Customer present competitive advantage but also help us in how things have to evolve to maintain and consolidate the competitive advantage.

- High customer loyalty & repeat purchase among existing customers – Starbucks Customer old customers are still loyal to the firm even though it has limited success with millennial. I believe that Starbucks Customer can make a transition even by keeping these people on board.

- Streamlined processes and efficient operation management – Starbucks Customer is one of the most efficient firms in its segment. The credit for the performance goes to successful execution and efficient operations management.

- Low profitability which can hamper new project investment – Even though Starbucks Customer financial statement is stable, but going forward Starbucks Customer 5-7% profitability can lead to shortage of funds to invest into new projects.

- Starbucks Customer business model can be easily replicated by competitors – According to Youngme Moon, John A. Quelch , the business model of Starbucks Customer can be easily replicated by players in the industry.

Opportunities

- Increase in Consumer Disposable Income – Starbucks Customer can use the increasing disposable income to build a new business model where customers start paying progressively for using its products. According to Youngme Moon, John A. Quelch of Starbucks: Delivering Customer Service case study, Starbucks Customer can use this trend to expand in adjacent areas Customers, Financial management, Market research.

- E-Commerce and Social Media Oriented Business Models – E-commerce business model can help Starbucks Customer to tie up with local suppliers and logistics provider in international market. Social media growth can help Starbucks Customer to reduce the cost of entering new market and reaching to customers at a significantly lower marketing budget.

- Growing dominance of digital players such as Amazon, Google, Microsoft etc can reduce the manoeuvring space for Starbucks Customer and put upward pressure on marketing budget.

- Customers are moving toward mobile first environment which can hamper the growth as Starbucks Customer still hasn’t got a comprehensive mobile strategy.

Once all the factors mentioned in the Starbucks: Delivering Customer Service case study are organized based on SWOT analysis, just remove the non essential factors. This will help you in building a weighted SWOT analysis which reflects the real importance of factors rather than just tabulation of all the factors mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of Starbucks: Delivering Customer Service Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that impact the macro environment in which Starbucks Customer operates in. Youngme Moon, John A. Quelch provides extensive information about PESTEL factors in Starbucks: Delivering Customer Service case study.

Political Factors

- Political and Legal Structure – The political system seems stable and there is consistency in both economic policies and foreign policies.

- Little dangers of armed conflict – Based on the research done by international foreign policy institutions, it is safe to conclude that there is very little probability of country entering into an armed conflict with another state.

Economic Factors

- Inflation rate is one of the key criteria to consider for Starbucks Customer before entering into a new market.

- According to Youngme Moon, John A. Quelch . Starbucks Customer should closely monitor consumer disposable income level, household debt level, and level of efficiency of local financial markets.

Social Factors

- Leisure activities, social attitudes & power structures in society - are needed to be analyzed by Starbucks Customer before launching any new products as they will impact the demand of the products.

- Consumer buying behavior and consumer buying process – Starbucks Customer should closely follow the dynamics of why and how the consumers are buying the products both in existing categories and in segments that Starbucks Customer wants to enter.

Technological Factors

- Artificial intelligence and machine learning will give rise to importance of speed over planning. Starbucks Customer needs to build strategies to operate in such an environment.

- 5G has potential to transform the business environment especially in terms of marketing and promotion for Starbucks Customer.

Environmental Factors

- Consumer activism is significantly impacting Starbucks Customer branding, marketing and corporate social responsibility (CSR) initiatives.

- Environmental regulations can impact the cost structure of Starbucks Customer. It can further impact the cost of doing business in certain markets.

Legal Factors

- Property rights are also an area of concern for Starbucks Customer as it needs to make significant Customers, Financial management, Market research infrastructure investment just to enter new market.

- Health and safety norms in number of markets that Starbucks Customer operates in are lax thus impact the competition playing field.

What are Porter Five Forces

Porter Five Forces Analysis of Starbucks: Delivering Customer Service

Competition among existing players, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitutes.

What is VRIO Analysis

VRIO Analysis of Starbucks: Delivering Customer Service

VRIO stands for – Value of the resource that Starbucks Customer possess, Rareness of those resource, Imitation Risk that competitors pose, and Organizational Competence of Starbucks Customer. VRIO and VRIN analysis can help the firm.

What is Porter Value Chain

Porter Value Chain Analysis of Starbucks: Delivering Customer Service

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and it is primarily used for analyzing Starbucks Customer relative cost and value structure. Managers can use Porter Value Chain framework to disaggregate various processes and their relative costs in the Starbucks Customer. This will help in answering – the related costs and various sources of competitive advantages of Starbucks Customer in the markets it operates in. The process can also be done to competitors to understand their competitive advantages and competitive strategies. According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry. So Value Chain competitive benchmarking should be done based on industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of Starbucks: Delivering Customer Service

BCG Growth Share Matrix is very valuable tool to analyze Starbucks Customer strategic positioning in various sectors that it operates in and strategic options that are available to it. Product Market segmentation in BCG Growth Share matrix should be done with great care as there can be a scenario where Starbucks Customer can be market leader in the industry without being a dominant player or segment leader in any of the segment. BCG analysis should comprise not only growth share of industry & Starbucks Customer business unit but also Starbucks Customer - overall profitability, level of debt, debt paying capacity, growth potential, expansion expertise, dividend requirements from shareholders, and overall competitive strength. Two key considerations while using BCG Growth Share Matrix for Starbucks: Delivering Customer Service case study solution - How to calculate Weighted Average Market Share using BCG Growth Share Matrix Relative Weighted Average Market Share Vs Largest Competitor

5C Marketing Analysis of Starbucks: Delivering Customer Service

4p marketing analysis of starbucks: delivering customer service, porter five forces analysis and solution of starbucks: delivering customer service, porter value chain analysis and solution of starbucks: delivering customer service, case memo & recommendation memo of starbucks: delivering customer service, blue ocean analysis and solution of starbucks: delivering customer service, marketing strategy and analysis starbucks: delivering customer service, vrio /vrin analysis & solution of starbucks: delivering customer service, pestel / step / pest analysis of starbucks: delivering customer service, swot analysis and solution of starbucks: delivering customer service, references & further readings.

Youngme Moon, John A. Quelch (2018) , "Starbucks: Delivering Customer Service Harvard Business Review Case Study. Published by HBR Publications.

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