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8/3/2019 Rogers Correia Starbucks Case Discussion
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Starbucks:
DeliveringCustomer ServiceCase Discussion: March 4
Target Solutions Marketing Group
Taiya Brandon
Kelvin Brown
Shawn Correia
John Kimwele
Dale Hall
8/3/2019 Rogers Correia Starbucks Case Discussion
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Issue
Recent Market Research shows a decline in CustomerSatisfaction at Starbucks. To stay on plan with theiraggressive growth strategy, should $40 million beinvested in the 4,500 stores focusing on improving thespeed of customer service?
Will this improvement lead to
increased satisfaction that will
translate in to an increase in sales
and profitability?
Does this investment align with the growth strategy
of retail expansion and product innovation?
8/3/2019 Rogers Correia Starbucks Case Discussion
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Starbucks:
Take Home an Experience
Mission Statement live coffee
The Starbucks Value Proposition
1. To create an experience around theconsumption of coffee, an experience thatpeople would weave into their lives
2. To create an uplifting experience in
Customer intimacy3. To create an ambience based on human
spirit, sense of community, and the need forpeople to come together
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Matters of Concern
Starbucks is suddenly in a position of:
Consistent sales
BUT
Low customer satisfaction Low speed of service
Customized drinks Slows down the service process
Strain on workers
Hand crafted Drinks
Involve Time Slows down the service process
Competition A variety of regionally concentrated small scale
Specialty coffee, bagel and donut chains
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Market Research
Recent Findings of peoples experiences:
Starbucks cares primarily about making money
Up from 54% to 61%
Starbucks cares about building more stores
Up from 48% to 55%
Top 5 Attributes of Starbucks:1. Known for specialty/gourmet coffee (54% strongly agree)
2. Widely available (43% strongly agree)
3. Corporate (42% strongly agree)
4. Trendy (41.5% strongly agree)
5. Always feel welcome at Starbucks (39% strongly agree)
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Starbucks Options
1. Investment of $40 million annually toincrease speed of service
(impact = customer satisfaction, translates to sales)2. Alter the product mix
Determine change depending on store size and location
3. Process of Measuring Service performanceCategories: Service, Cleanliness, Product Quality, Speed
of Service
4. Retail ExpansionNew stores in new markets
Geographically cluster stores in existing markets
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Starbucks Options continued
5. Product innovationPriority of Mgmt given that the prices were stable in
recent years
6. Service InnovationStarbucks store Value Card
7. Effort to identify and demonstrate in very
concrete terms on how to determineMarket Research Data
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Starbucks Forte
11th consecutive year of consistent sales of 5% or greater Company spent close to nothing to achieve this goal
Sales climbed at an annual compound growth rate of 40%
and net earnings to 50% since Starbucks went public
Good strategic alliances with Pepsi-Cola and Kraft foods to
distribute some of their products
Lowest employee turnover rates in the industry
(just 70% as compared to 300% the average of the fast food industry)
Implemented good policies to insure competitive advantage
Just say Yes policy
Measuring service performance
Expect business projections to rise and be steady and
consistent
8/3/2019 Rogers Correia Starbucks Case Discussion
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Plan of Action
Plan based Starbucks strengths relative to the presented issues
1. Proceed with investing the $40 million annually in the 4,500 stores
to increase service efficiency (impacting customer satisfaction.
Goal ~ customer retention in the competitive coffee house market)
2. While the investment enables additional labor hours, research
efforts to increase efficiency through set-up and equipment (e.g.automated espresso machine, specialized work stations)
3. Use secondary market research data to identify, analyze, and alter
product differentiation strategies, with respect to smaller chains
and Starbucks obliquities
4. Alter the product mix depending on the store size and location ofthe outlet (demographics)
Sample to find out what customers mainly look for
Sample data results would narrow the customization and train baristas
with those special concoctions
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Plan of Action cont.
Plan based Starbucks strengths relative to the presented issues
5. Marketing Research showing that existing markets are far from
saturation
Analyze this particular area with specific concrete terms targeting a
particular objective
6. Continue with Product and Service innovation, proactively conduct
an environmental scan to launch new products
7. Validate Market Research metrics and methods of sampling, data
analysis
Service Performance categories
Does the data translate in to measurable metrics that can impact sales and
profitability?