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Starbucks Case Study:

7/13/2011 1 Starbucks Case Study Archana Chelliah B.Anirud, P.Harish, Moon Saha, M.Vimalan


7/13/2011 2 Outline How to maintain a customer focused brand image while continuing expansion in the field of coffee shops To improve the customer satisfaction by forming a strategy team.

Background and History:

7/13/2011 3 Background and History Gerald Baldwin, Gordon Bowker, and Ziev Siegl – opened a small coffee shop in Seattle’s Pike Place Market in 1971 Howard Schultz – Joined the Starbucks marketing team Traveled to Italy and became interested in the espresso bars and tried to bring it to America Founders sold the company to Shultz Began to open new stores and had 140 stores by 1992 Decided to take the company public and succeeded by opening more stores Shultz continued to take the position as chairman and chief global strategist and hired CEO Orin Smith in 2002

Mission/Vision of Starbucks:

7/13/2011 4 Mission/Vision of Starbucks To satisfy customers and to create a “third place” environment Three components to branding strategy : the coffee itself, service, and atmosphere

Overview as of 2002:

7/13/2011 5 Overview as of 2002 5,886 stores(4574 National, 1312 International) Customers(20 million total, 570 per week per store) Net Income of 215 million $ Customer Demographic (Traditional vs. New) Menu (Average price of drink – $3.85, 30 drinks, and 23 whole bean coffee blends) Partners – 360 total labor hours and an average pay rate of $9.00 per hour Partnerships (Pepsi Bottling Co., Kraft Foods, and Dreyers Ice cream)

Slide 6:

7/13/2011 6 Starbucks Share of Specialty Coffee Market 42% (estimate) – 13% Total Market Share

Slide 7:

7/13/2011 7 Starbucks Share of Specialty Coffee Market 50% (estimate) – 20.5% Total Market Share


7/13/2011 8 Strengths Well developed and established brand strategy: “live coffee” Locations Product Mix “Partners” Customization of Drinks


7/13/2011 9 Weaknesses Customization of Drinks Caused tension between product quality and customer focus Increased menu size Lacked a strategic marketing group Very little image & product differentiation


7/13/2011 10 Opportunities Increase Customer Satisfaction Customer Quota Increase the number of stores Domestically/Internationally Create New Products & Services


7/13/2011 11 Threats Competition Donut & Bagel Chains Small scale specialty coffee chains


7/13/2011 12 Problem Key Problem : Maintaining a customer focused brand image while continuing expansion Customer Satisfaction Lost sight of the consumer Lost connection between customers and growing business Service gap

Existing Plan:

7/13/2011 13 Existing Plan Investment Plan $40 million annually Add 20 labor hours a week Maintain 3 minute service time goal Increase customer satisfaction Goal : All stores achieve $20,000 increase in weekly sales

Reinvigorating a Customer Focused Image:

7/13/2011 14 Reinvigorating a Customer Focused Image New Incentives for customer Ideas: Drink of the day, membership cards, serve at your seat Incentives for Partners Adding 20 hours during peak hours to maintain 3 minute time More authority to regional retail managers Install a rolling menu policy

Maintaining Expansion:

7/13/2011 15 Maintaining Expansion Moving into new domestic and international markets Not saturating existing markets Instead: move into untapped domestic markets and increase through put at current stores through added hours Advantages: Will appear more customer focused locally, faster


7/13/2011 16 Recap customer service inovations brand image Marketing plan Expansion Domestic International

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