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Running head: STARBUCKS: DELIVERING CUSTOMER SERVICE

Starbucks: Delivering Customer Service

Student’s Name:

University affiliation:

October 15, 2017

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STARBUCKS: DELIVERING CUSTOMER SERVICE

International Marketing HULT INTERNATIONAL BUSINESS

SCHOOL
CORE ISSUE

Starbucks has not been meeting its customers’ expectations in the customer satisfaction area and
for that reason the company’s senior vice president of administration in North America, Christine
Day, to Should Starbucks invest $40 million to increase labor in each of its 4,500 stores in order
to improve its customer satisfaction ratings?

1. Background

Founded in 1971 in Seattle, Washington by Gerald Baldwin, Gordon Bowker and Ziev Siegl, and
later on bought by its marketing team member, Howard Schultz years later, Starbucks is a
luxurious diverse sensation. As a result, the story of Starbucks’ success is simply an astonishing
one. Undeniably, Howard Schultz vision back in the 1982 has turnout to be an ethnic
phenomenon. In fact, according to the case study Schultz states that, “The idea was to create a
chain of coffeehouses that would become America’s ‘third place.’ At the time, most Americans
had two places in their lives-home and work. But I believed that people needed another place, a
place where they could go to relax and enjoy others, or just be by themselves. I envisioned a
place that would be separate from home or work, a place that would mean different things to
different people.” The statement clearly shows that Schultz’s lasting vision has turned into a
reality.
While the company mainly concentrated on creating an experience around coffee for the
customers, the business’s attractive value proposition was the greatest contributor to Starbucks’
success in the 90s. With Starbucks motivation to incorporate the company “live coffee” mantra
into the normal life, he introduced three key aspects to the business branding tactic, which
included, the atmosphere, service and the coffee as the actual product. The company was
outspoken in its ability to provide the highest-quality of coffee in the globe; mainly from rich
country of Africa, Central and South American and finally the Asian-Pacific areas of the world.

2. This scenario has led to:

The scenario has led to the development of the key components that contribute to the success of
the business. The components as analyzed above were employed by Starbucks as the company’s
branding strategy. These according to the case study are the customer service, the atmosphere
and the affordability of the products itself in this case the coffee product.
Customer service is a single greatest factor that significantly contributed to the success of the
company. Customer service that Starbucks refers to as consumer intimacy is developed from this
scenario and has significant potential of leading success of the coffee company branding
strategy. According to Starbucks, customer service is always appreciated within the
organizational setting, however, the deeper customer intimacy concentrates more on recognizing
and sustaining the customers’ immediate wants. In fact, this has led to the company’s realizations
of productive customer services leading to the company embracing customization of its products
and including other customer services such as offering discounts, promotions as well as
additional incentives to procure coffee product at its shops.

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STARBUCKS: DELIVERING CUSTOMER SERVICE
The scenario has similarly led to the realization of the important of atmosphere in the company’s
success. While branding its product, atmosphere that surround the consumers of the company’s
product plays a major role in product promotion. The atmosphere focusing on the case study
determines the customers experience in the shop. This scenario has led Starbucks to establish
comfortable temperatures, different aromas (of bakery products and coffee), ambience, open
reclining zones and provides cool music in an effort to provide conducive environs for its
customers. According to Schultz, this type of environ and the sense of society has kept the
customers vising the shop more often.
Also, the scenario has contributed and helped Starbucks to retain its reputation and productivity
by employing interesting strategies such as treating its staffs like family. According to the case
study, the Starbucks staffs were not just employees but were called ‘partners.’ As a result, the
company secure a large broad of customers across the world ranging to 60, 000, with about 50,
000 partners located in the North America. The partners were given such generous services such
as health-insurance policies and stock options. Surprisingly, these services were provided to all
staffs including the youngest employees often of ages 17-23 years. This scenario has resulted to
the lowest company’s turnover rates associated to existing food industries, which have sustained
as a high as 300% turnover rates compared to 70% of employee turnover at Starbucks.
However, despite the success at Starbucks, consumer satisfaction rates are recorded to have
declined due to reduced service scores. This scenario was facilitated by dissatisfying services,
the quality of the product and product accessibility as the company expands to the global
markets.
The company similarly suffered from jumbled structures of the market that ignored the market
and customer related trends. This scenario made the company to conduct a marketing research
after which they identified a shift in the customer behavior for the past twenty years. The
company also realized the changing customer demographics and preferences; this revealed the
need of the company to adapt and embrace flexibility to address the difference customer
demands. The failure scenario at Starbucks made them focus on the renovation of the services as
well as their product. As a result, the business started providing original products on daily basis
inclusive of a completely new line of bottled, Frappuccino drinks that had turnout to a $400
million franchise.
3. Analysis, Options (Conjoint Focus group) & Risks:
While analyzing Starbucks company, I strongly feel that the company can not only meet the
expectations of its customers, but also exceed them. Through the services and product
renovation, he company is adapting the needed steps to adjust to the diverse markets of its
customers across to the globe. Also, its operation and customer relations reveal that there is
always room for improvement and development. In this case, the company should provide more
of pasties, a broader variation of drinks adding more tastes of hot juices and chocolate including
such incentives as free Wi-Fi around their shops to attract customers who are mostly the young
and modern generation. The stores are currently nor offering these services which are speculated
to contribute to the success of Starbucks while venturing to new markets.
Focusing on the options, possible options, the company should capitalize more on marketing
research and addressing the customer’s feedbacks. This would help them to maintain an updated
status of the trends in the market and what they need to do more to promote their product. This
will similarly help them to survive and flourish in the dynamic markets facing their products and
existence. Also, concerning the business proposal to invest an extra 40 million dollars in labor as
proposed by Day C. as the top VP of management in North America, the investment is rewarding

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STARBUCKS: DELIVERING CUSTOMER SERVICE
and a terrific move for the company; this would help them to enhance their services and
consumer satisfaction. This would be anticipated to promote productivity leading to improved
general consumer experience.
The major risk would be associated with the $40 million investment as seen above. Although the
investment would be rewarding to the company’s success, the calculation in the investment plan
ignore certain uncertainties such as increased store visits from dissatisfied customers and also
overlook the increased customer trends and changing preferences which had previously led to the
failure in the company. Marketing research can however help to get the feedback from the
customers as a result helping to solve the problem in the future.
4. Best Option
In general, Starbucks seem to be leading change and heading to successful journey. There are
different factors which have long contributed to this company’s success among them including
the inviting customer atmosphere, product affordability and accessibility and existing customer
services within the organization. This has not only changed the overall company’s reputation, but
has attracted a broad range of consumers as well. However, based on the previous failure
scenarios, the best option for Starbucks is to conduct regular market research to gather
customer’s feedbacks and keep track of the market trends and changing customer dynamics.
Also, investing 40 million dollars in labor would also be a better option for the company as it
would help them improve the services and customer satisfaction levels.

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Reference
Moon, Y., & Quelch, J. (2006). Starbucks: delivering customer service. Harvard Business
School.

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