2. Starbucks – dominant specialty brand more than
4500 retail outlets in 2002
Aggressive expansion strategy requires additional
750 retail outlets
Market research shows customer satisfaction is on
decline
Brand image to is showing rough edges
3. ? What factors accounted for SB success in early 90’s
? Why have SB customer satisfaction scores decline
? How does the SB of 2002 differ from 1992
? Describe the ideal SB customer from profitability
point of view
? Should SB made the $40m investment in labour
4. Megabrand image- without mass advertising
Sales growth 5% for 11 consecutive years
Serving 20m customers in more than 5000 stores
Tightly integrated value proposition perfectly
aligned with target market needs
5. As a result the following consequences evolved:
Starbucks
Dunkin Donuts
6. CONSUMPTIONS PATTERNS
Customers tend to
overstay
Ritualistic consumption
Choose SB for leisure
with friends or being
alone
Chat with baristas
DISTINCT PERCEPTIONS
Best coffee in the
market
Upscale and classy
Social reinforcement
7. Brand – more accessible
o Introduced drive throughs (50%)
o Non company operated retail chains (15%)
Customer base has been changed
o Massive store expansion
o Non coffee house channels
o Non coffee products
o Other mechanisms
8.
9. Increased product diversity
▪ Exhibit 5 shows a typical menu board and the price list of the
store
Increased pressure on baristas
10.
11. Highly satisfied customer - $172 and $200 more
than unsatisfied
Lifetime value of highly satisfied customer is $2248
$2970 more than satisfied and unsatisfied customer
respectively
12. ESTABLISHED
Want peaceful
ambience
Want friendly
employees
Want customized
beverage
NEW CUSTOMERS
Create a rushed
environment
Made the employees
grumpy
Put pressure on
baristas
13. 83 % of the customers
ranked a clean store being
highly important in
creating customer
satisfaction.
14. Customers want friendly and attentive staff
Fast and effective service
Same reflected by mystery shoppers
16. SB lacked a strategic marketing group
New acquisitions due to new customer base
Establish customers less profitable but help
in retain a good brand image
17. Installation of automated machines
Facility remodeling
Product innovation
SVC prepaid cards
Store clustering
Employing more labour
18. Investment is needed not only to convert
satisfied customers to highly satisfied but is
also needed to retain the present satisfied
customers