2. COMPANY BACKGROUND
3 coffee fanatics – Gerald Baldwin, Gordon Bowker
& Ziev Siegel
Specialized in selling arabica beans
Create the 3rd home – Home, Office & Starbucks Coffee
Shop
By 1992, 140 stores
In 1992, decided to go public & raised $25m
. By 2002, sales climbed at CAGR of 40%
Since IPO, net earnings risen at CAGR of50%
Now serving 20 million unique customers
5000 stores around the globe
On an average, it opening 3 new stores a day
Spent almost nothing on advertising:
Focused on point-of-sale branding
Local-store marketing
•
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3. STORESTATISTICS
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FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
Total North America
(Stores)
1755 2217 2976 3780 4574
Company Operated (%) 92.42 91.93 82.19 78.60 76.43
Licensed Stores (%) 7.58 8.07 17.81 21.40 23.57
Total International (Stores) 131 281 525 929 1312
Company Operated (%) 50.38 34.52 32.95 31.75 29.27
Licensed Stores (%) 49.62 65.48 67.05 68.25 70.73
# Total North America: Steady rise in number of Licensed stores
# Total International: Steady rise in number of Licensed stores
North America Company Operated Stores (FY2002)
Details Average Unit
Average hourly rate with shift supervisors & hourly
partners
9 $
Total Labour hours per week, average store 360 Hours
Avg. weekly store volume 15400 $
Avg. Ticket 3.85 $
Average daily customer count, per store 570 People
4. Starbucks Value Proposition
.
Creating an „experience‟
An experience that could weave into the fabric of
their daily life
Their ‘Experiential Branding Strategy’
The Coffee (The Product)
Service (Customer Intimacy)
The Atmosphere (Ambience)
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5. 5
Channels of distribution
To reach customers where they work, travel,
shop & dine
Channels
• Starbucks Coffee Shops
• Specialty Operations (Retail channels)
Product Mix, North America Company-Operated Stores
FY2002
Retail Product Mix % of Sales
Coffee Beverages 77
Food Items 13
Whole-Bean Coffees 6
Equipment & Accessories 4
6. Starbucks Partners
Employees called „Partners‟
Hourly-wage employees called
„Baristas‟
60,000 partners worldwide
Partner satisfaction leads to customer
satisfaction
Low employment turnover rate
Company encourages promotions
within its own rank
#tobeapartner ep 1: anniversaries -
YouTube
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7. Delivering on Service
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Partners had 2 types of
training
Soft Skills
Welcome customer to store, to
smile, remember their names
etc.
Hard Skills
Use Cash Register, Mix drinks
etc.
„Just Say Yes‟
Policy
Empowered partners to provide
best service possible, even if it
meant going beyond company
rules
E.g. Customer spills drink &
asks for a refill, we give it!
E.g. Customer doesn't have
cash & wants to pay by
check, then we give drink as a
free sample
Don't want to win argument &
lose customer
8. Measuring Service Performance
Customer Snapshot” – A Mystery Shopper program done
3 times a quarter
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Speedof Service
• How long did the customer have to wait? (Goal was to serve in 3 minutes from back
of line to drink in hand)
Product Quality
• Was the order filled accurately?
• Was the temperature of the drink within the range?
• Was the beverage properly presented?
Cleanliness
• Was the store clean? The counters, the tables, the restrooms?
Service
• Did the partner verbally greet the customer
• Did they make eye contact & say thank you?
9. COMPETITION
Store Name No. of
Stores
No. of
States
Differentiation Aspects
Caribou 200 9 Core Environment
Look & feel of an Alaskan Lodge Fire
Places & Soft Seating
Peet's Coffee &
Tea
70 5 Freshest coffee in the market
Roasting to order (Hand roasting small
batches of coffee)
Dunkin
Donuts
3700 38 Flavoured coffee, Non coffee alternatives
Dunkaccino (A coffee & chocolate combo)
10. 10
CAFFEINATINGTHEWORLD
Optimistic Growth Plan because:
Coffee consumption was on the rise in US
Specialty coffee, one-third coffee
consumption outside of the home
8 states in US without Starbucks
Scope for growth in existing markets
Retailing Strategy
Opening stores in new geographical area
while clustering stores in existing areas.
Resulted in cannibalization but overall sales increased
Demographics, Competition , real estate
Company’s goal to have 15000 international stores-
UK, Australia, Asia, Japan
RETAIL EXPANSION
11. Product Innovation
Introduced at least one new hot beverage every holiday season
R & D team: Product formulations, focus groups,
in-store experiments, market tests
Drink fit into the ergonomic flow of operations
Importantly- partner acceptance
Most successful innovation- coffee and non- coffee-based line of Frappuccino
beverages
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12. Service Innovation
Store-value card(SVC)-launched Nov
2001
Prepaid, swipe able smart card- used to pay for
transactions in any Starbucks store
Cardholders- visit Starbucks twice as often
Card given as gifts introduced
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13. MARKET RESEARCH FINDINGS
Starbucks‟Brand Meaning
Little image differentiation b/w Starbucks and
smaller coffee chains
Starbucks focused primary on making money and
expansion
Brand Meaning:
Everywhere- the trend
Good coffee on the run
Place to meet and move on
On the way to work
Accessible
14. Changing customer
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New customers- Younger, less educated,
lower
income
Less frequent and had different perception of
Starbucks brand compared to established
customers
Historical customer profile had expanded e.g.
large Hispanic customers in California
Driving customer satisfaction
Direct link b/w customer satisfaction and
customer loyalty
Customer satisfaction gap due to service gap b/w
scores on key attributes and customer expectations
Poll results showed that Starbucks needs to have
friendly staff, faster service and better offers for
loyal customers etc.
15. Rediscovering
The Starbucks Customers
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Relaxing labor-hour controls, add additional 20
hours of labor, per week, per store.
Need to bring service time down to three-minute
level
Increase customer satisfaction and build stronger
long-term relationships
Improve customer throughput
Starbucks- establish connection between
satisfying customers and growing the business
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MADE BY : SANIDHYA SHARMA ( USC16046)
ANANYA MISHRA ( USC16009)
