Marketing Management - II

Project 1 by SEC D Group 2

Case Title

Starbucks: Delivering Customer Service

2301243 Aditi Chandra

Ans: Starbucks, the go-to brand for premium coffee lovers in the 1990s, offered a plausible value
proposition. One of the significant factors propelling its popularity was that no major competitors in
the market offered the same level of consumer satisfaction.
Moreover, the coffee bars and locations the company set up were prominent in upscale localities. This,
in turn, generated high profits as the customers were mainly from well-educated, affluent backgrounds
aged 25 to 44 years. Not only were they drawn towards the uniqueness of Starbucks, but the
company's commitment to providing freshly roasted, top-notch coffee beans ensured a superior taste
compared to many competitors.

The value proposition of Starbucks is entirely focused upon the brand strategy that consists of three
main components. The most appropriate brand strategy of the company was captured by the attractive
caption of "live coffee." The phrase reflects the importance of keeping the coffee culture alive. From a
retailer's perspective, the company had created an experience where they have offered high or
optimum-quality coffee to its consumers and controlled most of the supply chain.

Another value proposition of Starbucks has been what the company referred to as 'Customer Intimacy.'
Starbucks believed in creating a welcoming and cozy atmosphere in its coffee shops, emphasizing the
idea of the "third place" between work and home. The in-store experience included comfortable
seating, inviting decor, and a focus on customer service, creating a sense of community and relaxation.

The third primary value proposition that has gauged reasonable profits for the company is that it offers
customization to its loyal customers, helping them personalize their coffee orders. It added a sense of
individuality and satisfaction, along with maintaining the service across all its locations in the USA.
Along with the value propositions stated for the period of the 1900s, the brand image that Starbucks
has been able to pull off in the market could have been better compared to other coffee brands in the
years to come. However, it has attained the highest level of customer satisfaction. The company has
been constantly facing a decline in its market share and brand image simultaneously.
However, in the late 1990s and early 2000s, several changes occurred that had both favorable and
unfavorable impacts on Starbucks' value proposition:

Favorable Changes:
Global Expansion: Starbucks continued to expand globally, reinforcing its brand presence and
introducing its value proposition to new markets. This expansion increased the revenue and market
share.
Innovation: Starbucks introduced new products such as the Frappuccino, which delighted a broader
range of customers, especially during warmer seasons.
Digital Transformation: Starbucks was one of the pioneers in using technology to enhance the
customer experience, introducing mobile ordering and loyalty programs like the Starbucks Card.
Unfavorable Changes:
Rapid Expansion: In its quest for growth, Starbucks opened too many stores too quickly, which led to
concerns about oversaturation of its premium-ness.
Quality Control: Maintaining product quality became challenging as the company expanded quickly,
leading to inconsistencies in some locations.
Competition: As the coffee industry evolved, Starbucks faced increased competition from both
established coffee chains and independent coffee shops. This competitive pressure led to pricing wars
and margin pressure.
2. HOW SHOULD STARBUCKS MANAGE CUSTOMER’S EXPECTATIONS IN THE AREA OF CUSTOMER
SATISFACTION?

Ans: To manage customers' expectations in the area of customer satisfaction, Starbucks should focus
on addressing the service gap between their scores on key attributes and customer expectations. This
can be achieved by improving service, particularly in terms of speed-of-service, which was mentioned
most frequently by customers as an area for improvement. By bringing service time down to the three-
minute level in all stores, Starbucks can increase customer satisfaction and build stronger long-term
relationships with their customers.

Additionally, Starbucks should prioritize factors that are highly important to customers in creating
customer satisfaction, such as a clean store, product quality, and friendly staff. By consistently
delivering on these key attributes, Starbucks can meet and exceed customer expectations, leading to
higher levels of satisfaction.

The company should clearly communicate its value proposition which will help customers understand
that Starbucks is not solely focused on growth and making money, but also cares about providing
quality products and creating a positive social impact.
Also by utilizing customer data the company can leverage it through its customer loyalty program and
payment cards to gain insights into customer preferences and behavior. This data can be used to
personalize marketing efforts, develop targeted promotions, and improve overall customer
satisfaction.

Starbucks can also differentiate from its competitors like from smaller coffee chains by highlighting its
unique offerings, such as convenience, accessibility, and consistency. Additionally, Starbucks can
emphasize its commitment to community outreach and charity to further distinguish itself from
competitors.

To Improve its Brand Image, Starbucks should address the perception that it primarily cares about
making money by showcasing its dedication to customer satisfaction and social responsibility. This can
be done through marketing campaigns that highlight Starbucks' values, community involvement, and
commitment to providing a positive customer experience.

Furthermore, Starbucks can utilize measurement tools like the Customer Snapshot program to track
service performance and identify areas for improvement. By regularly evaluating their performance
and making necessary adjustments, Starbucks can ensure that they are meeting customer expectations
and delivering a memorable experience that inspires customers to return often and recommend the
brand to others.

Overall, managing customers' expectations in the area of customer satisfaction requires Starbucks to
focus on improving service, meeting key attributes that are important to customers, and continuously
monitoring and adjusting their performance to deliver an exceptional customer experience.