Starbucks Success

7/29/2019 Starbucks Success

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Amity Business School

STARBUCKS

Presented by-

Abhinav(24)

Shivam Yadav(25)

Dhruv Narang(27)

Sudhanshu Gupta(26)

Pankaj Pant (28)


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How it started.. In 1971, Baldwin, Gordon Bowker, and Ziev

Sieglopened a small coffee shop in

Seattles Pike Place Market.

The shop specialized in selling whole arabica

beans to a niche market of coffee purists.

In 1982, Schultz joined the Starbucks

marketing team.

Upon his return from a business trip in Italy,

the inspired Schultz convinced the companyto set up an espresso bar in the corner of its

only downtown Seattle shop.

When Starbucks founders didnt go with his

idea, he started his own coffee house and

later bought the Starbucks name


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The growtho As soon as Schultz took over, he immediately began

opening new stores.

o The stores sold whole

beans and premium-priced coffee

beverages by the cup

and catered primarily

to affluent,

welleducated, white-collar patrons between

the ages of 25 and 44.

o By 1992, the company

had 140 such stores in

the Northwest od USA

and was successfully

competing against othersmall-scale coffee

chains such as Gloria

Jeans Coffee Bean and

Barnies Coffee & Tea.

o By 2002, Schultz

had established

Starbucks as the

dominant specialty-

coffee brand in

North America


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Starbucks value proposition

Places the customer and the service delivered to the customer above everything

else.

The value proposition is not about the coffee exclusively but about the coffee

culture and the experience of drinking coffee.

Moves away from the tangible benefits that the coffee offers, such as taste,

stimulation, alertness and concentrates on the quality of its coffee and the

intangible benefits of the experience of drinking Starbucks coffee.

Starbucks value proposition is not about coffee, it is about the experience of

drinking coffee in a Starbucks store integrating the product with the emotional

benefits.


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Factors that accounted to Starbucks success

Atmosphere

Schultzs idea was to make Starbucks Americas third place. By recreating the

Italian coffee culture he met in Milan, he managed to make Starbucks a place

where people can enjoy their social interactions, relax, or just spent some time bythemselves.

From buying coffee as a drink to the exper ience of enjoying coffee.

People viewed Starbucks as a place they wanted to be at and they spent as much

time as they could in the stores.

It was an uplifting experience that was complemented with the layout designed torovide an invitin environment.


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Coffee quality

Starbucks strategy was to open only companyowned stores and avoid

franchising. This enabled the company to keep full control of quality of its

products and services.

At the same, Starbucks tried to control as much of the supply chain as possible in

order to keep the quality of coffee at high and consistent levels by working with

growers and enforcing coffee standards.

These two strategies enabled Starbucks to deliver on the first component of its

value proposition; quality


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Service

Partners were trained on both hard skills and soft skills when hired to work for a

Starbucks retail store. This equal emphasis on the hard and soft skills further

highlighted Starbucks strategy to make the experience pleasant for the customer.

The soft skills were a way to teach the partners on how to connect with the

customer, by establishing eye contact, smiling and greeting them with their nameswhen the customers were regulars.

In addition to that there was also the Just Say Yes policy for which the partners

went beyond company rules in order to satisfy the customers.

These again created a friendly environment for customers who felt special and in

combination with the two points mentioned above increased their customersatisfaction.


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Factors that accounted to Starbucks success Partner satisfaction

Schultzsbelief was that if the Starbucks employees were happy, then this would lead

to higher customer satisfaction. For this reason, Starbucks partners were among the

highest paid hourly workers, they enjoyed health benefits and they had stock options.

This resulted in one of the lowest employee turnover rates in the industry and aconsistently high employee satisfaction rate. Furthermore, the majority of promotions

for Starbucks were within its own ranks.

Even though there is no evidence that the satisfaction of partners led to customer

satisfaction, it would be safe to assume that the low employee turnover meant that

partners stayed at their positions for longer time, were more experienced in treatingthe customer and could provide a faster service.


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Measuring Service Performance Starbucks tracked service performance using a variety of metrics, including

monthly status reports and self-reported checklists.

The companys most prominent measurement tool was a mystery shopperprogram called the Customer Snapshot. Under this program, every store was

visited by an anonymous mystery shopper three times a quarter. Upon completing

the visit, the shopperwould rate the store on four Basic Service criteria:

ServiceDid the register partner verbally greet the customer? Did the partnermake eye contact with the customer? Say thank you?

CleanlinessWas the store clean? The counters? The tables? The restrooms?


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Measuring Service Performance Product qualityWas the order filled accurately? Was the temperature of the

drink within range? Was the beverage properly presented?

Speed of serviceHow long did the customer have to wait? The companys

goal was to serve a customer within three minutes, from back-of-the-line to

drink-in-hand. This benchmark was based on market research which indicated

that the three-minute standard was a key component in how current Starbucks

customers defined excellent service.


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Value Chain

The above is the value chain for Starbucks. The upstream portion of the value chain

shows the product development from adding teas and international influences, to the

research that took place to develop the VIA instant coffee line. They also search theglobe for Fair Trade suppliers of high quality beans. These products are then

distributed to corporate storefronts, franchise locations, airport terminals, grocery

stores and more, and finally offer ground coffee and gift cards to take home.


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New Value Chain

The above is a new value chain with international development added upstream to

allow for international markets to develop new products that better suit there culturesthat could potential add value to the US market as well such as the Green Tea Latte

developed in Japans Starbucks. Added downstream is Online Storefront

customization, that would allow you to create a profile online, order online, create

new drinks etc. Also added is a mobile app that could locate starbucks locations, put

in drink orders etc.


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Why starbucks is staying ahead of competitorsin the competitive Quick Service industry.?

Centralized Decision Making Process

Data Driven Marketing

Leverage Technology

Great Relationship with Customers


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Continuous Service Innovation

Starbucks stored-value card (SVC) had been launched in November 2001. This

prepaid, swipeable smart card was used to pay for transactions in any company-

operated store in North America

In surveys, the company had learned that cardholders tended to visit Starbucks

twice as often as cash customers and tended to experience reduced transaction

times.


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Starbucks was the 1st coffee outlet to introduce HotSpot wireless Internet service,

in August 2002.

The service offered high-speed access to the Internet in Starbucks stores


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Starbucks recently announced that they will be addingDuracell

Powermat wireless charging stations to its stores in Silicon Valley

following a successful test of the technology at Boston area stores.


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Starbucks has also introduced a mobile application by which

we can order coffee from our mobile .


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We arent in the coffee business, serving peopleWe are in the people business, serving coffee.

Haward Schultz

Documents

Starbucks Success