Marketing Starbucks Case Study
BACKGROUND:
The Starbucks brand has evolved over the last decade and is now facing newer and more complex challenges in the way they do their business, such as:
• Evolving target customer base and their positioning strategy
• Widening gap between brand value proposition and customer perception
• Increasing complexity of product-mix and service delivery
The management is faced with the mandate of taking key business decisions that must address the major internal and external trends that are currently affecting /driving revenues and profits. The company is evaluating its performance in customer service delivery and has noticed that they have not been meeting customer expectations in this area.
PROBLEM STATEMENT:
Starbucks’ most recent market research has revealed that the customer satisfaction level has dipped. Starbucks plans to invest $40 million to increase labor hours which will subsequently result in improved customer satisfaction. This investment will reduce the EPS by 7 cents per share.
• Should Starbucks make this investment?
• Has customer satisfaction been measured using the correct metrics? Will the investment improve customer satisfaction ratings? In other words, will the investment directly address / increase customer satisfaction ratings?
• Are there other alternatives or avenues of investment that can address this issue?
THE IDEAL STARBUCKS CUSTOMER:
An ideal and profitable Starbucks customer typically possesses the below characteristics:
• Belongs to a diverse population group:
Starbucks originally targeted affluent, well-educated, white-collar female patrons, aged between 25 and 44 years. However, a recent study has revealed that newer/first-time customers tended to be younger, less well-educated, and in a lower income bracket than Starbucks’ more established customers.
• Provides Repeat Business:
Market data suggests that a satisfied customer visits the store 4.3 to 7.2 times a month, as compared to an unsatisfied customer
The Starbucks brand has evolved over the last decade and is now facing newer and more complex challenges in the way they do their business, such as:
• Evolving target customer base and their positioning strategy
• Widening gap between brand value proposition and customer perception
• Increasing complexity of product-mix and service delivery
The management is faced with the mandate of taking key business decisions that must address the major internal and external trends that are currently affecting /driving revenues and profits. The company is evaluating its performance in customer service delivery and has noticed that they have not been meeting customer expectations in this area.
PROBLEM STATEMENT:
Starbucks’ most recent market research has revealed that the customer satisfaction level has dipped. Starbucks plans to invest $40 million to increase labor hours which will subsequently result in improved customer satisfaction. This investment will reduce the EPS by 7 cents per share.
• Should Starbucks make this investment?
• Has customer satisfaction been measured using the correct metrics? Will the investment improve customer satisfaction ratings? In other words, will the investment directly address / increase customer satisfaction ratings?
• Are there other alternatives or avenues of investment that can address this issue?
THE IDEAL STARBUCKS CUSTOMER:
An ideal and profitable Starbucks customer typically possesses the below characteristics:
• Belongs to a diverse population group:
Starbucks originally targeted affluent, well-educated, white-collar female patrons, aged between 25 and 44 years. However, a recent study has revealed that newer/first-time customers tended to be younger, less well-educated, and in a lower income bracket than Starbucks’ more established customers.
• Provides Repeat Business:
Market data suggests that a satisfied customer visits the store 4.3 to 7.2 times a month, as compared to an unsatisfied customer