star bucks 2

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an analysis of the change in starbucks approach to satsify customers and expand business.

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STARBUCKS: Delivering customer service Aadil KHAN Monia LADJIMI Phillipe MAALEK Yuka YOON Sarah ZHAI Haili ZHANG

Success factors in early 1990s STARBUCKS Products ServicesNiche segment Premium priced beverages Accessories Successful World-OfAadil KHAN Mouth Monia LADJIMI Phillipe MAALEK competitors Less Yuka YOON Sarah ZHAI Premium customers Haili ZHANG Store expansions Customer intimacy

Value proposition STARBUCKS Live coffeeDeliver highest quality in coffee Experience Customer intimacy and loyalty Feel good factor Atmosphere and sense of communityAadil KHAN Monia LADJIMI Phillipe MAALEK Yuka YOON Sarah ZHAI Haili ZHANG

Brand image in 1992 STARBUCKS Best in qualityPremium pricing Sophisticated customized serviceAadil KHAN Monia LADJIMI Phillipe MAALEK Yuka YOON Sarah ZHAI Haili ZHANG

Customer Satisfaction ScoresCustomer satisfaction scores declined due to:Service gap between ideal and reality Focus shift from customers to products Perception primary focus on business performance Change in Target expansion of segments Marketing data no analysis Organizational structure - no marketing department Competitive advantage no differentiation from competitors

1992 vs. 2002Stores Localization 140 in the US Product range by sales revenue 50% beverages 50% coffee beans Stores Globalization 5,000 stores worldwide (open 3 per day) Product range by sales revenue 77% beverages 13% food 4% accessories 6% beans Increased product ranges

Customers Customers White-collared affluent & Younger patrons Less educated & lower Aged 25-44 males income

Services Services Just Say Yes services Simplified process, bottle Personalized and intimate neck eliminated services Tech. Innovation, viz Automated coffee machine Competitors Competitors Big brand and international Small-scaled competitors competitors Coffee chains Food and beverage chains Distribution channels Distribution channels International-licensed, Company-operated retail online, mail-order stores food service accounts, retail stores, offices, joint ventures Service innovation Store-value card (SVC) Wifi

Ideal Customers from Profitability StandpointGender Age Income Education Coffee/ week SB visit /month $ /visit Female 30 50 $70,000 $90,000 College degree 20 8 $5.00

To ensure ideal customersStarbucks has to maintain: Clean Store Convinient to approach Treat customer as a prime value Maintain a friendly staff Maintain quality coffee taste/flavour.

How valuable?Highly satisfied customers Annual = $ 382 Lifetime = $ 3170 Satisfied customers Annual = $ 209.50 Lifetime = $ 2514 Unsatisfied customers Annual = $ 181.6 Lifetime = $ 199.8

$40 million programInvestment Goal Increase labour capacity by 20 hours per week Reduce serving time by 3 minutes per store Increase customer throughput Increase customer satisfaction Increase long-term relationship Increase process efficiency Increase weekly sales revenue by $20,000 per store Increase EPS by $0.07 per share Starbucks should invest in labour through $40 million program

$40 million programPossible to deliver customer intimacy? Customer intimacy is the initial core value of Starbucks It is possible to put all the efforts to reach, control and regain its competitive advantage 232,029 customers need to be converted from Satisfied to Highly Satisfied Realistic? 232,029 customers / 4,500 stores = 52 customers per store per year Realistic!!

THANK YOU