04-16-2017, 06:09 AM
Starbucks Customer Satisfaction
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What was so compelling about the Starbucks value proposition?
The value proposition of Starbucks focused on a brand strategy that was comprised of three components. The brand strategy was best captured by the phrase live coffee. This phrase reflected the importance of keeping the national coffee culture alive. From a retail perspective, this meant creating an experience that people would want to incorporate into their everyday lives. There were also three components to the branding strategy. The first component was simply the coffee. Starbucks offered the highest-quality coffee in the world and controlled much of the supply chain as possible to help insure that. Starbucks worked directly with growers to purchase green coffee beans, it oversaw the custom-roasting process, and it controlled distribution to retail stores around the world. The second brand component was service, or what was also referred to as customer intimacy. This included simple things such as remembering someone s name or drink order. The third brand component was atmosphere. Starbucks stated that people came for the coffee but stayed for the atmosphere. Therefore it was important to provide a comfortable atmosphere that allowed a sense of community. All of these things combined led to a compelling value proposition.
What brand image did Starbucks develop during this period?
The brand image that Starbucks developed during this period was not necessarily the best. Starbucks was known for being widely available, their gourmet/specialty coffee, and being trendy. Customers also though that the stores were clean and overall satisfied with the Starbucks product. However, the market research team discovered that Starbucks brand image was declining. The number of respondents that agreed with the statement, Starbucks cares primarily about making money, was up from 53%to 61%. The number of respondents that agreed with the statement, Starbucks cares primarily about building more stores, was up from 48% to 55%. Starbucks brand image was becoming more about the growth plans of Starbucks rather than the value they wanted to provide to their customers.
Why have Starbucks customer satisfaction scores declined?
Customer satisfaction declined because there was very little image or product differentiation between starbucks and the smaller coffee chains. The image people had was that the company was only interested in achieving profits and expanding and not so much delivering good coffee quality and friendly service always feel welcome had only 39% of agreement on the 2002 survey. No clear communication of value and values to customers. There is also the shift in customers from well educated to less educated and with lower income, who had a different perception of the brand compared to more established customers.
Starbucks customer satisfaction scores began to decline despite the fact of Starbucks overwhelming presence and convenience. There was very little image or product differentiation between Starbucks and the smaller coffee chains. However, there was a significant differentiation between Starbucks and the independent specialty coffeehouses. The brand image of Starbucks also had some rough edges. More customers were beginning to agree with the fact the Starbucks cared primarily about making money and building more stores. Also, despite the high customer snapshot scores customer satisfaction scores were declining. It was believed that there was a service gap between Starbucks scores on key attributes and customer satisfaction. In polls by customers improvements to service, particularly speed of service, was most mentioned for improvement.
Has the company s service declined or is it simply measuring satisfaction the wrong way?
Customer behavior and shift in customer base are major factors for this decline in servive satisfaction. The company didn t follow the changing trend and continued doing the same things which clearly were not working anymore, leading to unsatisfied customers. Demographics changes means these people value other aspects more than others. The behaviour also, as most customers visit the store only 5 times a month.
The overall company service has not necessarily declined. Overall, customers are pleased with the cleanliness, atmosphere, and product quality. However, wait time is steadily increasing. This is the main problem. While some people go to Starbucks for the experience, many people get their coffee and are out the door. Therefore, wait time is exceedingly important. This is where the satisfaction has begun to decline. While wait time is a part of customer satisfaction it is not the only thing that determines customer satisfaction. The satisfaction level of customers also varies with the type of customer. Customers that visit more often, spend more often, and are more loyal tend to be more highly satisfied. Also, Starbucks is measuring much on how people view the company, as trying to expand and make more money, rather than how people view the coffee. Generally customers are satisfied with the coffee. While customer service has declined some, the main issue that should be addressed is the view itself of the Starbucks organization.
Describe the ideal Starbucks customer from a profitability standpoint.
It is no surprise that lower prices are not one of Starbuck s values that lead to its success. With Starbuck s concentrating mainly on value, customer satisfaction, and atmosphere, there was little room for low prices. These higher prices were not an issue during the 1990 s,but the customer base is rapidly evolving. The customer is changing away from the established high-income business- woman, who has more disposable income for high-quality coffee. The typical Starbuck s customer that has grown into existence, in the late 1990 s and early 2000 s, tends to be younger, less well-educated, and in a lower income bracket . The customer base also grew in that a larger number of Hispanic and Cuban- Americans became a customer of Starbucks.
The ideal Starbuck s customer would be the customer that visits a Starbuck s at least eight times a month. Conducted research shows though that customers in this bracket visit much more than eight times a month, with the number of visits per month averaging eighteen. These customers make up 62% of all Starbuck s transactions. If the number of customers who visited this often increased, sales would increase tremendously. Research shows that customers who visit only one to two times per month only generate a measly11% of all Starbucks transactions. Overall, Starbucks should put focus on bringing in the current customer more often. When targeting consumers the geographical location, in terms or rural and urban areas, would not matter; both of these markets present the same customer patterns.
What would it take to ensure that this customer is highly satisfied?
To ensure that the customer is highly satisfied with every element of their Starbucks experience, there are a few key factors, aside from the coffee itself that the Starbuck s stores and its employees must exhibit. From a Starbuck s survey in 2002, a clean store was the number one factor leading to customer satisfaction, with 83%. If a store appears clean and has a high sanitation grade, customers will be assured that what they are consuming has been made from and kept in a clean environment.
Convenience is the next factor leading to customer satisfaction, with 77%. Starbuck s has done an excellent job saturating the market. Customers love having a Starbuck s location on their normal traffic route, therefore not having to drive out of their way for a cup of coffee. Other factors that ranked highly for customer satisfaction were being treated as a valuable customer (75%) and friendly staff (73%).
How valuable is a highly satisfied customer to Starbucks?
Creating customer loyalty has proved to be the reason behind the bulk of Starbuck s transactions because the highly satisfied customer is the loyal customer. It is crucial that Starbuck s maintain customer satisfaction to keep these loyal customers coming back. Without the 21% of customers, averaging eighteen visits a month, Starbuck s would lose 62% of all its transactions. Starbuck s has also found that highly satisfied customers have an average ticket price of $4.42, as opposed to a satisfied customer who only spends on average $4.06. Therefore, having a satisfied customer is very valuable to Starbuck s and its sales.
The detailed objectives of this research include 1) investigating the relationships among cognitive drivers (brand awareness, perceived quality, brand image, and perceived value), affective drivers (pleasure and arousal), brand satisfaction and relationship commitment in the formation of brand loyalty, 2) examining the relative importance among. 3 Must-See Quotes From Starbucks' Earnings Call. For Starbucks (NASDAQ: SBUX), the fiscal second quarter was solid, bolstered by strong comparable-store sales growth in the U.S. And a 17% year-over-year increase in stores in China. This translated to a nice 13% year-over-year increase in non-GAAP earnings per share.