Case Study: The Starbucks Corporation

Starbucks Case Study

Introduction

Starbucks Coffee Company was established in 1971 and has grown to be the leading retailer roaster and brand on specialty coffees in the world with 15,000 retail outlets across the world. Its common goal is to provide its customers with the finest product and customer experience whilst combining this with their business principles of which involve them incorporating social, environmental and economic responsibilities and benefits in the communities in which they do business. The company's mission statement states 'to establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.'

They have sought throughout their history to achieve this goal through a number of intrinsic principles which incorporate respect, dignity, diversity, excellence, enthusiasm and desire to create an environment, a product and an unparalled customer experience.

Reasons for Success

The foundations of Starbucks success has been built around an aggressive retailing strategy, Starbucks successfully entered the European market in May 1998 through the acquisition of 65 Seattle Coffee Company stores. The layout of Starbucks retail outlet is designed to create a comfortable laid back sociable but also private surroundings for consumers to relax and unwind. These values have seen the company establish itself as a premium coffee provider on the high street with expediential growth in line with the emergence of luxury markets particularly throughout the eighties and nineties. Starbucks has become synonymous with capitalism and a symbol of wealth. Its common goal throughout this period in keeping with its premium image has been its unfailing attention to provide the customer with a high quality product and consumer experience, never placing the product before the customer. The development of Starbucks retail outlets have emerged to provide a comfortable and luxurious setting with a host of features including Wi-Fi wireless connection, the promotion of exclusive record deals and also its own corporate branding through trademarked coffee bean sales and company logo branded merchandise.

Threats and Problems

With Starbucks position as a premium coffee purveyor it is seen in the eyes of many consumers as a luxury expenditure and one that at times of financial uncertainty which many of the economies which Starbucks operate in is expendable. With the rising number of consumer concerns coupled with inflated cost of living and fuel and heating expenses, these small luxuries such as a cup of premium coffee may be an item that the consumer seeks to curtail in an attempt to relieve the pressure on their disposable income. Increased global warming and environmental conditions coupled with unpredictable weather cycles in some of the regions which Starbucks source their beans may cause a shortage in the supply and force trade prices high, this puts an ever growing emphasis on Starbucks ability to update and actively pursue their links with the environment and the communities that they are involved in to ensure the security and reliability of production. Successful and profitable suppliers coupled with a strong sustained working relationship have been and will continue to be the bedrock of Starbucks strategy going forward.

APPROACH

Voice of the Customer:
Measure the Starbucks Customer Experience in coffeehouses.

Analytics and Reporting:
Custom reporting and data analytics solutions such as key drivers, Customer Experience mapping and sales linkage analysis in Second To None’s robust cloud-based console.

Brand Experience Strategy and Design:
Second To None aligned Starbucks brand strategy to the Customer Experience with the evaluation program. The questionnaire focused on Starbucks value to each customer interaction

Starbucks value to each customer interaction

SOLUTION

Second to None implemented a program that measured detailed quantitative information about the customer experience on a consistent basis for company owned and licensee delivery channels, ensuring all reports were identical to legacy documents for transparent transition. An in-house procurement and distribution system for scales, thermometers and stopwatches was developed as well as custom web-based report dispute resolution system for tracking of individual shops. Second to None gathered qualitative research on how stores delivered on the Starbucks mission of Culture, Coffee and Connection.

RESULTS

The program has become an integral part of the Starbucks “green apron” program and over 500,000 evaluations were delivered and analyzed. These evaluations revealed a set of best practices, that if delivered yielded a dramatic impact on performance- including process improvements and production area layout changes. Using the data to tweak operations, Starbucks achieved a large and significant improvement in speed of service. Building on that success, year-over-year revenue increased 12-16% at stores that moved from ‘good’ to ‘exceptional’ status.