Marketing Management

Case Analysis of Quiz Kerala

1. What factors accounted for the extraordinary success of

Starbucks in the early 1990s? What was so compelling about the
Starbucks value proposition? What brand image did Starbucks
develop during this period?

Starbucks wanted to be the third home to Americans, after work and

home. They created an “experience” around the consumption of
coffee, an experience that people could weave into the fabric of their
everyday lives.

Starbucks owes its success to three factors

1. Quality - They provided what it believed to be the highest-quality
coffee in the world, sourced from the Africa, Central and South
America
2. Service or customer intimacy. -“They wanted to create an uplifting
experience every time a customer walk through their main door
3. Atmosphere - People go to Starbucks for coffee but stays there for
the ambiance.

2. Why have Starbucks’ customer satisfaction scores declined?

Has the company’s service declined, or is it simply measuring
satisfaction the wrong way?
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I don’t think that the quality of service of Starbucks declined

Customer satisfaction gap could primarily be attributed to a service

gap between Starbucks scores on key attributes and customer
expectations. When Starbucks had polled its customers to determine
what it could do to make them feel more like valued customers,
“improvements to service”—in particular, speed-of-service—had been
mentioned most frequently

Lack of loyalty/incentive programs and need of better pricing is also

reasons for fall in customer satisfaction

3. How does the Starbucks of 2002 differ from the Starbucks of 1992?
Starbucks in 2002 is different from 1992 in different ways
a) Product
During the 90’s Starbucks stores sold whole beans and premium-priced coffee
beverages by the cup
During 2002 Starbucks started selling sold rich-brewed coffees, Italian-style
espresso drinks, cold-blended beverages, and premium teas. In addition to selling
whole-bean coffees, these stores averages accounted for the largest percentage of
sales in these stores (77%); this represented a change from 10 years earlier, when
about half of store revenues had come from sales of whole-bean coffees.
b) Variety of product.

During the earlier days It used to be that a barista could make every variation of drink
Starbucks offered in half a day. By 2002 they have so much variety that it would take
16 days of eight-hour shifts.
c) Customer profile

During 1992 Starbucks catered primarily to affluent, well- educated, white-collar

patrons (skewed female) between the ages of 25 and 44

Starbucks’ newer customers tended to be younger, less well-educated, and in a

lower income bracket than Starbucks’ more established customers. In addition, they
visited the stores less frequently and had very different perceptions of the Starbucks
brand compared to more established customers

4. Describe the ideal Starbucks customer from a profitability

standpoint. What would it take to ensure that this customer is
highly satisfied? How valuable is a highly satisfied customer to
Starbucks?
The ideal Starbucks customer visits Starbuck’s at least 8 time a
month. As per the study such a customer’s makes up to 62% of the
total transactions .These customers make up 62% of all Starbuck’s
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transactions. Usually such customers are highly satisfied. If the

number of customers who visited this often increased, sales would
increase tremendously. Increase customer satisfaction and build
stronger long-term relationships with our customers, will also improve
their customer throughput.

There are a number of factors which leads to customer satisfaction.

People come to Starbucks for coffee, so obviously they need to give

good quality coffee to satisfy customer. But besides these, there are a
number of factors which adds to the satisfaction. A study has shown
that factors such as, cleanliness (83% of customers) , stores at
convenient location ( 77%) ,friendly staff (73%) , customer should be
treated as valuable customers (75%)

5. Should Starbucks make the $40 million investment in labor in

the stores? What’s the goal of this investment? Is it possible for
a mega-brand to deliver customer intimacy?

Day, Starbucks’ senior vice president of administration in North

America has to make recommendation on whether or not to invest an
additional $40 million annually in the company’s 4,500 stores, which
would allow each store to add the equivalent of 20 hours of labor a
week. “The idea is to improve speed-of-service and thereby increase
customer satisfaction,”. But as Day herself pointed out they are not
sure on the impact So, it would be really unwise to spend the whole
money at one shot and then wait for result. I would approach the
problem differently

Instead of going full on reforms, they should try the planned reforms in
certain stores and measure the impact the behavior before spending
the 40 million $.The stores to experiment could be decided based on
various factors such as, type of customers, amount of sales
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