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 Starbucks: Delivering Customer Service

 Howard Schultz¶s idea with Starbucks to create a chain of coffeehouses with a

product differentiation of specialty ³live coffee´, service or customer intimacy with
an ³experience´, and an atmosphere of a ³third place´ to add to their work and home
alternatives.
 The original stores sold whole beans and premium-priced coffee beverages by the
cup and catered primarily to affluent, well educated, white-collar patrons (skewed
female) between the ages of 25 and 44.
 By 2002, there were over 5,000 stores around the globe.
 Company spent minimal dollars on advertising to promote a brand concept.
 Enforced exacting coffee standards by controlling the supply chain as much as
possible, and maintain control over the operations at the retail level.
 Starbucks research indicated that customers did perceive many independent coffee
houses as a ³third place´, but Starbucks was seen more as a convenient, quick, and
consistently good coffee provider. This is in contrast to the way Starbucks
management viewed the company.
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 Kise of coffee consumption in the US with
the largest growth being that of specialty
coffee. 


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 Starbucks had no operations in 6 states, and '

 
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was operating in only 150 of 300 metro
areas.
 In the home segment, specialty coffee was
estimated to be 3.2 billion. Starbucks only
had 4% of this market.    
  

 The opposing chart depicts the total coffee m
  
  
 
market, and the representative share of
specialty coffee.
SWOT Analysis
Strength
- High-quality coffee for Starbucks controlled as much supply chain from
various countries as possible.
- Established brand name.
- Great ability of measuring things by collecting market data

Weakness
- Indiscipline at using data to drive decision making

Opportunities
- Many stores all over the U.S. and some other countries
- Kising coffee consumption
- Eight states in the U.S. without a single company-operated Starbucks
- Being far from reaching saturation levels of Starbucks¶ stores in many existing markets

Threats
- Kising competitive coffee bars
- Bad image of a company caring primarily about making money
- Very little image or product differentiation between Starbucks and the smaller coffee
chains