This case is accompanied by a Video Short for Premium Educators to show in class. To watch the video or display to students, click on the video icon. Starbucks, the dominant specialty-coffee brand in North America, must respond to recent market research indicating that the company is not meeting customer expectations in terms of service. To increase customer satisfaction, the company is debating a plan that would increase the amount of labor in the stores and theoretically increase speed-of-service. However, the impact of the plan (which would cost $40 million annually) on the company's bottom line is unclear.
1. What factors accounted for the extraordinary success of Starbucks in the early 1990‟s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period?
2. Why have Starbucks‟ customers satisfaction declined? Has the company‟s service declined, or is it simply measuring satisfaction the wrong way?
3. How does the Starbucks of 2002 differ from the Starbucks of 1992?
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?
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?