Starbucks: A Case Study Essay

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STARBUCKS

A venti issue: blending together a solution to satisfy the needs of customers, new and old.”

Customer satisfaction is a key component to any successful business, especially one in the coffee industry. Starbucks started as a small coffee shop in Seattle in 1971. Howard Schultz, the chairman and chief global strategist, joined the marketing team in 1982 with a vision—a vision to capture “the live coffee mantra.”[1] Until the early 2000s, before Starbucks took off, there were limited places for people to socialize outside of work and home. When Starbucks infiltrated the market as a “third place”, it found sudden success. In 2002, Starbucks was the dominant specialty-coffee brand in North America.[2] Starbucks streamlined the coffee industry in the United States, and the numbers proved that “more than 109 million people now drank coffee every day, and an additional 52 million on occasion…and it was estimated that about one-third of all U.S. coffee consumption took place outside of the home, in places such as offices, restaurants, and coffee shops.”[3] Before all of this major success, a brand was created. Starbucks has three components to its successful branding strategy: having the highest quality coffee in the world, providing the best service, and creating an atmosphere that makes people want to stay for the experience. This branding strategy is responsible for Starbucks’ major triumphs in following years. Currently, their average market share is 32.6%, and their main competitors include Dunkin Donuts, McDonalds, Panera Bread and local coffee shops. Market research found that Starbucks was not meeting expectations in the area of customer satisfaction. According to Marketing Management, satisfaction is defined by “a person’s judgment of a product's perceived performance in relationship to expectations. If the performance falls short of expectations, the customer is disappointed. If it matches expectations, the customer is satisfied. If it exceeds them the customer is delighted.”[4] According to Forbes, Starbucks has two main target audiences, the traditional adult segment, ages 25 and up, and the new, young adult segment, ages 13-24. The new consumers, who make up about 41 percent of customers, are primarily concerned with convenience and speed, while traditional consumers, who make up around 49 percent of the customers, are more concerned about atmosphere and personality. After conducting our research, we have determined that Starbucks’ problem is a mismatch between traditional (adult) customer base values versus the new (young adult) customer base values. Starbucks is not meeting the needs of both consumers, leaving at least one group of customers dissatisfied.
One main piece of evidence for the mismatch problem is the baristas; they are coffeemakers that are trained to connect with customers, enthusiastically welcome them to the store, establish eye contact and smile, and to try to remember their names and orders if the customers are regulars. Starbucks’ main belief is that employee satisfaction and customer satisfaction are intertwined; therefore, the company strives to treat its employees very well. The baristas started to decrease satisfaction when Starbucks grew as a major coffee brand. Accompanying this growth was new drinks and a new consumer base. New drink orders became more complicated to make, and partner acceptance of these new drinks became key to their success. [1] With this growth, the consumer base was also changing. Originally, the baristas would strike up easy conversation with the consumers; however, now most customers order a custom beverage. Due to this trend, baristas have a harder time engaging with these consumers on a deeper level because of the extensive time the drink takes to prepare. Because of this, the baristas are rushed and worried about the coffee, rather than the customer, overall decreasing customer satisfaction. Without overly friendly
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