Starbucks

STARBUCKS has become target fixated on growth. In ten years time the organization has grown from 140 regional stores to 5886 stores with a global footprint. In doing so, the company has is undergone an identity crisis with its customers and lost focus on what their true product they are selling to Joe Public. To fix the problem, senior management has proposed based on various data obtained that $40 million be invested annually to increase the number of ‘partners’ at each store. This would be expected to lower the average waiting time (time of arrival thru departure) to approximately three (3) minutes. It has always been assumed that wait time is critical to overall customer satisfaction. “The idea is to improve speed-­‐of-­‐service and thereby increase customer satisfaction.” In this regard, we feel it would be premature to blindly invest such large sums into the employment of additional ‘partners’. The situation has not been properly assessed. STARUCKS should only increase the manpower in those stores that have a high customer turnover and long wait times and not just blindly increase manning across all stores. Investments should be made in technology ensuring high traffic coffee shops are outfitted with the latest coffee machines that include automation thus reducing the time and steps to make coffee. Technology upgrades should be also made to the ‘environment’ which includes convenient Internet access and power supplies making the ‘third place’ more valuable to the customers. Finally, STARBUCKS needs to co-­‐ordinate its marketing effort. Doing so will allow the company properly segment the population, target the correct customer base across various markets, and position itself geographically without excessive cannibalization of existing stores and to penetrate deeper into retail stores. Howard Schultz had a crystal clear vision of the STARBUCKS brand. He recognized that “what the customer buys and considers ‘value’ is not the product but the ‘result’ or the service provided by the product.” The value was derived from three components, atmosphere, customer intimacy, and quality coffee. He saw drinking coffee not as a process but as an experience and wanted to make coffee apart of everyday life. People spend there time at work and home. Schultz’s believed STARBUCKS could be the ‘third place’ where customers could come get not just a high quality cup of coffee but also stay and relax. It was an idea to mimic the social scene of espresso bars throughout Europe. It would become a place where people would want to come and hang out for a while. Recognizing customer intimacy as a pillar of the value proposition, ‘partners’, the frontline face of the organization, needed not only ‘hard skills’ training in making the various concoctions but also the ‘soft skills’ training for interactions with customers. These ‘soft skills’ allow ‘partners’ to engage and connect with each customer thus