Situational Analysis
Customers:
Affluent, well-educated, white-collar patrons(skewed female) between the ages of 25 and 44 Most loyal customers visit Starbucks as often as 18 times a month, but typical customers visited just 5 times a month Context:
Stores located in high-traffic, high-visibility settings such as retail centers, office buildings and university campuses Along with whole-bean coffees, company-operated stores also sold rich-brewed coffees, Italian-style espresso drinks, cold-blended beverages, premium teas, pastries, sodas, juices, music CDs, games and seasonal novelty items Beverages accounted for the largest 77% of sales in stores. This represented a change from 10 years earlier, when about half of store revenues had come from sales of whole-bean coffees. Company encouraged promotions within its own ranks. About 70% of the company’s store managers were ex-baristas, and about 60% of its district managers were ex-store managers
Not easy to strike up a conversation with customer as before because today every customers orders a handcrafted beverage Coffee consumption was on rise in the United States. More than 109 million populations drank coffee every day, and an additional 52 million drank it on occasion. Consumption of specialty coffee was rising and it was estimated that about one-third coffee will be consumed outside of the home New product development process took 12-18 month cycle and its success mainly dependent on partner acceptance Starbucks’ customer base was evolving. Newer customers tended to be younger, less well-educated and in the lower income bracket.
The Term Paper on Coffee shops essay
This study includes two of the biggest coffee chains within UK. Their analysis regarding segmentation, targeting and positioning strategy is described below. Also there is an approach for their existing adverting, unique selling propositions, media consumption, consumer behaviour and external factors 1. Introduction The brand Costa Coffee is a leading UK high street coffee chain which was founded ...
Company:
Dominant specialty-coffee brand in North America
Starbucks owned close to one-third of America’s coffee bars, more than its next five biggest competitors combined Serving 20 million unique customers in well over 5000 stores around the globe and was opening on average 3 stores a day Starbucks operated over 300 company owned international stores and about 900 licensed stores across globe Marketing consisted primarily of point-of-sale materials and local-store marketing(Most fast-food chains had marketing budgets in the 3%-6% range) 11 consecutive years of 5% or higher comparable store sales growth Excellent product(coffee), awesome service and lounging environments were the three components of branding strategy Starbucks controlled as much of the supply chain as possible Lowest employee turnover rate(70%) compared to industry average of 300% Partner satisfaction rate consistently hovered in the range of 80% to 90% range
Complementers:
Starbucks worked directly with coffee growers to purchase green coffee beans JV with Pepsi-Cola to distribute bottled Frappuccino beverages in North America and partnership with Dreyer’s Grand Ice Cream to develop and distribute a line of premium ice creams
Competitors:
Regionally concentrated small-scale specialty coffee chains differentiated itself on the basis of store environment and freshest coffee Starbucks also competed against thousands of independent specialty coffee shops which also sold beer, wine and liquor. Some of them offered satellite televisions, internet connected computers. Donut and Bagel chains like Dunkin Donuts with 3700 stores also competed with Starbucks. It has started offering flavored coffee and non-coffee alternatives
SWOT Analysis
Criteria examples
Starbucks was operational in retail centers, office buildings and university campuses.
Starbucks took care of its employees through Health Insurance and Stock options.
Starbucks introduced at least one new hot beverage every holiday season
Starbucks sales were increasing at a CAGR of 40%
The Essay on Starbucks Shops Coffee Competition
... pay high prices for coffee. This fails to benefit Starbucks because they are eliminating potential customers due to their high price. By turning away potential customers Starbucks ... variety of pastries and confections, and coffee related accessories and equipment - primarily through its company-operated retail stores. Starbucks does not franchise, but enters ...
Strengths
Starbucks had company operated stores located in high-traffic, high-visibility settings. The employee turnover rate was lowest at Starbucks with only 70% turnover when compared to the industry average of 300%
Starbucks invested highly on innovations.
Strong financial foundations with since the company had gone public Weaknesses
Customer satisfaction is decreasing and Starbucks is losing the customer loyalty.
Self-cannibalization of at least one third of Starbucks stores everyday
Customer snapshot score not showing reality
Criteria examples
The perception of Starbucks Brand Image in the Recent Findings of people’s experiences: Starbucks cares primarily about making money – from 54% to 61%. Starbucks cares about building more stores – from 48% to 55% Starbucks strategy for expanding in retail business was to open stores in new markets while geographically clustering stores in existing markets. There is service gap between Starbucks scores on key attributes and customer expectation.
Criteria examples
More than 109 million people now drank coffee every day and an additional 52 million drank it on occasion. Company was only in 150 of the roughly 300 metropolitan statistical areas in the nation. In the southeast there was only one store for every 110000 people compared with one store for every 2000 people in the pacific northwest.
Opportunities
Coffee consumption was on the rise in United States.
Company has the opportunity to cover 150 metropolitan areas in the nation. It could open new stores in existing markets where saturation level was not high.
Threats
Increasing consumer perception that Starbucks only cared about the money. New customer perceived that Starbucks is not so high quality brand. Very little image differentiation between itself and smaller coffee chains.
Criteria examples
Number of respondents who strongly agreed with the statement that Starbucks cared only about the money increased from 53% to 61%. Only 34% of new customers believed it to be a high quality against the established customers whose 51% proportion believed it to be a high quality brand. There was very little image or product differentiation between Starbucks and the smaller coffee chains.
Problems Statement:
Customer satisfaction is decreasing and Starbucks is losing the customer loyalty. Data revealed that they are not meeting customers’ expectation in the area of customer satisfaction Complexity of job increased because of customized demand, which slow down the service for everyone else Starbucks lacked strategic marketing group. Organizational structure meant that market- and customer- related trends could sometimes be overlooked. Data were not used judiciously to take marketing decisions.
The Essay on 2004 At Approximately Customer Company Store
White Marsh Electronics, Inc. 1000 Bel Air Rd. White Marsh, MD 21236 April 1 st, 2004 John Leonard 1313 Wake Forest Way Baltimore, MD 21234 Dear Mr. Leonard: This letter is to inform you that because of numerous offenses against the company's rules and regulations we are terminating your employment with us effective immediately. This letter will spell out all documented occasions with times and ...
Little image or product differentiation between Starbucks and the smaller coffee chains in the minds of specialty coffeehouse customers Increased doubts over clearly communicating values
Newer evolving customers visited the stores less frequently than the established one and their perceptions regarding high-quality brand, tastes, quality were also on down swing Possible alternatives:
1. Invest additional 20 hours of labor, per week, per store, at a cost of an extra $40 million per year to improve speed-of-service and thereby increase customer satisfaction. 2. Focus on Product innovation & Retail expansion as growth strategy.
Evaluation of alternatives:
The company’s most frequent customers averaged 18 visits a month while the typical customer visited just five times a month. The following can be analyzed from the customer visit frequency data: 21 % of customers visits 8+ times/month and contribute 62 % of the Starbuck Transaction 37 % of customers visits 3-7 times/month and contribute 27 % of the Starbuck Transaction 42% of customers visits 1-2 times/month and contribute 11 % of the Starbuck Transaction
Average Weekly revenue per store = 15400
Average Annual revenue per store = 800800(15400*52)
Average No. of transactions per store = 208000(800800/3.85)
Average No. of transactions per customer per month = 5
Average No. of transactions per customer per year = 60
No. of Ideal Customer per year = 3467
No. of highly satisfied Customers = 728
No. of Satisfied Customers = 1282
The Research paper on Case Analysis Pizza Hut A Customer Loyalty Program
Case Analysis: Pizza Hut - A Customer Loyalty Program List of Facts In 1958 the Carney brothers opened their first Pizza Hut restaurant. The company was so successful that by 1977 it had more than 3,200 restaurants. Further it was acquired by PepsiCo. The quantity of restaurants increased to 12,300 and Pizza hut became the worlds largest pizza restaurant chain. In 1986 Pizza Hut implemented the ...
No. of Un-satisfied Customers = 1456
Contribution of Highly satisfied customer per year = $381.88 Contribution of Satisfied customer per year = $209.4
Difference in contribution of highly satisfied customer & satisfied customer = $172.3 Investment per store(assuming it is done in 4574 stores) = $8745 No. of customers converted from satisfied to highly satisfied who will contribute the margin ~ 50( 4 % of the Satisfied Customers) We can see that the $40M investment on the stores ($8475 per store) can be recovered if we can convert 50 “satisfied” customers to “highly satisfied” customers from the 3467 customers that visit the store every year.
Proposition and our stand
Starbucks should make the $40 M investment to improve the speed of service which will increase the customer satisfaction. This will increase customer loyalty barring which there is a possibility that the ‘highly satisfied’ and ‘satisfied’ customers might become ‘Unsatisfied’ customer. They should create a strategic marketing group that would collaborate the efforts of market research group, category group and marketing group. They should improve the metrics to measure the service performance.
