Starbucks

Service Marketing

Starbucks Case

Julian Andrés Maya 00072649

Feb 23, 2014

What factors accounted for Starbucks success in the early 1990s and what was so compelling about its value proposition? What brand did Starbucks develop during this period?

Starbucks became successful in the 90’s after Schultz bought it from their founders. One of the factor was the service focus that Schultz give to the company making, his idea of make starbucks the third place into the people life after home and work. Then, location, location, location Starbucks place stores in all key points, they put stores everywhere near to the people works and home. Another factor it’s the idea of introduce a new culture, before Starbucks people in America just drink coffee, cheap coffee, but Schultz introduce the culture of live the coffee as the Italian coffee shops. Another key its their human resource strategy linked to the product, front line work was not stressful at starbucks, their employees who are called partners seem to be very pleased with the company. It is a clear sign of satisfaction into a industry were turnover its about 300% starbucks has only the 70%.

The company had a generous policy of giving health insurance and stock options to even the most entry-level partners, most of whom were between the ages of 17 and 23. Partly as a result of this, Starbucks’ partner satisfaction rate consistently hovered in the 80% to 90% range, well above the industry norm,5 and the company had recently been ranked 47th in the Fortune magazine list of best places to work, quite an accomplishment for a company with so many hourly-wage workers. (YOUNGME MOON, JOHN QUELCH)

Where is the key? As Lovelock and Wirtz mention on their book, frontline is stressfull but the humans in that first line of action need the weapons to act against stress and giving the best service as they can. Starbucks give them the instruments with capacitation; they said that all their partners should always have a positive answer to any customer, even if it means to break any company law. In order to make it easy to their partners, they teach them with examples. Education and compensation to their employees is the key, partners are happy means happy customers. The case also mentioned how low turnover rates means engagement and fidelity with the customers because partners have learned about their customers likes.

Why have Starbucks customer satisfaction scores declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?

Lovelock and Wirtz mentioned a Rabkin Quote “Institutions are like steel beams—they tend to rust. What was once smooth and shiny and nice

tends to become rusty.” The service structure at Starbucks didn’t

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