Starbucks

Starbucks is unique in the fact that every employee is called a “partner.” There are about 60,000 partners worldwide, and each one is given health insurance and stock options. This creates an extremely high employee satisfaction rate, and very low turnover rate. The special training that employees go through is also an important part of Starbucks’ image. They go through both hard skill and soft skill training. The hard skills focus on learning how to mix drinks, run the cash register, etc. The soft skills, on the other hand, teach partners how to connect more personally with customers. By learning skills such as starting conversations, remembering customer names, and keeping a smile all the time, Starbucks tries to promote a friendly and more personal environment.

Starbucks has many different methods of measuring its service performance. It tracks service issues by the monthly status reports as well as the self-reported checklists. Starbucks also has a mystery shopper program called the “Customer Snapshot.” This program helps rate Starbucks on its service, cleanliness, product quality, and speed of service. These details are later used to determine whether or not Starbucks is living up to its standards in each of these categories. It can also be used to compare Starbucks to its competition and see where it needs to be improved.

Because Starbucks has faced a lot of competition from small scale specialty coffee chains, it implemented different growth strategies to differentiate itself. Retail expansion was one way Starbucks wanted to grow. With about half the U.S. population drinking coffee every day, and one-third of this consumption taking place outside of the home, Starbucks believed it could eventually expand to 10,000 stores around the country. They wanted to open up stores in new markets, while geographically clustering stores in existing markets. This often caused Starbucks to “self cannibalize” its stores. However, the company believed that this cannibalization was more than offset by the total sales associated with increasing stores. Another method of growth came from product innovation. This was one of the most significant factors in stores sales growth. Starbucks launched new products consistently, and came out with at least one new hot beverage every holiday season. The biggest product innovations came from the 1995 introduction of the Frappuccino beverages. The third growth strategy was service innovation. One way Starbucks wanted to improve services was by introducing the Store Value Card. This prepaid card was more convenient than cash and helped to reduce transaction times. It was also shown that cardholders came to Starbucks twice as often as other customers. Another service innovation was the introduction of the T-Mobile HotSpot wireless internet service in Starbucks retail stores. By offering this service, it brought in more customers who wanted to get some work done while they had a cup of coffee.

Although Starbuck’s has had tremendous growth and profits, they have had issues with their brand image and customer satisfaction. Starbucks did not have a strategic marketing group or a CMO initially, but they are thought to have one of the most effective marketing organizations. The marketing related responsibilities were forced by Starbucks’ Senior executives along with their other responsibilities. This caused much customer gathered data to be overlooked and not effectively utilized. Starbucks collected a tremendous amount of data but the data was not analyzed and not used in decision

Once Starbucks started analyzing the data they realized that although they were well recognized and convenient, they were unable to differentiate themselves from the small scaled coffee chains, such as Caribou Coffee and Peet’s. Their brand image was not nearly as positive as they once thought. In a 2002 survey conducted by Starbucks, 53% of respondents strongly agreed that “Starbucks cares primarily about making more money.” About the same percentage strongly agreed that they were only interested in building more stores. The brand