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Unformatted text preview: highly satisfied and there would be higher need to invest in a store where there is a high percentage of less satisfied customers. Based on the above assumptions, I believe that Starbucks should only invest the money in labor wherever needed and in what amount needed. A good way to do that would be to do a more thorough analysis of its customer base and identify areas where people are less satisfied because of the speed of service and then invest in those locations only. Hopefully the addition of extra labor in those locations would eliminate problems associated with fast service and treating the customer as valuable. At the same time however, I believe that there are far more important investments that need to be made and part of that $40 million could be used for those investments. As a first step, it would be a good idea to establish an internal strategic marketing group that would coordinate actions of the market research group, the category group and the marketing group. This would give the opportunity for Starbucks to get faster feedback from customers, and be proactive instead of reactive. As 77% of the company’s revenues came from beverages which were handcrafted and since there was a problem with service times, the company could find other ways of increasing its productivity at the point of making the drink, such as investing in new machines or removing unpopular beverages from the menu. The money could also be spent on better training of partners’ “soft skills” in order to ensure that the customers are treated the way the Starbucks has promised them that they would. Concluding, I would like to add that an investment in adding more labor to stores might help the company increase some of its satisfaction levels and maybe even get a good return out of it, but from the data available in the case it appears that Starbucks has a lot of other problems that needs to tackle. They need to re‐evaluate their value proposition, examine how their expansion strategy has led to the deterioration of their brand image and find new ways to satisfy the customer....
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This document was uploaded on 04/02/2014 for the course ECON 101 at Sant'Anna School of Advanced Studies.
- Spring '14