When starbucks evolved as a business it set the

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Unformatted text preview: lways served within two minute. Mr. Steve is not satisfied with the Starbucks service even though the service at Starbucks has been the same for the last 8 years. This example shows that even though Starbucks could have been consistent in its service, it has added a new customer (Mr. Steve) to its customer base who is not as satisfied because the service does not meet the expectations Mr. Steve had acquired from using a competitor. Let’s also examine now, possible reasons that could have resulted in actual declining customer service of Starbucks. When Starbucks evolved as a business it set the standards very high for its customers through its value proposition. Even though the company initially managed to meet these standards, the retail expansion and the product innovation strategy that the company followed along with the customization of the drinks had a harmful effect on all three components (coffee quality, service, and atmosphere) of the value proposition which had led to the declining effects of customer satisfaction. The image of the brand changed. The store which used to be known as the “third place”, a place where you could relax and enjoy your coffee, was now appealing to a much larger target market. It was the store for everybody. In the past customers were paying a premium for the Starbucks experience, but now Starbucks was not anything special. In the mind of the consumer, Starbucks became the norm, a place which was everywhere, with good coffee and consistent service. The loyal customers lost the touch they had with the brand; there was no reason anymore to pay a premium for a good coffee when they could get it anywhere else for a lower price. Starbucks had about 150% increase in retail stores from 1998 to 2002. By geographically clustering markets, Starbucks was compromising the “atmosphere” aspect of its value proposition. Many stores built were small and did not have seating or lounging place. Therefore, the upscale yet inviting environment that...
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