Case overview:The case of Starbucks talks about the remarkable journey of a brand built on the basis of Quality, Superior service and valued customer orientation. The case is about a strong brand in service marketing world which enjoys the high customer loyalty somewhat losing out on the customer satisfaction aspect because of the shifted focus towards expansion and growth.Q.1. What factors contributed to the extraordinary success of Starbucks in the early 1990s?Under penetrated Market :-•Only largest organized company•Used its reach and size•Lack of organized big competition•Backed by innovative products - that could be customized on customers preferences.Large Product Mix offered:-Most stores offered a variety of products right from eateries like rich brewed coffees, sodas, juices, to coffee related accessories and equipments like music CD's, games and seasonal novelty items. Some stores even carried a selections of sandwiches and salads.The "third place":-Starbucks realized the long standing need of people to go to a place where they could relax, enjoy or just be by themselves away from work and home i.e to have a place that would mean different things to different people.Generated word of mouth publicity:-Starbucks spent nothing on advertisement saving on a substantial amount of revenue.Most of their marketing consisted of point-of-sale materials & local store marketing.The industry budgets for marketing were in the range of 3% - 6%.Starbucks Value Proposition:-Starbucks' branding strategy was not only to offer coffee to its customers but to offer a great experience around the consumption of coffee. This is what lured the customers as it is known that people purchase "the experience" and not a "product". Hence the "Surround" that was created by Starbucks helped it to attract a loyal customer-base. For these customers Starbucks wasn't merely a coffee-shop, it was the Experience associated with it. This is what explains the behaviour of customers who were ready to shell out double the amount for the coffee compared to the other stores.Supply Chain & Distribution:-It offered the highest quality coffee which was sourced from Africa, Central and South America and Asia Pacific regions. To achieve the exacting standards of coffee quality it controlled the Supply Chain as much as possible by working directly with the coffee growers in various countries so as to directly purchase green coffee beans from them.It also oversaw the custom-roasting process for the company's various blends & single-origin coffees and it controlled distribution to retail stores around the world.Good Positioning and Targeting:-Starbucks had chosen to target the primarily affluent, well-educated, white-collar patrons between the ages of 25-44. The affluent class wouldn't mind spending $1 on coffee (instead of 50 cents offered at other places) at a place which offers great service, a great experience & a place which offers an upscale yet...
