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Starbucks MOS Group 1Presentation Number 9

Presented By:Sourabh Mangla(A-26)

Himanshu Srivastava(A-28)Hari Om Dubey (A-37)

Debaion Roy(A-50)Saakshi Aggarwal(A-58)

Bhushan Goyal(A-59)Neha Sehgal(B-16)

Shaalu Khandelwal(B-19)

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The Frappuccinos

Introductio n to Starbucks

C ompa ny started in 1971 in Seattle, Washi ngton

Grew f rom 55 stores in 1989 to over 2,200stores toda yProducts sold include:

- bevera ges - pastries- whole coff ee beans - coff ee-related retail items

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Service recover y

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PASSIVE VOICERS IRATES ACTIVISTS

ACTION LEA ST L IK ELY AC TIVELYCOM PLA IN

NOFEEDBAC K

COM PLA IN TOPR O VIDE R S,F RIE ND S,TH IR D PA R TY

W.O.M NO LE SS L IK ELY NE GATIVE DAMA GING

PSYCHOLOGY DOUB TEFFEC TIVE NE

NO T WO R THTIME A NDEFFO R T,PE R SO NALVALUE S

LE SSAL IE NATEDF R OMSOC IE TY ,COM PLA INHA S SOC IALBE NEF ITS

SOME WHATAL IE NATEDA NGR YWITHPR O VIDE R S

COM PLA INTF ITS TH E IR

NO R M , MO R EAL IE NATED ,CA SUALLYCA N BECOME'TERRORISTS'

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Voicer Jerem y D orosi n went to the B erkele y, C alif or nia Starbucks store and bought himsel f an E spresso maker (Vapore) f or $299.00He f ound it def ective, retur ned it and received a loaner on a less expe nsive machi ne (which he loved), an E stro 410 , which retailed f or $189.00. He got his new replaceme nt and gave the loaner back .D orosi n came back into the store to pick up the gif t machi ne f or his f riend, however, it could nt be f ound. The store emplo yee then f ound the machi ne in a diff erent (and dama ged) box . D orosi n expressed concer n that they were giving him a loaner or a used machi ne, prompti ng him to ask the clerk to inspect it, which she did . She said it was f ine. He also did not get the lb . of f ree coff ee that was supposed to come with each machi ne purchase . He took the gif t machi ne to his f riend. However, there was no instructio n manual .

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His f riend f or whom he purchased the E spresso machi ne f ound rust in the machi ne, and there were parts missi ng. D orosi n called the Starbucks store f rom which he purchased the machi ne and was told that those parts didnt exist . D orosi n retur ned the gif ts to the store f rom which it was purchased and told his stor y to the store manager . The manager off ered a ref und, which D orosi n ref used .He was then sent to the San F rancisco (D istrict) off ice where he told his stor ya seco nd time . He f inally ended up speaki ng by telepho ne to B ill Stei n, C ustomer Service Supervisor, in Seattle, to whom he told the whole stor yagain f or a third time .In his conversatio n with B ill Stei n, D orosi n proposed that Starbucks:

R eplace his machi ne (the Vapore) which had just broke n f or the seco nd time .

Send his f riend, the bride, a letter of apolo gy.Send the bride the nicest replaceme nt they had, then asked what the next

best

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Stei n called D orosi n, liste ned to his concer ns about the way he was treated inthe store, and the conditio n of the gif t machi ne (E stro 410 ). D orosi n dema nded that a $2495.00 Starbucks top-o f -the-li ne machi ne be sent to his f riend to compe nsate f or the def ective $189.00 g if t, or he would place an ad in the Wall Street Jour nal. Stei n apolo gized f or his f rustratio n and told him the compa nywould work with him to get either replaceme nt machi nes at better qualit y, or a ref und.Stei n called back with a cou nter proposal:

Send D orosi n a $269 machi ne (althou gh he paid $299 ) to replace his twice-

broke n machi ne.Send his f riend a $269 machi ne f or her original one which was priced at

$189.

D orosi n said that he was not happ y with the compa nys proposal, and asked Stei n to reco nsider his (D orosi ns) proposal . Stei n called back and said that the compa nys proposal was the best that could be done. D orosi n was incensed .

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Stei n spoke to D orosi n a seco nd time . Stei n told D orosi n again that the compa ny would replace the machi nes with ones of equal or better value and write a letter of apolo gy to him and his f riend, but that a $2 ,495.00replaceme nt machi ne was not a reaso nable solutio n. D orosi n gave Stei n a two-hour ultimatum: send him a $2495.00 machi ne or hed place an ad in the Wall Street Jour nal soliciti ng other dissatis f ied Starbucks customers . Stei nexpressed concer n, but could not meet D orosi ns dema nds, and began preparatio ns to send replaceme nt machi nes, coff ee and letters of apolo gy.He then decided to run a local ad ($800 ) in the Wall Street Jour nal. U poninf ormi ng Stei n about his plans, D orosi n reported that Stei n said, in a condesce nding tone, G ee, Im sorr y you f eel this way. D orosi n said he thou ght Stei ns implicatio n was that D orosi n was lying.

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TE RRI O RIST

D orosi n ran his f irst Wall Street Jour nal ad, in the West C oast, San F rancisco editio n. B etsy R eese, C orporate C ustomer R elatio ns M anager, talked to D orosi n, expressed Starbucks concer n f or his dilemma, and once againoff ered to work toward a reaso nable solutio n. R eese explai ned the steps that Starbucks was taki ng (sending machi nes, coff ee and letters) . However, D orosi n said it was too little, too late . He instead dema nded that Starbucks place a f ull page ad of apolo gy admitti ng that the compa ny k nowi ngly sold used equipme nt, signed by the compa ny C hairma n.Starbucks off ered replaceme nt machi nes f or 12 him and his f riend, steami ng pitchers, and f ree coff eeall of which were in excess of his original purchases by over $175.00. M r . D orosi n ref used the off er, f or the seco nd time .D orosi n suggested that Starbucks take out a double f ull page ad in the Wall Street Jour nal apolo gizing, althou gh he insisted that this was not about money.R eese suggested that instead of taki ng out an ad, the compa ny take the amou nt that an ad would cost and donate it to charit y. D orosi n agreed .

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Since Starbucks could nt satis fy D orosi n, a decisio n was made to tr y to at least take care of his f riend. Starbucks sent an apolo gy letter to D orosi ns gif t recipie nt, M s. C ohe n, explai ning that a replaceme nt machi ne was on its way as an apolo gy gif t to her . A dditio nally Starbucks sent a f ull ref und via certi f ied mail . D orosi n ran a seco nd ad in the Wall Street Jour nal.KGA News (the ABC aff iliate in San F rancisco) did a stor y on D orosi n.D orosi n ran the third Wall Street Jour nal ad .D orosi n ran the f ourth ad in the Wall Street Jour nal.A new stor y on the situatio n was reported in C ontra C osta News . D orosi n

called R eese with a new dema nd, aski ng f or collaboratio n on a juve nile runawa y shelter . R eese expressed that the compa ny did not see this as a reaso nable solutio n nor did Starbucks see a correlatio n betwee n this dema nd and his original complai nt.

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Service R ecover y System

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Service R ecover y system

O ne of the guidi ng principles in customer service that Starbuck f ollowed was to D evelop enthusiasticall y satis f ied customers all of the time .A lso the compa ny took customer service ver yseriousl y. E mplo yees received 24 hours of f ormal classroom trai ning at a Starbucks trai ning center, and up to 30 hours of practical on-site .

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Immediate A ctio n ,a def ective Vapore a nd a loaner E stro 410replaced by new M achi ne.

Impude nt and casual attitude towards the order of loaner that f ollowed by A polo gy f rom the compa ny

A n unreaso nable dema nd was made with a threat to publicisethe issue in media to which an U r gent reinstateme nt was made by the district M anager and came up with negotiatio ns

E mpathised a nd started worki ng upo n the coff ee machi nes ,gif ts and letter i.e. a C ompe nsatio n f ollow up was done bythe compa ny

E vents F ailures

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When the A rticle tur ned out it created a puff ed up issue with customers and stockbrokers which was f ollowed up by compa ny

with the f urther raised up negotiatio ns which was tur ned dow n byD orsi n.

B ut compa ny on its ow n took care of M s. C ohe n and af ter the seco nd A d came out sent a f ull ref und to him which was againtur ned dow n.

B y now dorsi n has done interviews and articles on the same issue and dema nded a run awa y shelter

With celebrit y endorseme nts and no public relatio n with the compa ny whatsoever which was an irreleva nt and illo gical dema nd

which was not take n up by the compa ny.

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R emedies

B uildi ng B rand L oyal C ustomersIrreleva nt and illo gical D ema nd not to be entertai nedC elebrit y endorseme ntsA dvertiseme nt and live promotio nal campai gnsVarious Schemes , off ers and warra nties

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Product M ix

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Product M ix

Product mix is a combi natio n of products manuf actured or traded by thesame business house to reinf orce their prese nce in the market, increasemarket share and increase the tur nover f or more prof itabilit y.

Starbucks product-mix expa nded f rom 30 varieties of whole beancoff ees to eco- f riendly cappucci no, coff ee makers, and other Starbuck parapher nalia .Its product off erings have also expa nded beyond pastries and coff ee to

oatmeal, smoothies, and wraps to keep up with the competitio n and satis fy more customer needs .The compa ny has also been constantly introduci ng new products, such as "Instant via R ead y" and "F ull L eaf Tazo Tea L attes " and "Tazo Tea Inf usio ns".The compa ny also off ers Starbucks coff ee and cappucci no makers f or consumers who wish to replace their existi ng home coff ee makers .

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Hardware & E quipme nt

10% hardware equipme nt.These include equipme nts like coff ee makers and grinders and cappucci no makers, etc .It is critical that Starbucks positio n their brand f or what the brand stands f or: an innovative industr y leader that produces high qualit y products .This helps to maximize their brand aware ness and establish themselves as the most reco gn ized and respected brand inthe world .

Within their tar get market, Starbucks has been able to capture a lar ge share by being able to off er such hardware & equipme nts.

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Industr y and C ompetitive A nalysis

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Industr y and

C ompetitive A nalysisC ompetitor analysis

2 Ty pes of C ompetitor:

C off ee shops and restaura nts

Natio nwide coff ee manuf acturers (rival brands of specialt y coff ee)

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C ompetitive A nalysis

C ompetitor analysis

F uture goalsTo grow biggerTo better position themselves as an alternative toStarbucks

C ompetitive A ctivit y Many companies are in the market and competition is fierce Competitors use location, product mix, and store atmosphere

differentiation to establish market niche Merger of local and regional chains of coffee shops

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Industr y and C ompetitive A

nalysisGeneric Competitive Strategy

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C ompetitive A nalysis

F ocused differentiationStarbucks positions their products based on quality and image.Serve niche buyers better than rivals

Buyers have distinctive preferences, special requirements, or uniqueneedsHave unique capabilities to serve needs of target buyer segmentBig enough to be profitable and offers good growth potentialCostly or difficult for multi-segment competitors

to meet specialized needs of niche membersStarbucks will be able to combat the threats of bargaining power of

buyers, substitute products, and competitive forces by continuing tomarket based on their highly differentiated products and unique brandimage.

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Justi f icatio n of D ema nds

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D ema nds of the dorosi n were justi f ied at the initial stages, but in the end thou gh he was dissatis f ied with the relucta nt behaviour of compa ny his dema nd was irrevela nt.His dema nds were more towards tr ying to squeez as much out

of Starbucks rather than a f air compe nsatio n.C ompa ny should go f or mutuall y-agreeable solutio n and provide D orosi n with the top of line machi nes as these machi nes cost alot less than there ima ge, which is priceless .C ompa ny should insist D orosi n to bring this into public that Starbucks has spo nsored his runawa y shelters as toke n of compe nsatio n along with that talki ng on radio about various social activities in which starbucks have been involved .If dema nd increases by D orosi n, Starbucks should stand by its

word and back its ima ge.

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Tha nk you