ASSIGNMENT: CASE STUDIES

SUBJECT: SERVICE MARKETING

SUBMITTED TO: MISS ASMA RAFIQUE

SUBMITTED BY:
HAFIZ RAUF AHMED BBA-02153118
AROOBA SHOAIB BBA-02153181
M USMAN JAMIL BBA-02153084
NOUMAN AMJAD BBA-02153138

BBA-VI
SEC-C
 CASE STUDY

CASE: FOUR CUSTOMERS IN SEARCH SOLUTIONS

Based strictly on the information in the case, how many possibilities do you see to segment
the telecommunications market?

 Location of numbers called: International calls are made by Chen to Southeast Asia, by
Portillo to Mexico and South America, and by Robbins to the United States. Long-
distance calls within Canada are made by Chen and Robbins.
 Time of calling: Calls should be identified by time of day and date.
 Type of problems: Chen is concerned about overcharging, Portillo about missed calls,
Vanderbilt about obscene calls, and Robbins about poor sound quality. They have
different problems that the company should solve.
 Types of services: internet or phone line.

As a customer service representative how would you address each of the problems…?

Is the problem one of charging for calls that were never made? Does he recognize the entire
phone numbers actually dialed? Alternatively, is he being charged too much for a specific call?
Does the length of each call as identified on the bill seem too long? His complaint may simply be
that the prices are too high. If he says he never made a specific call, then it would probably be
best to give him the benefit of the doubt and offer a refund on that call without further argument
unless the record shows that he complains and seeks refunds on a regular basis, in which case
there might be grounds for suspecting either a billing malfunction or dishonesty.

This problem must be handled with sensitivity and caution. Her voice may give some clues as to
what sort of person she is (e.g., her age, nature of her emotions frightened, angry, level of self-
confidence, etc.). Details of the timing of such calls, any information about the caller’s voice
gender, age, how well-spoken, any identifiable accent may be helpful, and the nature of what is
said may be helpful. There are well-established procedures in most phone companies for dealing
with obscene calls, and the customer service representative will need to follow these.

Details of what the noises sound like and whether they are encountered all the time may provide
some technical clues as to their source. The rep can arrange to have the line tested by an

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engineer, but might first suggest that try disconnecting the phone machine to see if that makes
any difference

As a marketing manager do you see any market opportunities for the telephone company
in the complaints?

There may be special pricing plans that would reduce his phone bill. There may also be discount
plans for international calls. One interesting question is what lies behind the pattern of the phone
calls from his home

Possible solutions to her problem might include subscribing to call waiting or installing a second
phone line. Again, a curious marketer might probe gently to learn more about how she uses
phone service. Are there other people in the house who are using the line?

One option is to change her phone number and consider having it unlisted. A second is to install
a phone machine to screen calls before she answers. A third is to subscribe to caller ID, which
would display the number of the phone from which the incoming call was being made again, a
useful screening device.

CASE: STARBUCKS DELIVERING CUSTOMER SERVICE

What factors accounted for the extra-ordinary success of Starbucks in the early 1990s?
What was so compelling about the Starbucks value proposition? What brand image did
Starbucks develop during this period?

Many factors accounted for the extra-ordinary success of Starbucks in the early 1990’s.
Starbucks owns nearly one-third of America’s coffee bars, which is more than its next five
biggest competitors combined. Almost all of Starbucks’ locations in North America are
company-owned stores located in high-traffic, high-visibility settings such as retail centers,
office buildings, and university campuses. This made Starbucks a very convenient coffee bar
because of the many different locations. Starbucks also worked to add more depth to their
product in the coffee shops. In addition to selling whole-bean coffees, these stores sold rich-
brewed coffees, Italian-style espresso drinks, cold-blended beverages, and premium teas. Product
mixes vary depending on the stores size and location; however, most stores offer a variety of

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pastries, sodas, juices, coffee-related accessories and equipment, CDs, games, and seasonal
novelty items.
Starbucks also sold products through non-company-operated retail stores such as hotels, airlines,
and restaurants. Additionally Starbucks formed joint ventures to distribute a bottled frappuccino
thru Pepsi-Cola and an ice cream thru Dreyer’s Grand Ice Cream. This allowed the Starbucks’
brand to be recognized not only in freestanding Starbucks stores, but also throughout other
channels as well increasing their brand awareness. Starbucks worked very had to expand the
number of retail stores as well as product innovations and service innovations. New products
were launched on a regular basis, such as one new hot beverage every holiday season. The store-
value card (SVC) was also introduced which led to reduced transaction times. Due to the
innovations and brand equity Starbucks had built Starbucks was able to achieve extra-ordinary
success.

The value proposition of Starbucks focused on a brand strategy that was comprised of three
components. The brand strategy was best captured by the phrase “live coffee.” This phrase
reflected the importance of keeping the national coffee culture alive. From a retail perspective,
this meant creating an “experience” that people would want to incorporate into their everyday
lives. There were also three components to the branding strategy. The first component was
simply the coffee. Starbucks offered the highest-quality coffee in the world and controlled much
of the supply chain as possible to help insure that. Starbucks worked directly with growers to
purchase green coffee beans, it oversaw the custom-roasting process, and it controlled
distribution to retail stores around the world. The second brand component was service, or what
was also referred to as “customer intimacy.” This included simple things such as remembering
someone’s name or drink order. The third brand component was atmosphere. Starbucks stated
that people came for the coffee but stayed for the atmosphere. Therefore it was important to
provide a comfortable atmosphere that allowed a sense of community. All of these things
combined led to a compelling value proposition.

The brand image that Starbucks developed during this period was not necessarily the best.
Starbucks was known for being widely available, their gourmet/specialty coffee, and being
trendy. Customers also though that the stores were clean and overall satisfied with the Starbucks
product. However, the market research team discovered that Starbucks’ brand image was

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declining. The number of respondents that agreed with the statement, “Starbucks cares primarily
about making money,” was up from 53%to 61%. The number of respondents that agreed with the
statement, “Starbucks cares primarily about building more stores,” was up from 48% to 55%.
Starbucks brand image was becoming more about the growth plans of Starbucks rather than the
value they wanted to provide to their customers.

Why has Starbucks’ customer satisfaction scores declined? Has the company’s service
declined or is it simply measuring satisfaction the wrong way?

Starbucks customer satisfaction scores began to decline even with the fact of Starbucks’ vast
presence and ease. There was very little image or product differentiation between Starbucks and
the smaller coffee chains. However, there was a important separation between Starbucks and the
free specialty coffeehouses. The brand image of Starbucks also had some rough edges. More
customers were beginning to agree with the fact the Starbucks cared mainly about making money
and building more stores. Also, despite the high customer picture scores customer fulfillment
scores were declining. It was believed that there was a service gap between Starbucks scores on
key quality and customer satisfaction

The overall company service has not necessarily declined. Overall, customers are pleased with
the hygiene, atmosphere, and product quality. However, wait time is progressively increasing.
This is the main problem. While some people go to Starbucks for the experience, many people
get their coffee and are out the door. Therefore, wait time is very important. This is where the
pleasure has begun to decline. While wait time is a part of customer satisfaction it is not the only
thing that determines customer pleasure. The satisfaction level of consumers also varies with the
type of customer. Customers that visit more often, spend more often, and are more reliable tend
to be more highly satisfied. Also, Starbucks is measuring much on how people view the
company, as trying to expand and make more money, rather than how people view the coffee.
Generally customers are satisfied with the coffee.

Describe the ideal Starbucks customer from a profitability standpoint. What would it take
to ensure that this customer is highly satisfied? How valuable is a highly satisfied customer
tostarbucks.

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It is no shock that lower prices are not one of Starbuck’s values that lead to its success. With
Starbuck’s absorbed mainly on value, customer fulfillment, and atmosphere, there was little
room for low prices. These higher prices were not an issue during the 1990’s,but the customer
base is rapidly growing. The customer is changing away from the recognized high-income
business- woman, who has more disposable income for high-quality coffee. The typical
Starbuck’s customer that has grown into continuation, in the late 1990’s and early 2000’s, tends
to be “younger, less knowledgeable, and in a lower income group”. The customer base also grew
in that a larger number of Hispanic and Cuban- Americans became a customer of Starbucks.
The ideal Starbuck’s customer would be the customer that visits a Starbuck’s at least eight times
a month. Conducted research shows though that customers in this bracket visit much more than
eight times a month, with the number of visits per month averaging eighteen. These customers
make up 62% of all Starbuck’s transactions. If the number of customers who visited this often
increased, sales would increase tremendously. Research shows that customers who visit only one
to two times per month only generate a measly11% of all Starbucks transactions. Overall,
Starbucks should put focus on bringing in the current customer more often.

To ensure that the customer is highly satisfied with every element of the Starbucks experience,
there are a few key factors, aside from the coffee itself that the Starbuck’s stores and its
employees must show. From a Starbuck’s survey in 2002, a clean store was the number one
factor leading to customer satisfaction, with 83%. Convenience is the next factor leading to
customer satisfaction, with 77%. Starbuck’s has done an excellent job with saturating the market.
Customers love having a Starbuck’s location on their normal traffic route, therefore not having to
drive out of their way for a cup of coffee. Having the drive-thru service has also made a positive
impact for the convenience factor. Other factors that ranked highly for customer satisfaction
were being treated as a valuable customer (75%) and friendly staff (73%).

Creating customer loyalty has proved to be the reason behind the bulk of Starbuck’s transactions
because the highly satisfied customer is the loyal customer. It is crucial that Starbuck’s maintain
customer satisfaction to keep these loyal customers coming back. Without the 21% of customers,
averaging eighteen visits a month, Starbuck’s would lose 62% of all its transactions. Starbuck’s
has also found that highly satisfied customers have an average ticket price of $4.42, as opposed

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to a satisfied customer who only spends on average $4.06. Therefore, having a satisfied customer
is very valuable to Starbuck’s and its sales.

Should Starbucks make the $40 million investment in labor in the stores? What is the goal
of this investment? Is it possible for a mega brand to deliver customer intimacy?

Starbucks needs to examine how much they are willing to spend to reach their goal of customer
familiarity. As stated in the case study, the biggest decision Howard Schultz and Orin Smith
have to make is how much they want to impact their bottom line. Going the whole way with the
labor is very risky. I would recommend another option. This option would propose implementing
more labor, but testing out the effects in certain urban stores worldwide. If the increased labor
has the desired effect, then Starbucks can slowly add the extra labor to every store. However, if
the cost is the exceeding the profit, then it would easier to cut back.

The goal of this potential investment is to increase customer satisfaction while attempting to
generate more profit. This is from a survey Starbucks conducted in 2002 that stated 65% of
customers wanted faster service. Starbucks found customers would leave the store if they had to
wait for the coffee, and if they can cut service time then more customers would be served.

Starbucks trains their employees in two different directions. One direction is learning the
procedures to making all the different drinks, learning and working the register, and so far. The
other training is in customer satisfaction and creating customer intimacy. Starbucks wants their
employees to remember the loyal or frequent customers’ names and orders have conversations
with customers, etc. They want those customers to feel special and welcome when they enter the
store. Starbucks believes if they are able to create customer intimacy then they can keep those
customers and increase their sales. However, in today’s time creating customer intimacy is
harder than ever, especially in Starbucks. I believe a mega brand can create it, but it would have
to be in the right atmosphere. The atmosphere that would probably work best for customer
intimacy is stores that cater to the upper class. They have a more consistent customer base, they
have the ability to have personal interaction or relationships, and just by percentages in one city
or town there is only going to be so many from the best circle that can shop in that category. It is

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still difficult to create it, but those upper crust stores would have more of a shot than a store like
Belk’s where there are all sorts of customers.

How does the Starbucks changed since its early days?

The Starbucks of 1992 was obviously still in the beginning stages of establishing themselves as
a prestigious company. However, by 1992, Starbucks acquired 140 stores and were challenging
against other coffee brands. The kind of customer Starbucks attracted during this time was
white-collar business-type individuals, who were always on the go. The Starbucks business was
successful and continued to grow. Also, during 1992, people just wanted coffee instead
personalized orders. This made it easier for partners to communicate with customers and
understand the customer on a personal level. So, Starbucks decided to go public and make the
coffee brand accessible to varieties of people. Businessmen tried to talk Howard Schultz out of
the idea but nevertheless the company became a huge success. The Starbucks of 2002 became
trendy because of the companying becoming public over the years. The company began serving
20 million diverse customers in over 5,000 stores.

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