In mid-2002, Christine Day, Starbucks’ Senior Vice President of Administration in North America, sat in the seventh-floor conference room of Starbucks’ Seattle headquarters and reached for her second cup of toffee nut latte. The hand-crafted beverage—a buttery, toffee-nut flavored espresso concoction topped with whipped cream and toffee sprinkles—had become a regular afternoon indulgence for Day ever since its introduction earlier that year.

As she waited for her colleagues to join her, Day reflected on the company’s recent performance. While other retailers were still reeling from the post-9/11 recession, Starbucks was enjoying its 11th consecutive year of 5%, or higher, comparable store-sales growth, prompting its founder and chairman, Howard Schultz, to declare, “I think we’ve demonstrated that we are close to a recession-proof product.”1 Day, however, was not feeling nearly as sanguine, in part because Starbucks’ most recent market research had revealed some unexpected findings. “We’ve always taken great pride in our retail service,” said Day, “but according to the data, we’re not always meeting our customers’ expectations in the area of customer satisfaction......................

Questions 

1. What factors accounted for Starbucks’ success in the early 1990s, and what was so compelling about its value proposition? What brand image did Starbucks develop during this period?
2. Why have Starbucks’ customer satisfaction scores declined? Has the company’s service declined, or is it simply measuring satisfaction the wrong way?
3. How has Starbucks changed since its early days?
4. Describe the ideal Starbucks customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied? How valuable to Starbucks is a highly satisfied customer?
5. Should Starbucks make the $40 million investment in labor in the stores? What’s the goal of this investment?
Is it possible for a mega-brand to deliver customer intimacy?