Services Marketing – Starbucks Case Study

I’m doing a course this term called Services Marketing, which does exactly what it says on the tin. Our latest assignment – head into a Starbucks, and create trouble for them to see how they react. Then repeat with a Dunkin Donuts. Even though I don’t drink coffee, it seemed like too much fun to pass up.

Starbucks

I ordered a latte – standard size. Not many other people in the shop. The lady taking my order seemed very pleasant and tried to make a light joke. They didn’t take my name to yell out when it had become ready (thank goodness). I received the latte.

I then tried to return it and get a Mocha, offering no explanation why. The chap who had make my latte turned, initially confused, to the barista next to him. She nodded and said it was okay – after which he took the latte to one side and produced a mocha to my taste. The mocha is slightly more expensive than a latte.

Dunkin’

Dunkin’ Donuts is a US based food chain. They were originally known for donuts (hence the name), but in recent time coffee has become a central offering – so much so that the logo has a coffee cup on rather than a donut:

DD_LOGO_tag

Same trick – I ordered a latte, took a couple of sips and then tried to swop it. They asked why I wanted to swop it – I replied that I didn’t like it. They just swapped it.

What does that mean?

Both did well – but I got the strong sense at Starbucks that being nice was the party line, while at Dunkin’ I got lucky. I’m drawing that conclusion somewhat from the reputation and the ambiance of both stores – Starbucks is well known as the “3rd place” and has to be welcoming, while Dunkin looks like more of a transactional environment – you come in, pay your money, take your item and bugger off.

The General Opinion

The class generally found that Dunkin’ generally wasn’t as accommodating, and interestingly, that their experiences with Starbucks were inconsistent. We heard stories of two stores just down the road from each other (in New York) having completely different customer service standards.

The Problem With Starbucks

… is one of segmentation. Their target customer while they were in high growth was all about the third place, wasn’t used to premium coffee and just moved slower. Now that time has moved on, a new and significant younger segment who is used to premium coffee just wants to get in, get their coffee and get the hell out. So we can see a shift in what’s important in store:

  • Before: Barista knowledge of the coffee, a pleasant environment
  • Now: Speed

So we can make two deductions.

  • The people who are getting agitated waiting in line are disrupting the pleasant environment of the older segment
  • There isn’t much overlap between the desires of these two segments

So what’s the solution?

Here’s one solution, anyway

If you’ve been keeping an eye out, you may have noticed this – Starbucks Express. This is a store where you don’t even have to interact with anyone – you can just get your coffee and get out.

Will this start to turn off the older segment? Will they start heading to Peets instead? There are no answers yet – this is one case study we’re living in the middle of, so all we can do is wait and see.

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