SVKM’s Narsee Monjee Institute of Management Studies

Hyderabad Campus

Post Graduate Diploma in Management

2018-20

SERVICE MARKETING
CASE STUDY 2 - STARBUCKS

SUBMITTED BY: -

MITTALI BANSAL 80303180021

SECTION - A
What is or should be the value proposition of Starbucks. Justify it.
The value proposition of Starbucks lies in enhancing the customers’ experience while drinking coffee.
Their value proposition is focused on a brand strategy that is comprised of three components.
• Live Coffee
o The brand strategy is best captured by the phrase “live coffee.” This phrase reflects
the importance of keeping the national coffee culture alive.
o From a retail perspective, this meant creating an “experience” that people would want
to incorporate into their everyday lives.
o 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.
• Customer Intimacy
o 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.
• Atmosphere
o The third brand component was atmosphere. Starbucks stated that people came for
the coffee but stayed for the atmosphere.
o Therefore it was important to provide a comfortable atmosphere that allowed a sense
of community.
Add-on to Starbucks value propositions

• Installation of Duracell Power mats on its tables.

o The obvious reason behind this is for the coffee shop’s customers to charge their
phones while they sip their drinks. This may seem as a simple innovation but scrutiny
reveals that this new feature shows Starbucks’ commitment in sustaining and
enhancing its value proposition.
o Clients and guests can leisurely sip their drinks while charging their phones. This is
significant since people nowadays rely so much on their smartphones or mobile
phones to conduct their businesses. If customers can charge their phones in
Starbucks, then they’ll have another reason patronize the company’s coffee shops.

With Starbucks installing phone-chargers on its tables, the company is staying true to its strategy of
ensuring that customers experience a comfortable atmosphere while drinking their coffee.