Howard Schultz and Orin Smith

What factors accounted or the extraordinary success of Cataracts In the early sass? What was so compelling about the Cataracts value proposition? What brand image did Cataracts develop during this period? (team 9, 10 & 1) Factors: It Is own value, creating an uplifting experience every time customers walk through the door; located in high traffic, high visibility, retail centre. Innovation e. G. Et up an espresso bar in their downtown Seattle shop. Specialty coffee, premium, 50% sales of beans.

Relax consumer – intimacy – baristas, knowing customer’s name and drink C] hard skills ; soft skill; atmosphere 0 furnishing, music, aroma. Value proposition: 1) coffee ? offering highest quality, lots of control over supply chain; 2) service 0 customer intimacy, loyalty of customers, customizing drink In their way; 3) atmosphere Providing an upscale yet inviting environment.

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Tight value proposition for well defined market: customer patterns C] stay for a while (linger/ hangout), rituals: read magazine/ do puzzle, chat; established customers D coffee fanatics, 24-44, white alular, well educated, affluent, female; brand perceptions/ Image CLC escape: a 3rd place, premium coffee, affordable luxury. Brand Image: sense of community, everywhere – the brand, good coffee on the run, place to meeting and move on, convenience oriented – on the way to work, accessible and consistent. 2. Why have Cataracts’ customer satisfaction scores declined?

Has the company’s service declined, or is it simply measuring satisfaction the wrong way? (team 1, 2 ; 3) Decline: change of customers from affluent, well-educated, white collar female teen the age of 24 to 44 to people who are younger, less well educated and in a lower income bracket.

Expectations are higher. Services declined: more crowded, time needed to serve customers longer, can’t build up friendship. Measuring satisfaction the wrong way: TLD differentiate frequent buyer and non- frequent buyer Metrics for Judging stores: speed – 3 miss goal; clean; friendly/ service oriented (great service); product quality/ complexity.

C] speed and great service/ speed and product quality/ complexity:: not consistent. Inexperience managers + new customers + product complexity = long linens] grumpy employees C] grumpy customers 0 lower satisfaction.

New customers: younger, less well educated, lower income, 1 SST experience with Cataracts not in Cataracts coffee shop. Consumption pattern: less frequent, don’t linger, coffee on the run, established customers might also be new customers. Brand perceptions/ image: less positive image of company. 3. How does the Cataracts of 2002 differ from the Cataracts of 1992? Team 4, 5 ; 6) 1992: 140 stores in North West and Chicago; selling whole bean and premium prices beverage; target customer group 0 affluent, well-educated, white alular female between the age of 24 to 44; before 1992, company not yet public.

2002: customer base, younger, less well educated and In a lower Income bracket; 5000 stores around the globe, average 3 new stores a day; these stores sold rich brewed coffees, Italian-style espresso drinks, cold blended beverages, and premium teas: equipment, depending on the store size. 4.

Describe the ideal Cataracts customer from a profitability standpoint. What would it take to ensure that this customer is highly satisfied customer to Cataracts? (team 7 ; 8) Ideal Cataracts customer: fluent, well-educated, white collar female between the age of 24 to 44. Actions to be taken: Meet the customer expectations by closing the service gap between Cataracts scores on key attributes and customer expectations. E.

G. Improvement in Speed of service which is what customers want Cataracts to improve. Unsatisfied 0 revenue per year $182, CLC. 200; satisfied 0 revenue per year $210, CLC. $923; highly satisfied 0 revenue per year $382, CLC. 3170 (look in Exhibit 9, differences between each category).

Essence: to get satisfied customers to be highly satisfied. 5. Should Cataracts 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? (team 9, 10, 1 1) Yes, since: 1. The investment could lower the service time, which in turn enhances customer satisfactions; 2. Lid stronger long term relationships with the customers; customer throughput 3.

Improve the All in all, saving $40 million is cost control. But investing $40 million could help Cataracts generate larger profit. 40 million/ 3496 stores = 1 1 . K per store investment 0 11. 41 $172 = 67 customers loud have to go from satisfied to highly satisfied. 0 break even point.

Goal: move each store closer to the $20,000 level in terms of weekly sales Yes, it is possible if the mega brand could make best use of the advanced technology.

For instance, to Cataracts, if she could take the advantage of her stored value card (C.V.) which collects all kinds of customer-transaction data, then the customers still are able to get customized services from the Cataracts. She still can deliver customer intimacy. Take sways:- 1) As firm’s customer base grows value proposition not evolve.

) In retail footprint, segmentation is very challenging. 3) Employee satisfaction key driver of customer satisfaction. 4) Should Cataracts make the $40 million investment in labor in the stores? ) Whether or not Cataracts should invest $40 million into labor in their stores has a more complicated answer than a simple yes or no. Cataracts needs to examine how much they are willing to spend to reach their goal of customer intimacy. 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 affect, then Cataracts 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. 6) What is the goal of this investment? 7) The goal of this potential investment is to increase customer satisfaction while 2002 that stated 65% of customers wanted faster service (exhibit 10 in the case study).

Cataracts 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. 8) Is it possible for a mega brand to deliver customer intimacy? ) Cataracts 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. Cataracts 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. Cataracts 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 Cataracts. 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 legislations, and Just by percentages in one city or town there is only going to be so many from the elite circle that can shop in that category.

It is still difficult to create it, but those upper crust stores would have more of a shot than a store like Bell’s where there are all sorts of customers. 10) Like 11) Be the first to like this. Raffia, ?Rife) Ease, Should Cataracts 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?