Provide a 9 pages analysis while answering the following question: Of Starbucks, Which Offered a Defective Cappuccino Maker to One of Its Customers. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. Simply, there are no unimportant customers. However, before drawing any recommendations, a careful analysis of the situation should be made. Especially I would like to focus on the three key points in the whole story. First, final costs of settling the issue with the dissatisfied customer, who went on an anti-Starbucks ad campaign, are much greater than the initial costs of satisfying the client, who returned his defective cappuccino maker. Second, during the investigation of the case by Starbucks, the customer was disturbed so many times, that his dissatisfaction had grown greatly, almost turning into aggression. He had to tell his story to every manager he talked to and had to face several weak attempts of compromising before his demands were satisfied. Third, problems with Starbucks coffee makers did truly happen. It can be concluded from a wave of phone calls on the phone line established by the furious customer. “Upon the first advertisement’s appearance, Dorosin received a “ton of calls.” He said he had received thousands of calls, from customers, competitors and employees who felt Starbucks misrepresented themselves to the public.” (Barr et al 1998) Therefore, Starbucks did perform badly.
In fact, the customer was so upset, that this issue has overgrown the simple financial compensation. What he thought Starbucks should do is to apologize. The point is in moral compensation, not just financial. This fact is supported by $20,000 spent by the client on the case: “He set up a toll-free line with six telephones installed in his small scuba shop and hired extra employees to answer the calls. In one year he received about 6,000 responses. His total estimated outlay: $20,000.” (Kalis and Leaf 1999) The media attention to the situation made the position of Starbucks even more complicated.
Now let us turn to Starbucks profile and background. The company has been developing rapidly since 1988, offering various coffee drinks and beverages, operating through its own stores. The company’s competitive advantage was based on three whales: highly differentiated offers, the suitable position of its stores, and great attention paid to customers. “Customer service was a key ingredient to Starbucks’ success. One of the five guiding principles of the company was ‘Develop enthusiastically satisfied customers all of the time.'” (Barr et al 1998) It was the reason people preferred the large corporation offering rather expensive beverages to tiny comfortable cafes.
In the light of this strategy, a weak decision of replacing Dorosin’s and his friend’s machines with two new ones at a cost of $270 instead of top-of-the-line cappuccino maker priced $2500 and apology looked very bad. From the external viewpoint it looks like, not only the company has failed to deliver its services to a customer on the proper level of quality, but also tried to pinch pennies on the compensation. After all, what is one top-of-the-line machine to Starbucks in compare to its brand image? Nothing. If given a decent amount of attention from the Starbucks’ management the issue would have been resolved without unnecessary noise in the media. The hysteria raised by the press was even more uncomfortable because Starbucks experienced another problem: the company was accused of the elimination of local coffee businesses throughout the country, which could not match to the corporation. .