Starbuck's Case

376 Words2 Pages
Starbuck’s case What went wrong and what would you recommend for improvements? Stock price plummeted Starbuck’s experience lost its flavor Competition from below and above Too much real estate, too fast : Recommendation : starbuck’s stores cannibalizing each others sales => relocate Starbucks’s stores strategically It was as an upper class coffee chain that they first made their mark and was what defined the success of the company. Sure people were aware that the beverages at Starbucks were more expensive than at many cafés but they still frequented the outlets, as it was a place ‘to see and be seen’. Setting up a brand as a symbol of status has served many companies well but if the company becomes too commercial and widely used it will lose much of its’ initial appeal. After all, if every second person appeared to be wearing Armani clothing, would anyone pay $400 for an Armani shirt. Overpriced products Once their growth really took hold they gradually gained a greater reliance on less-affluent consumers. Consequently, the reason for the decline at a time of disappointing economic growth highlights that their customer base is now predominantly the middle and lower wealth classes who have sought to save in times of trying conditions. The expensive cup of coffee is very 5 years ago. Now, in times of recession, people realize that good coffee can be had much, much cheaper at Dunkin', McDonalds, or just pulled out of the ol' home coffee brewer. Even gas stations are ramping up the quality of their coffee to compete with Starbucks, and at much better prices as well Recommendation : Starbucks should consider the general demand and work a price reduction strategy into the Company's overall pricing strategies. Price reduction strategies may include a rebate or coupon promotion program as the increase in sales will offset the costs of these price

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