Starbucks Positioning Essay

372 Words2 Pages
How should Starbucks redefine positioning (target market, differential customer value) after its decline in 2007? Starbucks’ share price decline showed that its growth strategy had created a fundamental problem: Starbucks is a mass brand attempting to charge a premium price for an experience that is no longer special as it was. The CDs, movies, breakfast sandwiches, and the fast speed of order delivery diluted the brand and eroded its coffee authority. These innovations added respectable revenue streams at the expense of the integrity of the Starbucks brand for coffee purist and the time for baristas to dialogue with customers. Faced with the problem, Starbucks should rethink about the positioning in regard to both its target market and differential customer value. 1. Target Market The expansion of Starbucks resulted in a larger customer base and a changed profile for an “average” Starbucks customer. To be specific, the average annual income dropped from $81,000 in 2000 to $55,000 in 2005. During the same period, consumers with college degrees declined from 78% to only 56%. This change indicated that the elite segment of Starbucks customers were diluted by lower educated consumers with lower social status. However, those well-educated customers had higher brand loyalty and buying power. So Starbucks should win back this important segment by bringing back its “coffee authority”. 2. Differential Customer Value Starbucks expanding strategy put itself in a coffee war with McCafés with its lowered-down coffee and service quality. In order to regain its former competencies on “coffee authority”, Starbucks should grow at a more controlled pace or even close some stores to get back to its “coffee roots”. Especially, for those early adopters who valued the club-like atmosphere of relaxing over a quality cup of coffee, they need to see more focus back on to the
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