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Published by AmirAllam69
What were the reasons for Starbuck’s falling popularity in 2008?
What were the reasons for Starbuck’s falling popularity in 2008?

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Categories:Types, Research
Published by: AmirAllam69 on Jan 20, 2013
Copyright:Attribution Non-commercial


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What were the reasons for Starbuck’s falling popularity in 2008?
1-Economic situation the economic crisis that did affect the whole world and considered to be the worst since the Great Depression. With thousands of people loosing their homes and jobs, the last thing on their spending budjet would be to drink expensive coffee. The fact that most Starbucks stores were in the backyards of the communities badly affected by the economic slump had an adverse impact on the company’s sales.

2- Brand differentiation Schultz admitted that with rapid growth Starbucks had lost its soul and its focus. From being a warm neighbourhood store, Starbucks had become an chain store without its traditional atmosphere where customers could relax and enjoy their coffee. However, in order to grow, Starbucks started to attract customers for whom speedy delivery was more important than personal service. This led to a fall in service quality with the high end customers moving away to neighbourhood coffee boutiques. 3- Product and price Also, Starbucks came up with new design and meaning Express, Kiosks, book stores, airports etc., which also served to make it a mass brand. Markets of premium products would never advise wide distribution. However, that is exactly what Starbucks did. Starbucks expected customers to pay more for something that was no longer special. 4-Rapid growth The number of Starbucks stores increased from around 7,000 in 2003 to over 15,000 in 2008. According to analysts and by the company’s own admission this rapid expansion led to brand dilution 5- comepetition Self competition: rather than increase sales, the presence of several Starbucks stores close to each other led to cannibalisation of sales. Starbucks was also faced with increasing competition. Starbucks was attacked from both sides – several high-end coffee houses that offered personal office and luxurious ambience sprung up in

was likely to appeal to more people that are not used to strong coffee offered by the company. 2.Menu revision . 4.com ( customer play role in company’s future) Introduce loyalty program ( reward registered cardholders) this could increase the frequency of visit but also some people will not see value on that offer Strength relationship with CI (conservation international) . McDonalds and Dunkin Donuts catered to the low end of the market Analyse whether the transformational initiatives would help the company in stopping the slide in traffic and earnings. but the impact on training and motivation level will improve the [performance 3.The return of Schultz to replace Donald as CEO of Starbucks. may disturb and confuse customers . a fresh customer facing initiatives was introduced to stop sales sliding. Initiatives and critical decisions: 1. Mystarbuckscommunity. Starbucks could succeed to bring in new customers.major cities.The closing of 7100 store for 3 hours daily for training to relearn the coffee making and to improve employee motivation. semi automatic espresso machine ( more customer interaction that could benefit in personalizing service) Complete reinvention of brewed coffee in store (remind customers with originality of starbucks coffee. which means focus on the “customer experience and innovation” to reserve the slide in stakeholders value . abcde- On the annual shareholders meeting . attracting Starbucks original customer base. removing warm breakfast sandwiches items that interfere the coffee aroma. the agenda included 5 main initiatives Introduction of Mastrena . that did help the company to reh hit on main strategy.Starbucks new coffee – Pikes Place Roast (a lighter roast) .

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