Question

"A Starbucks on Every Corner"

In 2008, Starbucks announced that they would be closing 600 US stores. Up to that point, Starbucks stores had added new offerings, including Wi-Fi and music for sale, but started to lose its warm "neighborhood store" feeling in favor of a chain store persona. Harvard Business Review points out that in this situation, "Starbucks is a mass brand attempting to command a premium price for an experience that is no longer special." Meaning, to keep up, Starbucks would either have to cut prices, or cut down on stores to restore its brand exclusivity. HBR's case study shares three problems with the growth of Starbucks: alienating early adopters, too broad of an appeal, and superficial growth through new stores and products. Harvard recommends that Starbucks should have stayed private, growing at a controlled pace to maintain its status as a premium brand.

Answer these questions (explain in seven to ten lines):

1. Why do you think Starbuck’s was providing “an experience that is no longer special”?
2. Do you agree that in order “to keep up, Starbucks would either have to cut prices, or cut down on stores to restore its brand exclusivity”?
3. Provide three recommendations the coffee company should instrument to enhance success.

Answer 1

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Why do you think Starbucks was providing “an experience that is no longer special”?

Italy is known as the world 's coffee city. The personal experience and high quality of coffee in Italian coffee houses is what distinguishes Italian coffee. The history of the American coffee house means that coffee can be ordered. Over the decades coffee rituals have become, albeit in different ways, an important item in the Italian and American cultures. Starbucks was involved in bringing to the United States the Italian coffee house experience. An Italian style coffee house, where one can sit and be served with coffee to his or her taste by a familiar barista, was an exceptional experience in light of the indifferent service in typical American coffee housA coffee house in Italian style, where you can sit down to be served with a friendly barista with coffee to your taste, was an excellent experience despite the indifferent service of the traditional American coffee houses.

Starbucks' emphasis on the grab and go coffee consumers that make the majority of American coffee lovers work for a robust rise. The opening of coffee shops at Starbucks to the kind of client who wanted to provide service quickly rather than personal experience and to discuss services in the coffee house with the barista changed the business. Starbucks eventually lost the Italian feeling that he was originally trying to sell himself and became a modern American coffee house.

Do you agree that in order “to keep up, Starbucks would either have to cut prices, or cut down on stores to restore its brand exclusivity”?

Starbucks’ options to reclaim itself as a brand are conforming to the American coffee traditions, or reverting to the original idea of an Italian style coffee house. Since the American concept of a coffee house is widespread in the United States, Starbucks would have to lower the prices while maintaining its quality of coffee to create a competitive advantage against other coffee houses. If Starbucks opts to maintain the vision of an Italian coffee house, it would have to close some of its stores as it opted to in 2007. The closing down of the stores would remove Starbucks' rivalry against each other while increasing its service exclusivity. This move will be especially enticing for consumers looking for an exclusive, personal and quality coffee service similar to a membership club.

Provide three recommendations the coffee company should instrument to enhance success

Starbucks will restore or refresh its brand to improve its chances of success. When Starbucks wants to regain exclusivity and sell the service at an exceptional price, the number of its stores will be limited. As already mentioned, the limited number of shops should make consumers interested in a personal experience at the coffee house more appealing. The benefit of this course is its low costs and ease of use. In fact, shortly after implementation it will encourage brand loyaltyWhen Starbucks opts to reinvent itself as a coffee house in an American style, its prices should be reduced to a fair price, as predicted, and coffees should go. This choice would not only allow Starbucks to benefit from its vast network of stores, but also from the low cost.

Starbucks should rebrand its stores and split them into two groups based on their suitability, to make use of their experience. The outcome will be a chain of coffee houses in American style, which was the bulk. At low rates and quick delivery of services that would draw customers. The luxury shop will be a much smaller chain of coffee houses in Italian style, providing a special personal experience of much better coffee quality. While this split is a more expensive option, it can produce substantially higher yields and can sell Starbucks brand. The reshaping will also allow the company to encourage brand loyalty for both consumer categories.

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