Starbucks' Problems

Last year Starbucks announced they were closing approximately 600 stores, with more possibly to follow. So what went wrong with their marketing strategy? Or were they victims of $4/gallon gas and a slowing economy? Did they have a solid, fundamentally correct marketing strategy that was just the victim of bad times? Or was their marketing strategy fundamentally flawed?

Marketing Strategy Subject: Starbucks, Inc. Length: 3 - 5 pages, double-spaced.

Everyone knows Starbucks, the home of the $10 cup of coffee. That's awfully simplistic for Starbucks regulars. Ordering coffee was an art form, and those making your order were even given special titles - Baristas. There were multiple ways to order your beverage and how you ordered it was as complicated as making it. Those who could order more complicated beverages achieved a slightly higher status among their peers. If you ordered "just a coffee, please" you could feel all the regulars laughing at you. Indeed, many people were actually so intimidated by the ordering process, they wouldn't go there.

The chain was phenomenally successful. At times it seemed they were in a race with McDonalds to see who had the most stores open. It was an American success story. Starbucks made a number of strategic marketing decisions. First among them was the assumption that each Starbucks drew from a limited geographic area. If there wasn't a Starbucks within easy walking distance or on your way to work, you wouldn't go there. Their answer was the decision to put a Starbucks on every corner. They had to make their product easy to get to. A second strategic decision was to make Starbucks a lifestyle option. Each Starbucks had free Internet access, comfortable tables and sitting areas and outside tables and chairs. The ideal Starbucks had 10 - 15 consumers, hanging out, drinking their customized beverages, having a good time. Who wouldn't want to be part of that lifestyle? Through advertising, they cultivated an image that Starbucks was the first choice of the hip, young professionals A third strategic option was to expand custom offerings. They negotiated deals with select recording artists to be the sole retailer of a specific album. Or a specific CD. Or a specific book. By being the only outlet for a specific media product, new consumers would go to their stores.

Last year Starbucks announced they were closing approximately 600 stores, with more possibly to follow. So what went wrong with their marketing strategy? Or were they victims of $4/gallon gas and a slowing economy? Did they have a solid, fundamentally correct marketing strategy that was just the victim of bad times? Or was their marketing strategy fundamentally flawed?