Premium Essay

To What Extent Have Starbucks Recent Difficulties Been the Result of Its Inability to Retain Its Level of Differentiation from Other Markets?

In: Business and Management

Submitted By nathug225
Words 453
Pages 2
Product differentiation is the degree to which consumers see a particular brand as being different from other brands.

One point is that new competitors have copied what differentiated Starbucks initially in a good atmosphere brought about by free Wi-Fi, comfy seats, newspapers to read, cheerful welcomes and great tunes. This links to 2 of porters 5 forces, firstly threat of new customers, in that it isn’t too difficult to set up a coffee shop, there are very low barriers to entry, and secondly substitute products meaning that customers have the option to swap to very similar competitors. This means that Starbucks lack a competitive nature due to the fact that what they initially differentiated themselves from the market with is now being copied by new entrants to the market, this means that customers will have low brand loyalty, and can easily move to Starbucks competitors who may focus more on the quality of coffee and thus explain why they made a loss of $6.7million for the first time in their 15 year history. However, Starbucks still managed to differentiate from competitors in that they opened Europe’s very first drive through coffee store.

Another factor for Starbucks recent difficulties is the lack of advertising and being solely dependent on word of mouth advertising, this is an issue to Starbucks as they are unable to get their message across as they do not control what one customer says to their peers or family etc. This can be an issue as due to the inability of maintaining quality and consistency of its stores means that the word of mouth advertising may become negative as people have had bad experiences and tell their peers and family to go to other coffee shops that focus more on the quality of coffee such as Café Nero. This has led to recent difficulties for Starbucks in having a $6.7million loss.

Another reason for Starbucks recent struggles…...

Similar Documents

Premium Essay

Starbucks Case Analysis

...PLANET STARBUCKS TABLE OF CONTENTS 1 CONTENTS Background Problem Identification Main Issue Narrow SWOT analysis Functional Area Analysis Alternatives Recommendation Implementation PAGE 2 7 7 8 16 47 53 57 1 PLANET STARBUCKS (A) ‘Group B’ BACKGROUND About Starbucks: Starbucks is one of the finest coffee stores, popular among its customers for its aura with a very comfortable atmosphere to relax and the first rate music it plays. As in the 1990s, it is a store which has been almost everywhere throughout the United States and Canada. Starbucks was founded in Seattle by Gerald Baldwin, Gordon Bowker, and ZievSiegl in 1971. It started its operations as a gourmet coffee bean roaster and distributor. Howard Schultz joined the company as a member of their marketing team in 1982 and urged the partners to consider opening an Espresso bar alongside selling coffee. The company opened its first Espresso bar at its Seattle store. However, the partners didn‘t want to take the idea of expanding its Espresso bar line forward, as to them it resembled stepping into the fast-food business instead of focusing on their own business of roasting and distributing. In 1985, Howard Schultz opened Il Giornale after he left Starbucks. Il Giornale was an espresso bar that sold coffee and assorted coffee beverages made exclusively with Starbucks‘ beans. Two years later, Schultz bought the former Seattle Starbucks company, six stores and roasting plant, for $3.8 million. Schultz now......

Words: 21170 - Pages: 85

Free Essay


...The Future of Starbucks      An Analysis by Team Macchiato:  Zack Higbee  Chen Yee Liaw  Calvin Ting  Kevin Tjho  Michelle Ton    1 Executive Summary  Starbucks Corporation has arguably been the most successful coffee chain in the past few decades,  using their aggressive expansion strategies to push out much of its competition.  Through its  expansion, Starbucks has focused on creating a dense network of stores all around America, while  also opening up new locations all around the world.  By leading the retail coffee market, Starbucks  is able to sell its coffee for a premium price and increase their profitability.  Its success can be seen  in the gradual rise of its stock prices from 1992 – 2007, reaching almost 6000% of their initial  public offering 1 .  Yet, in the recent year, the market has shown Starbucks to be in constant decline, as their stock  has dropped about $15/share, a value they have been above since 2004.  Also, looking at  Starbucks’ SEC filings, we can see that its comparable store sales have decreased significantly in US  markets since 2004.  This has prompted Team Macchiato to evaluate Starbucks’ current strategies  in addition to the retail coffee market as a whole.  To evaluate the problem, one of the biggest  questions to consider is to what extent is the “designer coffee” market just a fad.  In other words,  will the allure of gourmet Starbucks coffee be maintained or will more appealing options threaten ......

Words: 6815 - Pages: 28

Premium Essay


...7730 March 20, 2009 Starbucks Coffee Table of Contents Introduction 3 Product Analysis 3 Product Overview 3 Market Structure 4 Competition 5 Dunkin Donuts 7 Krispy Kreme 3 McDonalds 8 Panera Bread 8 Elasticity Estimates Pricing Strategy 10 Forecast 12 Determants of Demand 13 Forecast Model 15 Forecast Error! Bookmark not defined. Summary 15 Works Cited Introduction With the economy in trouble, the stock market tanking it is important to start your day with a good cup of coffee to take on these challenges. Can Starbuck’s sustain it business model and place in the market? The paper examines Starbucks business and it respective practices. In 1971, the original Starbucks opened in Pike Place Market in Seattle, Washington by three partners named Jerry Baldwin, Zev Siegal, and Gordon Bowker. Their focus was to sell coffee beans and equipment. They purchased green coffee beans from Peet’s, a specialty coffee roaster and retailer, during their first year of operation. Later, they began buying coffee beans directly from the growers. In 1983, an entrepreneur by the name of Howard Schultz joined the company; Schultz felt that the company should sell coffee and espresso drinks as well as coffee beans. The partners felt that selling coffee and espresso drinks would take away from their primary focus of......

Words: 7573 - Pages: 31

Premium Essay

To What Extent Have the Millennium Development Goals Been a Success?

...To what extent have the Millennium Development Goals been a success? by Name Presented to: Instructor Course Institution City Date Introduction The Millennium Development Goals (MDGs) provide a comprehensive framework through which the society can address pressing issues of poverty. The MDGs are made up of eight major objectives, which are all related to global development. In 2000, 189 world leaders signed a Millennium Declaration. The leaders set 2015 as the deadline for achieving the set MDGs. There has been a mixed result of the progress towards attaining these goals. One of the major achievements has been achieved is that there has been a major reduction of people living in extreme poverty. Accordingly, the proportion of poverty fell to less than one fifth from nearly a third between 1990 and 2004. However, the results are not consistent throughout the world. For instance, the sub-Saharan Africa has not been able to meet any of the set targets. On the contrary, there has been a significant economic growth in some parts of Asia, especially, the Eastern part. The following is a summary of the progress that has been made so far based on the 2007 Millennium Goals Report. Extreme Poverty The percentage of people living in extreme poverty fell to 19% in 2004 from nearly a third in 2004. If this trend can continue for a long time, there is likelihood that the MDG will meet its target of halving those living on less than 1 dollar per......

Words: 1755 - Pages: 8

Premium Essay

To What Extent Have Modern Liberals Departed from the Ideas of Classical Liberalism? (45 Marks)

...Although it can be said that classical and modern liberals hold the same fundamental principles and ideas, it could also definitely be argued that modern liberalism moves away from the brutality of classical liberalism, and the two concepts have departed, with modern liberals focusing more on helping individuals achieve their potential and protecting them. With this said, both concepts do undoubtedly hold true the fundamental concept which is freedom of the individual; even if they interpret this concept in different ways. Whilst the moving away from classical liberalism holds to be true, because of concept such as neoliberalism, classical liberalism does still have an influence on every day life. One of the fundamental liberal principles is centered around freedom of the individual, and this can be said to be both one of the main similarities, and one of the main differences between modern and classical liberalism. Classical liberals believe in negative freedom; freedom being the absence of external constraints. The individual is therefore free: left alone and not interfered with or coerced by others. Classical liberals believe this leads to the formation of a meritocracy; where people can make a success of themselves based on their hard work and talents, and are not held back by the state when trying to do so. Modern liberals share this same concept of freedom and believe that the individual should be free to make the best of themselves through talent and hard work.......

Words: 1388 - Pages: 6

Premium Essay

To What Extent Would a Differentiation Strategy Be a Better Option Than a Low Cost Option for Aspire When Entering China

...To what extent would a differentiation strategy be a better option than a low cost option for Aspire when entering China? (16marks) A differentiation strategy is something businesses use to gain an edge over their competitors. In industries where multiple competitors produce similar products, managers will try to make their product unique in some way so that it stands out from the pack. A low cost option focuses on providing similar benefits to competitors, but at a lower price. For Aspire to differentiate, they need to provide more benefits than their competitors for example strong levels of customer service, which therefore should enable them to charge higher prices. If Aspire pursued a differentiation strategy the distribution of the coffee should be exclusive, keeping a tight control over distribution to maintain an exclusive image. This being used to emphasise the difference between their products (the coffee) to their rivals. In order to compete in the Chinese market Aspire needs to make sure its product is different from competitors. If consumers value this difference it will benefit the firm in two ways, firstly by an increased sales volume and a greater scope for charging a higher price. Differentiation can be based on a number of different characteristics for example different distribution methods, clever promotional and advertising campaigns to boost brand image and sales and the design of the products itself for example the coffee cups etc.......

Words: 574 - Pages: 3

Premium Essay

To What Extent Have Modern Liberals Departed from the Ideas of Classical Liberalism? (45)

...To What Extent Have Modern Liberals Departed from the Ideas of Classical Liberalism? (45) Liberalism has been active throughout Europe since the early 19th century, although the UKs first experience of Liberalism put into practice was in 1868 under Gladstone’s Liberal government. Early Liberalist ideas concentrated largely around core values of freedom, individualism and a minimal state. However, revisionists have deployed a modern liberalism, which in many ways have departed from core themes of Classic Liberals. Classic Liberalism has a heavy focus surrounding the core value of freedom, which also overlap the core theme of a minimalistic state. However, the evolution of liberalism, has brought about a different perspective as to what extent freedom should be exercised and at what point the state have a responsibility to implement restrictions. Early liberals such as John Locke and Adam Smith supported a ‘negative freedom’ whereby individuals were left to make their own choices without interferences from the state. J.S Mill another classic liberal proposed a very simple principle known as the Harm Principle. The harm principle is a concept which acknowledges the need for government intervention only when one’s action is physically detrimental to another. This again defends the concepts of both ‘negative freedom’ and a minimalistic state. Locke proposed the idea of ‘Natural Rights’ which specified god given rights such as life, liberty and the pursuit of happiness. The idea......

Words: 919 - Pages: 4

Premium Essay

Who Have the Been the Main Winners and Losers from Globalisation?

...Who have been the principal winners and losers from globalisation? Globalization affects everyone, whether intended, directly or otherwise; it has gradually increased its presence in our daily lives. In this essay, I will point out who are the ones benefited and the ones injured from it by breaking down the question in four broad aspects: economic, political, socio-cultural and environmental. Seemingly, I will analyse the causals for this particular outcomes and distributions that indicate that globalization is creating further divergence in our world increasingly fragmented and unequal. The globalization winners – predominantly developed countries, the top 1% wealthiest demographic segments, transnational companies (TNC’s), supranational organizations amongst others – deeply embedded in the neoliberal belief that markets are the answer to global growth through trade, fostered by incentives such as low tariffs and interest rates and minimal government intervention find themselves unattached to the markedly less benefited, the losers– developing countries, especially their poorest demographic segments, the low-skilled low-wage percentage of workforce, the unemployed, the minorities, women amongst others – who in turn find themselves trapped in this zero-sum cycle where one either leads globalization or follows it – at risk of falling behind – but not either. Globalization, as most concepts in IPE and other social sciences, is a highly contested concept and encompasses a wide...

Words: 2982 - Pages: 12

Premium Essay

Income Tax E-Filing – to What Extent Has It Been Accepted in Mauritius?

...Income Tax E-Filing – To what extent has it been accepted in Mauritius? Submitted by: ID number: Course name: Date of submission: Lecturer’s name: Table of Contents * Introduction * Problem Statement * Aims and Objectives * Literature Review * Research Methodology * The Gantt Chart * Budgeting * References Introduction Information communication technology is being integrated to deliver better and convenient public services by the government in various ways under the e- governance program around the world. Filing income tax return online is one such ambitious initiative under e-governance. Tax e-filing has been adopted by many developed countries today where the public has to discharge their responsibility to the tax authorities. In line with the Government’s Maurice Ile Durable strategy with the view of becoming an environment friendly organisation and for better tax administration and good governance practices, the Mauritius Revenue Authority (MRA) launched the Electronic Filing of Returns Facilities for individuals on 21st August 2009. The E Filing season 2014 has an innovative feature such that Electronic filing may now also take place via any electronic device (namely smartphones, tablets, iPhone, iPads, etc.) Furthermore, the MRA is also organising a Free Income Tax Assistance (FITA) campaign in Mauritius and Rodrigues. Taxpayers visiting the FITA centres will be able to file their......

Words: 1310 - Pages: 6

Premium Essay

Strategic Audit of Starbucks

...Strategic Audit of Starbucks Traci Hall Jones College Business Policy and Administration Professor E. Smith June 20, 2011 I. Current Situation A. Current Performance Starbucks is the fastest growing food chain and shows no signs of slowing down. it plans to boost earnings by 20% to 25% annually over the next three to five years and to bring its number of storefronts to 40,000 worldwide which is 10,000 more than McDonald’s. Starbucks is conservative in how it finances its goals. Operating cash flow from existing stores pays for new-store development. So far, the return on new stores has been excellent. Increasing same-store sales has been a tougher order, though, and Chairman Howard Schultz has expressed worries that moves to improve same-store sales with automatic equipment and off-brand merchandise could be turning consumers off. The return on investment (ROI) for Starbucks in 2010 was 22.50%. The market share was $27.33 billion while the profitability was at 30.4% (Donald, 2007). B. Strategic Posture Starbucks has an impressive mission statement because it addresses their product as a whole and their mission for different relationships. “The Starbucks Mission Statement-To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time. Here are the principles of how we live that every day: Our Coffee-It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them...

Words: 7814 - Pages: 32

Premium Essay

To What Extent Have Modern Liberals Departed from the Ideas of Classical Liberalism?

...To what extent have modern liberals departed from the ideas of classical liberalism? (45 marks) The two branches of modern liberalism and classical liberalism naturally clash within the ideology of liberalism itself. There are fundamental ideas that form criteria for debate across the two coexisting views, although they do possess various similarities with one another. Classical liberals often highlight the supreme importance of the individual, reflected in their desire to minimise the role of the state, whereas modern liberals take a more collective approach, and the see the expansion of the state as necessary based on the socio-economic circumstances of society. In this sense, modern liberalism can be viewed as a development on classical liberal thinking; it is only in the new ideas that modern liberalism brought about upon which they are fundamentally different. Modern liberalism can be viewed as taking a strong departure from classical liberalism based on their ideas of freedom. Firstly, classical liberals have believed in the idea of negative freedom, meaning non-interference or freedom from external interference of any sort; individuals should be left alone to make their own decisions. The government or state, external to the individual, should act as a ‘night watchman’, as summarized by the classical liberal John Locke, meaning its primary role should merely be to oversee society to keep law and order in place and the state in check. An extension of this classical......

Words: 1607 - Pages: 7

Premium Essay

B) What Were Some of the Major Causes of the Recent Global Financial Crisis (Gfc), and What Have Been Some of the Ongoing Economic Impacts, Either Globally or Locally in Singapore, of This Crisis?

...A period of economic difficulty that consumers and markets are experiencing world-widely is known as global financial crisis (BusinessDictionary, 2015). It occurs when there is an increase in asymmetric information coming from disruptions in financial system that is interrupting the funds from channelling efficiently between savers and households as well as preventing firms from having productive investment opportunities (Mishkin and Eakins, 2012, pp. 204). The recent global financial crisis began in the year of 2007 and the intensity increased in the subsequent year. Global financial crisis in 2007 happened as result of a number of factors such as government mandated subprime lending, imprudent mortgage lending, housing bubble, securitization and a few other more factors, which will be discussed. Causes The government mandated subprime lending has contributed to the financial crisis by promoting affordable housing under Community Reinvestment Act (CRA) as well as Fannie Mae and Freddie Mac. Through affordable housing, banks were encouraged to participate in imprudent mortgage lending as mandated by the federal in order to help low-income borrowers, which imprudent mortgage lending is another cause that contributed to the global financial crisis (Jickling, 2009). As a result of mortgage lending, low-income families are able to purchase houses that they are not be able to afford to purchase without the policy. The loans require low or no down payments and limited......

Words: 3381 - Pages: 14

Premium Essay

Difficulties from a Planned to Market Economy

...The Basic Diculties of the Transition from a Planned to a Market Economy The basic diculties of a transition from a planned to a market economy follow already from these general considerations on the base of the theories of a market and of a planned economy. 1. The production structure of a planned economy does not conform to the demand structure of a market economy. The preferences of the consumers and private investors are not those of a politburo, thus the nal demand is di erent and thus the production structure. 2. This means that also the structure of capital goods is di erent. New industries have to be built up, old ones must be given up. 3. Many plants which are now exposed to competition cannot compete with the costs inherited from the planning period. Eciency of production is needed, which in turn leads in most cases to dismissal of workers. 4. If the borders are opened to free trade, the economy has to be integrated into the world trade, i. e. into the international division on labor, which may lead to another type of structural change and in many cases also to unemployment. 5. Prices have to be adapted to marginal cost and wages to the value of the marginal product of labor. This leads to changes in the income distribution which will hurt some people. 6. Elder capital which still has been used in the planning era must be scrapped. 7. With high rates of unemployment labor supply decreases. The real wage of those persons who are nevertheless...

Words: 299 - Pages: 2

Premium Essay

Starbucks Case

...S w 9B08A016 PY A CRACK IN THE MUG: CAN STARBUCKS MEND IT?1 Michael Herriman, Motohiro Wanikawa, Ryoko Ichinose, Shobhana Darak and Yumana Chaivan wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. O Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail Version: (A) 2008-10-23 C Copyright © 2008, Ivey Management Services N O T After 20 years of phenomenal expansion, the last six months of 2007 saw Starbucks jolted by a decline in share price of 50 per cent and a decrease in customer visits to its outlets in North America. Its share price was hovering around $19 to $20.2 By mid-2008, it had declined to $18. Its fiscal first-quarter profit in 2007 rose by less than two per cent and in January 2008 it announced the closing of 100 U.S. stores. On July 1, 2008,......

Words: 5324 - Pages: 22

Free Essay

To What Extent Have Gender Inequalities Been Reinforced, Rather Than Reduced by Social Policy in Germany and Sweden

...To what extent have gender inequalities been reinforced, rather than reduced, by social policy in Germany and Sweden? Social policy in the modern western world is constantly developing in terms of equality, especially in the promotion of gender equality in society. Radical improvements such as the right for women to work, to vote and the equal opportunities available in terms of education; has radically improved the position of women, mothers and single parents in economic forerunners such as Germany and Sweden, with the gender gap being arguably non-existent if compared to previous generations. However, it is still apparent that there are startling differences between the two countries in terms of welfare benefits and social policy affecting men and women, with neither achieving the desired goal of an egalitarian society. Within his ground-breaking study on welfare state regime-types, Gøsta Esping-Andersen argues that gender imbalances within social policy is the outcome and production of the specific welfare-regime type the state possesses, suggesting that whether traditionalist or socialist in their views, welfare states dominate policies, consequently determining which social group benefits such as the bourgeoisie or proletariat, the majority or minority or men or women for example. (Esping-Andersen, 1990: 24) The first chancellor of Germany, Otto Von Bismarck created a social insurance system in 1873, of which became a pioneering model for the basis of......

Words: 4597 - Pages: 19

American Dream | P2P File Sharing | TR Dublaj