On March 19, 2008, Howard Schultz, the Chairman of the Starbucks, have begun on a detailed rescue plan as he and his company saw that the Starbucks underperforms and the stock price drops as time goes by.
The reason for Starbucks slowing down on its performance was pointed by Schultz is it lost on its purpose of their sales: "to sell the coffee experience." Due to a rapid expansion, its focus on "the experience" seems to be lost. The profitability has been focused more on the furnitures to make people comfy.
Starbucks also faced a difficulty in getting competition with McDonald's and Dunkin Donut. Those competing companies cut the Starbucks' gross profit. They have been focusing on the coffee business and now they are on the way competing with Starbucks.
Many other analysts suggest different problems in the company. Some says it's the coffee itself, and the other insist on the embedment of the company into local culture. Analysts talking about the problem of the coffee say that its coffee's quality should be more taken care of. Others insisting on the embedment into the local culture say that through many events and promotions and participations within the community should be done to emerse the the company into the community's culture.
Reading this article, I have thought of this company as being at a stage of Dormancy because of competitions with other companies. Other companies like McDonald and Dunkin Donut are offering fine quality of coffee which the customers don't really seem to matter buying coffee there.
The Starbucks nowadays are elsewhere and in some stores, they have more hard-woodened chairs than comfy sofas. As far as I know, Starbucks was created to sell the experience not coffee itself. The coffee is only a supplementary to the experience. In order the company to sell experience, they need to equip themselves with things that customers can feel it. Starbucks has become one of the leading brand that many people throughout the world long for. It's the perceived value that people think that the aura of extravagance fumes out from the cup and from the posture of the drink holder. Simply, Starbucks coffee gives confidence and pride to the people.
Just like what Collins in the article said, I think they have to go back to the basics. It means they have to think of what their original founding purposes are and follow their right track. People become more and more greedy on the capital itself so they sometimes are driven by the profit. I think it is more important to be driven by the goal of providing services to the people.
This is just what I have thought but I wonder why Starbucks itself does not have any advertisement on air. In Korea and in the Philippines, I've never seen any of them. I know in fact that they are advertising their bottled coffee but not the brand itself. I assume that if the Starbucks make advertisements on air like the Nike or Adidas ones, then it would make more people to buy the experience. I'm really amazed at how Nike and Adidas represent their value to the public. Just looking at their advertisement, the product looks premium. I'm thinking what if Starbucks also shows advertisements to the public like the brands I've mentioned. It would gain more people's respect towards the brand, and that equals profit.
Looking at this case, I came to understand how it is important to have unique items that nobody has in the product or in the company.
The Essay is based on the link below.
http://www.businessweek.com/innovate/content/feb2008/id20080220_372003.htm?chan=innovation_branding_brand+strategy
.jpg)
0 comments:
Post a Comment