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Trouble Brews at Starbucks

Solution Id Length Case Author Case Publisher
2648 1810 Words (7 Pages) Lauranne Buchanan, Carolyn J. Simmons Ivey Publishing : 909A02
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In 2007, the revenues of Starbucks proved to be $9.4 billion, with double-digit revenue growth and around 2500 latest store openings. It was founded in the year 1971 by three men, including Zev Siegl, Gordon Bowker, and Jerry Baldwin. After going public in 1992, the stock, which was initially priced at $17, a share rose to $21. With the market capitalization standing at $273 million, it encouraged tremendous investors' optimism. Howard Behar altered the way that the company perceived change and assisted in the introduction of nonfat milk and Frappuccino. In order to connect with customers, it introduced the entrance of music, movies, and books to the product mix. The growth of Starbucks outside of North America began in the year 1995 when it aimed to open up in Japan. By the year 2008, it proved to have around 4500 places in 43 countries that were outside the States. The major competitors of Starbucks proved to be McDonald's and Dunkin Donuts, and by the year 2007, Starbucks had become one of the most admired brands around the world.

Following questions are answered in this case study solution:

  1. Use your marketing skills, research, and experience to make TWO strategic recommendations for Starbucks based on information in the case.  For example, if one of your recommendations is that Starbucks should create a customer loyalty program, don't just say that Starbucks should have a customer loyalty program. Instead, talk about a company that has a successful customer loyalty program that Starbucks could emulate and explain why.

  2. Given the information in the case and marketing best practices, what ONE THING should Starbucks change in order to achieve continued success?

  3. What are THREE competitive threats on the horizon that Starbucks should position against? (For this question, feel free to use just the case information or also current information.

Case Study Questions Answers

1. Use your marketing skills, research, and experience to make TWO strategic recommendations for Starbucks based on information in the case. For example, if one of your recommendations is that Starbucks should create a customer loyalty program, don't just say that Starbucks should have a customer loyalty program. Instead, talk about a company that has a successful customer loyalty program that Starbucks could emulate and explain why.

Strategies and innovation are vital for all firms to succeed and flourish. By using a unique technique, companies are able to attract customers and focus on growth in the long run. Different companies, including Coco-Cola, Nestle, Tesla, and Apple, use differentiated tactics to appeal to and attract consumers to them. 

Creating a customer loyalty program could be a beneficial approach for Starbucks. Customers are a vital component part of any business, and in order to expand your loyal customer base, it is vital that they are provided with incentives accordingly. Customer loyalty and profitability tend to have a direct positive relationship. It is vital for entrepreneurs to fixate on attracting consumers, so they remain in the long run and reflect as a symbol of the company. 

The frequent flyer program for American Airlines was called AAdvantage. It was the second such loyalty program to be introduced in the world (the first having been at Texas International Airlines in 1979) and was still the largest as of October 2011, with more than 67 million members. In order to reward their most devoted customers, American Airlines introduced the Gold tier in 1982. The first contemporary coalition campaign was built on relationships they began that year with Hertz, Holland American Line, and British Airways.

The loyalty program of American Airlines is representative of how early loyalty programs were established and how they became relevant. In today's times, all major companies tend to have loyalty programs, including Amazon, Sephora, etc. This reflects how purchasing products and providing incentives for the future tends to be beneficial for the company's image. By opting for this strategy, Starbucks would be enabled to develop a more direct connection with the customers and provide them with motivation to revisit the store and continue the purchase of the product. Customers, if loyal to your company and if provided with the inducement to do so, continue to purchase your product no matter the entry of other competitors, and this ensures profitability in the long run. 

In 2007, Facebook Pages became available, which enabled brands and celebrities to post original content and media. By the end of October 2007, Facebook had almost 50 million active users. This indicates how many viewers Starbucks could have had if it had launched a proper Facebook page back in 2007. With so many users of Facebook, Starbucks could have gained enormous attention and enabled many more customers to acknowledge Starbucks.

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