Starbucks Case Essay example

1438 Words Jan 10th, 2016 6 Pages
Mr. Howard Schultz, the chairman and CEO of Starbucks Corporation is faced with some immediate and long term challenges in the year 1996. He needs to keep up the brand image of Starbucks, beat the competition, foray into new horizons for expansion, improve on the real estate strategy while maintaining the ‘coffee ‘ experience Starbucks is known for.
Immediate issues 1. MacDonald is petitioning for a contract to serve Starbucks coffee. Mr. Howard is sceptical that granting this contract will dilute the brand image of Starbucks. While this can boost revenue in the shorter term, this can also lead to loss in clientele and reputation. Should Mr. Howard agree to the proposal? 2. Starbucks has a goal of having 2000 stores by the
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We propose here some probable solutions to above issues. The assumption is immediate term solutions can be implemented in a year while basic issue solutions need a multi- year planning to deliver results.
Immediate Issue Solutions 1. We believe that Mr. Howard should not accept McDonald’s proposal to vend the speciality coffee on as is basis. Instead, he should focus on creating a further lower level sub product for this purpose and put up sale pitch accordingly.
Pros A)This provides immediate access to an unexplored market segment which would broaden the revenue base.
B) The current clientele will not switch as they would still continue to be treated as ‘premium’ customers with same barista and location experience. The sense of differentiation will continue to exist and both product lines can sustain together.
Cons A) Despite all sales pitch and marketing strategies to retain customer loyalty, there is still a chance that the existing customers get miffed and switch to competitors. B) The brand image of Starbucks may tarnish leading to loss of revenue in all product lines. 2. Starbucks should focus hard on Doppio strategy as that will reduce dependency on getting ‘A’ sites in ‘A’ markets and provide accessibility to uncommon sales area as bus stations , corner streets , small markets etc.
Pros A) Increased penetration in new customer base and an

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